The CEO Next Door: The 4 Behaviors that Transform Ordinary People into World-Class Leaders | Elena L. Botelho - Kim R. Powell - Tahl Raz

NEW YORK TIMES AND WALL STREET JOURNAL BESTSELLER • Winner of CMI Management Book of the Year 2019

Based on an in-depth analysis of over 2,600 leaders drawn from a database of more than 17,000 CEOs and C-suite executives, as well 13,000 hours of interviews, and two decades of experience advising CEOs and executive boards, Elena L. Botelho and Kim R. Powell overturn the myths about what it takes to get to the top and succeed.

Their groundbreaking research was the featured cover story in the May-June 2017 issue of Harvard Business Review. It reveals the common attributes and counterintuitive choices that set apart successful CEOs—lessons that we can apply to our own careers.
 
Much of what we hear about who gets to the top, and how, is wrong. Those who become chief executives set their sights on the C-suite at an early age. In fact, over 70 percent of the CEOs didn’t have designs on the corner office until later in their careers. You must graduate from an elite college. In fact, only 7 percent of CEOs in the dataset are Ivy League graduates--and 8 percent didn't graduate from college at all. To become a CEO you need a flawless résumé. The reality: 45 percent of CEO candidates had at least one major career blowup.
 
What those who reach the top do share are four key behaviors that anyone can master: they are decisive; they are reliable, delivering what they promised when the promise it, without exception; they adapt boldly, and they engage with stakeholders without shying away from conflict.
 
Based on this breakthrough study of the most successful people in business, Botelho and Powell offer career advice for everyone who aspires to get ahead. Based on research insights illustrated by real life stories from CEOs and boardrooms, they tell us how to:   
 
- Fast-track our career by deploying the career catapults used by those who get to the top quickly
 
- Overcome the hidden handicaps to getting the job we want.
 
- Avoid the 5 hazards that most commonly derail those promoted into a new role.
 
For everyone who aspires to rise up through the organization and achieve their full potential, The CEO Next Door is an essential guide.

Editorial Reviews

Review

“What does it take to succeed at the top? Botelho and Powell offer the answer — and it’s not what you think. Drawing on a remarkable analysis of thousands of current and potential CEOs, they find that the best of the best share some common traits. They may not all come from fancy schools, but they do know how to make smart decisions, adapt to changed circumstances, and work honestly and directly with customers and employees. Whether you’re running a large organization, or simply have your eye on the corner office, this book should be your guide.”
— Daniel H. Pink, author of WHEN and DRIVE
 
"Well-researched, practical and eye-opening...Botelho and Powell effectively demystify the path to becoming more successful.  Instead of one CEO trying to impart knowledge about how to get ahead, Botehlo and Powell change the game by providing you practical wisdom distilled from 2,600 leaders about what really causes people to achieve their potential. The CEO Next Door is like having 2,600 mentors take you under their wing."
— Shawn Achor, New York Times bestselling author of The Happiness Advantage and Big Potential
 
“The CEO Next Door is the go-to guide for every aspiring professional for how to play and win at the very top of their game. Botelho and Powell weave together cutting edge leadership research with practical advice and inspiring stories to create a useful and credible roadmap.”
— Marshall Goldsmith, #1 Leadership Thinker, author of the New York Times bestsellers Triggers, and What Got You Here Won’t Get You There
 
“Whether you're at the beginning, middle, or later stages of your career, The CEO Next Door offers practical, actionable advice to not just accelerate your path to the top, but also make you better at every step of the way. An indispensable guide for any aspiring professional.”
— Laszlo Bock, CEO of Humu, bestselling author of Work Rules!, and former SVP of People at Google
 
“Invaluable for anyone looking to raise their leadership to a higher level.  Using rigorous analysis drawn from thousands of interviews, Botelho and Powell have uncovered the behaviors, experiences and actions that truly differentiate leaders.  Their book isn’t leaving my desk as I prepare to step into the CEO role.”
— Tim Buckley, CEO The Vanguard Group
 
“Debunks a host of myths about what it takes to become a CEO—and succeed as one. Based on an impressive database of intensive interviews with executives, it turns out that big failures and small egos are among the building blocks of great leadership. You won’t ever look at the corner office in the same way again.”
— Adam Grant, New York Times bestselling author of GIVE AND TAKE, ORIGINALS, and OPTION B with Sheryl Sandberg

