The seesaw of corporate succession — a “time zero” event

When the top leadership of an organization changes, boards often make decisions that seem sensible, but which may not reflect the pattern that made a company successful to begin with. A major reason is that the heir apparent to a highly successful CEO often has quite different skill sets.

CEO change — more transient, and expensive, than ever

Just as companies face the phenomenon of transient advantage, so too apparently do CEO’s. According to a recent study by Equilar, the median tenure of CEO’s in the S&P 500 “has decreased 20% from six years in 2013 to 4.8 years in 2022. Although the average tenure also decreased during this period, the decline was comparatively modest. In 2013, average CEO tenure stood at 7.6 years, and by 2022, it had dropped slightly to 7.2 years. While this represents a 5.3% drop, the contrast between the median and average tenure is worth noting.” As the researchers point out, a few long-tenured and successful CEO’s skew the average number upward, while the typical CEO doesn’t make it for long. An example of a long-lived and also highly successful CEO is Jensen Huang, the CEO of Nvidia, who has been in the role for over 30 years, despite the dramatic upheavals of the industry the firm operates in.