22 May CEOs need to understand the “cliff effect” in their new organization—before they fall off the edge
CEOs need to understand the “cliff effect” in their new organization—before they fall off the edge
The conventional wisdom says that a new leader has 90 daysto prove that he or she was the right choice for the job.While that 90-day period is indeed critical, I believe the conventional wisdom has it slightly wrong. That period is actually the amount of time a leader has to create traction and momentum in the role, signalling to stakeholders that this appointment has a high probability of success. It’s like reaching first base without getting knocked out of the game. Even if it’s early innings, getting on first is still a significant milestone as success or failure during the first months is a strong predictor of overall success or failure in the role.
Most leaders intuitively understand this, but they fail to get an accurate reading on how much time their organization will give before reaching a judgment on their appointment. My co-practice group leader Mark Byford and I use the term “cliff effect” to describe what happens when organizations suddenly lose their tolerance for a new leader who is struggling to meet their expectations. Sadly, many new leaders neither solicit nor receive the feedback that would allow them to course correct before their stakeholders lose patience.
Senior leaders need to fully understand the cliff effect if they’re to successfully integrate in their new role. They need to understand the group dynamics that animate all organizations—but never appear on any organization chart. Organizations operate as tribes. The tribes consist of networks, each of which has a particular pattern of ties connecting the members in formal and informal ways. Information flows across these networks, allowing members to reach informal consensus. This is the mechanism enabling the cliff effect.
The cliff effect: when activated it is a steep and sudden plunge
In this context, as team members and stakeholders “sit on the fence” and watch their new leader take on their role, they are continuously observing, evaluating and sharing information. And in doing so they are co-creating their expectations and validating their acceptance or rejection of the moves the new leader makes and the progress he or she is making.
The new leader, however, is likely to experience this transition period in a completely different way. Having been selected after a painstaking process that may have taken months or even years if it involves an internal succession, many newly appointed CEOs feel that they have already “proven” themselves, that they are undoubtedly the best for the role. Understandably, this, along with the power of the role, makes them feel confident of their abilities and their chances of success. At a minimum, they expect the stakeholders and organization will give them a fair chance to prove themselves.
The paradox is that while senior leaders are assuming roles of power, they fail to grasp that the true power lies with the tribe and the ecosystem. During the transition period, tribe members at all levels are assessing their new leader and forming a consensus on whether they will stop sitting on the fence and become advocates. The truth is, there is a turning point that CEOs needs to pass where they have secured sufficient followership to assure at least some security in the new role.
What all of this points to, is a fundamental misalignment between the new leader and the organization. While the leader believes he or she has sufficient time to grow into the role, the stakeholders may feel that progress against specific goals is too slow, increasing the likelihood that the leader will run into the cliff effect. Or, just as damaging, the leader may believe that the business challenges are obvious so he or she takes charge quickly and makes a lot of changes fast. If this is not done in line with the culture, the tribe will ensure that the cliff effect kicks in.
To address these twin dangers, leaders need to find a balance between taking the time to resonate with the new organization and moving forward in running the business. Here are steps that can help to achieve this balance:
Understand the stakeholders’ expectations for the first 90 days and manage them. This is different from understanding the mandate of the role, that is, the milestones that must be achieved in the coming years to ensure a successful tenure. While the new leader does not necessarily need to abide by all suggestions, he or she must actively influence and manage those expectations—to avoid surprises on both sides.
“Meet” the people in the tribe where they are. And remember at all times: Tribes will not do what you want. They will do what they want. This is why they must be inspired to follow. The newly appointed leader must manage the juggling act of subtly promoting one’s ability while simultaneously sincerely reaching out to learn and meet people where they are. At the same time they need to develop an engagement and communication plan that is meaningful to the tribe.
Solicit honest feedback and course correct as necessary. This is more challenging than it sounds. It requires the leader to quickly establish a rapport with critical stakeholders on a 360° basis. Asking for external support from trusted advisors to reality check early impressions is key.
The cliff effect is out there and it is real. But by having a clear sense of expectations and a deeper understanding of what the integration process entails and all that is riding on it, new leaders can avoid the cliff and move to safer ground on which to build an effective and successful tenure.