“The CEO Next Door contributes much needed research and data to a subject long dominated by anecdote and conjecture. Your probability of success will rise substantially when you put these insights into action – if you aspire to be a CEO or if you simply want to reach your full potential professionally, or if you are charged with developing and selecting the next generation leaders as a board member or a CHRO.”
— L. Kevin Cox, Chief Human Resources Officer, American Express Company

"Based on extensive data from 17,000 assessments and field tested experiences, Botelho and Powell provide a compelling and concise roadmap to help you identify and develop your executive talent."
— Randall Stephenson, Chairman and CEO AT&T

"Botelho and Powell challenge conventional wisdom to deliver the most useful and credible book on career success I’ve seen in years! The CEO Next Door offers a rare view behind the scenes on how leaders get picked for coveted roles and how they really succeed and fail. . . refreshingly candid and deeply researched. Whether you aspire to CEO role or are just starting out your career, The CEO Next Door will raise your odds of success and protect you from painful stumbles."  
— Jacqueline Reses, Capital Lead and People Lead, Square, Inc.

"A first-rate guide for aspiring CEOs as well as for those who have already moved into the top spot. Botelho and Powell’s compelling research and real-life stories provide a practical roadmap to leadership and career success that readers can apply in any setting."
— Art Collins, Retired chairman & CEO, Medtronic, Inc.

"CEOs come from different backgrounds in terms of economic status, education, family, gender, race, color, country of origin and sexual orientation. Majority of them do an adequate job, some of them perform exceptionally well while few are utter failures. Everyone have a unique story of their journey to get to this destination. So what differentiates the top performers, mediocre performers and the laggards? This seminal work by Elena and Kim does an outstanding job of identifying habits and traits of super stars versus average performers. The frequent references to real situations and real people makes the book even more credible. The book ends on an optimistic note that everyone in any leadership position with determination and drive can master the skills. A must read for those who aspire to make a difference." 
— Raj L Gupta, Chairman Delphi Automotive PLC, Chairman Avantor Inc., Board member Arconic Inc, The Vanguard Group and IRI

With a 'Moneyball' approach to leadership, THE CEO NEXT DOOR uncovers 4 well researched CEO behaviors and shows the path to get to the top and stay there. A must read for aspiring leaders, CEOs, board members, and anyone responsible for grooming future leaders.  
– Jim Donald, former CEO Starbucks and Extended Stay Hotels

"Clear, practical guide on how to run any company, large or small. It’s not about credentials, breeding, looks, experience or resources, but about how one makes decisions, adapts to change, shows empathy and collects information. The CEO Next Door explodes the myths behind what it takes to get to the top and provides what works, regardless of gender or background. Eye-opening and operational."
– Stuart Diamond, serial entrepreneur, author of the New York Times bestseller Getting More: How To Be A More Persuasive Person in Work and Life, and Professor at Wharton Business School

"What an invaluable book. With colorful stories and interviews, and solid, in-depth data to back up its points, The CEO Next Door is the next must-read for business leaders of all types!"
– Susan Packard, co-founder HGTV, author and media executive

"The CEO Next Door is required reading for anyone who aspires to the C-suite and wants to thrive there. The analytics-driven insights in the book uncover traits of effective leaders that anyone can develop."
 – Jim Goodnight, CEO of SAS

"Being a CEO is not about background or good fortune but about performance and hard work based on decisiveness, impact, reliability and adapting boldly which sets the stage for any future or current CEO.  I enjoyed every page of this book.  A must read for all those who care deeply about leading well."
 – Vicki Escarra, former CMO of Delta Air Lines and CEO of Feeding America and Opportunity International

"Botelho and Powell have brought big data and analytics to one of the critical bastions of business: the individuals who make it to the corner office.   Their insights into business leadership has the promise to be a game-changer for companies, leaders, and everyone who aspires to get ahead." 
 – Thales Teixeira, Associate Professor, Harvard Business School
 

About the Author

ELENA L. BOTELHO grew up in Azerbaijan and Russia in a family of mathematicians, and earned her MBA from Wharton. She has advised over 200 CEOs and boards in nearly two decades, first as a strategy consultant at McKinsey and currently as a senior partner at ghSMART.
 
