The CEO’s secret to successful leadership: CEO Excellence revisited

In March 2022, McKinsey senior partners Carolyn Dewar, Scott Keller, and Vikram Malhotra launched CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest (Scribner/Simon & Schuster, March 2022), a New York Times and a Wall Street Journal best-selling book that revealed the characteristics of the world’s most successful leaders. The authors studied nearly 8,000 CEOs across the globe and across various sectors to determine what set these leaders apart from the rest. Through detailed interviews with 67 successful CEOs, they uncovered the mindsets, approaches, and practices that informed their leadership styles and delivered powerful results.

Since 2022, CEO Excellence has gone on to sell more than 161,000 copies and is being translated into 14 languages. To commemorate the second anniversary of this international business bestseller, McKinsey Global Publishing leader Raju Narisetti sat down with Dewar, Keller, and Malhotra once again. In this retrospective, the authors revisit their journey of writing the book and reflect on its global impact. They also offer more practical insights for CEOs and aspiring leaders who are eager to excel in an increasingly challenging operating environment. An edited version of the first installment of this three-part conversation follows. Be sure to check back next week for the second part of the discussion, which will focus on the authors’ personal reflections and on their latest research.

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Defining successful leadership

Remind our audience: Why did the three of you set out to write this book?

Scott Keller: We tell a little story at the beginning of the book about when it dawned on us that we should write it. But beneath that story are three things that we recognized. One is that this is a very important role. All the research conducted by some of our colleagues for a book called Strategy Beyond the Hockey Stick, which came before ours, suggested that high-performing CEOs and the high-performing companies they led dramatically outperformed the others.

If you are a company that has stayed in the top quintile of performance for more than ten years, you have 30 times the value creation for your stakeholders than the next three quintiles combined. They call it “the power curve.” That’s a lot of extra value created.

Second, there’s a lot of research on the CEO effect. The CEO effect essentially looks at, “How much do the actions a CEO takes affect company performance?” The research suggests that, over the past 50 years, the importance of what the CEO does for a company’s performance has increased twofold.

There are 70 million people who work for the top 2,000 companies in the world. It touches an incredible amount of souls and lives. When you think about the ethical, social, and environmental impact of big companies, you start to say, “That’s really important.” That’s a big deal. Then, you say, “Well, how are we doing as leaders in the role of the CEO?” And then you get to the statistics that say, “Two in five CEOs within 18 months of taking the role are struggling. One in three, after three years, are asked to leave.”

There’s some data that suggests that 60 percent of CEOs feel like they’re making it up as they go, because the role is one you can’t really prepare for. It’s one you’ve never had before. The third realization is this: “What is out there to help CEOs excel in this really important role?”

Sure, there are biographies from CEOs, and they’re well written. But they’re typically exciting because of a combination of personality, business context, and unique situation. They’re hard to generalize.

Then there’s work done by academics, which tends to be very descriptive. There’s work done by headhunters, which tends to be very trait-based: What traits do you need to have to become a CEO? But there are very few handbooks that ask, “How do I do the role well?” Those were the things that made us say, “Look, it’s an important role. It’s really hard. There’s not a lot of help out there. Why not McKinsey, and why not us to help fill that void?” To fill that void, we said, “We’re going to do two things.” First, we want to really clarify, “What is the role of a CEO?,” because we couldn’t go to a source and get the answer to that. Second, and most importantly, we want to answer, “What is it that separates the best from the rest?”

To do that, we had to first identify, “Who are the best?” We had our own methodology for that, which was rigorous, and it took into account a number of factors, not just financial performance, but social, ethical, and environmental impact.

We wanted a group that had been tenured—so they had to “eat their own cooking,” so to speak—and that had been in the role for a long time. We wanted those who had won the approval of their shareholders and stakeholders. We also wanted a very diverse group. So our methodology was adjusted to make sure we had geographic, ethnic, racial, and gender diversity.

We ended up with 200 CEOs who we felt represented the best CEOs of this century to date. We then said, “Let’s get a statistically valid sample of them, interview them, and try to understand what separates the best from the rest.”

