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mdc-u-grid-col-lg-end-8 mdc-u-ts-9"><span> </span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/michael-birshan" class="mdc-c-link-inline___7DRrt_2734c4f mdc-c-link-inline--secondary___YKoOK_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Michael Birshan</span></a> </span></span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/thomas-meakin" class="mdc-c-link-inline___7DRrt_2734c4f mdc-c-link-inline--secondary___YKoOK_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Tom Meakin</span></a><span> </span></span></span><span class="AuthorsByLine_mck-c-authors-byline__author__XdrlD"><span class="AuthorsByLine_mck-c-authors-byline__no-wrap__Ced0j"><a data-component="mdc-c-link" href="/our-people/kurt-strovink" class="mdc-c-link-inline___7DRrt_2734c4f mdc-c-link-inline--secondary___YKoOK_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Kurt Strovink</span></a></span></span></div><div class="mdc-u-grid-col-md-start-8 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-8 mdc-u-grid-col-lg-end-11 ArticleContent_mck-c-article-content__share-tools__kWRRw"></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-animation-blur-in-400"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_2734c4f mdc-u-ts-5"><div class="mck-u-links-inline">We assessed the early moves of CEOs with outstanding track records; some valuable lessons for leadership transitions emerged.</div></div></div></section><main data-layer-region="article-body" class="mdc-u-grid mdc-u-grid-gutter-xxl"><div class="mdc-u-grid mdc-u-grid-col-1 mdc-u-grid-col-md-12"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div class="mdc-o-content-body mck-u-dropcap"><div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="DownloadsSidebar_mck-c-downloads-sidebar__iFmyt mck-o-xs-right-span"><div data-layer-region="downloads-right-rail"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-c-heading--title___5qyOB_2734c4f mdc-c-heading--border___K8dj3_2734c4f"></h3><div><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f"><a data-component="mdc-c-link" href="#/download/%2F~%2Fmedia%2Fmckinsey%2Fbusiness%20functions%2Fstrategy%20and%20corporate%20finance%2Four%20insights%2Fwhat%20makes%20a%20ceo%20exceptional%2Fwhat-makes-a-ceo-exceptional.pdf%3FshouldIndex%3Dfalse" class="DownloadsSidebar_mck-c-downloads-sidebar__download-link__fPqFQ mdc-c-link___lBbY1_2734c4f" target="_self" data-layer-event-prefix="Download Link" data-layer-action="click" data-layer-report-type="" data-layer-file-name="what-makes-a-ceo-exceptional" data-layer-report-name="what-makes-a-ceo-exceptional>"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-download-icon"></span><span class="mdc-c-link__label___Pfqtd_2734c4f"> (PDF-193 KB)</span></a></div></div></div></div> <p> <strong>New CEOs face</strong> enormous challenges as they start assembling a management team and setting a strategic direction in today’s volatile environment. To provide some guidance for transitioning CEOs, we looked at the experiences of exceptional CEOs, those defined as the very top performers in our data set of roughly 600 chief executives at S&P 500 companies between 2004 and 2014.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor-signup mck-o-sm-left-span mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-signup"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f"><h2 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-7 DisruptorSignUp_mck-c-disruptor-signup__heading__JR4i0"><div>Stay current on your favorite topics</div></h2></div><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--align-left"><a data-component="mdc-c-link" href="/user-registration/register-mvc" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--primary___Ed-lT_2734c4f mdc-c-button--size-large___jwpUy_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Subscribe</span></a></div></div> <p> Our focus was on the top 5 percent of the CEOs in our sample as a whole whose companies’ returns to shareholders had increased by more than 500 percent over their tenure. We contrasted this group both with our full sample and with a subset of CEOs whose companies achieved top-quintile performance during their tenure as compared with their peers.<a href="#" rel="#footnote1" class="link-footnote"><sup>1</sup></a> <span style="display:none" class="tooltip" id="footnote1"><span class="footnote-content"><span class="footnote-number">1.