MBA Masterclass Who Becomes a CEO? Who Succeeds?

Kara Northcutt: OK, great. Well, we'll go ahead and get started. I know there's people still entering but you'll be able to catch right up, I promise, as everyone comes in. My name is Kara Northcutt. I am a Senior Director of Employer Engagement and Admissions at Chicago Booth; been at Booth for over 12 years now and it's just been a wonderful organization to be a part of. And you'll certainly, or hopefully, walk away with that impression today. So on behalf of our executive, full-time, evening and weekend MBA Admissions Teams, we're thrilled to welcome you to our final master class of 2020, titled: "Who Becomes a CEO? Who Succeeds?" with professor Steve Kaplan. Before we get started, just a few housekeeping items. Steve will be sharing his screen, as he is already, and throughout might ask, might prompt with some questions, and we'll also do some polling. So please, you know, pay attention to that and use the Q&A. Again, use the Q&A function and then also feel free to type in any questions that you would like to have me ask Steven at the end of the presentation. Assuming we have some time, I'll be able to ask him some questions and kind of moderate the Q&A there. So feel free to ask questions in there. I'll be monitoring the Q&A throughout. And today, you're gonna experience two key components of the Chicago Approach to business education. One of those is our data-driven and evidence-based approach. It teaches you how to ask the right questions, think more strategically and analytically -- which really prepares you and gives you the confidence to take on business challenges you're facing today and will face tomorrow, and 20 years down the road. Another key advantage of the Chicago Approach is really our supportive and collaborative community. At Booth, you join a really phenomenal group of current students, alumni and administrators that are really there for you to help ensure that you have a great experience throughout your MBA and beyond. We really are lifelong resources. An integral part of that community is of course our faculty. The same faculty teach across all MBA programs at Booth, and they truly become a part of your network as well. I'm really excited for you to be able to experience, through the classroom, that data-driven approach and that collaborative community by getting to know Professor Kaplan. So today, you'll hear from Professor Kaplan. He is a Neubauer Family Professor of Entrepreneurship and Finance at Chicago Booth. He is also the Kessenich E.P. Faculty Director of the Polsky Center for Entrepreneurship and Innovation. He researches private equity, venture capital, corporate governance, and executive talent. He is a co-creator of the Kaplan-Schoar PME, Public Market Equivalent, private equity benchmarking approach. A Fortune Magazine article referred to him as quote "probably the foremost private equity scholar in the galaxy." Pretty impressive. He teaches courses in Entrepreneurial, Finance, Private Equity, Corporate Finance, and Corporate Governance. Business Week also named him one of the top 12 business school teachers in the country, and one of the top four teachers in entrepreneurship. So it's no wonder his classes always fill up. Professor Kaplan co-founded the entrepreneurship program at Booth. With his students, he helped start Booth's business plan competition called the New Venture Challenge -- or NVC as we often refer to it -- which has spawned over 200 companies, and those companies have raised over $1 billion from investors. Investors include Excel, Benchmark and Sequoia, and have created at least $8 billion in market value. Companies include Grubhub, Braintree-Venmo, Simple Mills and Tovala. Outside of Booth, Professor Kaplan also serves on the board for Morningstar. So it's my pleasure now to turn it over to Professor Steve Kaplan, and I hope you enjoy the event. Thank you. Thanks, Steve.

