How We Did It: Creating a CEO Development Plan for Better Performance

The Need

For a global company with a highly visible C-suite, the board had no room for error in CEO succession. They needed to find a successor who would not only lead the business, but advance the culture.

The Solution

A CEO simulation helped them assess and develop several C-suite members. As the CFO—a strong business architect—emerged as successor, DDI helped him develop his skills in managing the culture.

The Result

The new CEO had a smooth transition and assisted right away with speeding up the company's crucial digital transformation, while keeping company performance high. He also kept his senior team highly engaged from the get-go.

We coached the future CEO on three key things to prepare him for a smooth transition: how he presented the reason for what he was doing, how he engaged his stakeholders, and how he tracked whether he actually had people on board.

Matt Paese, Senior Vice President, DDI Executive Services

In this How We Did It video, Matt Paese, leader of DDI's executive services business, shares how one company engaged in a CEO development plan for its senior leadership team well in advance of when they would need to make succession decisions. By using DDI’s assessment with simulation against the CEO role, their future CEO began individualized development and was identified as a potential successor long before actually taking on the role.

Learn how this global company worked with DDI to help its future CEO overcome his leadership challenges so he'd be ready for his new role.

Learn about CEO assessment.

Transcript: 

Beth Almes:

Hi everybody. I'm Beth Almes and welcome back to How We Did It, our series where we talk about the exceptional companies that we have worked with and how we've helped them solve some of their critical leadership challenges. Today, I have Matt Paese, who is senior vice president of our executive services team at DDI. And Matt's going to answer one of the biggest questions we hear from clients who work with us at the top of the house about how development before someone takes the CEO role affects their CEO performance after they're in the job. So Matt, welcome to how we did it. And we're excited to hear your story.

Matt Paese:

Thanks, Beth. Really excited to be here and excited to dive in.

Beth Almes:

So tell us a little bit about the company and how they started the process of CEO succession and how that started to follow through as they stepped into the role. And then it led to better performance?

Matt Paese:

Sure. This is a large global corporation with a very visible senior leadership team and a very visible CEO role. So in a way that we would consider best practices, they started very early. So they began to look at candidates for CEO several years before they believed they needed to make a decision. And in this case, the person we're going to talk about today started to become part of development two to three years before he actually took the role as CEO.

Although, another best practice that we think that this organization engaged in was engaging in development for everyone on the senior team. So it wasn't so much that there was a small number of candidates and a horse race, it was more that there was generalized development for everyone in the C-suite and everyone had an individualized development plan. And as they started to get closer to succession, some people's development plans took on more specific, more specific activities and process in keeping with the kinds of roles that they were candidates for.

Beth Almes:

So tell me a little bit about this candidate, what his background was and how some of his early development started to help him adjust for the CEO role in advance?

Matt Paese:

Okay. This is a really exceptional business architect, very creative, very strategic, had a lot of a variety of different roles in C-suite prior to being CFO, which was the role he was in before becoming CEO. His primary emphasis you'd have to say was in finance, although he had played a number of other roles.

And as he was started to go through development, there were a number of examples of things where these weren't major issues or problems that had come up for this leader. But what they had noticed is that the, I'll call it the business architect side, the strategist, the leader who's really business savvy was getting more emphasis than the cultural leader side.

And there were some examples of major changes that he had led and some smaller sort of influence scenarios where this leader could have done more to attend to some of the cultural dynamics that were part of his leadership.

In addition to attending to some of the business architectural dynamics, the finances, the strategy, the plan for how to execute was often over-emphasized with a bit of under-emphasis around some of the cultural issues, how people might react, engagement, how people were seeing not only what we would do, but why we were doing it, those sorts of things.

Beth Almes:

So a couple of years before he ended up stepping into the role, he was identified as a potential successor, right? And started to, these were a few of the problem areas where they said, "Hey, if he continues into bigger roles, we might see some of this emerge." So as they were thinking about his potential succession into the CEO role, what kind of work did we do with him to help him address these challenges and get out in front of it so that he would be successful eventually as a CEO?

Matt Paese:

Okay. So what we did is sort of established a series of dialogues between the individual, his CEO, his current, or his CEO at the time, and the CHRO to have an ongoing dialogue about development. And again, that was not only true for him, that was true for everyone in the C-suite. They all had development plans that they worked with the CEO and the CHRO. In this case, this leader's development plan started to become more specific and specific around some of these cultural leadership aspects.

