Given the scarcity, companies often need to turn to leaders who will be taking on the CEO mantle for the first time in their careers. Although it may feel like a daunting step for a company to deviate from historical leadership models, recent Spencer Stuart research reveals that first-time CEOs tend to have more success than experienced executives over the course of their tenure. Indeed, a first-time CEO with a hunger for transformation, curiosity and adaptability may be better able to regularly reinvent the business and drive growth over the long term.
We recently spoke with five first-time CEOs in the tech services sector for their unique insights on how they handled their new roles and thrived in them. In this article we look at several of the key themes that emerged from our interviews about what makes a successful first-time CEO in tech services: investing in learning the new business; building trust; having the courage to make tough decisions quickly; adjusting to changes in scale and maturity; leaning on past experiences; and valuing purpose over paycheck.
Learning the new business
It’s important that first-time CEOs recognize where they lack experience and find ways to build knowledge in those areas, including ensuring that they have people on the team who have that experience. Their previous experiences will be important, but if they lean heavily on the past, they may not perform as well as CEO as they could.
Indeed, new CEOs must also be adept at entering new roles with open ears and a willingness to learn — about the company’s history, its strengths and weaknesses, its people, its challenges, and the primary issues of its clients. They also need to look past their preconceived notions to dig deep into what the company is really about and what makes it tick. As Sanjay Jalona, the former CEO of LTI, an IT services company that merged with Mindtree in 2022, told us, while experience is very valuable, unlearning the past and dedicating time to understanding the new business is equally important.
Several CEOs said that early in their tenures they took purposeful steps to meet their companies’ people, asking their advice on whom to speak with about different matters, what projects to know about, and what clients were saying. For example, Eric Hutto, CEO of Diversified Systems, went on the road to different offices, discussing processes, goals and expectations with team members and clients. He told us it gave him an appreciation for how Diversified sold its services, how the internal system worked and how the company made money.
Hutto told us these steps played a role in a key element of success for first-time CEOs: building trust. Beyond gaining an appreciation and understanding of the business, the conversations created an important level of trust with employees and other leaders. “The associates don’t know you,” Hutto said. “You may not come from the industry or grow up in the company, so why should they trust you? In this situation, winning hearts before minds is really important.”
Trust building while establishing new goals and strategies is an early imperative for first-time CEOs. Trust ensures that the organization supports the long-term vision. Srikrishna Ramakarthikeyan, CEO of the IT services company Hexaware Technologies, said that he sought to gain trust by, in turn, ensuring his new employees knew that he trusted them. “That was literally the first five minutes of every conversation I had with everyone,” he said. “When you gain the trust of your people, they will know that you have the best interests of the company in mind even when you have to make tough decisions. And that doing what’s right for the company will eventually be what’s right for them.”
Making tough decisions quickly
No matter how much preparation a new CEO puts into the role, they are still going to face unexpected situations, often with incomplete information, that will require them to make tough decisions for their organizations — choices that consider not just one stakeholder but the needs of the broader set of employees, customers and communities.
Several CEOs pointed to trust they had established with their stakeholders, including the board, as giving them a boost in making tough decisions. “I personally have benefitted from two deep board mentorships,” said Nirav Patel, CEO of Bristlecone, a modern supply chain solutions provider. “They’re more like friends than anything. They help me make the decision, but they don’t make the decision for me.”
In critical moments, Hutto ensured he had sufficient data, especially in discussing plans with the private equity firm that owns Diversified. “Private equity is all about numbers, so I know my decisions have to be grounded in data,” Hutto said. “I would say that’s something for all first-time CEOs in a PE world: You need to know the language you need to speak to convince your key stakeholders.”
Ultimately, being decisive and having your own personal conviction is essential in a new CEO role. You need to be courageous enough to make the tough decisions and a skilled enough communicator to explain and discuss those changes with all stakeholders. “There are moments when you realize you need to just make the decision, to drive the change,” one first-time CEO told us. “I need to trust my convictions even though there might be a whole bunch of people who don’t agree.”
Adjusting to scale
Many first-time CEOs not only are confronted with new responsibilities, but also with dramatic changes in business scale, maturity and culture that they never confronted in previous roles. For those that came from big companies, they will likely find much different processes, policies, systems and scale at their new company. These changes require new CEOs to carefully prioritize their activities and ensure that they aren’t trying to do too much too fast.
Many interviewees highlighted the need for some pre-onboarding due diligence when possible. Forming an early view on what crucial investments are needed can help set the roadmap in your first weeks on the job. It can also help the CEO align with the board and other stakeholders, a critical success factor for any leader.
The importance of experience
The first-time CEOs we spoke with told us that they were able to lean heavily on, and take comfort from, the experiences they had had on the path to the top role, even as they took the top job for the first time. While the enterprise CEO role is notably different than any other role and requires continued growth and adaptation, there is no doubt that prior work plays a key role in shaping the vital leadership strengths that ease the transition.
Jalona told us that his past industry and market experience gave him the foundation for success as a CEO. “My prior experience in both sales and delivery gave me a good feel for what the market needed, what the company needed to do, and, therefore, what I needed to do.”
Indeed, past experience leading a unit or otherwise managing P&L were cited as key in helping our interviewees feel prepared as CEOs, as they gave them experience setting strategic direction, managing day-to-day operations and communicating with stakeholders, including investors, employees and the board. These past experiences and proficiencies can also prove valuable as CEOs navigate entirely new corporate environments.
Patel said that the strengths that made an executive previously successful offer guidance when taking the top position. “New CEOs should never let go of the strengths they had when they came into the job — for example, in revenue leadership or delivery excellence,” he said.
Purpose over paycheck
Although we heard it phrased in many different ways, our interviewees were nearly unanimous in the idea that for new CEOs, it’s critical that a clear purpose to push their companies forward must be both a driving force and a source of resiliency to handle the challenges of the job.
Our interviewees offered several examples of how they derive purpose from their jobs and how they imbue their work with that purpose. Ramakarthikeyan said he is driven by employing nearly 28,000 individuals and providing the means for their families. “I think you have to be clear in your head about why you want to be a CEO,” he said. “What’s the reason? Money can’t be the only reason. It must be something beyond.”
Others, like Hutto, focus on carrying on the company legacy and building a strong organization. “Are you building a company to survive? Are you building resiliency? Because if you don’t have that mindset and you’re just here for a quick dime, you will fail,” Hutto said. “Are you leaving something stronger than when you arrived? What is really driving you?”
First-time CEOs face a number of challenges. It is incumbent on not just the new CEO to be aware of these, but also for those around the CEO — the board and other senior leaders — to recognize these and help with the new leader’s transition into the role.
Ultimately, well-prepared and thoughtful first-timers can deliver great impact and superlative performance as CEOs.