Steven Neil Kaplan: Great. Well, thank you for that nice introduction, Kara. And welcome to all of you who I see are from all over the world. So some of you are at lunch and some of you are about to go to sleep. So I will try to keep you awake. And what I'm gonna talk about today, as Kara said, is "Who becomes a CEO and who succeeds?" So what I'll do as we go through this is, I'm gonna start off by saying, you know, talking a little bit about what we know about CEOs without this research. Then I'll talk about who becomes a CEO candidate; then once you're a candidate, who gets hired; and then once you're hired, who succeeds. So we'll go through all of that. And then, I'll talk a little bit about what it might mean for you. So there's a lot of anecdotal evidence and stories about what to look for in a CEO and what makes a CEO successful. And, you know, you almost see a different story about a different CEO every day or every week in the financial and business press. But there's very little systematic, large-sample empirical work, because it's really hard to get the right data. And what you'll see is, you know, I think we had the right data. So let me just start off and just get a sense, and you can use the Q&A, and we'll see if, you know, I can keep up with it. But what do you think is most important for becoming a CEO? What kind of abilities or characteristics? And if you type in the Q&A, I'll probably see it. Leadership, empathy -- I got empathy -- strategic vision, management skills, self-awareness, charisma, grit, curiosity, empathy, communication, influence, humility, critical thinking, consistency, high EQ, trustworthy, drive, decisive, adaptable, dynamic. This person has to be like a god! This person is perfect. Is he or she not, given what you've all said? Wow, all these great things. So that's very interesting. And we'll come back and see what's actually there. So now, oh my God, there are a lot of you who weighed in. OK, you're all awake. OK, next question. So there's all great things: resiliency -- OK. Now, next question is: What is most important for succeeding? And is it the same? Might be the same thing, but go ahead and type in. I'll just toggle through. There's resiliency, charisma, empathy -- same things, again, all these things -- vision, relationship, clarity and focus, management, accountability, high EQ. OK: patience, teaming, results, leadership -- leadership is what we're trying to understand -- team building, luck -- very good! -- strategy, intelligence. OK, good, good, good, good. So now, you know, you've gotten a teaser that there are all these things people say. And let me talk a little bit about what was in the literature when we started this and what people said. And it's almost, it's kind of like your list. So there's a well-known paper that said CEOs need to be charismatic. There was another one that said they need to, you know, have high cognitive ability -- that's being smart; conscientiousness and achievement -- that's results; and then extroversion and assertiveness, is probably charisma. And then another, you know, well-known paper: relationships, execute, teams, accountable, manage people and communicate, exercise judgment, have emotional intelligence and possess honorable character. You know, again, this is a list where there's a lot of things and it's like sort of the perfect person. And the question is: What actually really matters? Now, let me go to a few others. Jim Collins, have any of you read "Good to Great"? Just to get a sense of if any of you have read that. Yes, a few. OK... trying to think. So a lot of people, you're raising your hand. Thank you. So this is a very well-known book. He wrote it. You know, it's been around for a while now. But he ended up looking at largely, public companies. And what he looked for was CEOs who'd been CEOs of public companies for a while that had performed extremely well. And he got 11 CEOs, and he looked at what those 11 CEOs had done, and he described them as being Level 5 leaders. And the key characteristics of these leaders was: they were very modest; they gave credit to others; took blame on themselves; they had a lot of resolve. So they were driven and they worked hard and they got the right people. So this is, yeah, this is some of the answers you gave. This would be modest, empathetic, probably here, results-driven and getting the right people. So that's Collins. Now this is probably one of the most read management books, you know, ever written. And the thing that's a problem with this book is that he took the 11 CEOs that had done really well, and then he looked at what they looked like. But what you don't know is whether, when you started out -- So he got these 11 great ones, did you start out with 11? So it was 11 out of 11? Or did you start out with like 1,011 who looked like that and 11 did well? So this is something where there's a little bit of an ex-post bias that you have here. And it's interesting, but you don't exactly know if it works. And this is some work that was done afterward: This is how the companies did until the book was written. And this is how the companies did after the book was written. So this is the bias in that you're looking at things that did really well. Is it predictive? Eh, not so much. So that's Jim Collins. Then there's Bill George, who's at Harvard Business School. Collins was at Stanford. And Bill, you know, wrote a book called "Authentic Leadership," and he said, "Be authentic, be passionate, practice your values, lead with your heart and your head, establish meaningful relationships and have self-discipline to get results." So again, this is a number of the things that you said in the Q&A. A little bit different from Collins, you know, but related. And then you have Jeff Pfeffer, who is at Stanford. And he sort of came out being critical of these. And he called them "leadership BS." Because he said that's not what leaders are like. He said they're not authentic. They don't tell the truth. They don't pay attention to employee well-being. What they do is they build their power base, master influence and adapt. And some of you wrote this down. So these are kind of three very, very popular management books. And, you know, they incorporate a lot of things so I just wanna get a sense. Now we're gonna do a poll. Who do you think is more accurate? So let's launch the poll. Give you a few more seconds. Very interesting. OK, here we go. Let me show you