New CEOs from the Outside Should Build on Company Strengths

It doesn’t matter whether the new CEO from outside was recruited to bring professional management to an entrepreneurial venture or to revitalize a long established company. In either case, rather than striving for drastic change, the new CEO should seek effective ways to build on the company’s strengths. The CEO can bring management expertise, which sometimes may be badly needed. But, the new CEO should not make changes that destroy the essence of the company.

I stressed this not long ago when I was quoted in “Growing With Your Company”, a September 2013 Bank of America Merrill Lynch White paper written by Inc. magazine, which describes the winning characteristics of CEOs. In that publication, I pointed out that it is often necessary for growing ventures to bring in management expertise from the outside, but it must be done in ways that hold on to the company’s essence. The new leader should bring the management expertise needed to guide the company, but must not let that new expertise interfere with the company’s strengths or with vital components of the company’s heritage.

Furthermore, preserving past strengths is also essential for large established companies. A good example of doing this was discussed in a recent Fortune article, “An Outsider in the Family Castle” by Shawn Tully, November 18, 2013. The article tells about Fabrizio Freda, who was formerly with Procter and Gamble, and was recruited as CEO of Estee Lauder. In the article, Freda tells us “This is the period of the humble, listening CEO, who creates a future based on the strengths of the past”. And, in the Fortune article, Estee Lauder board member Rose Marie Bravo points out that, unlike most CEOs, Freda did not clean house, but instead strove to improve the people who were already there. The article also explains that Freda extends the emphasis on strengths to individual employees, stressing that they should build their strengths rather than work on their weaknesses.

It is encouraging to see examples like this that emphasize the importance of building on past strengths. As someone who has been researching business success and failure patterns for 25+ years, I can attest to the fact that preserving and building on past strengths is associated with success. Companies must change and evolve, but they must take advantage of strengths. This is crucial both for growing entrepreneurial ventures that need to bring in more professional management and for companies like Estee Lauder, in business for generations, but now with an outsider recruited to the helm.

It’s not necessary to follow the extreme path that Estee Lauder took bringing in so few outsiders. In fact, it is unclear to me whether or not bringing in some additional outsiders would work better than if Freda recruits very few or none at all. But, as an outsider brought in to lead Estee Lauder, Freda should be praised for recognizing the importance of not radically tearing down the existing business in an attempt to make it better. Making it better is admirable. Completely throwing away what is there is not. That’s why building on strengths is ever so important.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *