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Here Are the Steps to Becoming a CEO

Professor Christian Stadler studied a mountain of Fortune 100 CEO profiles to decode the steps that can boost your chances of getting the top job.
BY BrainGain Magazine Staff Writer |   11-07-2019

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella is a cloud guru, cricketer, and poetry buff, who studied in India and the US.

There's no guarantee you'll get the top job, because kismet plays a substantial role, but if you follow these steps, then you'll certainly increase your chances.

Christian Stadler, a professor of strategic management at Warwick Business School, sifted through a pile of CEO profiles looking for clues. Ultimately, these are the steps Stadler identified while studying Fortune 100 CEOs and more than two hundred CEOs from 18 companies which have been around for over 100 years.
 

Education

“Unless you're a founder CEO, your chances of making it to the corner office without a degree are non-existent,” wrote Stadler in “Forbes.”

Stadler discovered that just over half of Fortune 100 CEOs have a degree in business, economics, or accounting, while 27% studied engineering or science, and 14% law.

Fortunately, there's no need to spend your money on a top school at this stage. In his latest book, Malcom Gladwell argues that among people with similar SAT scores those who attend a lower ranked school do better in life. Gladwell argues that it allows them to “maintain their confidence, while even smart kids can struggle in a classes stocked full of academic overachievers.”
 

An MBA from a top school

After graduation, grab a few years of work experience before heading back to a big brand school for an MBA.

“Grades matter less than the school’s brand and the networks formed. Close to 40% of Fortune 100 CEOs did an MBA, and 60% of them went to an elite school,” wrote Stadler. “If you have the option, Harvard is still the place to go.”

In 2012, 40 Fortune 500 CEOs had an MBA from the world’s best-known business school.

“As markets become more globalized, more CEOs of America’s largest companies are likely to come from overseas,” wrote Stadler.

“Hence, many of them will have their first degree from home, but in order to burnish their U.S. credentials, an MBA from a top school will be helpful. We can also expect more engineers at the helm,” he noted.

Engineers tend to have an advantage when it comes to technology and digital markets. According to Andrew Roscoe from Egon Zehnder, an executive search firm, this is one of the issues high up on the agenda of CEO selection committees.

There’s been a steady drumbeat of IIT graduates from India coming to study in America. They have gone on to get degrees from Stanford, MIT, Virginia Tech, Purdue, Yale, Harvard, Princeton, UC Berkley and many other elite US schools.

Stanford educated Google CEO Sundar Pichai is the latest Indian-born executive to reach the top ranks in corporate America, where he joins Microsoft CEO Satya Nadella, former PepsiCo CEO Indra Nooyi, MasterCard CEO Ajay Banga, Nokia CEO Rajeev Suri, SoftBank Corp CEO Nikesh Arora, SanDisk CEO Sanjay Mehrotra and Adobe Systems CEO Shantanu Narayen, among others.
 

Career path

Large companies are complicated ecosystems, proving difficult for outsiders to navigate. The board of Fortune 100 firms are intimately familiar with this dynamic, preferring to select internal candidates in 79% of the cases.

“This does not mean that CEOs spent their entire career in the same company,” wrote Stadler. “Some work for a few years in one of the big consulting firms.”

A 2008 USA Today survey found that the odds of a McKinsey consultant becoming the CEO of a public company “were the world’s highest at 1 in 690.”
 

Operational experience

“Operational experience is important, though, as a direct move from consulting to CEO is a rare exception,” wrote Stadler.

Eventually, most future CEOs move into substantial operational roles, typically running the largest division or the most important international business, before they get offered the top spot.

Three-quarters of Fortune 100 CEOs come from operations.
 

Finance experience

The alternative career path is finance, as 32% of Fortune 100 CEOs previously held the post of CFO. “Usually, these careers are even more confined, creating the danger of viewing the entire organization through the prism of figures,” wrote Stadler.

On the other hand, Will Moynahan from Heidrick & Struggles, an executive search firm, points out that CFOs are typically the only ones with substantial experience in communicating with shareholders.

“Being fluent in the language of high finance with all manner of external stakeholders is a valuable attribute in public company CEOs,” wrote Stadler.

Boards put a premium on track records which reflect a wide breadth of experience. This does not mean that a solid finance or operations background will be dismissed, but throwing something else into the mix is certainly useful.

IBM CEO Ginni Rometty is a good example of someone with a variety of different postings. She started her career in General Motors before she joined IBM as a systems engineer. After a job in IBM consulting, where she spearheaded the acquisition of PricewaterhouseCoopers, Rometty became head of marketing and strategy, before taking the top job.
 

Personal characteristics

Selection committees need to examine the full package, meaning both personality and track record will be taken into account.

“On top of the list comes personal drive and ambition. Climbing to the top translates into stress that not everyone is cut out for combined with extremely long working hours,” wrote Stadler.

Bill Gates, for example, spent 10,000 hours programming on a high-school computer from the age of 13. Sears’ Edward Lampert lost his father at the age of 14, and helped to support his family by working after school and on weekends, while still earning good grades. In 2003, he was kidnapped in a parking lot outside his office. Two days after his release, he was back in the office to negotiate an important deal.

Communication skills are also high up on the list of requirements. At a time when every gesture and utterance can quickly be shared through social media, small gaffes can cause major harm to a firm.

“In my own study on CEOs from long-living companies, I found that the ability to listen is equally of high importance,” wrote Stadler.

Finally, it will not come as a surprise that the ability to build connections both with peers and bosses matters. At least 15% of Fortune 100 CEOs were members of a fraternity.

“In fact, the ability of former McKinsey’s consultants to arrive at the top can partly be explained by the firm’s unprecedented alumni network. It even has its own exclusive job offers,” wrote Stadler.

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