the results, which are awesome. So about half of you are torn between George and Collins -- who are sort of this positive view -- and then half of you almost have the cynical Pfeffer view. And so what's great about that is collectively, you have no idea. So you're gonna wanna keep listening. So here we go. Let's go and, sorry -- there there are all these opinions, all these different views, but there's not a lot of systematic, large-sample work. So here's what I'm gonna do. I'm gonna be able to tell you what characteristics CEOs have and how they're different from CFOs and COOs; then I'll tell you who got hired. And then I'll tell you what I think matters for performance. So here's what I used. I was able to get 2,600 very detailed assessments of candidates for C-level jobs at firms. They were initially private-equity funded companies and venture-capital funded companies but over time, they included non-private equity funded firms. And the data come from a firm called ghSMART; ghSMART specializes in assessing top management candidates. And these assessments were done between 2001 and 2011; that then gave us time to look and see what happened afterward. Since then, we've gotten another 3,000 assessments so we'll be able to look at over 5,000. And at least the preliminary results we have from that are pretty much the same as what I'm gonna tell you today. So we're pretty confident that this works. And this is work I've done with Morten Sorensen who's at the Tuck School at Dartmouth. So we have these 2,600 assessments and the assessments are based on four-hour interviews with the candidate. And so you are grilled for four hours about your life, about your management, about everything that you do. And by the time that the assessment is over, they then write up, ghSMART writes up, like a 40-page summary of the interview -- it's like a mini-biography -- and they then rate you on more than 40 specific things. And we're gonna code up those ratings numerically as a 4, as an A or A+, all the way down to a 1, which is a B or less. OK, so what's assessed? Here are the things that are assessed. Their leadership should be things like hiring A-players, removing underperformers, being efficient. Interpersonal, so do you have integrity? Do you move fast? Do you have follow through? Intellectual, so that's the analytical and creative part. Motivational, so that would be charisma, enthusiasm, persistence, being proactive. Work ethic, which is also one of the things that Collins mentioned. And interpersonal, which is open to criticism, teamwork, listening. Those would be kind of measures of empathy. So those are the things that are assessed. And what we were able to do is, we were able to get 30 ratings across all assessments. And it turned out that some of these ratings were, some of these ratings were correlated. And so what we did is, we did a numerical kind of analysis called a factor analysis, to take those 30 variables and compress them into four. And what we do with these four factors is, it explains 54 percent of the variation in the 30 variables. You're taking 30 and compressing it into four. And this would be an example of big data. Big data is really just statistics and machine learning is a kind of statistics, and this is a particular form of that. So let's look at what we find. So we found four factors. And the first factor was basically talent. And what does that mean? That all the, on this factor, all the variables came in positively. So you just basically, if you added up all the ratings, Factor 1 would basically be measuring your average score. Now once you had Factor 1, Factor 2 was really interesting. It is: Factor 2 was agreeable/interpersonal versus execution. And what that means is that some people scored very high on being agreeable and interpersonal, and some people scored high on execution -- and they tended to be negatively correlated once you controlled for talent. And so let me show you what's in there: If you had a positive score, or you had high grades rather, on treating people with respect, open to criticism, listening skills and teamwork, that was weighted positively. And high scores on aggressive, moves fast, proactive, holds people accountable, that was negative. So on this factor, people who scored high were kind of the empathetic people. And people who scored low were the results-oriented people. And the important thing is they're kind of negatively correlated, which is very interesting. The third factor would be analysis versus charisma. And again, if you were enthusiastic, persuasive, aggressive, proactive, that was weighted negatively here. And if you were analytical, detailed, this was positive. And so people who scored, you know, very high on what we'd call charismatic variables, this was negative on that factor. And then the fourth factor was actually strategic/creative versus managerial. And people who scored high on this factor were strategic, creative and smart. And people who scored low on this were, again, detailed, organized, more managerial. So these are the four factors and now we're gonna have a couple of other -- well, let me just show you that these factors actually mean something and then I'm gonna ask you a question about them. So before we knew what these factors were, we asked our research assistants to just tell us: Did they think the person was a nice person? Did they think he or she was a risk taker, extroverted, good at sales? And you know, we also kept track of gender. And it turned out that if you were a nice person, you scored very high on Factor 2 -- which, remember, is positive on being agreeable and empathetic, and is negative on execution. If you were a risk taker, you actually looked more like you were scoring high on execution and less on being a nice person or being agreeable. People who were extroverted looked like they were very strong on Factor 3, which we're calling charisma, and the same thing for good at sales. So what's important about this is, before you see the factors, if you just read these little assessments, you'll kind of match the factors. And so this is just a way of saying these factors -- even though they're mathematical, it was all statistical -- they're actually measuring something that you would get if you read these assessments. OK. So now, how do the CEO candidates compare to other candidates? And now again, we're gonna do a couple of polls. So first of all: How do CEO candidates compare to