A Class Apart

August 27, 2019

Antonio Nieto-Rodriguez is a thought leader, author of The Project Revolution and The Focused Organization. He teaches senior leaders at leading business schools worldwide.

Agile execution is now a key differentiator of organizational success. Given this context, it is essential that the CEO is an experienced project manager too.

Project managers are some of the best candidates to be CEO because to carry out their usual work, they have to bring together all the disparate aspects of theory, reality, vision, process, finances, value, politics, and human nature to create successful outcomes. They often manage projects that cross all organizational functions and get to see the organization as a whole entity rather than from the siloed view of a particular functional program. When you demonstrate success in managing enterprise-level projects and organizational resources from a holistic perspective, you should be a viable candidate to move up to a C-level position. For those project managers who are interested in moving in that direction, a CEO position, it should be a natural end to years of experience within an industry or group of related industries.

However, over many years—even decades—I have noticed that CEOs hardly ever come from a project management position. The ‘next CEO’ tends to come through very limited channels (either from within the company or from outside).1

  • finance, if the company requires cost containment and/ or cost cutting
  • sales/marketing, if the company has to increase their top line and focus on business development
  • R&D/IT, if the company is highly technologically driven
  • operations, as often the chief operating officer (COO) is the one running the internal side of the business, so it is a natural move.

Do these areas give any better experience or training for what is needed for a CEO than a project management background?

I have heard of only a few examples of project managers who made it to CEO level. For instance, Klaus Kleinfield, CEO of Siemens from 2005 to 2007,2 who established and led the Siemens Management Consulting Group (SMC). Klaus personally led projects for a number of global Siemens industry groups. This experience gave him a very broad understanding of Siemens’ multiple divisions, but at the same time he proved several times that he was someone who could make things happen (good at execution). Other examples can be found in the US defense industry. Kent Kresa, from Northrop, had a stint as a project manager of some of the major programs his firm had while on the way up.

Yet, there is an exception to this trend which I want to highlight, as it gives some of the answers we will discuss later on how a project manager can become the next CEO. A recent study found that, a few years ago, more than 70 past and present CEOs of Fortune 500 companies were McKinsey alumni, and in 2011 more than 150 McKinsey alumni were running companies with more than $1 billion in annual sales. McKinsey consultants are by nature project managers; their core business is executing projects for their customers, but they are also very well versed in content, business and strategic knowledge, which, as you will see later in my article, make the perfect mix to become the next CEO. A great success story was Lego, which in 2004 appointed as chief executive officer an ex-McKinsey consultant, Jørgen Vig Knudstorp,3 who managed to turn around and save from bankruptcy this legendary Danish firm.

Project managers often manage projects that cross all organizational functions and get to see the organization as a whole entity rather than from the siloed view of a particular functional program.

What are the skills and competencies required that make an outstanding CEO?

Becoming a CEO is the greatest leap that an executive can make in his or her career. What makes it such an extraordinary transition, of course, is the complexity of the role and the skills that are required to manage that complexity successfully. So, what exactly do CEOs have that ordinary employees do not?

Successful CEOs have the ability to deliver business results by maximizing shareholders’ value (measured in terms of EVA or any other metrics such as earnings per share, profits, or sales), and any other business strategic goals defined when they are hired. Being popular and charismatic may help substantially, because emotional intelligence facilitates leadership.

Russel Reynolds, one of the leading executive search companies in the world, analyzed the characteristics of nearly 4,000 executives, including over 130 CEOs, and they found nine attributes as key differentiating factors:4

  • long-term thinker—the ability to plan for the future

01 forward-thinking: plans ahead and is prepared for the future

  • intrepid—the ability to perform effectively in complex and difficult environments

02 calculated risk-taking: is comfortable taking calculated but not careless risks

03 biased toward (thoughtful) action: is biased toward execution but not too impulsive

04 optimistic: actively and optimistically pursues new opportunities

05 constructively tough-minded: is thick-skinned and perseverant but not insensitive

  • team building—the ability to achieve success through others

06 efficient reader of people: seeks to understand different perspectives but does not over-analyze

07 measured emotion: displays intensity/emotion but maintains control

08 pragmatically-inclusive: involves others in decisions but also is an independent decision-maker

09 willingness to trust: is comfortable with a variety of people but is not too trusting

Successful CEOs have the ability to deliver business results by maximizing shareholders’ value, and any other business strategic goals defined when they are hired.

What is so different about being a project manager?

Working in a business as a project manager you are exposed to decision-making, which is really the driving force of success. Observing how good decisions are made and understanding the analysis that is undertaken to reach those decisions is important to move in to a leadership position. As a business project manager, one is engaged in most, if not all, facets of business—sales, marketing, IT, support, etc.

