What makes a successful CEO?

The CEO arguably has more potential for influence than anyone else in a company. But maximizing the role’s potential is extremely difficult. Just thinking about the responsibilities is enough to trigger spontaneous exhaustion. The CEO is tasked with forming a company’s strategies and then marshaling the resources to deliver on them. And while other C-suite officers and employees help execute strategy, the CEO stands alone as the person ultimately responsible for its success or failure. What the CEO controls typically accounts for 45 percent of a company’s total performance.

But these days, the role is more difficult—and important—than ever. Industries are being transformed at a pace not seen before, and business leaders need to predict and respond to those changes with quicker-than-ever decision making.

Not everyone succeeds. Just three in five newly appointed CEOs live up to performance expectations in the first 18 months on the job. And only one in 12 companies moves from being an average to a top-quintile performer over a ten-year period.

But even as the times change, some fundamentals of leadership remain the same. According to our decades of work in the field and resulting insights, we know that CEOs will always be asked to set the direction, align the organization, and mobilize leaders within a company. They’re going to have to deal with boards of directors and manage stakeholders. And they have to manage themselves in a way that achieves and maintains consistent excellence.

McKinsey leaders have interviewed hundreds of CEOs and studied performance data on thousands more. We’ve published a number of leading articles, reports, and podcasts on the subject—as well as the 2023 bestselling book CEO Excellence. In this Explainer, we lay out the fundamentals of what it takes to succeed in the top job.

Learn more about McKinsey’s Strategy & Corporate Finance Practice.

So you want to be CEO. What are four key pieces of advice?

Since Edmund Hillary and Tenzing Norgay first summited Mount Everest in 1953, only approximately 6,300 people have followed. In that same period, we estimate that 1,000 fewer people have made it to the top of Fortune 500 companies. Statistically speaking, you’re more likely to be struck by lightning.

That doesn’t stop people from wanting the top job. It’s the most sought-after—and powerful—title in business. If you’re willing to take on the odds, there are four pieces of advice that will help you land the corner office—and when you do, serve successfully.

• Take a gut check of your motivations and expectations. “If the main reason you want to have the CEO title is for ego, that’s unlikely to be a sustainable motivator over time,” says former Cincinnati Children’s Hospital Medical Center CEO Michael Fisher. If you’re driven by a passion and vision for how you can help others climb further and faster to achieve new heights collectively, you’ll be more likely to succeed as CEO.
• Elevate your perspective while boldly delivering results. The best CEO candidates are able to deliver on their day jobs while stepping back and honing their view of the future, the company, and the company’s stakeholders. In both arenas, fortune favors bold action. (See more on boldness later.)
• Round out your profile with humility. Humans are predisposed to view their own actions favorably or interpret events in a way that’s beneficial to themselves. Aspiring CEOs should cultivate the humility to recognize their inherent biases and counteract them. They can do this by objectively assessing their capabilities versus what’s needed, filling their skill gaps, and refusing to play politics.
• Understand the CEO selection process and put your best foot forward. The final stages of CEO selection are likely to be stressful. Knowing what to expect can help you make the best impression. Preparation is the most important component—but don’t underestimate the power of authenticity. Landing a job you’re not able to do won’t work for anyone.

But the corner office isn’t the end of the journey. Once CEOs get settled in, the work has just begun.

How can CEOs lead their companies from average to outstanding performance?

Let’s be perfectly clear: taking a company from average to outstanding isn’t easy, and it’s not likely to happen. Many CEOs set a direction for their company based on increased investment in the most solid business cases. But research shows that strategies promising the hockey stick effect—an initial dip during the early months accounting for investment, followed by a steady rise in performance—often fail to deliver.

But just because it’s not easy doesn’t mean it’s impossible—and there are concrete things you can do to increase the odds. Based on analysis of our proprietary database, which contains 25 years’ worth of data on almost 8,000 CEOs from 70 countries and 24 industries (our database goes beyond those who led the Fortune 500 companies referenced above), we found that the most effective CEOs adhere to 18 practices, divided into six key areas of the job.

Beating the odds

• Vision: reframe what winning means. The most effective CEOs boldly reframe the definition of success by, for instance, adjusting the goal from being the top player in the industry to being in the top quartile of all industries.
• Strategy: make bold moves early. Making one or two bold moves more than doubles the likelihood of rising from the middle quintiles of economic profit to the top quintile. Making three or more bold moves makes such a rise six times more likely.
• Resource reallocation: stay active. Companies that reallocate more than 50 percent of their capital expenditures among business units over ten years create 50 percent more value than companies that reallocate less actively. In our interviews with CEOs for CEO Excellence, we didn’t find a single executive who felt they had been too active in reallocating resources.

