These days, successful CEOs must wear a lot of hats. It’s not enough to simply guide a company to a string of strong quarterly earnings or to launch an industry-beating product. They’re also in charge of keeping demanding investors happy, cultivating a workplace culture that engages employees and attracts new talent, and serving as a good global actor amid increased scrutiny on corporate ESG practices.
“The role of the CEO is more complex than it’s ever been,” says Asutosh Padhi, North America managing partner at global consulting firm McKinsey & Company. “The external pressures are abundant and mounting, and leaders must be plugged in to even the most granular details of the business. There’s no singular playbook CEOs can follow.”
This environment is affecting another aspect of the role: the legacy they leave behind.
Of course, leaving a legacy isn’t a prerequisite for taking the top job—plenty of CEOs have wrapped up their tenures without much to show beyond a sizable exit package. But for CEOs who want to leave a company better than they found it, building a legacy takes effort, boldness, and careful planning.
“It all comes back to ambition,” says Carolyn Dewar, senior partner at McKinsey & Company and coauthor of the recently published CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest. “Unless you’re in it for something bigger and more purpose-driven and have a clear sense of what you’re trying to accomplish in the world, there are easier ways to make a living.”
LEAVING A MARK
Dewar and her CEO Excellence coauthors, Scott Keller and Vikram Malhotra—both also senior partners at McKinsey & Company—drew on reams of data and sat down with nearly 70 CEOs to identify those qualities that make for a high-performing chief executive. Their conversations included sit-downs with corporate luminaries such as General Motor’s Mary Barra and Microsoft’s Satya Nadella as well as former CEOs, including Mastercard’s Ajay Banga. “They were remarkably transparent,” Dewar says. “They wanted to pass along some of the key lessons they learned, and what they wished they had done earlier in their tenures.”
When it comes to legacy, the most successful CEOs want to leave behind more than a strong balance sheet. Indeed, soft skills like creating a strong corporate culture can help CEOs leave an indelible mark during their tenure. Andrew Wilson, CEO of video game maker Electronic Arts, told Dewar and her coauthors about pausing a Zoom meeting with 7,000 employees to help his five-year-old son make a paper airplane. Many of those employees reached out to Wilson after the fact to tell him how much that short parental pause meant to them. “CEOs are learning that culture and talent matter more than ever,” Dewar says. “It’s not something you can outsource to HR. As a CEO you need to have a view of what culture you’re trying to create.”
THE IMPORTANCE OF BOLD MOVES
Of course, bold operational moves can move the needle on a CEO’s legacy, too. For instance, a smart M&A strategy that expands a company’s geographic footprint or helps it disrupt an industry can fundamentally alter that company’s trajectory well beyond the tenure of its current CEO. Then there are the strategic decisions that can radically reshape the company’s fortunes. Take Mary Barra of GM. Since becoming CEO in 2014, Barra has made difficult decisions about where to allocate the company’s massive financial resources. One such decision was to end the company’s operations in India, a long-running but money-losing legacy piece of GM’s global portfolio and reallocate those dollars to an area that she believed represented GM’s future: electric vehicles. “She made the courageous decision to pull out of the market completely,” Dewar says. “It’s being willing to say no to things you’ve been doing that are no longer working, and pivoting the capital, the talent, and the leadership bandwidth toward where you’re headed in the future.”
Sometimes, it’s the CEO who sets the trend. When Ajay Banga was CEO of Mastercard, the big credit card companies had long been fighting over share of a static market. But Banga stepped back and took a broader view of the potential market and made a crucial observation: the majority of consumers’ transactions were happening in cash. Banga shifted Mastercard’s business to focus on debit cards and online payments, opening up huge avenues of growth for the company. “It was a real reimagination of the company,” Padhi says. “And it took Mastercard’s market cap from $12 billion to over $300 billion.”
In these cases, CEOs had a singular focus: to build a stronger, more durable, and more sustainable company. Barra’s decision wasn’t a shortsighted bid to juice quarterly profits, and Banga didn’t scrap Mastercard’s legacy business to chase an unproven new market. Instead, both CEOs actively searched for ways to leave their companies better than they found them.
“Legacy is an outcome of the ambition that you have,” Padhi says. “It’s not individual ambition, and it’s not selfish ambition. It’s ambition with a capital A, which is grounded in the broader good for the institution.”