McKinsey’s Carolyn Dewar, Scott Keller, and Vik Malhotra chat with McKinsey Global Publishing leader Raju Narisetti about the global impact of their best-selling book, CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest (Scribner/Simon & Schuster, March 2022), and reflect on why the book is as relevant today as it was two years ago. An edited version of this third and final installment of our three-part conversation follows. See the first and second parts of the discussion as well.
Raju Narisetti: Has the response to the book changed your approach to CEO counseling?
Vik Malhotra: Certainly, for me, and I’ve been doing this for a long time. I have a very, very different lens on CEO counseling and senior-leadership counseling, more broadly. Some of the strengths I hope I have retained historically: qualities like being a good listener, having empathy, and being able to build a personal relationship.
I also came to recognize that I actually wasn’t pushing the people I was counseling hard enough on some of the dimensions of the [six mindsets]. It was easy enough to say, “OK, there’s a reason this next year needs to be a little more incremental in its approach.” In year two, year three, we can get bolder, and we can take some bigger steps, and so on.
What you soon realize is that if you’re an incremental leader for a couple years, you lose the permission from the organization to suddenly adopt a mindset of, “Be bold.” I use that as an example, but it certainly pushed me to push these leaders harder on the six mindsets.
Importantly, within the six mindsets, there are certainly five or six elements that I was probably not pushing them hard enough on: the boldness of the vision; being tough minded on resource allocation; shaping culture by picking on the one or two things that really align with your vision; recognizing that, at the end of the day, it’s all about talent, and asking, “Are you really doing everything you can to equip this organization not just on your team but across the organizational talent? Are you really doing everything to build a star team, not a team of stars, but a real star team? And are you putting in the personal energy, too, on the composition, the cadence of meetings, the coaching that they need—all of that?”
Then, on the personal operating model, a lot more pushing people by saying, “You’re spending way too much time running the business day-to-day when you’ve got great leaders around you. If you haven’t, you ought to be recruiting those great leaders to go do that.”
I highlight those things because they meaningfully changed how I talk to leaders today. I haven’t lost the empathy, and the listening skills, and the ability to be thoughtful when I interject all of that. But I didn’t interject those things as powerfully or tough mindedly as I do today.
Carolyn Dewar: I think it changed each of us in how we counsel. I also hope that it changed, more broadly, anyone who’s coaching a CEO, whether it’s our colleagues, board members, investors, even people who are reading it themselves. Because a big part of what this brought is a fact base and a pattern recognition. It’s really easy to get anecdotal when you’re giving someone advice. We’ve all done that in the past, and there’s value in the stories. We’ve actually looked across 70 CEOs who objectively have done it well.
So it’s not just because they’re your cousin, or your friend, or the client you happen to know. These are folks who’ve done it exceptionally well, the best in the world. We found the patterns. That gives all of us and should give anyone reading it confidence, too, that this isn’t just the autobiography or the anecdote.
There’s a body of thinking here that can be a handbook, that’s grounded in facts, that’s grounded in experience, that everyone should feel confident drawing from. I think that’s what’s shaped not only my counseling but also that of many, many colleagues. You don’t need to be Vik. I wish we could all be Vik. He’s amazing. Someone reading CEO Excellence can get the wisdom from all of those voices in one place. I think people should feel confident and emboldened by that.
There’s a body of thinking here that can be a handbook, that’s grounded in facts, that’s grounded in experience, that everyone should feel confident drawing from.
Scott Keller: In doing the research for this book, we came to know the game more than we ever have. We can now coach every play, every tackle. We can because we’ve gone so deep, asking, “What is the role?” I also think it’s because of our orientation. As you mentioned, Vik, it’s the amount of empathy we have for people in this role, the amount of compassion and desire to help this human being win for all the reasons we talked about earlier. It’s also thinking about the human being succeeding as being excellent in this role that they’ve been given to be of service to this great organization and to this group of people and to everyone who depends on it.
Our approach to CEO counseling is not just about, “Are you going to lift share price?” It’s about, “Are you going to leave a legacy not for you, but are you going to build this great institution in a way for generations, set it up for more leaders to be successful and for more humans to be successful?”
That’s knowing the game and standing for something more than winning. I think it strengthened both of these in a step-change way, at least for me, in how I counsel CEOs. That has made a big difference in the potency of being able to actually help advise in positive ways.
Raju Narisetti: The book came out in the height of the pandemic. It couldn’t have been a more challenging time to be CEOs. But how do you avoid being complacent as a CEO?
Vik Malhotra: One of the conversations I have with CEOs is that in today’s world, with all the uncertainty, inflation, supply chain, geopolitics, and more, it’s easy to jump to the here and now.