</span><span class="footnote-text"> We ranked all CEOs by annualized total returns to shareholders (TRS), normalized for the performance of their broader industry. Those in the top quintile, the 120 highest-performing CEOs, achieved at least 9 percent TRS above industry cohorts each year they were CEO. </span><span class="clear"></span> </span><span class="footnote-bottom"></span></span></p> <p> The exceptional group includes some leaders who managed remarkable performance in part due to unusual circumstances, for example, by guiding a company through bankruptcy proceedings and then returning it successfully to the public markets. It also includes CEOs who were able to deliver the highest returns through strategic repositioning and operational discipline over many years, within more normal industry and economic conditions. Overall, the exceptional CEOs were neither more nor less likely to be found in particular industries, to lead companies whose size differed from the mix in the broader S&P 500, or to join particularly high- or low-performing companies. Here are three lessons that emerged from close scrutiny of these exceptional leaders.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-md-span-12"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_2734c4f"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f"><div>Would you like to learn more about our <a href="/capabilities/strategy-and-corporate-finance/how-we-help-clients">Strategy & Corporate Finance Practice</a>?</div></h3></div></header><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f mck-c-disruptor1up__content Disruptor1Up_mck-c-disruptor1up__content--links__VV4lE mdc-u-grid-gutter-md"><a data-component="mdc-c-link" href="/capabilities/strategy-and-corporate-finance/how-we-help-clients/executive-immersions" class="mdc-c-link-cta___NBQVi_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Visit our C Suites page</span><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mck-link-arrow-right-icon"></span></a></div></div></div></div> <h2> The outsider’s edge</h2> <p> In our <a href="/featured-insights/leadership/how-new-ceos-can-boost-their-odds-of-success">earlier research</a>, we found that on average, CEOs who are hired externally tend to pull more strategic levers than those who come from within and outperform their internal counterparts over tenure. Our research on exceptional CEOs reinforced this finding: these CEOs are twice as likely to have been hired from outside the company as the average CEO in our data set (Exhibit 1), and roughly 1.5 times as likely to have been external hires as the other top-quintile CEOs.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mdc-u-grid mdc-u-grid-gutter-lg mdc-u-grid-col-sm-1 mdc-u-grid--align-start mdc-u-mb-3 GenericItem_mck-c-generic-item__sGwKL"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f mdc-u-grid-gutter-xs GenericItem_mck-c-generic-item__content__gq1m0"><div class="mck-c-eyebrow mdc-u-ts-10"><span> 1</span></div></div></div><div class="mck-u-inline-module-border-top mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/strategy%20and%20corporate%20finance/our%20insights/what%20makes%20a%20ceo%20exceptional/svg_qweb_ceo_exceptional_ex1.svgz?cq=50&cpy=Center"/><img alt="" src="/~/media/mckinsey/business%20functions/strategy%20and%20corporate%20finance/our%20insights/what%20makes%20a%20ceo%20exceptional/svg_qweb_ceo_exceptional_ex1.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p> Still, 55 percent of the exceptional CEOs were internal hires. Clearly, insiders can move aggressively and achieve outstanding results. Doing so often means cultivating an outsider’s point of view to challenge the company’s culture with greater objectivity and overcome the organizational inertia that sometimes limits an insider’s span of action.</p> <h2> Strategic actions</h2> <p> The findings offered additional insights on how CEOs may gain a clear-eyed perspective for action. In our sample as a whole, CEOs joining low-performing companies derived the biggest benefits from conducting a strategic review. Our exceptional CEOs did not join struggling companies in disproportionate numbers, but they were significantly (about 60 percent) more likely to conduct a strategic review in their first two years on the job versus the average CEO in our sample (Exhibit 2).