everybody else on talent? OK, give you a couple more seconds. Good, OK. Here we go. So three to one, they are talented. OK, interesting. I'm gonna do all of these. So second one: Are CEO candidates strong on execution or on being agreeable and interpersonal? And I'm giving you 20 seconds for all of these. This is very interesting. Almost 50/50: a little bit on the execution but very strong on the agreeable/interpersonal. I like this one because you have no idea. So very good. Let's go to the next one. OK, here we go. Charismatic or analytical? This is the third factor. OK, 20 seconds is up. And three to one charismatic. OK, so strong opinion there. And the last one: creative/strategic or managerial? I am very pleased. You're all voting. It's great. OK, a few more seconds on this one. OK, here we go. OK! 80/20: strategic/creative. OK, so you now know where you all stand, and the one place where you're kind of not sure is on the execution versus interpersonal. So let's see what we've got here. I will show you. OK. Here are the first two CEO candidates. They are high on ability, and they are very high on the execution. What was interesting is the CFOs, the candidates, were kind of the opposite. They were lower on ability and they were actually more agreeable. Now, if you wanna be a CFO, don't worry about this. Because remember, this is a group of very high achieving people so all these scores are relative rather than absolute. And there'll be good news for CFOs later. But this is a hard thing to present when you're presenting to CFOs, which I've done. OK. Next two factors: creative/strategic and charismatic. The CEOs are there. So you've got three right. And then that execution versus interpersonal was execution. Now, what was also good for us in looking at this is look at where the salespeople were. Salespeople were very high on charisma. They were like off the charts on charisma, which is exactly what you'd expect with salespeople. OK. So these are candidates. So not all the candidates got hired. And so the next question we asked is: Which candidates got hired as the CEO and which of those variables moved? And let me show you that. So what's interesting is the CEOs who got hired were slightly more able, so the talent went up. But what was interesting is they're still high on the execution versus the interpersonal. But the ones who got hired were the ones who were a little bit more interpersonal. So in some sense -- and that actually was true for all of the candidates. And here's where the CFOs -- the CFOs who got hired were the talented ones and also a little bit more interpersonal. But you can see from the candidates to the hired, talent went up to some extent and the boards tended to hire the people they liked. And charismatic also happened. The more charismatic CEOs got hired and they remain strategic/creative. So again, the people who are hired are actually overall: they're strong on execution, strong on talent, strong on charisma, strong on strategic/creative. So now I've just shown you this. And, you know, people criticize this as saying, "Well, you know, when ghSMART would interview a CEO candidate, they were looking for those characteristics." And so it's kind of like: "It's just endogenous, it's not causal." And you know, that's possible. The counterargument to that is ghSMARt didn't know these factors when they were doing the interviews. We basically told them about, the factors were there. But, you know, it's a possible criticism that you're looking for certain things in a CEO and then you rate that person that way. So what we did -- which is something that doesn't have a lookback bias or any bias in it -- is we looked at what happened to the people who were not interviewed for CEO positions, and we saw which ones of those became CEOs. And so the nice thing about that is when they're not being interviewed for CEO to be a CEO -- so ghSMART can't have that bias -- and then we can see which characteristics on the non-CEO candidates predict who's gonna become a CEO. And it turns out that the non-CEO candidates who had more general ability; who had better execution skills; who were more charismatic; and who were more creative/strategic; were more likely to become CEOs even though they weren't interviewing for the CEO job. And this made us feel really good that these measurements of these characteristics and factors are actually predictive. And again, it's different from Collins 'cause we're looking at the characteristics before things happen and then seeing what happens. So what does that mean? Means that CEOs are different. And how are they different? More ability, more execution-oriented, more charismatic, and more creative/strategic. That said, once you get to that position as a candidate, better interpersonal skills get you hired. And the other implication here is that these characteristics can be measured -- and again, in this world of more and more data, a lot of those data are available and the data are predictive: You should try to get as much data as you can. So the one thing that we don't know from this... What's interesting is these things are predictable. What we'd like to know is are they changeable? And my guess is some of them are -- I'll talk about that in a little bit -- but that's the one thing you can't say here. Can you work on these things if you wanna get to those positions? OK. So now, what about outcomes or success? So this sample, again, we've got outcomes. We're coding it up. We're very close. And the preliminary results are the same. But what I'm gonna show you is results from some earlier work that we did where it was largely private equity portfolio company jobs. And we had less data; it was just CEOs. But the way the data looked and these factors were pretty much the same. So what did we do? How did we figure out whether they were successful? In a lot of cases, we asked the private equity firm. And then what we did is we went and found out what happened to the executives by using websites: LinkedIn, Zoom info, et cetera. And there are three measures of success that I'm gonna show you. One is where we had an answer from the private equity firm. Another is where we said: OK, we have the answer from the private equity firm or we can see, did the company exit profitably? The CEO was successful. Or, you know, was the CEO removed? Or did the company go bankrupt? We assumed the CEO was not successful. And then we had a broader measure