So in this series of dialogues, what we were able to do is start with an assessment experience that involved a simulation against the CEO role. So he actually participated in a CEO simulation that gave him some feedback about some of these issues. We also interviewed a number of his colleagues who were able to provide some input, and we were able to pinpoint some of the more behavioral, the specific behavioral aspects of this pattern around overlooking some of the cultural aspects. And here's what it led to.

We began to work on really three specific things. One is the nature of the way he was presenting organizational change. Why were we doing what we were doing? He began to reframe the way he presented things and communicate again, more of the, why would you care about this? Or why would a customer care we're doing this? That was the first thing. The second thing was the way he engaged with his stakeholders.

He began to be more proactive, and actually found a series of places where he could be more proactive in reaching out to his stakeholders, not to just ask their opinions or gather some input, but to give them specific roles in the changes that he was beginning to enact. And then finally, he shifted the way he tracked engagement and buy-in over time.

And when he previously would've sort of made his own judgments about whether or not he had the right buy-in and engagement from his team and his stakeholders, he actually asked other people to determine that for him. And in one instance, it's a very powerful example. What he said was to a few of his key stakeholders as they were planning one of their key changes. He said, "Look, I can sometimes misjudge these things. I may think people are on board when in fact they're not yet. So I'm going to ask you to do that for me." Now, was that something he just decided to do on his own?

I think he was very willing to do it, but what we were able to do in a coaching engagement is talk about why that might be valuable or talk about how easy it might be to make a minor shift to something that he was otherwise doing that made a major difference in the way people reacted and generated ownership around it. So how he presented the reason for what he was doing, how he engaged his stakeholders and how he tracked whether he actually had people on board. Those were the three things we were able to coach him through in preparation for a succession.

Beth Almes:

So as he developed and took on, listened to the feedback from his executive coaches on the DDI team, as well as really saw how things were playing out with his stakeholders internally, how did that factor into the company's decision to say, yes, this is our right person for CEO?

Matt Paese:

Yeah. Enormously, is the simple answer to that. One of the things that we talk with boards very regularly, these days, it's not a brand new thing, but in my 25 year career, it's louder now than it ever has been. And it's, what is the role of cultural leadership alongside the role of business leadership? And that's a tricky question for a lot of boards to answer, especially if you're not relying on any objective data.

If you don't have any good behavioral examples, like how to prepare for presentations or how to specifically engage stakeholders, those are specific behavioral examples of things that have big ripple effects in the culture. And if you're not able to point to those specifics, you get more generalized sorts of assertions about whether someone quote, unquote "Fits with the culture" or whether she's going to be able to manage the culture as it changes, et cetera. So candidates and culture are something that is really enabled by more specific data and insight. And so in this case, what we were able to do is sharpen that dialogue and be able to say what we meant by cultural leadership.

Beth Almes:

In a really common path of CFO to CEO, we know lots and lots of organizations, that's how they go through succession through that lens from the business strategist, into that CEO cultural leader role as well. So as this leader went from that role, and then finally did step in the CEO role, how did you see that development reflected in his performance actually on the job?

Matt Paese:

Yeah. You know, I'm smiling because I'm thinking about when it happened. It didn't take long after he got into role for his own leadership style to emerge. I mean, let's face it some things are habits that we can amend and adjust and prepare for and begin to react to, but we're sometimes going to have habits that are going to continue to creep up. The question is how do we kind of hedge that or mitigate the risk of it. And in this case, we got a recent example, right after this CEO took the role.

It just happened to coincide with an enormous amount of pressure that the board and their shareholders and the market was applying around the speed of their digital transformation. And to make a complicated discussion very simple, it wasn't fast enough, it wasn't broad enough, it wasn't forward looking enough. And people started to become very worried about it.

So now imagine a new CEO who's in the first year of his tenure, who's beginning to feel the weight of this pressure and to feel as though the organization's response is not yet fast enough. So now, remember he's a business architect, that's where his wheelhouse is. So being able to invent or derive solutions that are not going to waste time, he's able to do that himself very quickly and very easily.