</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mdc-u-grid mdc-u-grid-gutter-lg mdc-u-grid-col-sm-1 mdc-u-grid--align-start mdc-u-mb-3 GenericItem_mck-c-generic-item__sGwKL"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f mdc-u-grid-gutter-xs GenericItem_mck-c-generic-item__content__gq1m0"><div class="mck-c-eyebrow mdc-u-ts-10"><span> 2</span></div></div></div><div class="mck-u-inline-module-border-top mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/strategy%20and%20corporate%20finance/our%20insights/what%20makes%20a%20ceo%20exceptional/svg_qweb_ceo_exceptional_ex2.svgz?cq=50&cpy=Center"/><img alt="" src="/~/media/mckinsey/business%20functions/strategy%20and%20corporate%20finance/our%20insights/what%20makes%20a%20ceo%20exceptional/svg_qweb_ceo_exceptional_ex2.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p> Informed by this view of the company’s past—and potential future—performance, this elite group was bolder than other top-quintile CEOs, far surpassing them in the average number of strategic moves they made in their first year. Changing strategic direction typically requires <a href="/capabilities/strategy-and-corporate-finance/our-insights/how-to-put-your-money-where-your-strategy-is">freeing up resources</a>, often in part by cutting costs in lower-priority parts of the company. While cost-reduction programs are, according to our earlier research, a no-regrets move for all CEOs, the exceptional CEOs were significantly more likely to launch such initiatives than the average CEO, thereby building strategic momentum.</p> <h2> Organizational balance</h2> <p> In our research on CEOs overall, organization redesign appeared to be a critical part of the typical high-performing CEO’s tool kit, and management reshuffles were particularly important for CEOs taking over lower-performing companies. Our sample of exceptional CEOs, though, was less likely than the average CEO to undertake organizational redesign or management-team reshuffles in the first two years in office. This could be a function of the strategic game they were playing: they may have inherited high-performing companies (which can be hurt by reshuffles) or prioritizing, since there are only so many initiatives and changes that organizations and people can absorb in a short space of time. Indeed, since the exceptional group contained an above-average proportion of outsider CEOs launching fundamental strategic rethinks, the data may reflect a sequencing of initiatives, with structural change following strategic shifts.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-lg-span-4 mdc-u-grid-col-md-span-5 Disruptor1Up_mck-c-disruptor1up__image___2Gc4"><picture data-component="mdc-c-picture"><img alt="How new CEOs can boost their odds of success" src="/~/media/mckinsey/featured%20insights/leadership/how%20new%20ceos%20can%20boost%20their%20odds%20of%20success/ceo-transition-1536x1536.jpg?cq=50&mh=145&car=16:9&cpy=Center" loading="lazy"/></picture></div><div class="mdc-u-grid-col-lg-span-8 mdc-u-grid-col-md-span-7"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_2734c4f"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f"><div>How new CEOs can boost their odds of success</div></h3></div></header><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f mck-c-disruptor1up__content Disruptor1Up_mck-c-disruptor1up__content--links__VV4lE mdc-u-grid-gutter-md"><a data-component="mdc-c-link" href="/featured-insights/leadership/how-new-ceos-can-boost-their-odds-of-success" class="mdc-c-link-cta___NBQVi_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Read the article</span><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mck-link-arrow-right-icon"></span></a></div></div></div></div> <p> By definition, not all CEOs will be exceptional. Yet for any CEO starting a transition, there is much to learn from the best. Adopting an outsider’s view will yield the unbiased insights needed for breakthrough moves. Likewise, investing in a robust strategic review will provide a surer perspective for setting a strategic direction. A grounding in the organization’s context, meanwhile, will help calibrate the speed and scope of change. Those in our sample do much of this at the highest level, setting a benchmark for every CEO aspiring to a successful debut.</p> <p><em>Thriving in the C-suite: See the other</em> McKinsey Quarterly <em>articles in our special collection on how CEOs and top team members can become better leaders.