where, you know, the outcome wasn't completed but you could get a sense of whether the CEO was successful or not. So here's the first thing that's very interesting is, it's hard -- it's not so easy to pick a successful CEO. And so remember, these are private equity firms -- they're highly motivated to put in a good CEO -- and they told us they only got it right about half the time. And half the time, they got it wrong. And yeah, there some small number in between. So this is actually pretty hard. And, you know, the idea from the research is to get a little bit better at it. OK. So now, next question: Which of these two things matters more? And let's go to our last poll. Is it execution or agreeable/interpersonal that matters more for success? OK. Very interesting. So it's about two-to-one execution here as to what matters more, even though you were, sort of, it was closer to 50/50 when you were wondering who becomes a CEO. So let's see what was in the results. And turned out it is execution and actually creative/strategic. Efficient CEOs, persistent, proactive, high standards, accountable: Those would all go in execution. And analytical and brain power also mattered, which would go on the creative/strategic. Those were the variables that were correlated with success. And none of the interpersonal variables seemed to matter. They weren't negative, but they weren't positive. And I'll just show you: If you were persistent, efficient and proactive -- which you can remember as PEP -- your likelihood of success was hugely higher than if you weren't from the buyout firms. And that's very statistically significant. And you got the same results when you use the other measure. These were just big differences. And you can look at this actually with the 4, 3, 2, 1: 4 being A or A+, and the 1 being B or below. Efficient, organized, committed, persistent, proactive: The 4's are always doing the best. And the 1's and the 2's tend to be doing worse, and the 3's are sort of mixed. If you look at the team/interpersonal, treating people with respect actually was at the bottom. Networking was at the top. Calm under pressure was good. But if you are a 2, you actually did better. Listening skills, you were OK if you were a 4, but you were better if you were a 2. Open to criticism, you were good if you were a 4, but you were terrible if you were a 3. So you can see why these results happen: that the execution, the best people, or the highest rated, did better. And this is success, rate of success -- whereas the interpersonal was more or less all over the place. So what does that mean? Means that general talent matters for success. So that's good. That was also in the data. Success is more strongly correlated with execution than interpersonal skills. So that's also very much in the data. And, you know, you can think about this. Some people, you know, say, "Well, you know, how can you say that?" And you know, just think about it. Here are three of the most successful CEOs in the last 40 years: Jack Welch, Steve Jobs, Jeff Bezos. And none of them is noted, I think, for being empathetic and interpersonal. They are all noted for being very execution-oriented and I'd say probably creative/strategic. What's also interesting is you can go back to, this is when Jeff Immelt was CEO of General Electric -- and 2007, so he'd been CEO for five years -- and Joe Nocera at the New York Times wrote a very nice article about him saying, "I think Jeff Immelt is the prototype of the modern chief executive. ... Chief executives today need to have the whole range of 'softer skills.' They need to be good listeners." And Immelt was somewhat known for being a good listener. And what's interesting is, you know, that's probably how he got hired -- he had very good interpersonal skills -- but it wasn't clear he had strong execution skills. And I can tell you that based on this research -- this was like 10 years ago when I first had some early results -- it was sort of my bet: Well, he's a good listener, he has the softer skills, but nothing about execution. This is not the person you want as the CEO of General Electric. And that turned out to be right. Only one data point, but very consistent with what's in the larger sample. And for those of you who are interested, there's a very nice book called "Lights Out" about Immelt. And you actually get a sense of why he was not a good CEO. And then there's a book that's less well known called "Winning Now, Winning Later" by David Cote who had been at GE. He became the CEO of Honeywell, where he did a great job. And he talks about the things he did. And what he did is actually extremely consistent with what I just showed you. He was very strong on execution, very creative/strategic, and he did a spectacular job. So let's go back to where we started. What about "Good to Great"? You know, "Good to Great" is OK. It's consistent with unwavering resolve, being fanatically driven, workmanlike diligence, and hiring the right people. So he gets that right. It's not so consistent with the compelling modesty 'cause I don't think Steve Jobs or Jeff Bezos or Jack Welch were particularly modest. And I would say George, George was kind of more like Collins: so you know again, some right, some wrong. And Pfeffer, Pfeffer was a little bit the cynic and so he got that right. I'm not sure he got this right. So I think there's some truth in Collins, George and Pfeffer, but not one of them got it completely right. What's very interesting -- I'll come to what's interesting in a second. So they were OK but not perfect. Now when people who see this result and see execution, they then say, "Well, wow, wow, wow. Does that mean I have to be a jerk?" And the answer is no, that's not what it means. 