KIM R. POWELL grew up in Atlanta, and earned a BA from the University of Notre Dame and an MBA from the Kellogg School of Management. Over the last twenty years, Kim has applied her passion for helping people to her role as a trusted advisor to CEOs and high potential leaders, first at the Boston Consulting Group and now at ghSMART.

Tahl Raz is an award-winning journalist and bestselling author. Find him at tahlraz.com.

Excerpt. © Reprinted by permission. All rights reserved.

Chapter 1

Unlocking the Secrets of the CEO Genome

“You had the power all along, my dear.”

—L. Frank Baum, The Wonderful Wizard of Oz

You will never be a CEO. That’s the message most of us internalize from an early age. You may be extremely competent, work harder than anyone else, do everything right, but you are told that if you don’t look the part, don’t have the right institutional names on your résumé, don’t possess the right pedigree, your chances of reaching the top are slim. And so we assume that being a CEO just isn’t in the cards for “regular people” like us.

The world is changing faster than ever, but the narrative of leadership remains dominated by talk of such larger-than-life visionary prophets as Steve Jobs and such executive warriors as Jack Welch. This iconic CEO is powerful and patrician, a bold, charismatic extrovert with a flawless résumé. An oracle of business judgment who jets around the globe from Davos to Detroit with superhuman confidence. A brilliant strategist who shapes the reality in his path. It’s a story we, the public, have been absorbing for decades.

No wonder we assume that we are not CEO material! We know that this stereotypical character is nothing like us.

But then there’s Don Slager. When we first met Don in 2005, he didn’t see himself as CEO material either. Walking into the meeting with our team, Don stretched out the large hand of a laborer. Towering over six feet tall with the frame of an offensive lineman, Don looked formidable. Yet his handshake was surprisingly tentative. Don confided to us that he was uncertain he was cut out for the CEO job. He enjoyed his COO role and didn’t see himself as a CEO. He questioned whether he was a worthy candidate and didn’t think he would seriously be considered for the opportunity to be CEO.

Don is not what one thinks of when one thinks of a CEO. He grew up in a blue-collar community a short distance from Chicago and the Gary Works steel mills in Lansing, Illinois. He was surrounded by welders, truck drivers, and steel-mill workers—not college graduates. For Don at the time, there was no CEO next door. He went to vocational high school with aspirations to become a builder, but graduated into a bum market for construction. Instead, he started his career driving a garbage truck. For the better part of six years, he punched in at 2:45 a.m., started driving at 3:00 a.m., and endured the thankless monotony of his route for ten to twelve hours a shift. At the end of each week, he collected his paycheck and prepared himself to start the routine again.

But here’s the strange thing: Don is, in fact, a CEO. Don is a great CEO. Under his leadership, stock of Republic Services—a Fortune 500 powerhouse in the waste services industry generating over $9 billion in annual revenue—outperformed S&P average returns between 2012 and 2016. In 2015, Republic Services outperformed the S&P by eight times. Since Don took the top job, Republic Services’ market cap has nearly doubled from $11.5 billion to $22 billion as of midyear 2017. Based on anonymous and voluntary reviews by Republic Services’ employees, Don was recognized with the Glassdoor Employees’ Choice Award and named to Glassdoor’s 2017 highest-rated-CEO list. Don didn’t learn about leadership at Harvard Business School. He didn’t even graduate from college. The foundation for his leadership success was built on the sturdy platform of his blue-collar beginnings and his six years of driving garbage trucks around Des Moines, Iowa and Chicago, Illinois. Don’s leadership behaviors and choices—not his pedigree—propelled him to the top of the waste services industry. Don’s father, whose motto was “Show up every day,” had always given his son a long leash as long as his grades were good and his chores completed, planting the seeds for unwavering reliability, a key attribute of successful CEOs. Don’s reputation for always giving 110 percent attracted the notice of powerful mentors who pushed him to aim higher. Long hours that ended only when the trash bins were empty gave him the stamina not only to survive but to emerge as a leader during the dark days of restructuring at his company, when many others quit or were let go. More important, his roots gave him the authority to evolve the business in ways that the front line would have rejected coming from a more “typical” white-collar executive.

