Friday, May 20, 2016

New CEOs Use Same Strategies To Improve Results At Well-Performing, Poorly Performing, And Stable Companies: McKinsey & Co

From McKinsey & Company, Mckinsey Quarterly, May 2016, "How new CEOs can boost their odds of success" by Michael Birshan, Thomas Meakin, and Kurt Strovink:
We expected that CEOs taking the helm at poorly performing companies, feeling compelled to do something to improve results, would have a greater propensity to make strategic moves than those who joined well-performing organizations. To learn whether this idea was true, we looked at how each company had been performing relative to its industry counterparts prior to the new CEO’s arrival and then subdivided the results into three categories: well-performing, poorly performing, and stable companies. When we reviewed the moves by companies in each of these categories, we found that new CEOs act in similar ways, with a similar frequency, whether they had joined well- or poorly performing organizations. CEOs in different contexts made bold moves—such as M&A, changing the management team, and launching new businesses and products—at roughly the same rate (Exhibit 1). [Emphasis added].

Exhibit 1
Source: McKinsey & Co

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