'Cause remember, the interpersonal wasn't negative -- It just wasn't positive. And so, let me give you some examples. So Satya Nadella -- who is I think a very successful CEO and is perceived as actually a very, very likable empathetic person -- he wrote a book, and he had three leadership principles in that book. What were they? Be clear; be energetic; deliver success. Now what's interesting there is none of that is about being interpersonal or empathetic. Those all three are about execution. Turns out, though, he's a very nice guy. It also turns out he was a student of mine -- I'm very proud of that -- 20, 25 years ago. And that, in fact, is the only good thing about getting older, is that your former students become more successful. So I hope some of you will become current students. And then I hope some of you will become as successful as Satya: And in fact, some of you will. That's one of the great reasons to come to Booth is we get people like Satya, and some of you actually end up being that successful. OK, so Satya is an example of someone really good on execution and also a very nice person. Mary Barra, the CEO of General Motors: who's also, I think, perceived as very competent but also not a jerk at all. And she, you know, three things I'll tell you about her. Number one, she was asked, how had she changed as CEO from before being a CEO? And she said, "I've become more impatient." And so again: That's getting stuff done, becoming execution-oriented. The second thing is when she was the Chief Human Resource Officer of General Motors -- this was what she did before she became CEO -- she showed up and she was trying to figure out what was going on. And she read a lot of documents and she read the General Motors dress code. The General Motors dress code at the time was 20 pages long, single spaced. Now that is not efficient. And she said, "We're changing the dress code. It's not gonna be 20 pages, single spaced. The dress code is now: Dress appropriately." So, great example of being efficient. And last thing, best time to solve a problem is the minute you know about it. Most problems don't get smaller with time. Bob Iger, CEO of Disney, very successful. He's also actually perceived as a nice guy. "Literally, I've never heard one person say a bad thing about him and I have never seen him to be mean," David Geffen. And that's sort of consistent with what other people say. But what does Iger say was the secret of his success? "What happened early on is people started relying on me because they knew if they asked me to get something done, I would get it done." So again, very strong on execution. And that's also a nice book to read. It's his autobiography. It's called "The Ride of a Lifetime." Ulysses S. Grant, the person who won the Civil War in the United States, not a CEO, but a great general. What did he say? He said, "In war, anything is better than indecision. If I am wrong, we shall soon find it out and can do the other thing. But not to decide wastes both time and money and may ruin everything." So again: execution, get things done, don't sort of do nothing and be indecisive. Now it turns out, I showed you Collins. I showed you George. I showed you the Pfeffer. The person who's actually spot on on this research is someone named Peter Drucker. And Peter Drucker has passed away but he was considered probably the top management theorist of the 1900s. And his method was like completely different from mine. He would go and talk to people, and not big data; it was sort of impressions. And he wrote a book called "The Effective Executive." And what did he say effective executives do? He said they were introverts, they were extroverts, they had all kinds of different personalities. But they did five things: They were efficient. They focused on contribution. They made their strengths productive. They did first things first. And they made effective decisions. So the first four, I think you would call execution and PEP. And then that fifth one is the creative/strategic part, and very consistent with what we found in our research. So Peter Drucker -- and that book was written, by the way, in 1967. It's still worth reading. You can get it on Amazon. So other evidence? I'll tell you a few more things and then we'll take some questions. So there's ghSMART. They saw our results and they learned some things from our results. Then they did some additional work. And they have a strategy, or they have a framework called DARE. And successful CEOs decide with speed and conviction. They adapt proactively. They deliver reliably. And they engage for impact. So again, these are very much the execution-oriented characteristics that we found. And ghSMART, by the way, over time has gotten bigger and bigger. They've been very successful themselves. Teresa Amabile, who's a professor at Harvard Business School, she did some work at sort of the mid levels of companies and wanted to understand what really motivates workers. And she asked them, you know, What made you most enthusiastic? Was it incentives? Was it money? Was it recognition? Was it support, progress or goals? And she asked those questions, and think about what the answer is. I didn't put a poll for this. I should have. And the answer was progress. So people in the middle of an organization can put up with a lot of stuff if they're making progress. And that probably explains Amazon and Apple, companies that are, you know, have some people view as hard -- you know, it's hard work but they are always making progress and that keeps employees motivated. There's a book, "Super Bosses," by a friend of mine, Syd Finkelstein, and he's got three very different super bosses here. They are very different. George Lucas is passionate. He's not, again, not the strongest on being interpersonal but boy, he gets stuff done. Larry Ellison, not the nicest guy, gets things done. And Mike Miles and Tom Frist actually were nice guys and got things done. But all of these were super bosses in the sense that people who worked for them went on and did great things. And turns out, again, very different personalities, very different interpersonal skills, but very consistent on execution. So what does that mean if you wanna be a successful CEO? Be persistent, be efficient, be proactive. My guess is, you know, going back to whether you can work on these things or whether they're innate, these things you can work on. On the margin: Get something done more quickly, make a decision, be more or have more PEP. There we go. Work on these at Booth. So stronger on execution, I think you can work on. Stronger on creativity and strategic thinking. That's something we try to teach you at Booth. Stronger on charisma, I'm not sure. That's something where there's a question of whether you can work on that -- although my guess is you can try to be more outgoing. You can try to learn how to speak in public more. And that's gonna help you be a successful CEO. And just remember, getting the job, you still have to convince a board to like you -- and so, that matters as well. So I'm gonna stop there. And we have five or 10 minutes for questions. And Kara, are you gonna help me do that?