When Don became CEO of Republic Services, he had held almost every position in the company and had worked as the COO alongside four very different CEOs. In 2005, Don wasn’t sure he deserved or wanted to be a CEO. There were some things about the CEO role that he found off-putting, such as the need to cater to Wall Street. So when he finally said yes, it was for one simple reason. His vision for how to make Republic Services “America’s preferred choice” required him to be able to do what only a CEO can: Set the strategy and build the team and culture that would take the company there.

And so it is that a garbageman without a degree becomes a CEO who is recognized by employees and competitors as one of the most passionate, respected, and effective leaders. Don’s journey from the garbage truck to the corner suite may sound unusual, but it is not an anomaly. There are countless like him who came from unlikely backgrounds. CEOs such as Aetna’s Mark Bertolini or Lear’s Matt Simoncini. Seemingly ordinary people achieving extraordinary success. The CEOs next door. How do we know? We know because, between the two of us, we have coached, advised, and vetted over three hundred CEOs. We are leadership advisors at a firm called ghSMART. Leading boards, outgoing CEOs, and investors count on our objective counsel to help them select the right CEO candidates, prepare them for the role, and coach them to perform at full potential. We deploy a rigorous analytical approach to first help our clients define what future business success looks like and the leadership profile it requires, and after that we assess candidates to help predict how they would perform if hired. We conduct extensive, five-hour interviews to identify candidates’ skills, accomplishments, mistakes, motivations, and mind-sets. We ask questions in a precisely defined sequence that cuts through a clever executive’s artful spin. We hear the unvarnished truth of their greatest victories, their painful blowups, their challenges, and their regrets.

Our robust technique for data collection and analysis provides a “moneyball for leadership” solution that helps clients avoid the pervasive errors of gut feel that plague so many failed hiring decisions. Our clients’ independent analysis shows that our approach is accurate at least 90 percent of the time—compared to a 50 percent error rate in a conventional interview process. Since 1995, our team has advised and assessed over 17,000 C-suite executives, including over 2,000 CEOs and CEO candidates. Unlike a board member or a search firm, we analyze CEOs with a fully objective perspective, not invested in any particular outcome. When our analysis of a leader’s capabilities indicates a fit with a CEO or leadership position in a company, we recommend her or him, whatever her or his pedigree, much as we did with Don.

When you encounter as many exceptional but seemingly unconventional CEOs like Don Slager as we have, you begin to question convention. If many of these CEOs had bought in to the existing stereotypes of leadership, they might never have attempted to win even the first promotion. Looking at Don’s success today, nobody would guess that twelve years ago he questioned whether he belonged at the top. “You guys did my assessment and told me that I was a walking, talking symbol of the American Dream and that I had CEO potential. You are experts on CEOs. Thanks to your feedback, I changed my outlook, gained confidence and began to work on my gaps. I decided to go for it and see what I can do. The rest, as they say, is history.”

We found ourselves inspired by these CEOs’ stories of seemingly unlikely success. And that inspiration led to the foundational question behind this book: Are the “unlikely” CEOs we know simply lucky exceptions? Or did conventional wisdom get it all wrong about what a successful CEO looks like and what it takes to get there?

In our client work, we aim to solve a $112 billion problem. Hiring or holding on to the wrong CEOs costs shareholders an estimated $112 billion in lost market value annually, according to a study by PwC. In May and June of 2017 alone, CEOs of General Electric, U.S. Steel, Ford, and J. Crew all stepped down under pressure from shareholders, prompting the New York Times to call the end of the American era of the baronial chief executive. With this book, we aim to solve a much bigger problem. These prevailing stereotypes of CEOs—arguably the most prominent people in business—offer false role models and success guideposts for leaders at any level. Even worse, they deter millions of talented people like Don Slager from ever aspiring to senior leadership roles. Stereotypical CEOs look nothing like me, so why even try? they ask. That is the real tragedy.