There is a common belief among the project management profession that project managers are like ‘CEO of the projects’, that is, they have to answer to a steering committee (the board of directors) and are responsible for project execution of strategic initiatives (organizational performance). If that is the case, why do not more project managers actually become CEOs?

To understand the situation better, let us now look at the project management skills.

According to most academic studies of project management, the qualities of a project manager are categorized into the following three areas:

  • project management core skills. These skills include planning, organizing, managing risks, anticipating issues, and coordinating the work.
  • technical expertise. Technical knowledge gives the project manager the creditability to provide leadership on a technically based project, the ability to understand important aspects of the project, and the ability to communicate in the language of the technicians.
  • interpersonal skills. These skills include providing direction, communicating, motivating, assisting with problem solving, and dealing effectively with people without having authority.

A program manager will need more of the leadership skills, while a project portfolio manager will need more of the strategic thinking skills.

Looking back at Russel Reynolds research, we can see that a good project manager will actually meet all the nine CEO attributes, which proves one of my starting assumptions: project manager should be, in principle, considered CEO material!

A program manager will need more of the leadership skills, while a project portfolio manager will need more of the strategic thinking skills.

Is something missing?

I believe that despite having very similar competencies, project manager-only skills do not make a good CEO but project management experience should be a ‘must have’ competency of many chief executives.

I recently heard that large corporations are including a year of managing a project as part of the career path for their high potential staff. This is already a good sign that corporations are changing to the right direction.

Can you increase your chances of becoming CEO?

Besides the core skills that a project manager will develop through his/her career, which as we have seen represent a very solid basis to have the potential of becoming a CEO, here are the additional skills you should develop in order to make it happen:

01 you need to have a vision to create something that can generate recurring revenues and growth for the organization

02 you need to be results-driven and focus on delivering the benefits and impact of the project. A common path to CEO is through sales, which is also a results-driven environment, but those who bring in revenue will always be more visible. Plus, successful sales often require navigating the prospect’s political environment to close the deal

03 assume profit and loss responsibilities, beyond your projects. That can be done by gaining business unit (line) management experience

04 increase your organizational intelligence competencies. In general, the best project managers are often not the most popular people in the company. Although they have diplomatic skills, they do not jeopardize their project objectives or deadlines, just for being nice with people. If they have to get things done, sometimes they leave a few heads on the road and they do not spend lots of times doing internal politics.

05 do not neglect the soft skills, including charisma, political prowess and strategic vision, and continuous education in complementary disciplines, such as psychology, finance, sales and marketing —I always say that the on the best combinations of growing a successful CEOs are those that have completed an MBA and are able to deliver projects successful

06 last but not least, develop your entrepreneurial skills. The ability to take risks, drive, ability to inspire others etc is something often required to become a successful corporate leader.

In summary—you have the skills to make it to the top,
be confident in yourself, keep learning and spend time
understanding the business.
The biggest hurdle for most project managers is
understanding that it is not just about planning and
organizational skills; you have to really embrace strategic
planning, sales, and marketing. You need to understand
how the business runs:5 the key value drivers, the history,
the products and services, the market, the competition,
as well as being a visionary, looking around corners and
putting your ear to the ground.

 

 

So does it matter to organizations?

I believe that organizations would be more successful if they would be led by experience-all-around, business-minded project manager. Not so long ago, one of the key differentiators of success in an organization would be their strategic thinking and strategic planning capabilities. Today, in our fast-changing world, one of the key drivers of success is on strategy execution: the ability and speed of implementing new ideas, new products, new services while keeping the business running.

 

 

 

 

 

 

 

01 The exception is when the company performs in a project-based world – by which I mean that a majority of the revenue and employees spend time on individual projects – so the possibility of a Project Manager moving up to the CEO is much more likely.
02 Klaus Kleinfeld established and led the Siemens Management Consulting Group (SMC), an organization formed to develop and oversee a corporate revitalization and business improvement program. Under his leadership, SMC transformed from a small corporate cost center to a highly profitable and respected consulting business that established cutting-edge practices in benchmarking, project management, business re-engineering and innovation.
03 https://hbr.org/2009/01/lego-ceo-jorgen-vig-knudstorp-on-leadingthrough- survival-and-growth
04 http://www.russellreynolds.com/content/making-it-top-nine-attributesdifferentiate-ceos
05 It is important to distinguish between running the business and changing the business. Usually the work of project managers is around the later one. However, the most important side of the business is always the running. It is not until a Project Manager understands how a company runs and how the projects he/she manages impact the organization that it starts to be recognized as a potential leader. I explore the concept further in my book, The Focused Organization.