Inside vs. Outside CEO’s: Booz&Co Perspective!

Back in December 2009, I blogged about the ‘CEO’s from Within’. In that article, I expressed my opinion on the viability of having a CEO from the inside, from within the senior leadership of organizations to reach the helm and be the next-CEO. I still believe in this opinion. Nonetheless, It’s fair to mention that It came as a surprise to me the Booz&Co article on ‘Why Outsiders are better in Turnarounds’ which briefly discusses the psychological impacts of recruiting insiders as CEO, especially when it comes to handle turnarounds and big decisions. The paper was published by The Journal of Experimental Social Psychology, and authored by Brian C. Gunia (Northwestern University), Niro Sivanathan (London Business School), and Adam D. Galinsky (Northwestern University) on November 2009.

What surprised me, though I did not have full access to the research, is the psychological connection as with the Birthday. The study refers to four experiments. One of them was about giving higher raise to an under-performer because of the psychological link with the decision maker who recruited him at the first place.

Well, I am not confident that the study negates the ability of insiders or Inside-CEO to tackle turnarounds, and case of Jack Welch, who spend 20 yrs at GE before assuming leadership for another 20 years is quite inadmissible and supports such argument.

Anyway, such study and earlier researches by Jim Collins and several others mandate further investigation and research on the subject matter.