One of the reasons for this is that we tend to limit our thinking to the companies and leaders that regularly appear in mass media. This view – typically focused on Fortune 500 companies— is very narrow. It is also very shallow: we know little about these leaders beyond their seemingly perfect public bios. We tend to ignore the vast universe of companies of all sizes. If you broaden the lens beyond the Fortune 500, there are, for example, over two million companies with more than five employees in the United States alone. This means over two million CEOs: a broad, rich set of leadership experiences that don’t often get talked about in the press. These smaller companies are an important engine of our economy, generating almost half of the U.S. non-farm GDP. When we expand our horizons to include companies of all sizes and apply a deeply analytical approach to understanding CEOs and their paths to the top, our profile of the “average” CEO changes radically, as do the odds of attaining the corner office. Instead of a 1 in 240,000 chance of becoming a Fortune 500 CEO, it means 1 in 50 odds of becoming a CEO if you broaden the company set.

On our mission to separate facts from fiction on what successful CEOs really look like, we started asking a few pointed questions: How does one become that 1 in 50 who gets the CEO seat—or, for that matter, the 1 in 240,000? What allowed Don Slager and others like him to beat the odds and get to the top? How did they excel? How did they get noticed? What can each of us learn from them? What distinguished those who succeeded at the top from those who flamed out?

If we could answer these questions, we thought, we could tell a far more accurate story of leadership, one that would blow open the doors of the CEO suite to any talented person who wants to reach his or her full potential and is prepared to do the necessary work. Even better, we could provide the map to get there.

What Makes a Great CEO?

To uncover the answers to these questions, we turned to the ghSMART data set of 17,000 leadership assessments. The assessment interviews we conduct typically last roughly five hours and reveal vastly more than one could gather from traditional interviews or psychometric assessments. The Wall Street Journal called this information “coveted” for its unique breadth and depth of leadership data. To mine this data, we engaged leading academics and researchers and deployed cutting-edge analytical techniques. For the first time ever, The CEO Next Door unveils insights on CEOs based on the world’s most comprehensive leadership data set, powered by twenty-first-century state-of-the-art data-mining techniques.

Ten years ago we partnered with professors Steve Kaplan and Morten Sørensen and their research teams at the University of Chicago and Columbia University to study our data set of 17,000 leaders. To do that, they extracted a subset of 2,600 leaders to analyze in greater depth. Kaplan’s research is based primarily on the thirty competencies measured in the ghSMART analysis. As we read through transcript after transcript, we found ourselves wondering whether behavior patterns of CEOs compared to those of non-CEOs, and of low-performing to high-performing CEOs, held deeper insights than the competencies data alone could offer. To uncover these patterns would require analyzing almost one hundred thousand pages of text transcripts—a daunting challenge.

Much like mapping the human genome, uncovering secrets of the “CEO Genome” required cutting-edge science and technology. The solution came from an unexpected place. In 2013, ghSMART founder Geoff Smart and Elena interviewed Dr. Jim Goodnight, cofounder and CEO of SAS, for Geoff’s book Power Score: Your Formula for Leadership Success. SAS text-analytics software powers the predictive tools that the IRS and major banks use to detect fraud, to name just one high-stakes application. In the conversation, it dawned on us that if the software could handle more than 238 million tax returns filed in the United States annually, it could handle thousands of CEO interview transcripts. And so we unleashed the world’s most powerful predictive-analytics software on a subset of what we believe to be the world’s richest data set of leadership behaviors.

What we came to call the CEO Genome Project broke new ground in understanding what drives leadership success, uncovering insights that typical regression analysis never could have picked up. What we discovered surprised and inspired us. Harvard Business Review found our research compelling and relevant for today’s leaders, featuring “CEO Genome Behaviors” in a cover article (“What Sets Successful CEOs Apart,” HBR May/June 2017). This article and related press coverage got downloaded over 250,000 times by readers globally. The portrait of the successful CEO staring back at us from the data looked nothing like the glossy, unattainable image we’d all come to expect. In fact, the data burst a number of the myths surrounding CEOs:

CEO Myths

• Only Ivy Leaguers need apply. In fact, only 7 percent of the CEOs we have analyzed graduated from an Ivy League college. Eight percent of CEOs in our sample did not even complete college or took unusually long to graduate. Ivy League graduates are more prevalent among the ranks of Fortune 500 CEOs, but outside of that small set of the largest companies, we see a much broader range of educational backgrounds and pedigree.

• CEOs were destined for greatness from an early age. Over 70 percent of the CEOs we interviewed didn’t set out to become CEOs early in life. Only when they came within reach of the C-suite—typically after fifteen-plus years of experience—did they start to feel that maybe they could achieve and thrive in the role.