Identify the Risk of Shorter CEO Tenure
In 2018, research firm Equilar reported that the average tenure for a CEO at large U.S. companies was just five years (down twelve months on a similar report four years previously).
Given that the best way to get a digital transformation launched and followed through is through the CEO's sponsorship, that means you have to accept that, over a 3 to 5-year digital transformation project, your CEO, other important members of the leadership team, and company strategy may change.
This is a significant risk factor for the successful outcome of a multi-year project. So how do you protect your project?
While you can never guarantee that it will survive such a significant personnel change, the best answer is to make sure you have broad support and communicate progress with major stakeholders. In other words, don’t be complacent.
Such change is natural. Consider the findings of an influential 2012 study that concluded that long CEO tenure can hurt performance.
The study argued that the optimal average tenure for a CEO is 4.8 years, reflecting the changes in an executive’s risk profile over time. Early on in their tenure, CEOs tend to take bigger risks and be more inclined to leading organizational change, such as a digital transformation plan. Over time, their openness to external learning, and new ideas tends to lessen. Equally, the teams around them tend to become more likely to support the status quo.
Therefore, it’s worth considering at what point in your CEO’s career in your organization your project gets approved (and that of the rest of the leadership team).
Keep Communicating With Key Stakeholders Throughout the Project
Just as when you were first planning the project you assessed the different stakeholder agendas, it is important to maintain that overview, updating your SWOT analysis and your map of the organization and the leadership team as both internal and external factors take effect.
Watch Out for Other Leadership Changes
At the same time, whenever changes to the leadership happen (promotions, new hires, departures, etc.), make sure you spend the time and effort in winning ongoing support.
Of course, your project will also have been progressing, and the business case needs to be kept up to date to reflect these ongoing changes.
The average CEO tenure is now around 5 years - and CEO risk profiles change throughout that tenure.
Keep up to date with changes in the leadership team, maintaining your SWOT and stakeholder analyses.
Adapt and refine your business case throughout the time of your digital transformation project.
This theme of continuous change is one you’ve already seen throughout this course. It’s a central part of any digital transformation. As we conclude Part 2, I’ve once again put together a quiz to test what you’ve learned about the BCG transformation framework, identifying key stakeholders, creating your initial business case, and the strategies for quick wins, demonstrating long-term success and protecting your project as key stakeholders change.
Once you’ve finished the quiz, I’ll look forward to seeing you in Part 3, where we’ll pick up the theme of continuous change once more and examine how to instill a long-term culture of continuous innovation. Good luck with the quiz, and I’ll see you on the other side!