What did we actually find? Well, if you say to us, “What is the role of a CEO?,” we’re now crystal clear on what that is. We would say the irreducible core of the role consists of six things you will need to do:

1. set the direction
2. align your organization on that direction
3. mobilize your leaders to deliver on that direction
4. work with your board
5. connect with a group of stakeholders
6. manage your personal effectiveness

Whether you’re a great CEO or not, these are the six roles of a CEO. Six feels like a lot, but it’s a big job, and it’s a hard job, as we just described. I think all of our CEOs looked at that list and said, “You know what? That’s a good taxonomy.”

Then we had to answer the question, “What separates the best from the rest?” We started asking a lot of questions about what these CEOs did. There weren’t a lot of patterns that emerged. We then adjusted our approach using a technique called laddering. In operations, the technique is essentially the equivalent of what they call the “five whys.”

In operations, if a machine stops working, you say, “Why?” Well, the engine burnt out. Why? Because it overheated. Why? Because it didn’t get enough ventilation. Why? Because it was too close to the wall. Now we know the root cause, and we don’t just change the motor. We actually move the machine away from the wall. When applied to leadership, the laddering technique takes you from actions and behaviors to just how people think about the world and about their mindsets.

When we began that form of inquiry, we started to see concrete patterns of, “Ah, this is how this group of excellent CEOs thinks about direction setting. This is how they think about aligning the organization.” The power of mindsets is pretty profound.

To articulate the six mindsets that separate the best from the rest, you need to say, “What is it about direction setting? How do these leaders approach it? What do they think about it that causes them to act? What predisposes them to act in a certain way?”

Imagine you get handed the keys to drive an organization that’s worth $30 billion and has 20,000 employees. It would be easy to have a mindset that says, “OK, discretion is the better part of valor here. Do no harm is the first thing that I need to think about,” and to be relatively conservative.

Our CEOs did not have that mindset. They had the opposite mindset, which was, “Be bold. Fortune favors the bold.” They were consistently considering, “How do we take the next step, that change in performance?” We describe a lot of what they did that comes out of that. But “Be bold” was the mindset that really separated the best from the rest.

On the topic of aligning your organization, we often link to the Einstein quote of not everything that counts can be counted. I think people get that. When you think about organization, culture, talent, and more, people often think of that Einstein quote.

It matters, but it’s hard to count. We call it soft. Our CEOs didn’t think about it that way. The CEOs we interviewed said, “We’re going to put the same level of rigor and discipline into the ‘soft’ stuff that we put into all of our financial and operational work.”

They found ways to do that, because they had the mindset that said, “We will put rigor and discipline into the soft stuff.” Very powerful.

As for mobilizing leaders—the team and leaders that are close to you—the CEOs considered dynamics. They thought less about the mechanics of, “What do we meet on, with whom, and when,” and a lot more about, “What is the psychology of our team?” It was about dynamics, not mechanics. Are people showing up as what I would call thermostats, not thermometers?

It’s easy to show up and report what’s going on, in the way a thermometer would. But to actually do things that change the outcome is what you want in your leaders. Are people showing up as “we” versus “me”? They think about the psychology on a number of dimensions and work on that psychology. That’s more about where they put their time rather than the mechanics of how to run the team.

A lot of CEOs see their board as, “My job in relation to my board is to help them do their fiduciary duties.” Our CEOs? “My job as CEO is to help the board help the business.” Regarding stakeholders, it was less about thinking of the actions in relation to stakeholders and more about the motivations.

It begins with the why. Reed Hastings [cofounder and chairman of Netflix] gave a great, simple example of this. He said, “When I talk to the media, I know they want to be truth tellers. That’s why they got into the job. But they also have to be entertainers, because that’s how they get cut-through on their stories.

“So when I talk to the media, I understand their why. I understand what they’re solving for. And I give ‘em a bit of both. And I then get cut-through on what I want, which is the message to get through for Netflix.” So starting with why versus starting with what, who, when, or where is very important when it comes to stakeholders.

Finally, in terms of personal effectiveness, you are accountable for everything. It would be easy to have the mindset that says, “I need to do anything that needs to be done around here.” Our CEOs did not have that mindset toward their role.