Kara: Absolutely. And feel free, participants, to throw or type your questions in the Q&A. So there was one early on, bear with me. The question is, "With social equity appearing to influence business practices throughout our global lexicon -- COVID-19 notwithstanding -- who is researching how this may impact private equity firms and who they may choose to invest in, or not to invest in?" Let me know if you need me to repeat that.

Steven: Say the beginning of the question again?

Kara: "With social equity appearing to influence business practices throughout our global lexicon, essentially who is researching this, the impact on private equity firms to social equity issues, and like influencing who they may or may not invest in?"

Steven: So I think it's a, there's a broader question that it's, you know, the ESG issues -- which I think are front and center for public companies as well as private companies. And I'm trying to think if there's various researchers; Marianne Bertrand at Booth does a lot of work on this. There's something that I may start working on to look at this. And it's interesting 'cause it's a little bit... What has changed I think is that the ESG -- which includes environment, social and governance, and so the equity is in the social part -- company customers and company employees I think care more about companies doing the right thing along those lines than they used to. And as a result it's, you know, value maximizing. It's the right thing for the companies to do to sort of be better on those dimensions. So it's hard to research because you've gotta measure the various characteristics. And you gotta take those measurements and see how they map into value. So it's a good question. There's a lot of work being done. There'll be more work going forward and I hope to do some of it.