A big push I make a lot, specifically with about-to-become CEOs or recent CEOs, is that this book is about timeless messages. I think great CEOs were bold 20 years ago. They are today, and I think they will be 20 years from now.
When it comes to aligning the organization, they’ll treat the soft stuff as the hard stuff. They did that 20 years ago. They do it today. They’ll do it 20 years from now. So you have to get your head around the timeless actions that will always serve you well no matter the environment.
This book is about timeless messages. So you have to get your head around the timeless actions that will always serve you well no matter the environment.
Yes, of course you have to adjust for legacy and for circumstance. I’m very clear now to say, “I think you should worry whether you will still be in the role two to three years from now, because I don’t think those actions are sufficient, particularly given what your competitors are doing, given what’s happening in the environment, all the changes, and disruptive aspects like [generative] AI. You can’t be complacent.” That’s actually a big part of the message no one actually ever talks about: “Oh, I’m complacent about this.”
Scott Keller: Right.
Vik Malhotra: But you can see them talking in incremental terms. I’ve been very tough minded about saying, “You cannot be incremental. The world’s moving too fast. The change is too rapid. Take these timeless messages and apply them.”
Now, you also want to overlay on that everything as it’s happening on a timely basis. If you happen to be a global company, and geopolitics is a real risk, you’ve got to factor that in. You have to worry about the timely aspects as well and work on them. Don’t let the timely aspects hold you back, which is what people will do by saying, “I’ve got X challenge and Y challenge and Z challenge, and I’m just going to anchor on them.” Well, you also have to remember these other lessons.
Carolyn Dewar: I think some of the interesting conversations about complacency come up when folks are a few years into the role. It’s one thing when they’re starting out. But when we’re sitting and talking with CEOs who are three, four, five, ten, 15 years in, well, by 15 years they usually realize they can’t be complacent.
But they’ve gone through that first S-curve. They’re saying, “OK, I got through the first three, four years. I nailed it. I had my agenda. I made it happen. I’m good now, right?” That’s one of the moments when you need to be really careful.
A lot of our research since then, and some of the work we’re doing more and more with clients, is asking, at midtenure, “What should you be thinking about”? There are a couple of key things.
One is, “What is your own learning agenda?” You’ll only realize that complacency is an issue if you’re open to what’s happening in the world. There’s so much right now, it’s hard to not be aware. But some of these CEOs are very deliberate about asking, “How are they exposing themselves to the new ideas, the latest innovations, the new technology that’s coming down, AI, geopolitics, all these various things?”
Some take a really prescriptive approach. Satya Nadella spends one day a month just learning. He has his chief of staff gather information in advance, and he reads it, and he meets with people. For other folks, it’s more about attending forums and having conversations.
The second part is taking a real outsider view of your business. Do you have a view of your own learning journey? Do you know what you need to learn? And are you open to that? Do you realize you still have things to learn?
What are you doing as a leader to take a real hard-eye view and ask, “How are we doing? Are we reaching our full potential? Are we being as bold as we should be? Are we doing those things?” What’s your mechanism to do that and to really challenge the thinking?
The last part is your team. Some team conversations are so hard to have, even in the early days as a new CEO: “Oh, this person’s been here a long time. I feel loyal.” They get their new team finally in place.
In year four or five, when you’re sitting on that next S-curve, saying, “We did our first piece. What’s our next bold vision?” It’s also a moment to step back and say, “What is the mission of that team going forward? What will I need of my CFO, my CMO [chief marketing officer], my product person in this next era?”
“And I might have terrific people, but are they the profile for where we’re going next?” And, again, taking that fresh-eyed view. There are some moments in your tenure, particularly in that middle piece, where you need to build in explicit ways to ensure you’re not being complacent.
Raju Narisetti: Scott?
Scott Keller: I love the Andy Grove quote, where he says, “Success breeds complacency. Complacency breeds failure.” That’s very hard to stay aware of in this place where you have been successful.
To Carolyn’s point on the learning agenda, CEOs who have been successful in their first three to five years are asked to talk about their success. They somehow think they’re still getting out there and being external, but they’re actually not learning anything. They’re just telling their story. To Carolyn’s point, they can turn those into learning experiences: “Well, what would you do in my case for the next S-curve? What do you see happening in other industries that is really interesting for us in our industry that we can learn from?” So I just reinforce that point. I think about it from the outsider’s view, and having that mindset of, “What would an outsider do?”
Carolyn touched on three of the things that are in our thinking on midtenure CEOs. The last one is not to lose sight of having a risk management plan. It’s easy to think that if things are going well, everything will always go well.
Then, things happen. Things can happen if you don’t have a crisis management plan, which is often hard to manage when things are going well.
