I’m just curious if there are examples of companies choosing CEOs who are younger and relatively inexperienced (but shows great promise) to lead the company into a new era instead of an older, more-experienced candidate.
If there are, how did it go for the company?
Also, feel free to enlighten me if my wording is not correct. I don’t know if a CEO is really “chosen” but I feel like the board chooses a CEO.
So, should I take this to mean it has never happened? Or that my post got lost in the election excitement?
Well, the Board of Directors does indeed choose the CEO, but I’ve never heard of a BOD choosing an inexperienced neophyte before: young, yes: inexperienced, no.
The board answers to shareholders (and the board themselves are shareholders) so choosing some inexperienced popcorn vendor would not be good.
I’m not sure. I’ll ask my dad.
I suspect that the most likely case of a transition to an inexperienced CEO is going to be when the CEO has been grooming a replacement (who is accepted by the board of directors.) I’d be 99.9% certain that this has happened historically and is likely fairly common.
Whether a board has gone out and hired someone without anything in the way of a executive experience, I don’t know. I suspect that it’s happened, but more likely are people who started one or two failed businesses in their 20s/early 30s that never lasted more than a year. Again, I’d be decently certain that’s happened, though probably only at smaller publicly traded companies.
I am Sage Rat’s dad, and was a CEO of a public company for eight years (1,000 employees)…
Because you used the word “CEO” I am assuming you are speaking of a fairly large company. My answer does not apply to small businesses, where anything can happen.
As someone mentioned, the CEO is chosen by the board of directors. Generally, CEOs are only chosen when there is some sort of corporate event. The prior CEO is being ousted, the prior CEO is being “kicked upstairs” (moved aside), the CEO has died, etc. Sometimes, it is because a company has outgrown the founder’s skills, and a seasoned veteran is being brought in. Sometimes the CEO is retiring (which rarely happens unless there is a reason).
It does happen that young, inexperienced executives are appointed CEO, but this is rare. My guess is that it would most likely occur when the CEO is being tossed for some reason, cash is tight, and there is a VP level candidate who has done an outstanding job, and “presents well”. In this situation, the board would “take a chance.”
As to the board recruiting a CEO among recent MBA graduates, I can’t imagine a scenario in which this would happen. Maybe… if it were a venture capital backed startup, and there were a Harvard MBA, or Stanford MBA, who was somehow known to the Venture Capitalists.
It’s really not an issue of age, but of experience. There are a lot of different skills needed to be a CEO of a company; people skills, management skills, fund raising skills, presentation skills, accounting skills, marketing skills, etc. There certainly could be some untested individual who has these skills, but without experience to point at, how is the board to know. Doing well on an interview does not neccesarily mean you are equipped to guide a company. The best indicator of future results is past results.
-Ken W
PS Sage Rat raises another reason I hadn’t thought about. It is certainly possible that the CEO would groom a replacement for himself who might not otherwise be a candidate. For instance, let’s say someone were president of a division of a large corporation (divisional presidents are not usually called CEOs). I could envision this person grooming someone to succeed them should they get promoted, then recommending the person for their job. Anyone watched “The Office” … it’s not as far off how the real world works as you might think.
I believe this is largely an plot device in business themed movies. There are plenty of youngish CEOs but they are usually entrepreneurs who started the business. It’s a hard sell to shareholders that the new 28 year old CEO can really run a $2 billion business with no real prior experience.
Maybe in high tech where you have young people starting companies and then maybe moving to other VC backed startups.
The thing is, being a CEO isn’t just about being smart and clever. It takes experience, business relationships and leadership presence. That’s tough to find in a young person. Generally the larger the organization, the more experienced and older the CEO you want.
I’d just like to note that I didn’t say “inexperienced,” but “relatively inexperienced.”
I should elaborate. What I meant was to say that there are two or more candidates for a position, and, on paper, one seems clearly to be the more experienced of the two, but neither have executive experience. One offers a history of success and expertise, the other younger candidate offers new ideas. Both are risky. The older candidate risks pushing older policies that worked in a previous era, and the younger guy ends up, well, ultimately failing in one way or another in implementing policies that have never been tried before.
I’m curious how this plays out in the business world. Has there ever been a case where our younger candidate was chosen? What happened?
(One can easily see the parallel here, but I don’t want to start a discussion about specific political figures)
Also, I said “younger.” I’m thinking more along the lines of a 40-something and a 60-something.
My apologies GitFiddle. Especially, when you are talking youngish, and relatively inexperienced versus oldish, and well-seasoned, I can think of many examples where the younger person won the competition.
As long as the candidate has enough experience to “get themselves through the door”, then it is all up to the impression they make. A junior person, or one straight out of school, would never get to the interview stage. But, someone who had been a VP Sales for a company, or CFO, a venture capitalist, an investment banker, might qualify. Once you get in front of the board, anything can happen, because it really comes down to the ability to present a vision for the company that the board believes in.
-Ken W
PS Speaking of youth and lessor experience beating out age and more experience … didn’t we just see an example of that yesterday? (grin). Never underestimate the importance of making a powerful impression, and communicating well.
Tossing some anecdotes into the ring for interest’s sake…
I was the CTO for a public company in the late 90’s, and I was asked to meet with some candidates for my boss’ boss’ role (i.e. CEO) before they were to be presented to the Board. One of these, the choice of the non-Executive Board members, was the same age as me: 34. [The then-CEO, who had founded the company some 20+ years before, didn’t leave at that time, in the end.]
I also worked with a guy who had, in his early 30’s, headed up one of Ross Perot’s companies.
[sub]SageRat, I promise not to mention That Night in Tokyo while your Dad might be reading. I’m sure you don’t want anyone to know about that…[/sub]
Well, there’s thisguy - Brandon Tartikoff, head of the entertainment division of NBC at 31, president of Paramount Pictures at 43 (and tragically, dead at 48). He was pretty much the stereotypical media wunderkind.
I don’t know if that counts as a CEO, though.
I can remember ‘Two Brains’ at Barclays Bank and a neophyte at Bank of New Zealand before they got NABbed.
In both cases the guys were in their early thirties - and in both cases the markets were surprized at the decision.
CFOs (Finance Directors) can be very young - and comparatively inexperienced. They also have a tendency to slip into the top job.
Theo Epstein, named General Manager of the Boston Red Sox at age 28, youngest GM ever. Protogé of club President Larry Lucchino. He seems to have done fairly well at his job (2 MLB Titles in his 6 years).
From Forbes: America’s Youngest CEO’s - America's Youngest CEOs
There’s a popup slideshow, age range 33-35.