GPM First

Opinion

Project managers have the skills to become CEOs, so why don’t they?

Guest Editor, Antonio Nieto-Rodriguez, investigates what skills and competencies are needed to make it into the chief executive officer’s chair, and tries to resolve the riddle of why so few project managers make it to the very top.

It is well known among the project management community that there is a glass ceiling in the career path of project managers (PMs). Only a tiny proportion have the opportunity to reach the top of the corporate ladder and land the chief executive officer (CEO) job. In my Guest Editorial, I will prove – for the first time – that PMs have all the skills and competencies to make it into the CEO’s chair, and assess some of the reasons why, currently, few PMs get there.

 

PMs are some of the best candidates to be CEO, because to carry out their usual work PMs have to bring together all the disparate aspects of theory, reality, vision, process, finances, value, politics and human nature to create successful outcomes. PMs often manage projects that cross all organisational functions and get to see the organisation as a whole entity rather than from the ‘siloed’ view of a particular functional programme.

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 PMs 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 programme manager, portfolio manager, PMO. I also don’t make a distinction on the projects types, obviously the larger the project (i.e. infrastructure initiative) the closer the PM is to the CEO role.)

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, so it 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 PMs who 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 revitalisation and business improvement programme. Under Klaus’s leadership, SMC was transformed from a small corporate cost centre 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 defence industry. While on his way up the corporate ladder, Kent Kresa, from Northrop, had a stint as a PM for some of the firm’s major programmes, for instance.

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 PM 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, which, as you will see later in my 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, Jørgen 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 maximising 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, analysed the characteristics of nearly 4,000 executives, including over 130 CEOs, and they found nine attributes as key differentiating factors:

  • Forward thinking – the ability to plan for the future
    1. Forward thinking: plans ahead and is prepared for the future
  • Intrepid – the ability to perform effectively in complex and difficult environments
    1. Calculated risk taking: is comfortable taking calculated but not careless risks
    2. Biased towards (thoughtful) action: is biased towards execution but not too impulsive
    3. Optimistic: actively and optimistically pursues new opportunities
    4. Constructively tough-minded: is thick skinned and perseverant but not insensitive
  • Team building – the ability to achieve success through others
    1. Efficient reader of people: seeks to understand different perspectives but does not overanalyse
    2. Measured emotion: displays intensity/emotion but maintains control
    3. Pragmatically inclusive: involves others in decisions but also is an independent decision maker
    4. Willingness to trust: is comfortable with a variety of people, but is not too trusting.

 

What’s so different about being a PM?

Working in a business as a PM 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 in to a leadership position. As a business PM 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 PMs 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 PM are categorised into the following three areas:

  • Project management core skills. These skills include planning, organising, managing risks, anticipating issues and coordinating the work
  • Technical expertise. Technical knowledge gives the PM the creditability 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 programme 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 PM will actually meet all the nine CEO attributes, which proves one of my starting assumptions: PMs should, in principle, be considered CEO material!

List showing that a good PM will actually meet all the nine CEO attributes

 

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 recently heard 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.

 

Can you increase your chances of becoming CEO?

As well as the core skills that PMs will develop through their career (which, as we have seen, represent a very solid basis to have the potential of becoming a CEO) here are the additional skills you should develop in order to make it happen:

  1. You need to have a vision to create something that can generate recurring revenues and growth to the organisation
  2. You need to be results-driven and focus on delivering the benefits and impact of the project. A common path to CEO is through sales which is also a results-driven environment, but those who bring in revenue will always be more visible. Plus, successful sales often requires navigating the prospect’s political environment to close the deal
  3. Assume profit and loss responsibilities beyond your projects. That can be done by gaining business unit (line) management experience
  4. Increase your organisational intelligence competencies. In general, the best PMs are often not the most popular people in the company. Although they have diplomatic skills, they don't jeopardise their project objectives or deadlines just to be nice to people. If they have to get things done, sometimes they leave a few heads on the road … and they don’t spend lots of time doing internal politics
  5. Don’t neglect the ‘soft’ skills, including charisma, political prowess and strategic vision, and continuous education in complementary disciplines, such as psychology, finance, sales and marketing. I always say that one of the best combinations of growing into a successful CEO are to have completed an Master in Business Administration (MBA) and to be able to deliver successful projects
  6. Last but not least, develop your entrepreneurial skills. The ability to take risks, drive, inspire others and so on are often required to become a successful corporate leader.

 

In summary – you have the skills to make it to the top, be confident in yourself, keep learning and spend time understanding the business.

 

The biggest hurdle for most PMs is understanding that it’s not just about planning and organisational skills; you have to really embrace strategic planning, sales and marketing. You need to understand how the business runs – the key value drivers, the history, the products and services, the market, the competition – as well as being a visionary, looking around corners and putting your ear to the ground.

And it is important to distinguish between ‘running the business’ and ‘changing the business’. Usually the work of PMs is around the latter. However, the most important side of the business is always the running. It is not until a PM understands how a company runs and how the projects he/she manages impact the organisation that they start to be recognised as a potential leader. (I explore the concept further in my book, The Focused Organization.)

 

Does it matter to organisations?

I believe that organisations would be more successful if they were led by experienced all-round business-minded PMs. Not so long ago, one of the key differentiators of success in an organisation would be strategic thinking and strategic planning capabilities. Today, in our fast-changing world, one of the key drivers of success is strategy execution: the ability and speed of implementing new ideas, new products and new services while keeping the business running. 

 

Please let me know what your thoughts are in the GPMFirst forum, or post a comment below. Did you feel like a CEO when you were managing your last project? If not, why not? Have you tried to become a CEO and failed? Or succeeded? What skills would you need to develop to become the next CEO in your organisation?

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