</em><br/> <a href="/featured-insights/leadership/why-effective-leaders-must-manage-up-down-and-sideways">Why effective leaders must manage up, down, and sideways</a><br/> <a href="/capabilities/strategy-and-corporate-finance/our-insights/a-deal-making-strategy-for-new-ceos">A deal-making strategy for new CEOs</a><br/> <a href="/capabilities/strategy-and-corporate-finance/our-insights/how-functional-leaders-become-ceos">How functional leaders become CEOs</a></p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor-signup mck-o-lg-right-span mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-signup"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f"><h2 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-4 DisruptorSignUp_mck-c-disruptor-signup__heading__JR4i0"><div>Stay current on your favorite topics</div></h2></div><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--align-left"><a data-component="mdc-c-link" href="/user-registration/register-mvc" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--primary___Ed-lT_2734c4f mdc-c-button--size-large___jwpUy_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Subscribe</span></a></div></div></div><div class="container-placeholder"></div></div></div><div class="mdc-u-grid mdc-u-grid-gutter-xl"><section role="contentinfo" data-layer-region="article-about-authors" class="mdc-u-grid mdc-u-grid-col-md-12 AboutAuthor_mck-c-about-author__nRJzu"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-c-heading--title___5qyOB_2734c4f mdc-c-heading--border___K8dj3_2734c4f mdc-u-align-center"></h5><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_2734c4f mdc-u-ts-8 mck-u-links-inline mck-u-links-inline--secondary mdc-u-mt-5"><div><p><a href="/our-people/michael-birshan"><strong>Michael Birshan</strong></a> is a partner in McKinsey’s London office, where <strong>Thomas Meakin</strong> is an associate partner; <a href="/our-people/kurt-strovink"><strong>Kurt Strovink</strong></a> is a senior partner in the New York office.</p><p> The authors wish to thank Max Eskell, Madjdy Kassem, Devesh Mittal, and Blair Warner for their contributions to this article.</p></div></div></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 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exceptional","fields":null,"databaseName":"web","deviceId":"fe5d7fdf-89c0-4d99-9aa3-b5fbd009c9f3","itemId":"cd390e58-e6a0-45bf-8ae7-52dcc3981760","itemLanguage":"en","itemVersion":1,"layoutId":"ae753eb4-a035-40b4-83bf-4b4438df6742","templateId":"683910db-02ba-40ba-92e7-726c880160a9","templateName":"ArticleJSS","placeholders":{"jss-main":[{"uid":"232bb7e9-289f-492d-a916-2b6185e44a84","componentName":"ArticleTemplate","dataSource":"","fields":{"data":{"articleTemplate":{"title":{"jsonValue":{"value":"What makes a CEO ‘exceptional’?"}},"sEOTitle":{"value":""},"description":{"jsonValue":{"value":"We assessed the early moves of CEOs with outstanding track records; some valuable lessons for leadership transitions emerged."}},"sEODescription":{"value":""},"displayDate":{"jsonValue":{"value":"2017-04-10T00:00:00Z"}},"body":{"value":"[[DownloadsSidebar]] \u003cp\u003e\n\u003cstrong\u003eNew CEOs face\u003c/strong\u003e enormous challenges as they start assembling a management team and setting a strategic direction in today\u0026rsquo;s volatile environment. To provide some guidance for transitioning CEOs, we looked at the experiences of exceptional CEOs, those defined as the very top performers in our data set of roughly 600 chief executives at S\u0026amp;P 500 companies between 2004 and 2014.\u003c/p\u003e\n[[DisruptorSignUp left]]\n\u003cp\u003e\nOur focus was on the top 5 percent of the CEOs in our sample as a whole whose companies\u0026rsquo; returns to shareholders had increased by more than 500 percent over their tenure. We contrasted this group both with our full sample and with a subset of CEOs whose companies achieved top-quintile performance during their tenure as compared with their peers.\u003ca class=\"link-footnote\" rel=\"#footnote1\" href=\"#\" onclick=\"return false;\"\u003e\u003csup\u003e1\u003c/sup\u003e\u003c/a\u003e \u003cspan id=\"footnote1\" class=\"tooltip\" style=\"display: none;\"\u003e\u003cspan class=\"footnote-content\"\u003e\u003cspan class=\"footnote-number\"\u003e1.\u003c/span\u003e\u003cspan class=\"footnote-text\"\u003e\nWe ranked all CEOs by annualized total returns to shareholders (TRS), normalized for the performance of their broader industry. Those in the top quintile, the 120 highest-performing CEOs, achieved at least 9 percent TRS above industry cohorts each year they were CEO.