Laying the foundation for all the stakeholders is key. You can’t build trust when a crisis happens. You build trust before a crisis happens. Are you on top of all that? As a successful midtenure CEO, it’s so easy to lose sight. Those are a lot of the things that we’ll talk about when we get in the room with them.
Laying the foundation for all the stakeholders is key. You can’t build trust when a crisis happens. You build trust before a crisis happens.
Vik Malhotra: I might also add that there was some method to our madness when we said, “Let’s look at CEOs who’ve been in the role for six years or more to judge their performance from a shareholder value creation point of view.” If we’d actually done that same analysis at the three-year point, we would have had about 1,000 CEOs in our database. That would imply that 800 of them somehow didn’t really follow up on that first three-year promise. You didn’t see that additional S-curve and that additional shaping of the institution beyond that because they’re doing well. They’re comfortable in what they’re doing. The reality is that there is a cycle, whether it’s three or four years of renewal that an institution needs. The CEO needs to lead the charge.
Scott Keller: I would like to reinforce that because it’s important for people to hear. If you look at who was in the Fortune 500 in the year 2000, and then you look at 2015, 50 percent of the companies are no longer there. They’ve either gone bankrupt, they’ve been bought, or they have just closed their doors for good.
You combine that and look over the last ten years and say, “How often does the word crisis show up next to one of the 1,000 largest companies in the world?” There’s an 80 percent increase. Part of that is the dynamics of the external environment.
All of that comes together to make us say, “If you’re feeling good about where you are as a CEO and don’t have all the bold vision and all the things we talk about in terms of the next S-curve, you are very likely to run off the road.” It’s a really important warning.
Take someone like [JPMorgan Chase CEO] Jamie Dimon who, I believe, in the latest polls, is the most admired CEO among CEOs. After the London Whale incident, which almost brought him down as a CEO, he shared a big learning: “You know what? What I learned is you can’t get complacent, no matter how successful you’ve been in the past.” I also think he’s done a really nice job of espousing that learning ever since.
Raju Narisetti: The three of you, in addition to continuing to be CEO counselors, have taken on new work and new research. And you’ve framed it as the The Four Seasons of a CEO. Carolyn, talk a little bit about that.
Carolyn Dewar: It’s a natural extension of a lot of the research that went into the book, but, even more so, a lot of the conversations we were having. There is a natural life cycle of a CEO. While the six mindsets and the roles apply across that whole tenure, how you apply them varies by these various stages, or “seasons”:
- Aspiring CEOs. You’re maybe a couple of years out. You’re looking ahead toward the role. You want to be ready. What’s that last mile?
- New CEOs. This is not the first 100 days. It’s your first six, 12, 18 months in the role. How do you get out of the gates well? How do you set the momentum for your tenure that’ll serve you well throughout?
- Midtenure CEOs. This is where the complacency is, and there is this question: “How do you renew for the next S-curve?”
- Transitioning CEOs. This is about finishing strong. How do you hand over the reins and finish strong as a CEO and set your successor up for success while you’re also excited about your own next chapter, whatever that’s going to be? We’ve seen a number of boomerang CEOs, so there’s a real question.
Now, we’ve become specific and clear about, “What is the advice for folks in each of those four stages? What does it look like?” The bulk of the conversations and the counseling we’re doing these days is, “Which stage is that leader in? What’s most applicable to this person? What are all the balls that this leader is juggling?”
Scott Keller: We should do some product placement here.
Carolyn Dewar: Yes.
Scott Keller: It’s not available in stores, but if you want one, reach out to your local McKinsey partner and say, “Hey, I’d really like to see that.” I think Carolyn did a great job describing what it is.
At a kind of thematic level, if CEO Excellence is the encyclopedia of being a CEO—to learn about whatever you want to learn about all the aspects of the role—this research is more like the Farmers’ Almanac, because it asks, “What do you do in spring versus summer versus fall? How do you make sure that all gets set up for the next season and the next cycle?”
There’s an institutional renewal that happens over time in these three stages: one person’s winter is another person’s spring as they come up, take over the role, as another person steps out. What we like about this book is it can also help people think institutionally and ask, “How do those cycles work exceedingly well?” When it comes to handing off the baton, we’re not dropping batons; we’re having the runner start running so they’re catching up to the speed. The handoff happens seamlessly, and we don’t lose any time as we do in the race of winning in a competitive environment.
Carolyn Dewar: That really comes into play. We’re spending more and more time with boards and investors and heads of HR. We work with them as as they think about the succession process and about building the bench of talent that will be ready and we help that handover happen.
Raju Narisetti: In a way, CEO Excellence could also be a handbook for board excellence.
Carolyn Dewar: Yes.
Vik Malhotra: Absolutely.
Carolyn Dewar: Absolutely.