The part he has to remember to do is the part about explaining why he wants to move faster, the part about how he brings his stakeholders in and the part about how he tracks whether or not he's got the right engagement. So he kind of tripped into this at first, but then quickly recovered. And what happened was he in a couple of successive senior team meetings, he sort of made some pretty strong statements about what he wanted to see, when and how. And it was sort of the architect's mind legislating a bit of a solution. But what he was able to do is very quickly identify when he had gone a little bit too far, a little bit too fast without the right kind of involvement.

He got a little bit of feedback from some of his team members that. And he didn't anticipate the feedback like, wait, what's my role in this? Or have we been clear about our strategic alignment? Are we as a team clear on? The fact that we want to do it this way and not that way in those moments, he was able to sort of flag because he had done it before, he had practiced it before he became CEO. He was able to say, "Wait, time out." Which is exactly what he did. He called a time out, did a little reset, called this team back together.

And he said, "I need to reintroduce this. And I need to just ask everyone to slow down for a second. We're going to take a step back because this is on me. I did this too quickly. And what I didn't do was involve some of you in the ways that I needed to. So I'm going to take a step back and do that." Which is precisely what he did. And he stopped and reestablished some of the steps that he had practiced beforehand. Why are we doing this? How am I going to engage my stakeholders?

So after that initial senior team meeting, it was going around to some of the individuals and dyads of people to say, "Hey, do I understand your perspective well enough? And have I incorporated it? And here's how we..." The part about moving faster and being more intentional about a digital transformation was not negotiable, but the way they did it was negotiable. The way they involved one another was negotiable. And so very quickly into his role as CEO, he sort of tripped but quickly caught himself and had some practice at it from before he had the role that he was able to draw on and quickly recover.

Beth Almes:

What I love about this story, Matt is how you're able to show that someone who probably had certain habits of how they went about work and leading change for likely decades, was able to use that assessment as a trigger to say, "Hey, here's some things I'm doing," to remember their coaching, to recognize when they, maybe in those situations now and then doing it wrong, and then really change dramatically the way they led the organization, that you saw the growth, you saw their performance change and how that really trickled down throughout the organization. So last question I'll ask you is just how he's doing more generally now, and the company has acclimated to his leadership as CEO?

Matt Paese:

Right. I think like any CEO, his performance is evolving. He's still less than two years in tenure as the new CEO. So I think what I can say is that he has extremely high engagement among his senior team, with whom we work with, I think all of them. And they are extremely tightly knit as a senior team. They're extremely open and candid with each other and they are learning the ways that they need to help the CEO to compensate for some of these issues. Why? Because he's transparent about it. He talks about the thing that he might trip over.

And so if you think about this, this is the kind of thing that a board of directors will be really cautious about. If you said, "Boy, we've got a CEO candidate who made some mistakes around cultural leadership." That's almost like a third rail kind of issue, never touch it or the shock you're going to get is going to be devastating. And meaning, we could never consider a candidate for CEO who has any questions around their cultural leadership.

But in this case, this is someone who was able to, with some help, boil it down to some specifics. And I think that's maybe one of the big takeaways in this whole lesson is that something that sounds like a big issue, like cultural leadership actually boils down to a few simple things that he was able to practice.

You can call them behaviors, you can call them habits, you can call them approaches, the headline is that they're simple. They're not complicated for him to remember or to practice. And they feel natural for him as he goes us through it, because it feels like an authentic version of his leadership just amended in some ways that help to compensate for what would be a natural pitfall that he might fall into.

So I think the performance that he's exhibiting is exceptional in terms of his ability to manage his own derailers. The company's performance is good and solid and moving forward. I can't point to some massive turnaround or something that's fundamentally changed. Their digital transformation is getting positive reviews from the board. They are moving forward. It's going to continue to take some time. They're moving, but I think the early signals are that he's engaging in the right types of collaborative behavior with his senior team to create the promise of a really successful future.

Beth Almes:

This is a great story of a leader who is not, it's not about creating the perfect CEO, but the one who knows where their vulnerabilities are, how to recognize them, how to lean on others to make sure that none of that, those weaknesses don't trickle down, that they strengthen the organization. Others can pick up and support that. So really wonderful story about how, from the first time they were identified as a potential successor all the way through to performance on the job. This leader and executive has really transformed and grown in a way that has led to positive performance for the board, the senior team and really everyone in the organization. So thank you for sharing that really great story.

Matt Paese:

My pleasure, Beth. Thank you.