\n\u003c/span\u003e\u003cspan class=\"clear\"\u003e\u003c/span\u003e \u003c/span\u003e\u003cspan class=\"footnote-bottom\"\u003e\u003c/span\u003e\u003c/span\u003e\u003c/p\u003e\n\u003cp\u003e\nThe exceptional group includes some leaders who managed remarkable performance in part due to unusual circumstances, for example, by guiding a company through bankruptcy proceedings and then returning it successfully to the public markets. It also includes CEOs who were able to deliver the highest returns through strategic repositioning and operational discipline over many years, within more normal industry and economic conditions. Overall, the exceptional CEOs were neither more nor less likely to be found in particular industries, to lead companies whose size differed from the mix in the broader S\u0026amp;P 500, or to join particularly high- or low-performing companies. Here are three lessons that emerged from close scrutiny of these exceptional leaders.\u003c/p\u003e\n[[Disruptor1UP dis1]]\n\u003ch2\u003e\nThe outsider\u0026rsquo;s edge\u003c/h2\u003e\n\u003cp\u003e\nIn our \u003ca href=\"/featured-insights/leadership/how-new-ceos-can-boost-their-odds-of-success\"\u003eearlier research\u003c/a\u003e, we found that on average, CEOs who are hired externally tend to pull more strategic levers than those who come from within and outperform their internal counterparts over tenure. Our research on exceptional CEOs reinforced this finding: these CEOs are twice as likely to have been hired from outside the company as the average CEO in our data set (Exhibit 1), and roughly 1.5 times as likely to have been external hires as the other top-quintile CEOs.\u003c/p\u003e\n[[exhibit 1]]\n\u003cp\u003e\nStill, 55 percent of the exceptional CEOs were internal hires. Clearly, insiders can move aggressively and achieve outstanding results. Doing so often means cultivating an outsider\u0026rsquo;s point of view to challenge the company\u0026rsquo;s culture with greater objectivity and overcome the organizational inertia that sometimes limits an insider\u0026rsquo;s span of action.\u003c/p\u003e\n\u003ch2\u003e\nStrategic actions\u003c/h2\u003e\n\u003cp\u003e\nThe findings offered additional insights on how CEOs may gain a clear-eyed perspective for action. In our sample as a whole, CEOs joining low-performing companies derived the biggest benefits from conducting a strategic review. Our exceptional CEOs did not join struggling companies in disproportionate numbers, but they were significantly (about 60 percent) more likely to conduct a strategic review in their first two years on the job versus the average CEO in our sample (Exhibit 2).\u003c/p\u003e\n[[exhibit 2]]\n\u003cp\u003e\nInformed by this view of the company\u0026rsquo;s past\u0026mdash;and potential future\u0026mdash;performance, this elite group was bolder than other top-quintile CEOs, far surpassing them in the average number of strategic moves they made in their first year. Changing strategic direction typically requires \u003ca href=\"/capabilities/strategy-and-corporate-finance/our-insights/how-to-put-your-money-where-your-strategy-is\"\u003efreeing up resources\u003c/a\u003e, often in part by cutting costs in lower-priority parts of the company. While cost-reduction programs are, according to our earlier research, a no-regrets move for all CEOs, the exceptional CEOs were significantly more likely to launch such initiatives than the average CEO, thereby building strategic momentum.\u003c/p\u003e\n\u003ch2\u003e\nOrganizational balance\u003c/h2\u003e\n\u003cp\u003e\nIn our research on CEOs overall, organization redesign appeared to be a critical part of the typical high-performing CEO\u0026rsquo;s tool kit, and management reshuffles were particularly important for CEOs taking over lower-performing companies. Our sample of exceptional CEOs, though, was less likely than the average CEO to undertake organizational redesign or management-team reshuffles in the first two years in office. This could be a function of the strategic game they were playing: they may have inherited high-performing companies (which can be hurt by reshuffles) or prioritizing, since there are only so many initiatives and changes that organizations and people can absorb in a short space of time. Indeed, since the exceptional group contained an above-average proportion of outsider CEOs launching fundamental strategic rethinks, the data may reflect a sequencing of initiatives, with structural change following strategic shifts.\u003c/p\u003e\n[[Disruptor1UP dis2]]\n\u003cp\u003e\nBy definition, not all CEOs will be exceptional. Yet for any CEO starting a transition, there is much to learn from the best. Adopting an outsider\u0026rsquo;s view will yield the unbiased insights needed for breakthrough moves. Likewise, investing in a robust strategic review will provide a surer perspective for setting a strategic direction. A grounding in the organization\u0026rsquo;s context, meanwhile, will help calibrate the speed and scope of change. Those in our sample do much of this at the highest level, setting a benchmark for every CEO aspiring to a successful debut.