Organizational alignment

• Talent: match talent to value. The best CEOs take a methodical approach to matching the best talent with roles that create the most value. Equally important, they move quickly on addressing low performers in key roles when it’s clear a change is needed.
• Culture: go beyond employee engagement. CEOs who insist on rigorously measuring and managing all cultural elements that drive performance more than double the odds that their strategies will be executed. They also deliver triple the total shareholder returns that other companies do. The best CEOs home in on one cultural aspect that could make the biggest difference to business performance.
• Organizational design: combine speed with stability. Excellent CEOs increase their companies’ agility by determining which features of their organizational design will be stable and creating dynamic elements that adapt quickly to new challenges and opportunities.

Team and processes

• Teamwork: show resolve. Successful CEOs quickly adjust team composition, which can involve making hard calls to remove likeable low-performers and disagreeable high-performers. They also put conditions in place for each team member to be successful, while maintaining distance to objectively judge and act on performance.
• Decision making: defend against bias. No one is immune to cognitive and organizational bias—not even CEOs. Excellent CEOs try to minimize the effect of biases by ensuring they have a diverse team and striving for more objective group reasoning approaches, which have been shown to improve decision quality.
• Management processes: ensure coherence. Management processes too often work at cross-purposes. Excellent CEOs should require executives to implement processes that mutually reinforce central priorities.

Board engagement

• Effectiveness: promote a forward-looking agenda. CEOs should use their boards as a resource, channeling board members’ energies individually and collectively beyond traditional fiduciary responsibilities. CEOs should neither resist the board as a knee-jerk reaction nor blindly follow every suggestion.
• Relationships: think beyond the meeting. Establishing good relationships and a tone of transparency allows the CEO to build trust and clearly delineate responsibilities between management and the board. Purposeful meetings in individual board members’ home environments can help CEOs work through topics that might be difficult for a larger group to address. Excellent CEOs also promote connections between the board and top executives, which gives both parties a more complete picture of the business’s performance and goals.
• Capabilities: seek balance and development. CEOs can guide the board to help the business by ensuring it comprises people with relevant and diverse expertise and experience. When new board members join, CEOs can help improve the board’s effectiveness by providing a thorough onboarding program and creating learning opportunities on topics such as technology, emerging risks, competitors, and macroeconomic shifts.

External stakeholders

• Social purpose: look at the big picture. The best CEOs spend time thinking about, articulating, and championing the purpose of their company as it relates to the big-picture outcomes of day-to-day business practices.
• Interactions: prioritize and shape. Excellent CEOs systematically prioritize and schedule interactions with their companies’ external stakeholders and use these experiences to motivate action.
• Moments of truth: build resilience ahead of a crisis. Most crises follow predictable patterns, even though each may feel uniquely unsettling. The best CEOs create crisis response playbooks to prepare for the worst.

Personal working norms

• Office: manage time and energy. CEOs’ energy is just as important as their time. Maintaining—and renewing—their energy levels allows CEOs to set a marathon pace rather than a sprint pace that could lead to burnout. The most successful CEOs quickly establish an office that can help conserve their energy, often including at least one highly skilled executive assistant and a chief of staff, to help them spend their time doing work only CEOs can do.
• Leadership model: choose authenticity. CEOs are people too. The best among them balance the reality of what they should do in their role with who they are as humans and what they personally want to achieve. By expressing their intentions as part of the rationale for their decisions and actions, CEOs can minimize the risk of unintended interpretations being amplified in unhelpful ways. One consumer goods CEO told us, “You are speaking through an extraordinary amplification system. The slightest thing you do or say is picked up on by everyone in the system and, by and large, acted on.”
• Perspective: guard against hubris. The best CEOs form a small group of trusted colleagues to provide unfiltered advice—including the kind that sometimes hasn’t even been asked for. They also keep in touch with rank-and-file employees. And, finally, they remind themselves that this role is temporary and does not define them.

Learn more about McKinsey’s Strategy & Corporate Finance Practice.

Why is boldness critical to CEO success?

Based on empirical research and interviews with approximately 7,800 top CEOs, the authors of the McKinsey book CEO Excellence found that boldness is an important predictor of excellence. And time is of the essence on boldness: “if you’re not bold in that first year, you’re not going to move the needle,” says McKinsey senior partner Vikram Malhotra.

What does boldness mean? According to CEO Excellence, it means thinking differently about what is and isn’t under your control. You probably have control over more than you think. Even if, for example, you’re the CEO of an organization in an industry facing low growth with certain adverse trends, adaptation to those trends is always possible to some extent. In conversation with CEOs, we’ve seen chemical companies become life sciences companies and old-energy companies become clean-energy companies.

How should a CEO plan for their first year?

“No one is prepared to become CEO, no matter how much they think they are,” says Bill George, former CEO of Medtronic. “You have to grow into the job.”

So it’s a trial by fire. Accepting that, it is possible to make a plan for your intense first year in the job. Given that more than 90 percent of CEOs say they wish they had managed their transition differently, thinking carefully about this plan can be the most important thing you do. CEO transitions are opportunities for institutional renewal—remembering this can help new CEOs get into the mindset of transformational change, rather than simply try to keep the organization afloat.

Each leader will act according to their unique situation. But there are at least four common ingredients for success in your first year.

