Share
FacebookFacebook icon TwitterTwitter icon LinkedInLinkedIn icon Email

Technology

Beyond Bezos: Amazon’s prime movers face a tricky transition

Published 5 July 2021 in Technology ‚ÄĘ 7 min read

Jeff Bezos will find the move from CEO to Chairman of the Board far from easy. Didier Cossin and Michael Watkins offer advice on avoiding the pitfalls. 

As Jeff Bezos is soon to learn, the qualities that make a great CEO do not necessarily make a great Chairman of the Board (hereafter Chair), even when a leader like Bezos has previously played both roles. As Andy Jassy takes the helm as CEO of Amazon, Bezos would do well to reflect on how focusing purely on being Chair is quite a different game. 

For a start,¬†it’s¬†not easy to give¬†up the¬†CEO¬†role¬†and focus exclusively on being¬†Chair.¬†Why?¬†Because many¬†CEOs¬†struggle to¬†stop wielding executive power¬†and¬†“over-manage”¬†the new CEO, setting up potentially dysfunctional battles¬†over influence¬†and decision-making.¬†This is not surprising, given that executive ability¬†and the need to¬†“run the show”¬†is¬†what gets CEOs to the top¬†in¬†the¬†first place.¬†That’s¬†why many corporate governance experts consider¬†it inadvisable to¬†move from¬†CEO to non-executive¬†Chair¬†in the same company.¬†¬†

However, some great Board Chairs (think of Peter Brabeck at Nestlé) have successfully navigated this transition. These leaders have the flexibility to shift roles and avoid falling into the control trap. Every executive becoming non-executive Chair needs to learn to let go while remaining ultimately responsible. This is, for example, something that Phil Knight struggled with in working with his first CEO at Nike, William Perez. He subsequently made it work with Mark Parker, who became the long-lasting CEO (and is now Chair).  

However, there is a second, more subtle reason why CEOs often struggle with the transition: success in the role requires a very different set of leadership skills. The implication is that great CEOs can be mediocre Chairs and, interestingly, average CEOs can be great Chairs. Indeed, some who barely made the CEO job came into their own leading the Board.  

 

Understand the qualities of great Chairs 

Moving from an executive to a governance role requires a different style altogether, one which allows for support, supervision, and co-creation while jointly setting high-level objectives. Based on our research and extensive experience, great Chairs are: 

Able to subordinate their¬†egos.¬†Effective¬†Chairs¬†accept that the CEO is¬†the¬†company’s¬†public face and are¬†willing to cede the limelight¬†to¬†operate effectively in the¬†background. Another reason¬†why¬†this is important is that¬†Boards tend to work better when¬†members¬†feel¬†that they are¬†roughly¬†on the same level.¬†This means that effective¬†chairs¬†operate more as¬†first-among-equals¬†and less as¬†“leader-in-charge.”¬†

Graceful in the exercise of power. Effective Chairs have authority but rarely resort to using it. This is important because most legitimate authority comes from the Board as a body rather than from any individual. They act as agenda-setters, promotors of constructive dissent, builders of authentic consensus, and the voice of the Board, and not as authoritative leaders. 

Dedicated to ensuring success in the long run. They keep the management team focused on the one to five-year time frame, and the Board focused on the five to 10-year time frame or beyond. Some can even have a 25 year, cross-generational focus (for example, in family businesses and sovereign wealth funds).  

Stewards of their companies. Effective Chairs embody and defend the core values of their organizations. They set the tone on the Board, steer the development of the vision and strategic framework, shape the culture, and establish the constraints within which the CEO can operate. They thrive for continuous improvement and rejuvenation of skills on the Board and beyond to ensure adaptability and agility for long-term survival.  

Able to work in tandem¬†with the CEO.¬†They understand that the CEO and the¬†Chair¬†should be¬†complementary roles, not competing ones.¬†They establish¬†boundaries¬†(more and more in writing to ensure clarity)¬†and empower the CEO and the management team to operate within them. They¬†monitor the¬†CEO’s¬†performance¬†(at least via the appropriate committees)¬†and¬†act as a sounding¬†board. Critically they¬†foster the trust and rich¬†communication¬†required to make the role split work.¬†¬†


Make the right role decisions 

Chairs are, of course, not all alike, and neither are the circumstances they face. The implication is that the Chair needs to be thoughtful in deciding how to play the role. Three key decisions are whether to: 

Supervise or support. Of course, every Chair needs to monitor the CEO’s performance through appropriate reporting, auditing, and supervision. But they need to explicitly decide whether, to what extent, and how they will provide support in the form of coaching and/or mentoring. Indeed, depending on the context the organization is in, simple, complex, or chaotic, and depending on the readiness and maturity of the CEO, the Chair needs to tune his or her role.  

