What are the secrets of companies that produce excellent CEOs?

Famous big companies like General Electric, IBM, Procter & Gamble and McKinsey have always been regarded as the factories that produced CEO in history. In fact, from 1992 to 20 10, 20.5% of all CEOs appointed by Standard & Poor's 1500 index companies came from 36 CEO factories, of which General Electric was the largest. The sheer brand influence of these companies usually helps their executives to be placed at the top of the search list. But now, GE is managed by outsiders, IBM's performance is mixed, and P&G has experienced a difficult "re-appointment" in the process of taking over as CEO. Now, we must go beyond the brand to explore replicable practices that can be used by the board of directors, CEO and HR team to strengthen their leadership.

It is easy to think that big companies have an advantage in cultivating talents. As part of the genetic research of ghSMART CEO, we found that some unexpected companies have produced a large number of excellent CEOs. In addition, the CEOs produced by these companies often have good performance, which is attributed to the leadership development practice plan adopted by the companies to some extent. We predict that there are more than a dozen "invisible CEO factories" in different industries and regions; These companies include Medtronic, Rohm and Haas and Danaher.

Before Larry Culp, a former employee of Danaher, took over GE, Danaher's outstanding performance in scientific innovation was not known to the public. Rohm and Haas (merged with Dow Chemical in 2009) is highly respected in the chemical industry, but it has not yet reached the point of household name. However, both companies have produced dozens of successful CEOs. More importantly, the performance of the company led by the leader who once served as CEO of Rohm & Haas or Danaher is 67% higher than that of the companies run by other CEOs.

The success of these invisible CEO factories benefits from three particularly important practices-these are completely different from the popular methods we see in many big companies today. These practices have important guiding significance for the board of directors, CEO and CHRO to train successors. These practices also provide useful guidance for those who wish to grow up.

1. Give leaders broad powers.

Contrary to the complex matrix management structure commonly adopted by large companies today, the invisible CEO factory gives the general manager a wide range of roles and powerful decision-making power. As Raj Gupta, former chairman, CEO and president of Rohm and Haas, said, "In the early days of their careers, we put the general manager in charge of manufacturing, sales, research and development, supply chain and asset management. These are real CEO jobs, responsible for the entire income statement and balance sheet, and making major decisions with minimal guidance from the company. "

Ceos from Rohm and Haas and Danaher, on average, spent nearly half their career in the leadership position of the income statement before becoming CEO for the first time, which provided them with valuable experience in running a business. Andy Sil Fenayre joined IDEX from Danaher, and created more than $9 billion in value for shareholders during his tenure as CEO. He said: "In Danaher, I broke even in the first June after I graduated from business school. This is a highly decentralized environment. When you are in your thirties, there will be many real business opportunities. The responsibility has reached this point, and you must make an early decision. "

Giving wider decision-making power is an important factor in cultivating future CEO. Our CEO gene research shows that the CEO who is given a high degree of decision-making power is more likely to succeed than others 12 times.

2. Encourage them to think like CEO.

Invisible CEO factories have forced their leaders to think like CEOs from the beginning-paying attention to indicators and stakeholders directly related to value creation.

The managers of Danaher are trained to give priority to cash, return on working capital and occupy a strong competitive position in the market with growth prospects. Therefore, the CEOs who came out of Danaher wisely chose the high-quality enterprises they wanted to operate and acquire. For example, Scott klausen is a successful CEO. The value of his first company (GSI, an agricultural equipment company with a market value of $800 million) quadrupled, while the return of his second company (Culligan, a water treatment company with a market value of $500 million) more than tripled. Scott told us that under Danaher's training, he has completed more than 35 acquisitions, which helps to consolidate the company's competitive position and increase the shareholder value of hundreds of millions of dollars.

Rohm and Haas formed a sense of responsibility for five key stakeholders ("five voices" in company jargon) among his leaders: customers, employees, investors, communities and processes. In most companies, only senior leaders can integrate this broad vision into daily decision-making.

"At Rohm and Haas, you were taught very early to evaluate every decision from the perspective of five voices," said Pierre Brondo, a former employee of Rohm and Haas and now the CEO of FMC. "This prepares you for the position of CEO-consider which stakeholders you are responsible for. This is not to please the boss, but to let stakeholders do the right thing. " Pierre successfully applied these principles during his tenure as CEO, which increased the value of Fumeishi company by five times.

In our CEO gene research team, leaders who can effectively interact with stakeholders and produce results are more likely to become successful CEOs.

3. Take advantage of plenty of opportunities to train excellent people as early as possible.

The invisible CEO factory takes young managers into unknown areas and only needs a little support. Raj said: "We bet on people and push them forward at an early stage." As an executive of Rohm & Haas pointed out, "Raj is very happy to see candidates other than obvious high-level candidates, who are often in lower-level positions."

For example, in the late 1990s, Raj made a bet on Carol Eicher, a relatively inexperienced young manager, to lead a Saudi joint venture with a market value of $654.38 billion, which was the first time Rohm and Haas did so. He did not hesitate to invite Carol to negotiate this important and complicated transaction, which was bigger than any business department of Rohm and Haas at that time, because he believed that the young man had the acumen to succeed. Carol successfully established a joint venture company and became a successful CEO, which brought four times the return to investors.

Our research shows that these types of bold bets ("professional catapults") help to greatly improve the ability of leaders. The CEO who came out of the invisible CEO factory has more such professional experience than the average CEO. One-third of all the CEOs we analyzed had similar experiences, but almost all the CEOs who came out of the invisible factory had this experience at least once, of which 79% had it twice and 37% had it three or more times.

The CEO's commitment is crucial.

In order to benefit from these methods, the CEO must take developing leadership as his top priority.

Raj Gupta said that he agreed with these practices and made them his top priority, which helped him cultivate 16 successful CEOs during his tenure at Rohm Haas, including IlhamKadri, who is now the second CEO of Solvi, a chemical company headquartered in Brussels with a market value of1/.

Kadri said, "As a young manager, I only worked in Rohm and Haas for a few months. During the financial crisis in 2008, I was responsible for completing a major acquisition in Russia. Then, I was appointed as the first female general manager in the Middle East and Africa, leading Rohm and Haas technology transfer in the United Arab Emirates and investing heavily in Saudi Arabia. These opportunities brought me many challenges early in my career. I have to face many unknown things and make decisions on various issues, which is a good training for training to become a CEO. "

Using the three methods here to train excellent leaders does not require a large-scale training budget. They need leadership values and a corporate structure that can truly empower and take risks. Most importantly, they demand, not obey, the company infantry.