The Life Cycle of a CEO

the most successful corporate leaders share a secret: their effectiveness comes not from being naturally gifted, but from understanding how leadership demands evolve over time. this is because each phase of a ceo’s tenure brings different challenges, requiring new skills and fresh perspectives. in other words, long-term success as a ceo depends on recognizing and adapting to these changing demands.

this chapter reveals the five distinct phases every corporate leader must navigate. you’ll gain practical insights into how leadership requirements shift over time, and how to prepare for each new stage. what’s more, this understanding will help you develop the adaptability and foresight needed to thrive in executive leadership, whether you’re just starting out or already established in your role. 

sounds good? alright, let’s get started.

the myth of the natural-born ceo is just that – a myth. while business media loves to portray corporate leaders as visionary heroes who emerge fully formed, ready to revolutionize industries, the reality is far more nuanced. this became clear after the authors, claudius a. hildebrand and robert j. stark, conducted their research of over 2,000 ceos. the results showed that great leaders are never born – they’re forged through a predictable cycle of challenges and transformations.

one such ceo is dave cote of honeywell. in 2002, wall street had written him off completely. he wasn’t the board’s first or second preferred candidate – in fact, he was their sixth. no elite education, previously fired from ge, none of the charismatic flair you’d expect. yet by 2017, honeywell’s share price had soared 245 percent, dramatically outperforming the market. cote’s secret? he understood that successful leadership is about more than having all the right qualities on day one – it’s effectively going through distinct stages, each demanding different capabilities.

this evolution follows five clear phases, and understanding them can transform your approach to leadership. it begins with the launch stage – that hugely important first year where everything flows through you like an hourglass. even seasoned executives find themselves starting fresh, as every decision, both internal and external, demands their attention. 

then comes calibration in year two, when initial optimism meets hard reality. years three through five bring reinvention, where you can finally begin driving real transformation. but watch out for the complacency trap in years six through nine – this is where even successful leaders must fight against the gravity of their own success. if you make it to year ten, you’ve reached the legacy stage, where you’ll face the complex challenge of driving growth while preparing your organization for succession.

cote’s journey perfectly illustrates how to navigate these phases. during launch, he ignored pressure for dramatic action, instead taking time to understand honeywell’s operational dna. this patience built the credibility he needed during calibration to implement deeper changes. by reinvention, he had earned enough trust to transform honeywell’s entire operating system – something that would have failed spectacularly in his early days.

whether you’re leading a manufacturing giant or a tech startup, this pattern holds true. the key is recognizing that different phases require different versions of you. success isn’t just maintaining a single leadership style – it’s growing into each new challenge as it emerges. in the following sections, we’ll explore in detail how you can navigate each of these distinct phases, giving you the tools to recognize and adapt to each stage’s unique demands.

while the launch phase follows a predictable pattern, experiencing it firsthand is anything but routine. those first days in the ceo’s chair combine exhilaration with intense pressure – imagine drinking from a firehose while walking a tightrope. the weight of responsibility hits immediately: you’re suddenly the focal point where every major decision must flow through.

when carol tomé took the helm at ups in june 2020, she faced this exact challenge. despite serving on the company’s board for 17 years, she quickly discovered hidden operational issues that weren’t visible from the boardroom. rather than pretending to have all the answers, she took a dual approach: she implemented quick operational fixes while deeply immersing herself in learning about the company’s culture and challenges. she donned the iconic brown uniform and worked alongside delivery drivers, demonstrating both humility and a commitment to understanding frontline realities.

but perhaps the most crucial early challenge is managing the board relationship. it’s important to nvest time early in one-on-one relationships with board members. charles lowrey, ceo of prudential financial, made it a priority to have individual meals with every board member in their hometowns. building personal connections with board members transformed the dynamic, creating a more comfortable and effective working relationship in formal settings.

the early days present a unique opportunity that shouldn’t be squandered. there’s typically a honeymoon period where stakeholders are more open to change. data shows that firms on average outperform the s&p 500 by 10 percent in a ceo’s first year. however, this initial enthusiasm can be a double-edged sword – 73 percent of ceos who enjoyed a honeymoon period saw lower results in their second year.