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eThriving in the C-suite: See the other\u003c/em\u003e McKinsey Quarterly \u003cem\u003earticles in our special collection on how CEOs and top team members can become better leaders.\u003c/em\u003e\u003cbr /\u003e\n\u003ca href=\"/featured-insights/leadership/why-effective-leaders-must-manage-up-down-and-sideways\"\u003eWhy effective leaders must manage up, down, and sideways\u003c/a\u003e\u003cbr /\u003e\n\u003ca href=\"/capabilities/strategy-and-corporate-finance/our-insights/a-deal-making-strategy-for-new-ceos\"\u003eA deal-making strategy for new CEOs\u003c/a\u003e\u003cbr /\u003e\n\u003ca href=\"/capabilities/strategy-and-corporate-finance/our-insights/how-functional-leaders-become-ceos\"\u003eHow functional leaders become CEOs\u003c/a\u003e\u003c/p\u003e\n[[DisruptorSignUp full-width]]"},"isFullScreenInteractive":{"boolValue":false},"hideStickySocialShareBar":{"boolValue":false},"desktopID":{"value":""},"mobileID":{"value":""},"desktopURL":{"value":""},"mobileURL":{"value":""},"desktopPaddingPercentage":{"value":""},"mobilePaddingPercentage":{"value":""},"desktopOverrideHeight":{"value":""},"mobileOverrideHeight":{"value":""},"cerosOembedURL":{"value":""},"cerosRenderMode":{"targetItem":null},"cerosBackgroundColor":{"targetItem":null},"hideByLine":{"boolValue":false},"tableOfContentsTitle":{"value":"TABLE OF CONTENTS"},"accessStatus":{"targetItem":{"key":{"value":"RegisteredUsers"},"value":{"value":"Registered Users"}}},"articleType":{"targetItem":{"displayName":"Article"}},"hasSpecialReport":{"boolValue":false},"contentType":{"targetItem":{"displayName":"Article"}},"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly","displayName":"McKinsey Quarterly","title":{"value":"McKinsey Quarterly"},"relatedlinks":{"url":"/quarterly/overview"},"landinglinks":{"jsonValue":{"value":[]}}}},"externalPublication":{"value":""},"mobileReady":{"boolValue":true},"forClientsOnly":{"boolValue":false},"excludeFromClientLink":{"boolValue":false},"originalPublishDate":{"jsonValue":{"value":"2017-04-10T00:00:00Z"}},"footnotes":{"value":""},"contributoryPractice":{"targetItems":[]},"aboutTheAuthors":{"value":"\u003cp\u003e\u003ca href=\"/our-people/michael-birshan\"\u003e\u003cstrong\u003eMichael Birshan\u003c/strong\u003e\u003c/a\u003e\u0026nbsp;is a partner in McKinsey\u0026rsquo;s London office, where \u003cstrong\u003eThomas Meakin\u003c/strong\u003e is an associate partner;\u0026nbsp;\u003ca href=\"/our-people/kurt-strovink\"\u003e\u003cstrong\u003eKurt Strovink\u003c/strong\u003e\u003c/a\u003e is a senior partner in the New York office.\u003c/p\u003e\u003cp\u003e\nThe authors wish to thank Max Eskell, Madjdy Kassem, Devesh Mittal, and Blair Warner for their contributions to this article.\u003c/p\u003e"},"authors":{"targetItems":[{"template":{"id":"3FBABDB63A094F68B1F8E1BBE1BA124E","name":"Author"},"id":"D32AF5E00B32488BBB2E0F21E6F99B0E","name":"Michael Birshan","authorTitle":{"value":"Michael Birshan"},"description":{"value":"Global coleader of our Strategy \u0026 Corporate Finance Practice, partnering with bold and determined leaders to set strategy, transform organizations, and deliver sustainable value"},"thumbnailImage":{"alt":"","src":null},"profile":{"targetItems":[{"standardImage":{"src":"/~/media/mckinsey/our people/michael birshan/michael birshan_8840_fc-mask_profile_1536x1152.png","alt":""},"emailLinks":{"value":"Michael_Birshan@mckinsey.com"},"linkedInUrl":{"value":"https://www.linkedin.com/in/michaelbirshan"},"description":{"value":"Global coleader of our Strategy \u0026 Corporate Finance Practice, partnering with bold and determined leaders to set strategy, transform organizations, and deliver sustainable value"},"locations":{"targetItems":[{"name":"London","displayName":"London"}]},"firmTitle":{"value":"Senior Partner"},"thumbnailImage":{"alt":"","src":"/~/media/mckinsey/our people/michael birshan/michael birshan_8840-1_fc-mask.png"},"url":{"path":"/our-people/michael-birshan"}}]}},{"template":{"id":"3FBABDB63A094F68B1F8E1BBE1BA124E","name":"Author"},"id":"86FF4EB381314F16AED9FAB412DDDFE4","name":"Tom Meakin","authorTitle":{"value":"Tom Meakin"},"description":{"value":""},"thumbnailImage":{"alt":"","src":null},"profile":{"targetItems":[{"standardImage":{"src":"/~/media/mckinsey/our people/thomas meakin/meakin_tom_01_print_fc-mask_profile_1536x1152.png","alt":"Thomas Meakin"},"emailLinks":{"value":"Thomas_Meakin@mckinsey.com"},"linkedInUrl":{"value":"https://www.linkedin.com/in/thomas-meakin/"},"description":{"value":"Serves technology, media, and telecoms companies on their most challenging strategic, commercial, and operational issues."