They said, “I need to do what only I can do as the CEO and with the capabilities I have.” They were very focused on areas where they would get involved and delve more deeply, rather than letting themselves get spread thin in a way that adds very little value to other leaders and to the company. So that’s the answer as far as the six roles of the CEO and the mindsets that separate the best from the rest.

The book was the first time you put it all together: the audience is CEOs and aspiring CEOs. What was the response?

Carolyn Dewar: The response has been tremendous. It really has. Maybe even surprisingly so to us, to our colleagues, and to others, in terms of people’s openness and willingness to learn and share.

There could be a myth out there that, “Well, they’re CEOs. They must all be perfect already. They already know what they’re doing.” This opened the conversation that these are hard jobs. There’s volatility in the world right now, too.

It’s OK if we don’t all have all the perfect answers. There are some truths based on the data, on some insights, and on some patterns in terms of what mindsets work well. But I found that people were really excited to engage in questions like, “What does that mean for me? How do I learn? What does that look like?” I found this to be true even for—and perhaps less surprisingly so—folks who aspired to the role, who are trying to look ahead and say, “What do I need to do?”

This is the case for new CEOs in the role who are going up a very quick learning curve and trying to juggle all kinds of things. It’s even the case for those who’ve been in the role for a long time. When we played it back to the 67 high performers we interviewed, for example, Satya Nadella [Microsoft CEO and executive chairman] and Jamie Dimon [Chase CEO), all these folks who’ve been in the role for many, many years, they saw something in it, too.

Seeing it written out that way, even the six elements of the role, there was recognition that prompted, “Wow, I’ve never seen it laid out that way. And now that I see it that way, I understand why I’m so tired, why this job is so hard, why it’s so important.”

There was a broad recognition that the insights resonated and that they were true, but then there was a real hunger to engage and have hundreds of one-on-one conversations asking, “What does this mean? How do I think it through? How can I apply this in the day-to-day?”

The part that has made me most excited is actually seeing all of the versions that people have created. Tons of folks have shared in real time or have sent us photos of the crib sheets that they’ve created—or the worksheets, or the thing that they’re now using as a bookmark.

The idea that there are these CEOs around the world who are now using this book in their back pocket as a practical tool really makes you realize that you are never too seasoned in the role to learn. That message has really resonated.

I guess there’s a reason why the book shows up in a Netflix documentary.

Vik, you’ve spent a lifetime listening to CEOs and then talking to them. What was the response?

Vik Malhotra: One thing of the many things that surprised me was that I thought we were writing the book for either current or aspiring CEOs. It really has turned out to be a book about leadership.

There are a lot of people in an organization who have the aspiration to be a leader. It may not just be the CEO. It could also be the business unit head or a CXO [chief experience officer]. They’re eager to learn the leadership lessons here, too. They may realize that they may not end up having to do everything these great CEOs do. But there are plenty of learnings in there, particularly if you run through the list of dimensions. This is certainly true when it comes to setting the direction, aligning the organization, mobilizing through leaders, and managing the effectiveness of your own personal operating model.

Those four dimensions resonate with anyone who has an aspiration to be a leader. You get into more CEO-like territory when you start working with the board or begin dealing with a broader range of stakeholders.

I was very inspired by the fact that at least two-thirds of the book resonated with anyone who wanted to be a leader. They were grasping for lessons, frameworks, and ideas. They loved the stories. So when someone like Ajay Banga [president of World Bank Group] says, “You know, I boiled my vision down to two words, which is kill cash,” they say, “Oh, my God. It can be that simple,” right?

Of course, there are lots of cascading elements that come off it. But they understood the boldness. It’s one thing for a consultant to tell leaders, “Be bold.” It’s another thing when they actually see practical examples of people who’ve done it. They see the success play out, market cap, company growth, and societal impact.

There’s a large group of people out there who just want to be leaders, but not necessarily CEOs. Yet they got a lot out of this book. Then there was the next group, who were the aspiring CEOs. It might be a step or two away, sometime in the next three to five years.

