Project managers are some of the best candidates to be CEOs, because to carry out their usual work they have to bring together all the disparate aspects of theory, reality, vision, process, finances, value, politics and human nature to create successful outcomes. Project managers often manage projects that cross all organizational functions and get to see the organisation as a whole entity rather than from the "siloed" view of a particular functional program.
When you demonstrate success in managing enterprise-level projects and organisational resources from a holistic perspective, you should be a viable candidate to move up to a CEO-level position. For those project managers who are interested in moving in that direction, a CEO position should be a natural end to years of experience within an industry or group of related industries.
However, over many years — even decades — I have noticed that CEOs hardly ever come from a project management position. (For the sake of simplicity, I use the term "project manager" in the broader sense, meaning that it encompasses also the program manager, portfolio manager and project management office. I also don’t make a distinction on the projects types, obviously the larger the project, i.e. infrastructure initiative, the closer the project manager is to the CEO role.)
CEOs follow very similar career paths
The "next CEO" tends to come through very limited channels (either from within the company or from outside):
- Finance: if the company requires cost containment and/or cost cutting.
- Sales/marketing: if the company has to increase their top line and focus on business development.
- R&D/IT: if the company is highly technologically driven.
- Operations: as often the chief operating officer (COO) is the one running the internal side of the business, this is a natural move.
Do these business areas give any better experience or training for what is needed for a CEO than a project management background?
I’ve heard of only a few examples of project managers who have made it to CEO level. For instance, Klaus Kleinfield, Siemens CEO from 2005 to 2007, who established and led the Siemens Management Consulting Group (SMC). SMC was formed to develop and oversee a corporate revitalization and business improvement program. Under Klaus’s leadership, SMC was transformed from a small corporate cost center to a highly profitable and respected consulting business that established cutting-edge practices in benchmarking, project management, business re-engineering and innovation. Klaus personally led projects for a number of global Siemens industry groups. This experience gave him a very broad understanding of Siemens’ multiple divisions, but at the same time he proved several times that he was someone who could make things happen (good at execution).
Other examples can be found in the US defense industry. While on his way up the corporate ladder, Kent Kresa, from Northrop, had managed some of the company's most strategic projects.
Yet there is an exception to this trend which I want to highlight, because it gives some of the answers we will discuss later on how a project managers can become the next CEO.
A recent study found that, a few years ago, more than 70 past and present CEOs of Fortune 500 companies were McKinsey alumni, and in 2011 more than 150 McKinsey alumni were running companies with more than $1 billion in annual sales. McKinsey consultants are by nature project managers; their core business is executing projects for their customers, but they are also very well versed in content business and strategic knowledge, often with a Master in Business Administration (MBA), which, as you will see later in this article, make the perfect mix to become the next CEO. A great success story was Lego, which in 2004 appointed as CEO an ex-McKinsey consultant, Jorgen Vig Knudstorp, who managed to turn around this legendary Danish firm and save it from bankruptcy.
What are the skills and competencies required that make an outstanding CEO?
Becoming a CEO is the greatest leap that an executive can make in his or her career. What makes it such an extraordinary transition, of course, is the complexity of the role and the skills that are required to manage that complexity successfully. So, what exactly do CEOs have that ordinary employees don’t?
Successful CEOs have the ability to deliver business results by maximizing shareholders’ value, measured in terms of economic value added (EVA) or any other metrics such as "earnings per share," profits or sales, and any other business strategic goals defined when they are hired. Being popular and charismatic may help substantially, because emotional intelligence facilitates leadership.
Russell Reynolds, one of the leading executive search companies in the world, analyzed the characteristics of nearly 4,000 executives, including over 130 CEOs, and found nine attributes (split into three categories) as key differentiating factors:
Forward thinking (the ability to plan for the future)
- Forward thinking: plans ahead and is prepared for the future
Intrepid (the ability to perform effectively in complex and difficult environments)
- Calculated risk taking: is comfortable taking calculated but not careless risks
- Biased towards (thoughtful) action: is biased towards execution but not too impulsive
- Optimistic: actively and optimistically pursues new opportunities
- Constructively tough-minded: is thick skinned and persevering but not insensitive
Team building (the ability to achieve success through others)
- Efficient reader of people: seeks to understand different perspectives but does not over-analyze
- Measured emotion: displays intensity/emotion but maintains control
- Pragmatically inclusive: involves others in decisions but also is an independent decision maker
- Willingness to trust: is comfortable with a variety of people, but is not too trusting.
What’s so different about being a project manager?
Working in a business as a project manager you are exposed to decision-making, which is really the driving force of success. Observing how good decisions are made and understanding the analysis that is undertaken to reach those decisions is important to move into a leadership position. As a business project manager you are engaged in most, if not all, facets of business (i.e. sales, marketing, IT, support and so on).
There is a common belief among the project management profession that PMs are like the "CEO of the projects"; that is, they have to answer to a steering committee (the board of directors) and are responsible for project execution of strategic initiatives (organisational performance). If that’s the case, why don’t more project managers actually become CEOs?
To understand the situation better, let’s now look at the project management skills. According to most academic studies of project management, the qualities of a project managers are categorized into the following three areas:
- Project management core skills. These skills include planning, organizing, managing risks, anticipating issues and coordinating the work
- Technical expertise. Technical knowledge gives the PM the credibility to provide leadership on a technically based project, the ability to understand important aspects of the project and the ability to communicate in the language of the technicians
- Interpersonal skills. These skills include providing direction, communicating, motivating, assisting with problem solving, and dealing effectively with people without having authority.
A program manager will need more of the leadership skills, while a project portfolio manager will need more of the strategic thinking skills, for instance.
Looking back at the Russell Reynolds research cited above, we can see that a good project managers will actually meet all the nine CEO attributes, which proves one of my starting assumptions: project managers should, in principle, be considered CEO material!
Is something missing?
I believe that, despite having very similar competencies, PM-only skills don’t make a good CEO, but project management experience should be a "must have" competency of many chief executives.
I hear more and more that large corporations are including a year of managing a project as part of the career path for their high-potential staff. This is already a good sign that corporations are changing to the right direction.
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