},"locations":{"targetItems":[{"name":"London","displayName":"London"}]},"firmTitle":{"value":"Senior Partner"},"thumbnailImage":{"alt":"Thomas Meakin","src":"/~/media/mckinsey/our people/thomas meakin/meakin_tom_01_print_fc-mask_headshot_988x741.png"},"url":{"path":"/our-people/thomas-meakin"}}]}},{"template":{"id":"3FBABDB63A094F68B1F8E1BBE1BA124E","name":"Author"},"id":"22150E04C301498988477B6C139A0195","name":"Kurt Strovink","authorTitle":{"value":"Kurt Strovink"},"description":{"value":""},"thumbnailImage":{"alt":"","src":null},"profile":{"targetItems":[{"standardImage":{"src":"/~/media/mckinsey/our people/kurt strovink/kurt strovink-17431_fc-mask_profile_1536x1152.png","alt":""},"emailLinks":{"value":"Kurt_Strovink@mckinsey.com"},"linkedInUrl":{"value":"https://www.linkedin.com/in/kurt-strovink-70372316a/"},"description":{"value":"Leads our global CEO Initiative to help build great CEOs and CEO counselors and the New York office as its managing partner; serves life insurance, asset and wealth management, property and casualty, and health insurance companies on strategy, finance, organization, and enterprise transformation. "},"locations":{"targetItems":[{"name":"New York","displayName":"New York"}]},"firmTitle":{"value":"Senior Partner"},"thumbnailImage":{"alt":"","src":"/~/media/mckinsey/our people/kurt strovink/kurt strovink-17431_fc-mask_headshot_988x741.png"},"url":{"path":"/our-people/kurt-strovink"}}]}}]},"nonPartnerAuthors":{"targetItems":[]},"interactiveToUse":{"targetItem":null},"enableArticleComponents":{"boolValue":false},"relatedArticles":{"targetItems":[{"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"How new CEOs can boost their odds of success"},"url":{"path":"/featured-insights/leadership/how-new-ceos-can-boost-their-odds-of-success"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"A data-driven look at the link between the strategic moves of new CEOs and the performance of their companies highlights the importance of quick action and of adopting an outsider’s perspective. \n"},"standardImage":{"src":"/~/media/mckinsey/featured insights/leadership/how new ceos can boost their odds of success/ceo-transition-1536x1536_standard.jpg","alt":"CEO-Transition-1536x1536_Standard"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"CEO transitions: The science of success"},"url":{"path":"/capabilities/strategy-and-corporate-finance/our-insights/ceo-transitions-the-science-of-success"},"eyebrow":{"targetItem":{"name":"Podcast"}},"articleType":{"targetItem":{"name":"Podcast"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"New CEOs are faced with a bewildering array of choices, so it’s crucial for them to take a data-driven look at potentially major moves—and to know when to make them."},"standardImage":{"src":"/~/media/mckinsey/business functions/strategy and corporate finance/our insights/ceo transitions the science of success/ceo-transitions-the-science-of-success-1536x1536_standard.jpg","alt":"CEO-transitions-the-science-of-success-1536x1536_Standard"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":null},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"Ascending to the C-suite"},"url":{"path":"/featured-insights/leadership/ascending-to-the-c-suite"},"eyebrow":{"targetItem":{"name":"Survey"}},"articleType":{"targetItem":{"name":"Survey"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"A new McKinsey survey finds that executives who move effectively into the C-suite are communicating priorities, valuing their teams, spending time on culture, and understanding their unique leadership role."},"standardImage":{"src":"/~/media/mckinsey/featured insights/leadership/ascending to the c suite/c level_transitions_1536x1536_original.jpg","alt":"C-level_Transitions_1536x1536_Original"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"Making the most of the CEO’s \u003ci\u003elast\u003c/i\u003e 100 days"},"url":{"path":"/featured-insights/leadership/making-the-most-of-the-ceos-last-100-days"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"For the sake of their companies—and their legacies—departing chief executives should leave things in the best possible shape. 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