Don’t make it about you. The sudden attention and power can distort reality. The best CEOs don’t let this happen. Instead, they keep their minds focused on the institution. For example, instead of asking, “What legacy will I leave?,” try “What organizational purpose do I serve?” Rather than “How will I know if I’m successful?,” ask “How will we know if we’re winning?”

Listen, then act. The most successful leaders in a transition know that it’s best to listen and find out what’s really going on before making broad declarations or premature moves. This ethos translates into four practices: start with a broad-based listening tour; create a fact-based, single version of the truth; lock in a short list of bold moves; and communicate those moves in a simple, engaging manner.

Nail your firsts. You never get a second chance to make a first impression. It’s an old saying, but no less true today than it ever was. Get your first impression right by understanding what motivates people, keeping to a single narrative, erring toward complete candor, and preparing intensely for moments of truth (like the first board meeting and first quarterly earnings report).

Play ‘big ball.’ Spend your time on things no one else can do—this magnifies your effectiveness while preventing you from getting bogged down. It also prevents you from overextending yourself, a common pitfall for new CEOs.

Learn more about McKinsey’s Strategy & Corporate Finance Practice.

So you’ve succeeded in your first years of being a CEO. How can you avoid complacency?

Let’s say you’ve done all the right things early in your role. You set a bold vision, pursued strategic moves, put the right talent and accountability mechanisms in place, gained the trust of your stakeholders, and focused your time on what matters—and as a result, you’ve started strong and are riding high a couple years into your tenure.

You’re not out of the woods yet. It’s during this middle stretch that you’re most likely to lose focus. It can be hard to recognize complacency in ourselves. But it’s easy to see—and usually a nasty shock—when competitors that you thought were behind are actually now ahead of you.

Take it from Jamie Dimon of JPMorgan Chase, one of the most successful and influential CEOs of the 21st century. In 2012, after Dimon’s first few knockout years in the role, JPMorgan Chase was hit with a trading loss of approximately $6 billion. “The biggest lesson I learned,” said Dimon at the time, is “don’t get complacent, despite a successful track record.”

So, how to avoid complacency? Based on our continued research and experience, four steps can greatly increase the odds of sustaining high performance.

• Enhance your learning agenda. In their early days, successful CEOs learn a lot—and then apply their learnings to shape strategy. But the prize you should keep your eye on is making every year better than the previous one. To do this, CEOs need to keep learning—both from external stakeholders and from the people who work for them (at all levels of the organization).
• Take an outsider’s perspective. Every year, CEOs refresh their strategy. But the best CEOs periodically do thorough analyses of all aspects of their businesses, in the same way they did when they first took the role—as though they were coming in from the outside with fresh eyes. This can be more difficult than it sounds: it’s natural to be biased toward our pet projects rather than look at them with the critical eye needed to make necessary changes. But striving for objectivity is critical for CEOs to be able to challenge received wisdom.
• Collaboratively define the next S-curve. An S-curve reflects how a strategy is applied over time. At first, there’s a period of slow initial progress as the initiatives are launched. That’s followed by a rapid ascent as the strategy comes to fruition, and then by a plateau where the value of the initiatives has largely been captured. A new CEO typically puts in place a plan to achieve an S-curve. When the CEO has gotten comfortable, it’s probably time to think about a new growth plan for the company. The best CEOs work with their executive teams and the next level of management to put together a plan for the next S-curve, and don’t let the first S-curve last longer than useful.
• Future-proof the organization. A crisis can end the tenure of an otherwise great CEO. Or it can be harnessed to propel the company to greater heights. Those who achieve more positive outcomes prepare for crises well before they happen. Future-proofing also means building the strength of your company’s talent bench, including succession planning for your own role.

Learn more about McKinsey’s Strategy & Corporate Finance Practice. And check out corporate strategy-related job opportunities if you’re interested in working at McKinsey.

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Articles referenced:

• “Staying ahead: How the best CEOs continually improve performance,” McKinsey Quarterly, May 25, 2023, Carolyn Dewar, Scott Keller, Vikram Malhotra, and Kurt Strovink
• “Four steps to success for new CEOs,” April 10, 2023, Carolyn Dewar and Gautam Kumra
• “Stepping up: Becoming a high-potential CEO candidate,” McKinsey Quarterly, March 6, 2023, Carolyn Dewar, Scott Keller, Vikram Malhotra, and Kurt Strovink
• “Starting strong: Making your CEO transition a catalyst for renewal,” McKinsey Quarterly, November 17, 2022, Carolyn Dewar, Scott Keller, Vikram Malhotra, and Kurt Strovink
• “Author Talks: What separates the best CEOs from the rest?,” December 15, 2021, Carolyn Dewar, Scott Keller, and Vikram Malhotra
• “The mindsets and practices of excellent CEOs,” October 25, 2019, Carolyn Dewar, Martin Hirt, and Scott Keller
• “What makes a CEO ‘exceptional’?,” McKinsey Quarterly, April 10, 2017, Michael Birshan, Thomas Meakin, and Kurt Strovink