Formative experiences pave the way for CEOs
The business leader and investment authority Warren Buffett famously cited a formative experience when he was 11-years-old as an early lesson in patience in investing. Eleven-year-old Buffett bought three shares of Cities Service Preferred at US$38 per share, which dropped to $27.00. He sold when they reached $40 — a decision he lamented when they soared to $200.
Buffett’s formative business experiences started earlier than most, however when CEOs are asked to reflect on the roles or activities that led them on the pathway to the top, many cite experiences from quite early in their careers. These experiences may be formed working on assignments that were extremely challenging with a high chance of failure. In fact, they may have bombed early, but learned lifelong lessons from the failure.
Most CEOs can tell a war story or two from their early career where they were offered a project that nobody else wanted. They invariably say they were the game-changing projects that defined their future careers.
However not all formative experiences offer the same degree of learning as shown in recent research conducted by my colleagues at the Korn Ferry Institute; Stuart Crandle, Evelyn Orr and Lalitha Urs. Their research paper: ‘Formative experiences may be key for CEO readiness’, identified how formative experiences differentiate within a group of high-level executives on track to become CEOs.
Their analysis of data on more than 60 executives — evaluated for CEO roles by completing Korn Ferry’s CEO Readiness Assessment — shows that those deemed most effective underwent formative experiences heavy in strategic and people demands, and extensive formative experiences.
7 categories generally encompassed all of the formative experiences rated by executives in this study:
- Fix-its and turnaround operations
- Cross moves
- Scale assignments
- Scope assignments
- Heavy strategic demands
- International assignments
- Significant people demands
Most executives in this sample said they had experienced heavy strategic demands at some point in their career, and the types of experiences were similar (e.g., change management strategy, divestiture, mergers and acquisitions).
What differentiated very effective executives from those executives who were less so was the overall number of heavy strategic demands they had experienced: 91% of very effective executives said they had experienced heavy strategic demands, whereas only 55% of less effective executives said they had this kind of formative experience.
Significant people demands were the second formative experience that separated very effective and less effective executives. The kinds of experiences were similar (e.g., developing people, building cross-unit teams, interacting with a variety of people). However, the number of such experiences differentiated the two groups: 86% of very effective executives said they had experienced significant people demands, compared with only 57% of less effective executives.
As many of the executives noted, diverse experiences in less-than-favorable conditions led to greater learning and future leveraging of those lessons.
While some executives had these experiences early in their careers, they occurred later for others, after they had acquired functional expertise in their own areas. This demanded flexibility to accommodate, adapt to, and learn from differing perspectives, expertise, and interest under conditions of high visibility.
Formative experiences are more than just skill-building events. They are important markers in an executive’s personal development journey. Executives wishing to reach the top may want to seek formative experiences heavy in strategy- and people-related demands and companies seeking highly effective executives and supportive of developing their own also may want to consider the number and type of formative experiences that elite talent takes on.
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