How one leadership advisory firm measures a potential CEO’s agility

Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning.

In today’s business environment, uncertainty is the new norm: 70% of current CEOs surveyed by management consulting firm AlixPartners say their companies face high levels of disruption. To lead through such terrain, boards and recruiters searching for future CEOs need to focus less on a candidate’s résumé and start asking whether an executive has the capacity to be agile.

“When you’re working on CEO succession, with the clients we serve, there’s less of a debate about whether people are qualified,” says David Lange, a managing director and member of Russell Reynolds Associates’s (RRA) Global Board & CEO Advisory Practice. “It’s much more about: ‘Can they scale; can they adapt; can they evolve?’”

Measuring pivot potential

RRA has developed a methodology for measuring what it describes as a “leader’s dynamic quality to continue evolving and leading through change.” The firm does so through its Leadership Portrait, an assessment model it has been refining over the last 26 years. The portrait endeavors to quantify factors such as curiosity, drive, resilience, and social intelligence. It more recently has sought to measure “potential realization” by evaluating an executive’s values, desire to have an impact, and self-awareness of their strengths and limitations.

Indeed, Margot McShane, co-lead of RRA’s Global Board & CEO Advisory Practice, notes that a leader’s willingness to say, “I don’t know,” and seek answers from their team is an asset in a rapidly changing business environment. “We think some self-doubt with a CEO can be a very helpful thing, because it keeps them curious and aware of blind spots which can derail them and organizations,” she says.

Evaluating candidates on potential realization can lead boards to consider and anoint candidates who might have been passed over in a previous era. In an insight report on its Leadership Portrait, RRA shared the example of a client that passed over its chief operating officer (COO) and elevated its chief financial officer (CFO) to CEO. What the former CFO lacked in traditional operating experience, he made up for in a leadership portrait that showed he had courage, the potential to learn, and the ability to navigate risk. RRA says under the new CEO, the company’s stock price increased 60% over two years.

Meanwhile, the traditional CFO skill set—including mastery of financial data to make airtight decisions—may not necessarily signal agility. “That is no longer actually as important as the ability to make sense fast,” Lange says.

Measurement’s impact

One unknown: whether this uncertain environment will make directors impatient with new CEOs. In an interview for Stanford Business School’s View From the Top speaker series, former Walmart CEO Doug McMillon—whose 12-year tenure at the retail giant is widely considered a success because of how he embraced technology and led the company through the pandemic—confessed that when he first became CEO he was repeatedly told that he took too long to make decisions.

“As the years went, that stopped being on my [reviews] because I think I got more confident and more self-aware that sometimes decisions just needed to be made,” he said. Interestingly, McMillon’s statement welcoming his successor John Furner highlighted a few traits that suggest the new CEO’s potential realization. “His curiosity and digital acumen combined with a deep commitment to our people and culture will enable him to take us to the next level,” McMillon said.

I asked RRA’s McShane if there are things aspiring CEOs can do to increase their chances of getting the top job, given that boards are now looking for candidates who display values, impact, and self-awareness. “Don’t think about what your next job is; think about what your last job would be—and what [you] need to do, personally and professionally, to make that happen,” she says. “What we know about any CEO candidate is that they have to own their ambition.”

How do you measure agility?

CEOs need to be agile, but so do team members. Are there agility indicators you seek when hiring? How do you know if they can realize their potential? I’d like to hear your thoughts. Send me an email at stephaniemehta@mansueto.com.

Read more: leadership acumen

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