Picking a CEO: The Real Moneyball

February 5, 2014 by Wally Bock

Picking a new CEO is important. Pick right and you can look forward to years of success. Pick wrong and you just might have a near-death or real-death experience. Just ask Ford about the impact of Alan Mulally or Home Depot about Bob Nardelli’s legacy.

We’re not doing a good job of picking our CEOs. According to an article by Ram Charan in “Ending the CEO Succession Crisis“, two out of five new CEOs fail in their first eighteen months.

The best way to prevent that kind of failure rate is to create a succession plan supported by a robust talent review process. But that takes a while. What if you have to pick a new CEO now?  Then you might be intrigued by this headline from Knowledge at Wharton: “The ‘Moneyball’ Approach to Hiring CEOs.”  Here’s the opening paragraph.

“It was the lesson of the best-selling book-turned-movie, Moneyball: Don’t throw money at big-name baseball players or judge future performance by purely physical attributes. Assess them, instead, by more relevant measurements, like their on-base percentage. Wharton professor J. Scott Armstrong and Philippe Jacquart of EMLYON Business School in Écully, France, say the same principles can be applied to choosing corporate executives.”

That would be great if there were statistics that we could compare easily across companies and industries and those stats were direct indicators of success. Alas, that’s not the case.

The hard truth is that if you want to make evidence based decisions, you have to have evidence. When it comes to picking a new CEO, we’ve got evidence, but it will take judgment, not algorithms to use it well.

Review a candidate’s history. Assess what they’ve learned in the course of a career. Is it relevant to the situation you want to put them in?  Assess the cultures where they’ve been successful. Is it like your culture?

There’s no CEO-equivalent of on base percentage. There are no simple, quantifiable comparisons that tell you much. You’re still going to have to use your judgment.

Wally Bock is a coach, a writer and President of Three Star Leadership.

Posted in Talent Management

If You Enjoyed This Post...

You'll love getting updates when we post new articles on leadership development, 360 degree feedback and behavior change. Enter your email below to get a free copy of our book and get notified of new posts:

Follow Envisia Learning:

RSS Twitter linkedin Facebook

Are You Implementing a Leadership Development Program?

Call us to discuss how we can help you get more out of your leadership development program:

(800) 335-0779, x1