There were brand-new CEOs as well. They were hungry for a framework for thinking about their role. They were hungry to learn actions they might take: “Here are some things I can do about being bolder in my direction tomorrow,” or “Here are things that I can do in terms of shaping one element of my culture better,” or “Here are some actions I can take on talent.”

I’d say the more tenured CEOs were a mixed bag. There were clearly people who got the joke that, “If you’re going to be a CEO for nine years, there are probably three S-curves here.” They were eager to learn in terms of, “OK, if I’m approaching my three-year point, what does it mean to be bold, given what I’ve done relative to the go-forward picture?”

But there were others who were actually quite comfortable in their skin. They felt like they understood the role. That was OK, too. I haven’t quite done the math yet on whether their companies ended up in a better spot than the others. One day, we’ll do that. Once in the role for a while, some CEOs are very inquisitive, but there are others who are less so.

Scott Keller: Could I add two quick things on that topic? There are over 1,000 reviews now on Amazon, and a 4.7 rating, which is more than we could ever dream of. This reinforces the applicability far beyond senior executives.

Raju Narisetti: Astonishing.

Scott Keller: But those 1,000 reviews aren’t from CEOs. They’re written by people from all walks of life, all geographies and profiles. We’ve also been asked to be guest lecturers at business schools: at Wharton, Stanford, and Harvard.

Carolyn Dewar: And INSEAD.

Scott Keller: And INSEAD. It has been interesting to see how hungry these students are to learn from this, as well. I would just reinforce that. The second thing I would say is, in my experience, at least, there are a couple of very senior CEOs who received the book from multiple places and were encouraged to reach out to us.

I would then go and talk to them, and say, “You received the book from four different people. You received it from a couple of people on your board and a couple people on your team. What’d you think of it?”

They would say, “Oh, it’s great. Beautiful articulation of the role.” When I asked, “Did you get any insights from it?” they would say, “Well, it just reinforced all that I’m doing.”

The self-serving bias is real. Tenured CEOs have a self-serving bias. We then said, “Well, why do you think four people handed it to you? What was on their mind? What did they think you could learn?”

“Oh, I don’t really think anything.” For a few of those CEOs, we’ve had them participate in the 360° review process. In the back of the book, there’s a way to do that. It was a real eye-opener for them to say, “Wow, actually, I thought I was great on aligning the organization, but you’re telling me I’m far from great.”

That was very helpful when they took that extra step to understand, “Well, I know how I view myself in relation to all this. But how do others view me?” That’s actually part of our ongoing research. One of our next steps is to create a very simple way to get that type of feedback on a regular basis for a CEO. So being a good CEO means understanding how people perceive you vis-à-vis how you perceive yourself on the six elements of the role.

Talk about the global response. Was it different from what you thought it might be?

Vik Malhotra: I would say that, first, there’s been a broad embrace globally. All three of us have been traveling, speaking to our colleagues, speaking to clients, all around the world: Japan, India, Germany, the UK, Latin America.

While these timeless lessons clearly apply, regardless of context, and geography, and the like, there are some important differences in certain countries. I don’t think you change how you think about being a leader, but you have to factor these differences in.

The biggest difference that struck me was, if you go to India or you go to many parts of Latin America, family-owned businesses are at the big level. This is very much written [in the book] from a corporate lens. I have personally had to think through, if I’m talking to you and you’re the CEO of a family-owned business, how I could slightly adjust the narrative around how you can be bold in that context.

What does it take to be bold in that context? How do you shape culture? How do you actually understand that the stakeholders there may not have the same motivation about shareholder return? They may be more worried about dividend flow to the family. So you have to adjust to that. As we went global, being able to adjust the narrative was an interesting learning. The other difference in the US and globally is seen in the way in which start-ups and founder-owned businesses are run.

Carolyn Dewar: I live in the Bay Area. I get this question all the time.

Vik Malhotra: And there’s a version of this for founder-led companies because they have different dynamics that you need to factor in. I don’t think we change the narrative too broadly. But you’ve got to factor in what they’re worried about.

Carolyn Dewar: Yes, and there is potentially a private CEO or portfolio company CEO.

Vik Malhotra: Yes.

