A new CEO. Exciting? Challenging? Certainly. But worrisome as well. Your company is staking a lot on the abilities of one person, and you want to be sure that person gets off to a good start.

We've helped many clients manage this tricky transition. Our experience has been that boards and owners pick capable people, but they don't always manage the transition as carefully as they should. The transition must strike a balance between, at the extremes, spoon-feeding the new entrant and allowing the new entrant to make mistakes that will have lasting negative consequences. Bringing on a new CEO is a critical event for any organization; ensuring a smooth transition shouldn't be left to chance.

Situation: Nature of the Goal
The Goal Itself
Before a new CEO can step into the role, perhaps before the Board even selects a new CEO, several things need to be clear: what is the goal for the business during the expected tenure of the new CEO and how much change will be required to reach that goal.

What goal is the Board aiming for? (We will talk about Boards, but all these lessons apply equally to non-Board owners.)

• New growth?
• New value offerings, new products?
• New channels, new ways of doing business?
• Going public, making an acquisition, sale of all or part of the organization?
• Rebuilding image, re-branding?

Change Required to Reach the Goal
When the Board is clear about the goal, it should also reflect on how big a stretch will be required to reach the goal. That stretch can be characterized as a progression-level change, a reformation-level change, or a transformation-level change.

• Progression changes are intertwined with day-to-day operations, may entail continued movement along an existing path, and feel methodical and controllable.
• Reformation changes are linked to strategic decisions, probably involve a change in direction, and feel turbulent but purposeful.
• Transformation changes disrupt fundamental assumptions about the business, change lots of rules, and feel chaotic and directionless.

If the Board was focused on the intended change when they made their CEO selection, they will understand that different circumstances speak to distinct sets of CEO skills and experience. For instance, a goal to move into new channels might be better served by an internal candidate who understands existing channels and can leverage traditional relationships. Or a transformational change may be easier to accomplish with an external candidate, who is not encumbered by unspoken, historical internal assumptions. In any case, maintaining a steady state is rarely the expectation.

1. The Board is clear about its expectations for the goal and (perhaps) the amount of change needed. This may have been part of their CEO selection criteria; they should ensure it is reiterated when the new CEO is on board.
2. The new CEO assesses the amount of change required: which of the three levels is required. Based on that, he or she plans for the distinct pace of change, amount of turmoil among the top team, disruption among Board members, and tolerance for agitation in the market.

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