Vik Malhotra: That’s a terrific point. As I was emphasizing earlier, we’ve talked to a lot of leadership teams about the application of this book. I’ve had a number of CEOs call and ask, “Will you come do a two-hour session with my leadership team?”
Similarly, we’ve received outreach from boards asking, “Will you come talk to our board about this, let them understand what excellence really looks like from a CEO point of view?” We’ve had board outreach at individual-company board levels, but there are many associations where board members get together and call upon us to speak to those groups so we can just share the lessons.
It’s interesting because you put it in terms of the CEO’s excellence, but it also very clearly informs board behavior: Are you, as a board leader, really doing the right things? Are you creating the room for the CEO and the leadership team? Are you building the strong relationship you should have between the board chair or the lead director and the CEO?
Are you making sure that the data that you’re absorbing about the company is focused on the big things that matter? Are you letting the leadership run what they need to run from a company point of view? It’s interesting. When they get into it, you can see the light bulbs going off and hear them saying, “You know, I could amend my own behavior a little bit here.”
Raju Narisetti: By design, the book was global. It’s probably going to come out in 15 languages. Korean, Japanese, and Chinese are already out.
Vik Malhotra: Yes, we have Polish and Hungarian as well—Hungarian is particularly relevant to you [Carolyn].
Carolyn Dewar: Yes, my husband likes that. It won me points with my [Hungarian] mother-in-law.
Raju Narisetti: What new insights might people take away from reading this book a second time?
Carolyn Dewar: Part of picking it up again is because a person’s context has changed. It comes back to both the stage of the journey that you’re in as a leader and the context of your company. So if you were a brand-new CEO reading it, the notes you took in the margin would have been very specific to the question “How do I get going?”
If you’re now a few years in, you’ll pick up different things. You’ll reflect. You’ll realize where you’ve done well. You’ll say, “I missed that one. But more important, going forward, what are some new habits that I can take on? What are some new best practices or examples that I might want to experiment with?” I think it’s as much about your context changing, and you being ready for that next learning, as it is about the world around us changing.
Vik Malhotra: To add to that, I have 12, 15, 20 CEOs who I talked to back in 2021, perhaps even before the book came out, because we knew what we were going to say.
In early 2022, they were coming back and saying, “OK, I’m now three years into the journey or two years into the journey. Let’s have another conversation. I want to tell you where I am.” Some of the ones who’ve continued to remain in that learning mindset and in that inquisitive mindset want to see how these lessons apply to them at all stages.
Scott Keller: In the back of the book, we purposefully put an assessment grid that you can complete. It starts with an assessment of, “What is your mandate for change on each of these dimensions? And then, “How comfortable do you feel that you’re delivering against that?” To Carolyn’s point, as your mandate for change evolves, you will want to dial into different things and maybe even get other peoples’ views, not just your own, on how you’re doing vis-à-vis these things.
At any given point in time, it’s just good hygiene to go back to that and ask, “Where do I need to tweak the dials, and where do I need to adjust?” By the way, if you have no mandate for change on any of these, and you’re three years into being a CEO—
Carolyn Dewar: You’re probably complacent.
Raju Narisetti: Right.
Scott Keller: Success breeds complacency. Complacency breeds failure.
I mentioned this idea of CEO blind spots and researching the other patterns and where CEOs tend to get blind spots. I mention it to raise the awareness of that and to say what to do about it and how to mitigate that.
That is one piece of research that we’re focused on. We also are helping a lot of our colleagues, who are more junior and aspiring to be the next Vik or the next Carolyn, learn that craft through that lens, using all the research that we’ve conducted. That’s super rewarding and exciting. It enables us as a firm to make a difference at a much bigger scale than just people always wanting to go to the authors. That’s super exciting, too.
Carolyn Dewar: Even though we call it four seasons, it’s never just four.
I think of a client who is in that awkward CEO-elect period. They know they’re about to get the job. Maybe it’s even been announced. Yet they’re not officially in the role for another six months. How do you navigate this? How do you make use of that time? What does that look like?
Alternatively, someone who’s about to hand over the reins is thinking, “What do I need to do in my last act to leave it in good place, to start thinking about my future, but also to create space and room for the next person?”
Vik Malhotra: Look, the research will continue. We’re also talking a lot about whether we create sector-specific perspectives, whether it’s for banking CEOs or advanced-industry CEOs and so on.
I think we should also give a shout-out to [McKinsey senior partner] Kurt Strovink, who is not one of the three authors of the original book but who is very instrumental to The Four Seasons of a CEO. He is really embracing and helping us evangelize this concept. Regarding the capability building that Scott was talking about, making sure it’s not just the three of us—with Kurt, the four of us—but there are 50, 100 practitioners out there. Kurt is really leading the charge and the push on that. He’s helping us both from an intellectual point of view and a capability building point of view.