you can maximize this period by focusing on three key areas. first, establish transparent communication channels throughout the organization. make it clear that you want to hear about problems, not just successes. second, evaluate your executive team swiftly but fairly. many ceos regret waiting too long to make necessary changes to their leadership team. finally, articulate a clear, compelling vision that can rally the organization. when larry merlo took over at cvs, he distilled the company’s verbose mission statement into one powerful phrase: “helping people on the path to better health.”

the first year as ceo requires both immediate impact and strategic foundation-building for the future. the momentum you build during this year will help navigate future challenges. remember – great leaders start by asking smart questions, absorbing insights from across the organization, and taking deliberate action based on these learnings. your role demands leadership from day one, even as you grow into the position.

after navigating your launch phase, you’ll face two distinct challenges: calibration, where you fine-tune your approach and build credibility, followed by reinvention, where you drive deeper transformation. both stages require different skills and mindsets, and understanding how to navigate them is imperative for your long-term success.

after the initial honeymoon period, you’ll likely face what’s known as the sophomore slump – a phenomenon where performance often dips in year two. this isn’t unique to business – we see it in music, sports, and academia. but understanding this pattern is vital for your future success.

take larry merlo’s experience at cvs. in his second year, despite making solid operational improvements, the market’s enthusiasm cooled significantly. share price growth dropped from 104 percent to just 1.8 percent. yet merlo didn’t let this deter him. instead, he used this calibration period to develop deeper insights into the business and lay groundwork for major strategic shifts.

the key is to avoid overreacting to market overreaction. when analysts and investors press for immediate results, remember they often lack understanding about the time required to produce meaningful change. your job isn’t to dance to their quarterly tune, but to build sustainable value. hubert joly demonstrated this at best buy. when the company’s share price cratered by a third in one day after missing holiday sales targets, he stayed focused on his long-term strategy of enhancing the in-store experience.

as you move into the reinvention phase, typically years three through five, you must leverage your earned credibility to drive bigger changes. this is when you fully own the strategy and can push for more ambitious transformation. mary barra at gm exemplifies this – after spending her first two years handling urgent issues like the ignition switch crisis, she launched a bold strategy to transform gm into an electric vehicle leader.

this is done by balancing the pace of change. you can’t outrun your organization’s capacity to execute, but you also can’t fall behind market evolution. this requires what’s called informed intuition – combining data analytics with pattern recognition and experience. remember, this period isn’t about maintaining the status quo. instead, you’re going to use your deepened understanding of the business to drive meaningful transformation. whether you’re pivoting strategy like cvs’s move into healthcare services, or accelerating existing initiatives like best buy’s digital transformation, success requires both vision and precise execution.

the most successful ceos use this phase to reinvent not just their companies, but themselves, developing new skills and perspectives needed for the next level of growth. your ability to evolve personally while driving organizational change will largely determine whether you emerge from these crucial years positioned for sustained success.

after successfully navigating the intense early phases of leadership – from the initial launch through calibration and reinvention – ceos typically enter the complacency trap, the critical fourth phase around years 6 to 10 of their tenure. as we mentioned earlier, this phase is when even the most successful leaders face their greatest test: maintaining momentum after achieving significant wins.

research across s&p 500 ceos reveals a striking pattern: performance often declines during this phase, with two out of three ceos showing lower results across key metrics compared to their first five years. revenue growth slows, operational efficiency decreases, and innovation often stagnates. it’s not that these leaders suddenly become less capable – rather, their very success creates new vulnerabilities.

consider the cautionary tale of blockbuster. under ceo john antioco’s leadership, the company achieved remarkable success, transforming from a struggling business in 1997 to an industry powerhouse by 2004. revenue and profits soared. yet this very success reinforced antioco’s confidence in maintaining the status quo, leading him to initially dismiss the threat from netflix’s innovative delivery model. by the time blockbuster finally decided to compete in online streaming, it was too late.