Be passive or active. The relationship between the Chair and the CEO is quite different if the Chair enacts an active role in the company. Being active can mean representing the company in dealings with external stakeholders in ways that the CEO cannot, connecting with the parts of society that are less on the radar screen of the management team, or simply less reachable.  Critically, however, it doesn’t mean engaging as an immediate decision-maker.  

Focus more on the inside or the outside. Given limited time, where should the Chair focus his or her attention? If an internal strategy is well established, a restructuring is required, or a culture transformation underway, the Chair will focus more on internal issues, engaging in supervision or support depending on the need.  In a well-aligned, finely-tuned organization, the need to deal with external issues related to technology, regulation, political instability, and social transformation will lead the Chair to have more outside focus.  

 

Manage the transition 

Like all challenging transitions, it’s essential to get off to a strong start. Here are some things new Chairs can do that help: 

Require world-class transition support. To make the process of shifting roles as efficient and effective as possible, both the new Chair and the CEO must have an excellent transition support process. This includes gaining alignment on roles, setting ground rules and operating principles (for example, concerning escalation and communication.) 

Get a mentor. If the CEO’s job is lonely, the role of the Chair is lonelier still. By the nature of the role, the Chair cannot develop trusted-advisor relationships with members of the executive team or with key external advisors who work with the company. Advice from experienced Chairs is invaluable in helping to avoid common traps, make sound decisions, and navigate Board politics through the transition and beyond. Mentors need not come from within the same industry or region. 

Cultivate a network of advisors. Considering the small size of their team, the successful Chair relies on expert advice on board renewal, strategic reviews, M&A, and more. He or she is keenly aware of advisors’ potential conflicts of interest and finds ways to manage them to serve the firm better. Great Chairs often rejuvenate their Board to ensure skills are fresh and focused. One Chair of a 200 billion+ company told one of us he was rotating the HR consultant for Board search every two to three years, as “the advisor very soon starts playing his own game in board nominations”. Another chair recruited a famous investment bank solely to help with the mechanics of a successful 70 billion transaction but still used extensively the advice of a niche firm (fewer than 20 employees) with whom he had a trusted relationship. 

Get and stay educated. Board work is evolving rapidly, and new best practices are being developed almost daily. Excellent governance has become a competitive advantage, and investors look at it more and more as a differentiator. It’s therefore essential for Chairs to stay current on the latest and best thinking on core topics. 

Ensure there is a best-in-class support system. The Board secretary has become a discrete but essential asset for large organizations. Rigorous, efficient Board processes have become critical to organizational resilience. Despite their relative isolation, Chairs must not be tempted by the do-it-alone syndrome. While your team has now extended far beyond the staff (and even beyond the Board members), the secretary is an excellent anchor to have within.  

Understanding and embracing the requisite leadership, making the right decisions about roles, and managing the transition well doesn’t guarantee that a CEO will move successfully to Chair. Not doing so, however, is a recipe for needless struggle and perhaps even derailment.  

Authors

Didier Cossin

Didier Cossin

Founder and director of the IMD Global Board Center, the originator of the Four Pillars of Board Effectiveness methodology and an advocate of Stewardship.

Didier Cossin is the Founder and Director of the IMD Global Board Center, the originator of the Four Pillars of Board Effectiveness methodology, and an advocate of stewardship. He is the author and co-author of books such as Inspiring Stewardship, as well as book chapters and articles in the fields of governance, investments, risks, and stewardship, several of which have obtained citations of excellence or other awards. He is the Director of the High Performance Boards program and the Mastering Board Governance course.

Michael Watkins - IMD Professor

Michael D. Watkins

Professor of Leadership and Organizational Change at IMD

Michael D Watkins is author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 11 other books on leadership and negotiation. A Thinkers 50-ranked management influencer and recognized expert in his field, his work features in HBR Guides and HBR’s 10 Must Reads on leadership, teams, strategic initiatives, and new managers. He taught at Harvard, where he gained his PhD in decision sciences, and INSEAD before joining IMD, where he directs The First 90 Days and Transition to Business Leadership programs.

Related

Locked door

My never-ending war on the Internet parasites

24 November 2022 ‚ÄĘ by Peter Bauer in Magazine

Peter Bauer, co-founder and‚ÄĮCEO of the cybersecurity company Mimecast, reflects on his company‚Äôs acquisition by‚ÄĮprivate equity firm‚ÄĮPermira for $5.8 billion, what keeps him motivated after two decades, and why his native South...

  • Audio availableAudio available
How to square the circle on sustainability

How to square the circle on sustainability

17 November 2022 in Magazine

Companies that integrate sustainability into their core strategy at the highest level will be better placed to reap long-term value for the benefit of shareholders and society alike. ...

Learn Brain Circuits

Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
 
Read more 

Explore Leadership

What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
 
Read more

Join Membership

Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.
 
Sign up

You have 4 of 5 articles left to read.