Scott Keller: Yes, and I would add government organizations.

Raju Narisetti: That’s right.

Scott Keller: Not-for-profits have their own flavors, as well.

Carolyn Dewar: Yes.

Scott Keller: It all applies, but there’s definitely tailoring in terms of ownership structure and leadership history for founder-led organizations.

Carolyn Dewar: Yes.

Based on the time you spent with CEOs, what’s been different in the last two, three years?

Vik Malhotra: In the grander context of things, there are a few things that are different. Decision making is a whole lot faster than it’s ever been. There is a need for you as a leader, a CEO and a leader, to make decisions, often with imperfect data, in weeks, days, even hours. Relatively speaking, 20 years ago, you didn’t have that same—

Scott Keller: That speed.

Vik Malhotra: You didn’t have that same pace of decision making. The speed of decision making is very different. The push on important trends that we’re facing didn’t exist—sustainability, DE&I [diversity, equity, and inclusion]. Those are new things that people have to factor in.

The one element that actually feels a little different and maybe less timeless is the engagement of the external stakeholders. I think if you go back 20 years ago, maybe that was 10 percent of their responsibility.

Today, it’s not unusual for it to be 30, 40, 50 percent of some CEOs’ responsibilities, particularly when you factor in the customers, regulators, analysts, trade unions—the world at large. So there are some real changes in today’s world relative to history.

I still think the timeless messages all apply. But as a leader, you likely do have to move more quickly. You have to be cognizant of the many more stakeholders than perhaps there have been historically. And you certainly have to be cognizant of some very important long-term trends that are, in the grander scheme of things, relatively new.

Scott Keller: I’ll pick up on one of the strands there, Vik. When we wrote the book, it was in the peak of the pandemic and everything going on there, the George Floyd murder, the Capitol riots, and there was kind of a strong push saying, “CEOs need to get out there, and talk about all these issues, and be really frontward facing.”

I feel pretty good about when we talked about what we put in the book and said, “Look, there is a time to speak out, absolutely—if it affects your business and your business values, if it’s a place you can make a difference, if you can actually understand where your stakeholders stand and make an informed decision.”

We tried to get a real middle-of-the-line, “You are going to have to speak out. This is going to be important, but you shouldn’t be out there opining on everything under the sun. It’s probably not your role, nor are you well informed enough or able to necessarily do that in the right sort of ways.” I feel good that we got that—right. But it’s been fascinating to see the swings—to witness those varying conversations. The second thing I’d say is, in a world that has gone from a blog-length thing that was considered short to a short Twitter headline and now a TikTok post, there’s now a higher premium on the ability to cut through with elegant simplicity.

Now CEOs have a company direction that they need to convey to 50,000 people around the world. How can they do that in six words or less in a way that’s emotive and powerful and gives all the information someone needs?

For example, having that conversation not just around the vision of the company but answering the question, “What’s the employee value proposition? What’s the proposition for customers, what we’re delivering for shareholders?” It was psychologist George Shultz who said that understanding goes from being simple to complex to elegantly simple.

On the far side of complexity is elegant simplicity. It becomes such a big tool for CEOs now to get cut through at scale. I love Piyush Gupta, what he did with DBS [Group], which is a Singapore-based bank that was the worst bank in Singapore when he took over, objectively speaking. And now, in most polls and measures, it’s the best bank in the world.

“We are a technology company that makes banking joyful.” That’s what you need to know about DBS. Six words: technology company that makes banking joyful. “Technology company” tells you a ton about where they’re investing assets, about how they think about product development, about running the place generally, the speed of decision making, and more.

“Making banking joyful” tells you a ton about what their customer experience is meant to be like and all of the investment they’ll put into it, what they expect of their colleagues and employees. There’s just so much richness in those six words that CEOs are able to get to the elegantly simple messaging around the things that matter. It might even be the bold moves.

“Here’s the five bold moves we’re making that are going to make the biggest difference.” They’re all crisp. There’s a real premium on that, and there will continue to be a premium on having more acuteness as we move forward—because the way that media and people digest information has changed. That’s my take on something that I feel has changed.