Twitter owner and CEO Elon Musk apparently didn’t ask my advice on CEO succession. And, considering what a bright and successful leader he is, Musk doesn’t really need to.
But, as a thought exercise about CEO succession, it might be fun to review the research — what the “book” says about how to find the right CEO — and then Musk’s actual decision-making process. to compare or contrast with.
The bottom line from long-standing research and seasoned practitioners is that there are three steps to onboarding a new CEO and empowering that person with the best opportunities for success. All the three steps should be done properly.
However, this is complicated by the fact that the second and third stages are progressively more difficult than the first stage.
Step One: Matching the “must have” specifications to the job requirements is the easiest part to get right, since essentially all external searches for CEO jobs have the same top-six “must have” specifications:
- A demonstrated history for getting results
- The ability to think strategically
- Superior communication skills
- Fit with the company culture
- Interpersonal skills (high E.Q.)
- Previous comparable experience
This particular research on CEO searches actually comes from a book I wrote, “Secrets from the Search Firm Files”. Working with one of the top five search firms in the United States, I had access to all the CEOs, presidents and chairpersons that the company executed over a two-year period.
Participants of these searches ranked a long list of characteristics by degree of “must have”. Apart from cultural fit and previous relevant experience, the results were quite similar in terms of the three key skills and ability to achieve results.
While cultural fit is essentially the second step, that and the previous “comparable” position are two that Musk’s Twitter search will need to be tailored to his unique circumstances and overall strategy. Interestingly, previous “industry” experience barely makes it into the top 10.
Therefore, “comparable” more closely matches where Musk wants to go with Twitter, not just reaffirming the company’s status quo. That means finding candidates who have experience tackling other challenges Twitter may face in the near future.
For Twitter specifically, the questions become: How do you find a stable revenue model? Does it mean re-establishing credibility with the wider user and advertiser universe? Or does it have more to do with the public forum becoming the new paradigm?
Step Two: Understanding the Culture
Is Twitter Sustaining Its Current Business Model? Does the company push to some extent? Or does it undergo a bulk rework to match where the musk needs to go?
It’s clear that Musk is already focused on finding a new business model for Twitter, and he’s prepared to act radically to get there. What makes the second phase more challenging for Musk than the first phase is matching the leadership styles of his CEO candidates to become Musk’s culture in the coming years.
In researching my book, all of the partners associated with the search firm broadcast the same message: Companies can easily find candidates who score a 9.5 to 9.8 on a 10-point scale of matching their specifications, but the CEO’s Actual performance is low. The predictor of who will be successful is cultural fit. This is the secret sauce.
To find a CEO who fits Twitter’s culture, Musk can’t just rely on his instincts — he knows “it” when he sees it. Working with search firm partners, I created a mental model that helps candidates fit with the desired culture. It includes two broad categories: decision making and style.
Musk must lay out his CEO candidates and his desired culture along the spectrum of each element of decision-making:
- autonomous on the one hand and collective on the other
- rule-based or person-based
- cautious or aggressive
- emotional and intuitive or fact-based
- Similarly, there are three dimensions of style:
clear, blunt communication versus discrete, coded communication ethos
looking “right” and fitting a particular background versus diversity (assuming ability)
Value Conformity vs. Results-Oriented Tolerance
Twitter’s owner and current CEO should find out where their candidates sit along these seven spectrum lines. The subset that moves the culture in the desired direction based on decision making and style will actually be successful in the end.
Stage Three: Managing the Handoff
Yet many well-designed CEO succession plans quickly fly apart as the proverbial handoff fails. In some cases, the current CEO never really wanted to leave, so they sabotage the process, at least inadvertently.
Think of Robert Allen at AT&T or Armand Hammer at Occidental PetroleumOxy-1.5%, who went through many “successors” under their watch. In other cases, the current CEO chooses a friend or close associate, even though the cultural fit was never right in the first place.
For Disney, then-CEO Michael Eisner’s selection of “super agent” Michael Ovitz in 1995 was a profound miscalculation of the culture that Ovitz brought with him. For public companies, the CEO handoff can take many forms. All can be successful under the right circumstances.
Bringing in an outsider with previous success at the CEO level usually requires a quick “baton pass” program, in which the retiring CEO is explicitly and quickly withdrawn from the board of directors and company premises. Internal candidates, meanwhile, can often benefit from a version of the “long goodbye.”
until they demonstrate a full range of executive skills and former allies accept that new leadership. But a fixed, relatively short time as chairman of the board of directors for the current incumbent is usually the outer limit of a happy ending.
In Twitter’s case, Musk is a shareholder, so that is the constituency the new CEO must serve and satisfy. The key is for those two individuals to come to an agreement on how this collaboration will work, and then stick to it.
A variety of styles can work. It could be a “Batman and Robin” situation, where the owner picks the battles and the CEO executes the game plan. Or it could be a case of “Butch Cassidy and the Sundance Kid,” with the two working together as new challenges emerge. What may not work, however, is that any of the partners is allowing the other officers to shop around among them for the desired decision.
That strategy requires Elon Musk and his new CEO to demonstrate zero tolerance, speak with one voice — no exceptions. And, unless specified earlier for a specific issue, that voice should be that of the CEO.