Stumbling blocks of new CEO

CEO characteristics

A promotion to lead a business can bring about some behaviors that are not in line with the leader’s normal style, but the new business card makes them bolder. Here are some executive characteristics I have observed over the years and through my own experiences:

Greater propensity for risk

There may be an increase in self-confidence to make decisions with a higher degree of risk to produce better results. This can be a trap. The same care and analysis undertaken throughout one’s career are sometimes abandoned.

This is part of human nature. When there is an increase in authority or personal power, there is a greater urge to assert that authority and give in to impulses that were previously controlled.

One must not confuse greater decision-making power with an increased ability to make the right decisions. One is not necessarily linked to the other.

In my first experience as a CEO, which was an internal promotion, I started making decisions on many matters that I previously considered strictly necessary. Several of them were correct, but in other cases, I had to acknowledge that the previous way was the right one.

I recalibrated my risk analysis. I became much more cautious in my subsequent experiences as a CEO.

Ignoring the company’s culture

For a CEO coming from outside, it is crucial to understand the culture of the new company. Bringing highly successful practices from the previous company does not guarantee success in the new one. Culture is something very strong, often intangible.

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I have seen very experienced executives being expelled by the dominant culture, no matter how successful the practices they brought with them were. I remember a comment from a manager who was subordinate to a newly hired CEO of a global company with a very traditional and deeply rooted culture, and the CEO was bringing about significant transformations.

When I asked him what was really happening, he responded, somewhat ironically, “We are giving him enough rope to hang himself.”

And that is exactly what happened.

I like books by academics and experts, but especially those who have hands-on experience. Together with J.P. Barney and Carlos Julio, Manoel Amorim co-authored a book released this year in the USA: “The Secrets of Culture Change.”

Amorim has been the CEO of billion-dollar companies in six countries and brings a wealth of practical experience on the subject. I highly recommend reading it.

Obsession with outperforming the predecessor

Turning the pursuit of superior results to an obsession is another major stumbling block. Each leader has their task to accomplish, and that should be the focus. If significant challenges are found, the concern should be on fixing the problems, not on criticizing those who caused them.

The famous expressions of “it used to be like this” and “now it’s like this” are frequently found in the comments of many CEOs. Unfortunately, many make it their life’s mission.

A personal challenge I faced was replacing a CEO who did exactly that, comparing his practices with those of his predecessor. I was hired externally precisely to lead the changes in these practices. Comparisons by high-level management and even employees were inevitable. I stayed on course toward my goals, and in about two years, we received global quality awards without me making the slightest criticism of my predecessor.

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It’s important to resist the attempts to “stroke your ego” and make the decision to leave the past behind and fulfill your mission. In fact, with few exceptions, I maintain good relationships with the people who preceded me in leadership roles.

Overconfidence

Recently, the CEO of one of the four largest banks in Brazil took over the leadership of one of the largest retail companies in Latin America and brought along his CFO. After one week in the position, the new CEO came out publicly with serious discoveries of balance sheet information manipulation, while announcing his departure from the company.

The company had high levels of debt with banks, leading to a rush by creditors to seek funds. The case is still in the courts today because the company is under judicial reorganization. This deeply damaged the decades-old brand’s image and affected the reputation of its shareholders, who own other globally recognized and prominent brands.

It’s not always possible to bring a CFO along when the CEO takes a position. Most structures are quite rigid, and the team is the one that’s in place to work. However, all possible safeguards should be taken to ensure that past events do not come back to haunt the CEO in the future.

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Even if a hiring is extremely friendly and efforts are made to maintain good relationships with the CEO’s hiring team, this is a business deal. Each country has its own laws that allow for this type of procedure and safeguard, whether through an audit, a statement by shareholders, or any other means.

The important thing is not to let the shine of the moment of hiring blind the new CEO to the risks that could deeply compromise them in the future.

Invasion of personal time

This is a very controversial issue in our day and difficult to reach a consensus on. In many cases, there is a great need for effort during a turnaround or for rapid results generation. At the same time, the new generations witnessed the meteoric success of Elon Musk, where working through the night with tireless entrepreneurial spirit took him to the peaks of fame.

A very personal issue, as it depends on the priorities each individual places on their life. History shows that, for a person’s well-being, balance is important in all areas of their life.

The potential damage to executives’ personal lives when their personal schedules are devastated by professional commitments is, in most cases, recognized later, with broken relationships, health problems, and many others.

I’m not able to give advice to anyone because I’ve faced my challenges in this regard, but a word of caution when assuming a CEO position is warranted: do not let your personal life be affected.

For me, Bill Gates’ quote is very emblematic: “Whether at work, at home, or on the road, I always have a stack of books I’m looking forward to reading.”