Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
August 30, 2017

Safe Landing for Parachuting Executives

Once considered separate career paths, roles in MNCs and in private enterprises in China are converging and the distinctions between the people taking them on have become less and less. Nowadays, it is hardly surprising to see global executives from MNCs joining a Chinese company. Some of these cases were in the limelight, for example, the former CTO of Cisco joined NIO last year as its CEO for North America and Dr. Qi Lu, former Microsoft executive vice president, joined Baidu earlier this year as its group president and COO. The trend extends well beyond these few well-known examples.

For most executives, even if their first foray into private enterprises does not work out well, they will continue trying to follow this career track with a better understanding of the industry. For those who choose to move back to MNCs, they often consider it as an adventure. Regardless of their final choices, these experiences help them to realise what they ultimately want to pursue and what types of organizations are the best fit for them.

While each executive has his/her own reason for joining private enterprises, I’ve noticed some common personality traits amongst them: curious, open-minded, confident and courageous. Out of professional habit, I have always tried to summarise the secrets of their success so that I can help more people with their transitions. I was disappointed to realise later on, that with each company being one of a kind, every executive who comes “parachuting in” has vastly different experience when making the transition.

With a combination of variables — the stage of corporate development, the economic cycle the industry the company is in, the management style of the bosses, and the backgrounds of the leadership team— these companies each have their own internal dynamics and working culture, and often it takes an enormous effort for the new executives to fit in.

I get asked very often by MNC executives hesitating to make the move: “Am I a good fit for the private enterprises?” They want to know what kinds of executives these companies are looking for and what types of people are more likely to succeed there.

Leaders of these private enterprises do not make the decision to bring in a parachuting executive without giving it thorough thought. They appoint these executives for various reasons: the improvement of management standards, IPOs or financing, or sometimes for the globalization of the company.

The mistake that sets up MNC leaders to fail in private enterprises

A common issue that makes it hugely challenging for former MNC executives to acclimate in these private enterprises is their lack of preparation to fit in with company culture. It is of utmost importance to build mutual trust with the boss, after which the path will soon reveal itself to the new executive. After all, gaining trust in the company comes down to the leader essentially telling his/her employees: “I can rest assured about the work you do.” In the last few years, many executives did not succeed in their new roles simply because they proceeded with daring reforms without getting a clear view of the situation or gaining complete trust with the boss, leading to conflict within the company. Bosses want reforms, but they do not want to see a mess as the end result. While some of these problems can be avoided, it’s important to note that the issue is not with the new executive, but with the boss. Not all bosses are prepared for the changes that come with bringing on new executives and often, are unsure how to prepare themselves.

One former MNC executive who survived three years (many consider this the minimum tenure to be considered successful as a “parachuting” executive) in a private enterprise revealed the secret for his success: Don’t take things too seriously when you are going to these companies. What he meant was that you need to be adventurous yet not be in a hurry to succeed, and that you should not think too highly of yourself and should be flexible and agile instead. Having a history as an MNC executive certainly helps, but it takes wisdom to determine the skillset suitable to a new environment and new rules. What capabilities do I have that will continue to be useful? What skills have become obstructive?

We’ve all heard stories of executives from MNCs who join local companies only for their roles to be marginalized in a few months’ time and are subsequently reassigned to other duties. In truth, it is not easy to go from a steadily growing and mature fast-moving consumer goods organization with a clear corporate structure to a rapidly growing Chinese company with a corporate structure under construction. This type of transition depends on a careful selection of the candidate’s past experiences and a clear understanding of the new company’s culture, with concrete plans for how to integrate the two.

The importance of being a “blank slate”

For the leaders in private enterprises, it is very important for new executives to have a “blank slate” mindset and self-awareness during the transition. One of the main reasons for these companies to hire an outside executive is to improve their management standards. Some executives from MNCs join with a box full of tools they accumulated throughout the years only to find out immediately that the tools don’t apply in this new situation. Frustration ensues with the frequent thought that the bosses are going against their own words. Executives with the “blank slate” mindset, however, aim at solving problems. To them, it is not the method, but the process of solving a problem that matters. Surely, methods used in MNCs may have brought about success before. It can be tempting to try to prove yourself early, but don’t simply reapply past methods without re-evaluating the current situation and coming up with novel solutions. The ability to try new things and apply mature judgment are of utmost importance, and are qualities that organizations often look for.

Advice from a “parachuter”

An executive who made the transition 10 years ago observed that it is not a good thing that outside executives are often considered to be “experts of methodology.” When he made the jump to a private enterprise, he didn’t mention his successful operating procedures, nor did he bring any ex-subordinates over to the new company. His advice: Let go of your identity as an MNC leader, don’t shortchange yourself and always remain humble. He believes that the leaders of the private enterprises, not the business school-trained executives, are the winners chosen by the market. Thus, he insisted on solving problems with the method and culture of his host company. So what did he bring from the MNC? A systematic thought process and highly effective communication skills. The MNC training made him a perfect executor of pre-determined actions; the private enterprise, however, wanted him to improvise, and the transition enabled him to apply his skills in a new way.

In conclusion, I cannot tell whether an MNC executive would be a good fit for a private enterprise for sure. However, if one could let go of one’s own brilliant past experiences, be curious and respectful of the private enterprises, and show empathy while solving problems, then why not give it a try?

Click here for the Chinese translation.

Sherry Ding is a member of Spencer Stuart’s Consumer, Retail, Private Equity and Financial Officer practices. She has more than 10 years of experience in executive search and leadership consulting for Chinese local and multinational companies. Reach her via email and follow her on LinkedIn.