In my time spent with executives, I’m often struck by their profound commitment to lifelong learning. Many are voracious readers, podcast connoisseurs, and bring decades of experience to the job. But they often miss out on a great resource and teacher: peer-to-peer learning. Who can they turn to when their organization expects them to have all the answers?
For the past 20 years, Jeff Sonnenfeld—CEO of the Chief Executive Leadership Institute at Yale University—has sought to foster these connections, leading nonprofit education and research focused on CEO leadership and corporate governance. In simple terms, Jeff runs a school for CEOs.
I sat down with Jeff to discuss the challenges facing CEOs and how the expectations of the person at the top are changing. Our conversation echoed so many I’ve had recently with my own clients. Today’s CEOs are tasked with keeping all the balls in the air while building organizations that are not only productive but also enablers of progress.
Yet Jeff believes this generation of CEOs has unexpected opportunity. Nobody’s going to give them a blueprint or a navigation chart that tells them what to do. They get to forge their own path. And as you’ll read here, that’s precisely what the job demands.
Jeff, let’s start with the basics. Why does the world need a school for CEOs?
The challenges CEOs face today are far deeper than what they pick up through experience before taking the top job—and certainly, far beyond what is being taught in business school. CEOs are also expected to perform instantly on day one. There is no grace period, no training ground, and no real peer group to learn from.
Historically, organizations relied on mentor–protégé relationships to prepare leaders for the job—but that simply wasn’t enough. CEOs needed a place to go as an adult learner to make themselves vulnerable, find inspiration, and get feedback from their peers. So that was the genesis of it.
Since you founded the institute in 2001, how has the role of CEO changed, especially in modern organizations?
It’s changed a great deal. We could talk about the impact of globalization, workforce, government involvement—the list goes on. But the most interesting change is how today’s company structure has shaped the way CEOs are selected.
CEOs have traditionally been the guardian of the succession process, while the board sat in an advisory role. Now the script is flipped, and succession is driven heavily by the board. This has led to far more outside hires than in eras past. We can debate whether this is good or bad, but it undoubtedly places heightened pressure on the new CEO to perform.
Jeff, I’d love to double-click. When companies make the pivot toward an external CEO candidate, does it tend to work well? Have you seen missed opportunities when a company did not look externally and instead chose an internal candidate who did a ‘good enough’ job?
While I personally favor internal candidates, organizations should be careful not to cut off external candidates. There are too many times where boards have lost out on a potential CEO because they hadn’t benchmarked against outside prospects.
There are also times when an external candidate simply makes sense; in a period when the management team has underperformed, it’s hard to imagine there’s somebody on the current team who’s right for the job. Another instance would be when there’s been a dramatic, wrenching change in the industry. In those situations, a company may need someone who thinks very differently from the existing mindset.
Over the past year, CEOs have experienced a series of interesting inflection points, from high inflation, high interest rates, ongoing labor shortages, complex geopolitics, and so on. How are CEOs responding to the macroenvironment and adapting as new challenges arise?
If you asked me this question six months or a year ago, it might have seemed like the environment was hard to navigate because of how much it had changed in a short time. But the real reason it’s hard to navigate is because it’s in constant flux—and it’s going to stay that way. CEOs must be prepared.
A year ago, we were wringing our hands over supply chain congestion. That’s mostly dissipated. But that doesn’t mean we’re off the hook for figuring out how to navigate a similar challenge in the future. This is not easy in practice, though. It’s hard to justify devoting attention to a possible crisis when you’re not in a crisis.
In one of your recent Op-Eds, you talked about how CEOs are leading a great new awakening in this country. Can you tell us a little bit more about that?
It started about 50 years ago when company leadership realized that “doing good” was not antithetical to “doing well.” Leaders like Indra Nooyi modeled this mentality of “performance with purpose” at PepsiCo, other CEOs followed, and it has carried through today.
Just last year, we saw 1,300 companies pull out of Russia after its invasion of Ukraine. Initially, they had to write down a lot of assets, but it benefited the shareholders enormously—and not just in terms of reputation and operational or financial risk. Immediately you saw a spike in their stock price.
So when I hear somebody say to a CEO, “You should just stay in your lane,” no. This is their lane. This is part of the strategic context of business. This is the role of the modern CEO.
Given everything you know about CEOs and how they operate, what advice do you have for them in this moment?
I think this generation of CEOs has unexpected opportunity to replot what they’re doing. Nobody’s going to give them a blueprint or a navigation chart that tells them what to do. There’s opportunity for them to forge their own path.
We have a long way to go on gender parity, and we have huge problems in racial justice; those are imperatives that will ultimately enable progress and create a business advantage. But right now, looking at the world around us, I can’t imagine a more exciting time to be a CEO.
Asutosh Padhi is a senior partner and the managing partner for McKinsey in North America, leading the firm across the United States, Canada, and Mexico and serving as part of McKinsey’s 15-person global leadership team. He is also a member of McKinsey’s Shareholders Council, the firm’s equivalent to a board of directors.
He is the coauthor of The Titanium Economy, a new book that explores the industrial tech sector and the bright future that it can help create. It’s available now.
Mentions of organizations or individuals are not endorsements by McKinsey & Company.
This piece was originally posted on LinkedIn.com as part of Asutosh Padhi’s interview series, Leadership Rundown.