Kara: Great. "With this current research, did you find any differences on CEO success or hiring depending on industry? Any differences in industry?

Steven: We didn't find much on industry. We tried, and this was pretty consistent across different industries and across different firm sizes. So this worked for big firms; it worked for smaller firms.

Kara: And globally, correct, as well?

Steven: Globally? These data were largely U.S. companies. So that's another, yeah, it's a question whether this -- ah yeah, do these results work? They work in the U.S. Do they work in, say Japan, which would be very different? It turns out I have a very good friend who's a very senior person in Japan. And I presented this paper and I said, "You know, Hideki, what do you think 'cause some people say it wouldn't work in Japan?" He said, "No, that's right." I think they're, how you get things done is different in different countries. But the fact that the people who succeed are the people who get things done, I think that is universal.

Kara: Great, that's really helpful. And another question kind of related to your research, "Do you plan to take this research further?" And kinda like: "What are your next steps with that?"

Steven: So there are a couple things. So, absolutely, and as I said, this research I just talked about is about a little under 3,000 people. We now have assessments on almost 6,000. And what we'll try to do is, first on the success component, you know, do that with a bigger sample and see if, again, the same things matter and whether different things matter. So that's one. Two, what I think is very interesting is understand how people go together. So if you have a CEO who's really good on execution, do you want a CFO who's really good on execution? Or do you want a CFO who's interpersonal? Do you want a CFO who's low charisma, high charisma? So to the extent we can, see which of these things go together. Are they complements or are they the opposite of complements?

Kara: I think that's really helpful. And here's a question. It's a version of the last question I was gonna ask you so I'm glad somebody else asked it, one of the participants. "Have there ever been students that you saw and thought to yourself: 'Yes, he or she will go on to do great things?' What was it about these students?" So my phrasing of that is like: What characteristics do you see for the successful students at Booth? You know, words or phrases to describe them?

Steven: No, so that's a really good question. I would say, you know, a number of you had luck in some of your answers earlier. And so there's always a component of luck that, you know, whether you end up like here or here, you have to get lucky to be at the real top. But what I will say is, students that I've seen who have a certain group of characteristics are much more successful on average than others. What are they? So first of all, you know, this is my -- I teach a course on venture capital and private equity, entrepreneurial finance. And to do well in that course, you have to do well on the exam. And the exam is, you know, analytics and understanding the big picture. So that would be creative/strategic and analytical, so that is important and you see that in the data. The second thing you have to do in my course is, half the grade is class participation. So to participate, what do you have to do? You have to be pretty aggressive and ambitious. And you have to raise your hand and get out there. So that's -- I don't know if that's exactly execution but it's certainly being proactive and persistent. And then when you do talk, you have to be coherent and persuasive, and that is a little bit the charisma of being able to convince people of what you're saying. And so people who do very well in my course, they do very well on: They participate, they're articulate when they do participate, and then they do well on the exam. That's a good predictor of people being successful and again, very consistent with what I find in the research. But nothing is completely predictive. So it's not 100 percent predictive but it is very directionally predictive.

Kara: Great, that's really helpful. And we're...

Steven: Satya Nadella, Satya Nadella was a good student. But I can't tell you he was great, 'cause that would be illegal.

Kara: There was a question kind of related to that then I promise we'll wrap up: "So how have you seen leaders like Satya and others you can think back on, how have you seen them evolve over time?" Anything that comes to mind?

Steven: I think, you know, people are always learning. You know, again, I think when you get out initially there's a little bit -- you know you're using your analytics, you're using the things you've learned in class. And over time, you know, it's the other skills that you develop. And again, I would just highlight, 'cause I don't necessarily teach, you know, it explicitly, of getting things done, being proactive, being persistent. So persistent, efficient, proactive, PEP: those are very useful in practice.

Kara: Yeah, I couldn't agree more. I've had that on my bulletin board for many years. I heard you speak on this years ago when I first, like, the department... ...there was the Drucker list as well, so. I greatly appreciate those and turn to those often. So, well Professor Kaplan, we cannot thank you enough on behalf of the admissions teams and all the participants today. Of course, apologize: We couldn't get to all the questions, so glad you all stayed very engaged. Feel free to reach out to any of us on the admissions teams across the evening, weekend, full-time, executive. We're all here for you and we hope you all have a safe and peaceful holiday season. Thank you very much. Have a great day.

Steven: Thank you all for being here and I hope I see some of you in class. So thanks again.

Kara: Absolutely. Thanks again, everybody. Thank you, Steve.