Successfully Navigating External Dynamics as a First-Time CEO

Career Climbers / 8th July 2024

According to the Harvard Business Review, two out of five CEOs fail in their first eighteen months, and it’s not their expertise or experience to blame; it’s their people skills, political nous and inability to build the necessary relationships with the key points of contact in your business. In my book Become a Successful First-Time CEO, I examine three wide relationship areas that are critical to get right and that make up what I call the CEO Winner’s Circle. The first two are fairly obvious. Firstly, it’s you – any issues you have with confidence and communication need to be addressed before you worry about anyone else. Secondly, it’s all the internal relationships within the company you now run: managing upwards, getting the best out of your direct reports, and leading the wider company. It’s the third area that’s less obvious but is still extremely important: the relationships we have outside the company with clients and suppliers, with partners, with the wider industry, and with the media.

One might expect that a first-time CEO is helped with all these areas as part of their induction, but McKinsey estimates that $1 Trillion of market value is lost from S&P’s top 1500 companies in the US due to poorly managed transitions of new CEOs and C-Suite appointments.

Getting the Supplier and Client Chemistry Right

Clients and suppliers may provide the content for your livelihood or your route to market and consumers. They will affect turnover and margin and determine your top and bottom lines. With this influence on your business, doesn’t it seem sensible that the CEO should do everything necessary to improve these relationships? Getting involved – as appropriate and agreed with the functional head who owns the relationship – is important and worth the time. Establishing a relationship with their CEO is also important as it builds the trust and empathy between the ultimate decision makers.

The basic principle is to make clear what your company is trying to achieve (mission, vision, etc.) and also for both parties to understand what their purpose is. In an ideal world, these would have parallels or connections that mean your relationship can progress you both towards your desired directions.

Sure, there are levers such as market share and which side of the supply chain you are on that can determine who has the upper hand. Former Chancellor of West Germany, Willy Brandt, once said, ‘If I am selling to you, I speak your language. If I am buying, dann müssen sieDeutsch sprechen.’ Immediately going to war with a supplier who enters into a discussion is premature escalation, and it’s good form to initiate negotiations by trying to find out what is important to the other side. Understanding your supplier’s priorities and key moments may be massive for them and virtually business as usual for you. It’s reverse account management, if you like, and all the more powerful for it.

We are dependent on the creators and originators, in-house or external, and those who pay for our products or services. The most important of these relationships have to be in the orbit of the CEO rather than totally outsourced to a member of their team.

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