If you are about to start a transition, try to learn from the best. This message comes from the McKinsey.com website in a piece we began exploring in the previous article.
Strategic actions – and cuts when necessary
Top CEOs begin by obtaining a clear perspective for their actions. For example, those who took over low-performing companies acquired considerable benefits from conducting a strategic review.
Exceptional CEOs seem to be significantly more likely to conduct such a strategic review in their first two years when compared to those who are only average CEOs.
As a result of this, they know very well their company’s past and can better plan its future performance. Top CEOs also make more strategic moves during their very first year.
To change the strategic direction of a company, you usually have to free up some resources. Otherwise you wouldn’t be able to move in the new direction. This is the reason why successful CEOs often cut costs in parts of the company that do not represent a priority for them.
Building that strategic momentum
Thus an exceptional CEO is more likely to launch an initiative of the kind mentioned in the previous paragraph. Then, in order to balance the organisation of the company, an exceptional CEO will redesign the organisational structure. That is a critical part of the tool kit of a top executive.
On the other hand, McKinsey discovered that the top CEOs did not reshuffle the organisation or their management team during their first two years in the role. Why not?
It seems that they were playing a strategic game. High-performing companies could be damaged by a sudden rearranging. And, furthermore, a company and its employees can only absorb a certain number of fundamental changes. So you need to start with the most important initiatives. You cannot do everything at once.
-jk-