You Need a Leader--Now What?: How to Choose the Best Person for Your Organization by Citrin James M. & Daum Julie

Author:Citrin, James M. & Daum, Julie [Daum, Julie]
Language: eng
Format: epub, pdf
ISBN: 9780307587817
Publisher: Random House, Inc.
Published: 2011-10-17T14:00:00+00:00

The bottom line, whether in the B0ike gom" al corporate, educational, or nonprofit sector, is this: fail to challenge the seemingly logical assumption that direct prior experience in a comparable role is a prerequisite to success at your peril. Whether it is a question of companies, universities, or other organizations, the best experience may be one, two, or even three steps away from having “been there done that.”

INDUSTRY EXPERIENCE

Another dimension of the experience question has to do with industry expertise. When making the choice about who should be appointed to key leadership jobs, one of the first questions that hiring managers and search committees wrestle with is whether industry experience is a “must-have” or a “nice-to-have.” In some sectors (such as pharmaceuticals, technology, financial services, aerospace, and energy), many consider it next to impossible to succeed without having grown up in that industry. In these sectors, industry experience is widely accepted as a non-debatable leadership requirement when formulating position specifications. But how frequently do companies go outside of their industry for new leadership? What are the industry dynamics that make it possible or implausible for an industry outsider to succeed? Are there any industries when industry outsiders outperform industry-experienced executives? Answers to these questions will round out the potential red herring of experience.

Recall that outsiders were brought into the companies that composed our US and international research base approximately a quarter of the time. Of this group, three-quarters came from within the same industry or from adjacent industries and one-quarter were complete industry outsiders. As a proportion of all CEO appointments, only a mere 6 percent of these CEOs lacked any industry experience, whether direct or adjacent.

When analyzing performance, it turns out that there are no sectors in which industry outsiders as a group perform better than industry insiders. In one broad sector, diversified industrials, industry outsider performance has matched industry insiders. There are several others, including technology and pharma/biotech, that are so specialized there have been virtually no outsiders to analyze, while in others, such as retail and diversified industrial, a number of industry outsiders were appointed, suggesting that industry expertise has been considered a “nice-to-have.” Here are the key factors underlying the top leadership dynamics in selected industries:

• In technology, companies face intense global competition and pricing pressure even while corporate spending recovers and consumer demand for technology-based products grows. In response, companies have launched dual-track strategies focusing on operational excellence to manage costs while also exploring new and potentially more profitable applications and products. The ever-accelerating convergence of entertainment, communications, and computing and the explosion of cloud computing have led to increasing demand for software, technical, and digital talent to manage the development of innovative products and services. These skills are very difficult to find in non-tech-industry-experienced executives.

• In pharmaceuticals and biotechnology, varied disciplines are coming together to open new frontiers in areas such as nanotechnology, genomics, proteomics, biodefense, and RNA research. A surge in venture capital investment, industry consolidation, and the drive to fortify pharmaceutical pipelines is fueling demand for experienc Beenenomiced industry executives grounded in science.

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