the antidote to this phase’s challenges lies in maintaining what’s known as productive paranoia. take piyush gupta at dbs bank, who recognized the dangers of complacency just as his bank was being celebrated as asia’s best. rather than resting on his laurels, he set an even more ambitious goal of becoming the world’s best bank and initiated a complete digital transformation. he turned dbs into a “twenty-thousand-person startup,” launching regular hackathons and setting a goal of conducting one thousand experiments annually.

to make sure you come out of this phase successfully, you need structured ways to challenge your assumptions. consider establishing regular “x days” on your calendar – days with no meetings, dedicated purely to contemplating new ideas and opportunities. create formal debates within your organization where teams argue both for and against potential changes. most importantly, actively seek external perspectives through board service at other companies, engagement with critics, and regular interaction with customers.

remember – maintaining momentum during this phase doesn’t mean constant radical change. instead, your focus should be on creating systems that force you to regularly question your assumptions and look at your organization with fresh eyes. success should be a platform for future innovation, not a reason to become complacent. the moment you start believing your own press releases is the moment you become vulnerable to disruption.

if you’ve successfully navigated the first four phases of your ceo journey – from the intense early days of launch through calibration, reinvention, and even the treacherous complacency trap – congratulations. you’ve already accomplished what many leaders never do. but now you face what might be the most nuanced challenge of all: the legacy phase. this final phase is all about mastering a unique balancing act: how do you maintain your organization’s momentum while preparing it for the day you’ll no longer be at the helm?

take mastercard’s ajay banga, who orchestrated one of the most successful succession plans we’ve seen in recent corporate history. over a decade, he methodically prepared his organization for life after his departure. but here’s what made banga’s approach special – he didn’t just focus on picking his successor. he built an entire pipeline of leadership talent, ensuring the company would thrive not just in the next chapter, but for generations to come.

the most successful ceos in their legacy phase strengthen the foundation for future growth. mark brown at sazerac spent eight years preparing for his departure, but during that time, he also launched some of the company’s most ambitious expansion projects. he knew that the best legacy is about leaving behind an organization capable of building even greater things.

you might be wondering how to apply these insights to your own leadership journey. so, start by asking yourself three crucial questions: first, are you building systems that can outlast your tenure? second, are you actively developing the next generation of leaders? and third – perhaps most importantly – are you prepared to let go when the time comes?

the most successful transitions happen when ceos understand that their legacy isn’t measured by how indispensable they’ve become, but by how well the organization can thrive without them. this means creating robust processes, nurturing future leaders, and building a culture that can evolve beyond your personal influence.

your ultimate goal here is to build something that will continue to grow and evolve long after you’ve moved on. the most successful ceos in their legacy phase don’t see themselves as the culmination of their company’s story, but as a crucial chapter in an ongoing narrative. and perhaps most important of all, they understand that true leadership is about preparing others to take the reins and lead the organization to even greater heights.

in this chapter to the life cycle of a ceo by claudius a hildebrand and robert j stark, you’ve learned that successful ceos aren’t born with innate leadership abilities – they develop through five distinct phases that shape their journey and effectiveness.

the journey begins with the launch phase, where new ceos must navigate their crucial first year while establishing credibility and direction. this leads to the calibration phase, where leaders fine-tune their approach and weather the inevitable sophomore slump. during the reinvention phase, ceos leverage their earned trust to drive meaningful transformation. the fourth phase presents the complacency trap, where even successful leaders must fight against the gravity of their own achievements to maintain momentum. 

finally, the legacy phase challenges ceos to prepare their organizations for continued success beyond their tenure. throughout each stage, the most effective leaders recognize that different phases require different versions of themselves, and they consciously adapt their leadership style to meet these evolving demands. success comes not from maintaining a single approach, but from growing into each new challenge as it emerges.

okay, that’s it for this chapter. we hope you enjoyed it. if you can, please take the time to leave us a rating – we always appreciate your feedback. see you in the next chapter.