Faculty Digest

For CEOs, Persistence Pays Off

Steven Kaplan uncovers why some leaders succeed while others struggle.

SuccessWith the passing of Steve Jobs, the business world is abuzz with talk about what characteristics make the ideal chief executive officer.

"One school of thought holds that successful CEOs are team players, good listeners, and humble," Steven Kaplan said in an article on Bloomberg.com. "In the book Good to Great, author Jim Collins called such people 'Level 5' leaders.

"Yet Jobs and other superstars such as Jeff Bezos of Amazon.com Inc. and Facebook Inc.'s Mark Zuckerberg aren't generally seen in those terms," said Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance. For example, he cited a Wall Street Journal article that described Bezos as "not always a 'nice' CEO" - one who "can inspire and cajole but also irritate and berate."

Is there a right model?

In a paper titled "Which CEO Characteristics and Abilities Matter?" to be published in the Journal of Finance, Kaplan and his colleagues find that efficient and persistent CEOs achieve more success than executives with different talents. CEOs who are not efficient and persistent are much more likely to falter.

Kaplan's team, which included Mark Klebanov of Ziff Brothers Investments and Morten Sorensen of Columbia University, studied assessments of more than 300 CEO candidates in firms funded by private-equity investors. Each potential CEO was interviewed and rated on 30 characteristics and abilities.

The researchers classified abilities into three categories. Some abilities were "hard" or execution-related, such as being efficient, aggressive, persistent, and proactive. Some were "soft" or interpersonal, such as being flexible, a good listener, open to criticism, and a team player. And some fit neither category, such as being persuasive, organized, analytical, and calm.

To measure success, Kaplan and his team first kept track of whether potential CEOs were hired and whether the private-equity firm chose to invest in their companies. Then the researchers tracked how well the CEOs and the companies did, both by checking with the private-equity investors and using public sources.

Many of the characteristics showed no relationship to success. Interpersonal CEO abilities proved particularly inconsequential. General skills that were neither interpersonal- nor execution-oriented were somewhat related to success, notably analytic ability and being organized. But it was the execution-type talents - those related to persistence and execution - that proved significantly predictive of high performance. In fact, CEOs with these skills succeeded 75 to 90 percent of the time, but CEOs who lacked them succeeded less than 50 percent of the time.

Persistent, efficient CEOs stuck with assignments until they were complete, were proactive about achieving results, and completed projects within short periods of time. While other qualities did not hamper or prevent CEO success, without execution skills these qualities simply did not matter, the study found.

In summary, the study found that good CEOs get things done despite very different personalities. "Level 5 leaders, while humble, showed unwavering resolve. In other words, they were persistent and proactive," Kaplan said, noting that at the same time, "there is no doubt that Jobs, while arrogant and perhaps even unpleasant at times, was persistent, efficient, and proactive. Both types of CEOs can create the kind of progress that motivates employees, and succeeds." - Seth Maxon, A.R.

Photo by Brian Ross

Last Updated 10/16/12