There is a New Sheriff in Town!

Is it a good thing when a company gets a new, experienced CEO? Sort of, according to a study from Harvard Business Review (HBR). 70% did better as CEOs in their first company than in the second.

Thought-provoking in my view. On the face of it, you would expect that experience is a big advantage and, all else being equal, would increase the probability of success.

The team behind the study thinks that there are several important reasons for this:

• Experienced CEOs often choose to stick to the playbook that made them successful in the first company. Their research shows that this approach has a greater probability of failure. This is in contrast to CEOs who chose to wipe the slate clean after the first company.

• Experienced CEOs are more likely to focus on costs rather than growth. They are more risk-averse.

• Experienced CEOs will likely more often be hired to handle particularly difficult situations. For example, if the board of directors can see that change is needed quickly to ensure the company’s survival. Experienced CEOs can often execute quickly because they know how.

When I read the article, it made me reflect on my own experiences with CEO replacements when I advise in Customer Experience (CX) matters. When I am doing the best job possible as an adviser, I investigate what the new CEO wants. Where is he/she coming from – what can I expect? This greatly impacts how I provide advice. Or more accurately: It should make an impact.

In my experience, when a new sheriff is in town, the organization often holds its breath to see if the sheriff will shoot at everything that moves (Yes, I completely agree. An unfunny attempt at referring Westerns. My humor is disgracefully bad. What is worse is that I intend to continue to make Western references throughout the rest of this article. But, read on nonetheless since there is also a moral).

Planned future initiatives are put on hold until people know where they stand – or should stand. Understandably enough, the new sheriff needs to get to know the town and its inhabitants. Several studies have shown that a significant prerequisite for success with CX programs is full support from the CEO. From my own good and bad experiences, I can only agree in this regard. It’s no good for me to advise something that would theoretically be perfect for the organization if I can tell that it would never receive approval from above. This doesn’t mean that my advice changes willy-nilly. I stand by my expertise. It does however mean that I try to use my expertise to find the right dosage and approach so that the CX program ends up making a real difference.

I have formulated some examples, which you may be able to use if you work with the CX program in your company. Examples that can form the basis of the dialog that you should establish – whether directly or through others – with the new CEO to ensure that CX continues to be on the agenda – or is put on the agenda for the first time. These examples are quite simplified for illustrative purposes. None of the five types below exist in their pure form.

They are, after all... examples:

• The imitator - If you sense that the CEO is coming up with a well-known playbook from previous companies, start by investigating the approach to CX in the CEO’s previous company/companies. Were they product- or customer-oriented? This is very important to how you should present the CX program and which questions you will encounter.

• The trimmer - If you can see that the new CEO is a “trimmer”, then this is your point of departure. Here, my advice would be to focus extensively on being able to show a return on investment (ROI) for CX initiatives. It is not always easy to demonstrate ROI for CX initiatives. So if you are currently lacking documentation, then I can only advise you to get going ASAP. You should demonstrate that it can pay to invest in CX initiatives that increase customer loyalty – it is often expensive to replace an old customer with a new one. If you cannot find documentation for ROI, you risk that the CX program will quickly be seen as a costly layabout, which the sheriff will put on an old mare and chase out of town.

• The executor - If you realize that the new first-time CEO has a top-line focus, then this is your point of departure. For example, this may mean that you should focus extensively on solutions that support sales excellence. And preferably something that works relatively quickly. I am not even sure about using the word executor. But it does sound like a good title for a Western movie where an undertaker plays a key role. And speaking of undertakers, avoid having your CX program put into the ground by an impatient executor by making sure that you clarify – specifically and ideally in terms of dollars and cents – how it supports the growth program, e.g. by increasing cross sales and additional sales.

• The diplomat - You have had countless bad media mentions, and since you know that the new and experienced CEO was brought in to get a handle on things, then this is your point of departure. For the diplomat, it is about reestablishing the company’s credibility in the eyes of the customer. Here, I would often place particular focus on how the CX program can be adapted to support the reestablishment of the lost credibility. It is difficult to please customers and to establish customer loyalty if they read one negative media mention after another.

Of course, my four types are not based on a large research-based study. They are based solely on my own experience as a consultant cowboy. However, I am not the only one who has amused himself by classifying CEOs. Professor Noel Capon and Christoph Senn have also done so. In the article When CEOs Make Sales Calls in HBR, they focus on how a CEO’s involvement in B2B relations can strengthen or weaken sales (I do read other things than HBR, even if it doesn’t seem like this is the case).

They work with five types:

• Hands-off - The type that does not even see customers and sales as his/her area of responsibility. The CEO is not interested in this nor does the CEO think he/she is competent within sales and relations – therefore, the responsibility and work is left to those who are skilled in this area. This may seem as being very reasonable, but Noel’s and Christoph’s research of 515 companies shows that this is where you get the worst performance in terms of sales and profits (measured as CAGR over five years).

• Loose cannon - The sheriff that shoots without warning. The type that visits customers without giving the KAMs a heads up. Promises are made left and right, which end up creating lots of problems that are hard to fix when these promises are broken. Noel’s and Christoph’s research shows that this group represents the companies with the second-worst results within sales and profits.

• Social visitor - Here we see better results since this type of CEO helps strengthen the relationship with the customer through social visits that are not focused on specific tasks or deliveries. The improved relations have a positive effect, though not as great as for the two next entries.

• Dealmaker - The type that is involved in customer relations and sales when there are particularly big gains in the pipeline. For example, in connection with large tenders. Often, there is significant focus on the individual contract and the ability to deliver as agreed – on the other hand, there may be less interest in long-term sales strategies.

• Growth champion - The type that looks far into the horizon, with a focus on the long-term relationship with the customer. This CEO delves into the customer’s business to understand how to develop the collaboration over time and offer the most value. And not least of all: The type that delivers the overwhelmingly best results in this study in terms of sales and profits.

Now, their article is about how CEOs affect sales. However, it could just as well have been about customer experience. I have a hard time imagining that they wouldn’t have reached the same general conclusions if they had looked at the effect of the CEO’s approach on customer satisfaction.

Also, notice how Noel’s and Christoph’s five types sound like characters in a good Western. Well, perhaps not Growth Champion. Such a type would probably be ideal to head a company – but way too dull and perfect to be a character in a Western.

Is there a moral here? Yes, there is. If you want to succeed with maintaining CX high on the agenda in your company, you should invest time in getting to understand your CEO’s type and the task that he/she has been assigned by the board of directors – is it about growth, trimming, restructuring or getting negative publicity under control?

Otherwise, you may be regarded as a cowboy who shoots left and right – with a gun that isn’t loaded. Click-click.