Exploring Five CEO Profiles and Which is Right One for Your Company
April 4, 2023 – Every company has unique business needs and therefore has distinct requirements for a successful CEO. When a company or board is seeking to hire a new CEO, it’s important to recognize the different types of CEO candidate profiles, then gather an understanding of the strengths and weaknesses of those profiles to match the requirements of your business.
As a partner and regional head of Southern California at SPMB Executive Search, it’s Natalie Ryan’s job to advise boards of directors on how to recruit and hire the right CEOs and CEO reports for their businesses. “I guide my clients to target different CEO profiles based on the proficiency of the sitting executive team and the strategic goals of the business which could be driving transformation, focusing on product innovation, and/or optimizing operations,” she said. “The most common categories for CEO profiles include: technical CEOs, finance and/or operations focused CEOs, up-and-coming P&L owning general managers ready for a CEO role, go-to-market oriented CEOs, and founder CEOs.”
Ms. Ryan offers these pointers to help you find out which is best for your business…
1. Technical (Product or Engineering) CEOs:
Who are they and what types of businesses are they best suited for? “It’s common for engineers to grow into CEOs of software/tech companies because they have hands-on experience creating and building the tech products that are at the center of these businesses,” said Ms. Ryan. “With a technical background, these candidates can understand their company’s products at a deeper level than a non-technical leader and because of that, they can hopefully drive better business decisions from the top. Additionally, with their technical chops, they can better attract, assess, and hire the best engineers. This is a massive competitive advantage since having the right engineering team in place is make or break for a software business.”
Typically, technical CEOs are the best for product-growth focused companies where there is an engineering led culture and the product roadmap and vision are the most important factors for success, according to Ms. Ryan. “This is especially true if the outgoing CEO was the technical mastermind behind the business,” she said.
As a partner at SPMB, Natalie Ryan leads the firm’s Southern California team and places key executive leaders across North America with disruptive growth-stage technology companies, as well as tech giants seeking innovation at scale. She specializes in managing complex and high-stakes CEO and C-suite executive search projects.
What are their weaknesses? What should I closely assess in the interview process? Ms. Ryan explains that just because a person can build a great tech product doesn’t mean that they are fit to run a business. “The larger and more complex a company gets, the more leadership, management, and operations are necessary for sustainable success,” she said. Oftentimes when SPMB is kicking off a CEO search, it’s because the client is replacing a technical founder CEO who isn’t keeping up with the business needs as it continues to scale.
If Ms. Ryan is helping a company hire a technical CEO, she will heavily vet these candidates for their people management and leadership skills. Have they taken action to improve their leadership and management skills and are they aware of their blind and weak spots? Have they been able to surround themselves with leaders, mentors, and advisors to help them in those areas? “As a hiring company, you want to make sure that the candidate has a strong reputation in the market with employees, customers, and across the industry — and, of course, has a proven track record of success,” Ms. Ryan said.
2. Finance and/or Operations-Oriented CEOs:
Who are they and what types of businesses are they best suited for? Just as it sounds, this profile comes from an executive building their career in finance or operations roles before becoming a CEO. “We see this often when a CFO or COO moves into the top role as CEO,” said Ms. Ryan. “Financial acumen is absolutely essential for running a successful business and CEO candidates with deep finance/operations skill-sets work well, especially for businesses in financial distress. Many PE-backed turn-around-focused companies welcome CEOs with strong financial knowledge and depth so they can cut costs, optimize spending, and get the business back to a healthy financial position in order to sell.”
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Additionally, Ms. Ryan notes that sometimes the business just needs a strong operational leader that can bring the functional heads together and make everything run smoothly. “COOs or executives who have management consulting backgrounds can make for very successful CEOs for these types of situations,” she said.
What are their weaknesses? What should I carefully assess in the interview process? Creating a financially and operationally healthy business and leading a successful business are two different things, according to Ms. Ryan. “Both are important but if you’re running a tech business you need to understand your products and the people and culture building those products,” she says. To assess this skill set, Ms. Ryan likes to ask these leaders the following questions: “How do you vet and hire technical leaders under you? How do you continue to measure their performance? How do you inspire the product and engineering organizations? If you don’t understand something at a technical level, how do you get comfortable assessing the work and setting the strategy surrounding that work?”
“Similar to the technical CEO, a successful finance/ops-oriented CEO should know how to hire executives who counter-balance their own skills and aren’t afraid to learn new things outside of their key strengths,” said Ms. Ryan.
3. P&L Owning Divisional General Managers:
Who are they and what types of businesses are they best suited for? Ms. Ryan says that you don’t always need a current CEO for your CEO hire. “In fact, many of our successful CEO placements were either a sitting divisional GM at a larger company or sitting No. 2 at a company as a president/COO,” she said. “In many large businesses, there are divisional or regional general managers/VPs who run their divisions/product areas/regions as a smaller business within a larger business. The beauty of these leaders is that they have experience managing budgets, growing revenue, and leading and growing multi-functional teams. Plus, your CEO opportunity will likely be an exciting career move for these candidates, which will widen your talent pool if you’re open to this type of profile.”
What are their weaknesses? What should I assess in the interview process? These executives can have a technical or go-to-market background based on the company’s structure, but they will also likely have some HR/finance skills matrixed into them, according to Ms. Ryan. “They haven’t run an end-to-end business and they’ve had a safety net of a larger business and brand to enable their success,” she said. “You’ll need to figure out how much control and responsibility they really have in that environment so you can see what success was driven by their leadership, versus others.”
Ms. Ryan likes to verify this information by speaking with others in the organization to understand the true business drivers, company structure, etc. Beyond that, since this will be the candidates’ first CEO position, she asks questions that dig into their past successes and approaches to taking on new challenges and risks.
4. Go-To-Market Oriented CEOs:
Who are they and what types of businesses are they best suited for? Go-to-market oriented CEOs are executives who grew up in marketing and/or sales or even customer success roles. In Ms. Ryan’s experience, this background is less common in the tech world but becoming more popular as the focus on customer experience and retention becomes critical within SaaS. “This CEO background can be a good fit for my clients that already have a solid founder/chief technology officer in the business and the company requires the most transformation on the revenue/sales side.,” she said. “CEOs with a sales/revenue-focused background will be comfortable crafting or transforming a go-to-market strategy, being the face of the company at industry events, selling the vision of the business to Wall Street or investors, and creating key relationships with customers.”
Ms. Ryan also says that this is a more common background for businesses with a heavier professional services orientation where strategic leadership is less needed in the technology.
Related: The Multifaceted Role of Today’s CEO
What are their weaknesses? What should I assess in the interview process? “Having the ability to sell the vision of a company is an advantage for a CEO since they can inspire their employees, excite their customers, and gain new investors,” Ms. Ryan said. “With that said, tech company CEOs who don’t have a technical background can face challenges since they may not understand the products or be able to assess the technical talent needed to build and maintain those products. Beyond that, you need more than sales skills to run a business. You’ll need to make sure that your CEO hire is financially savvy and not just focused on acquiring new customers and top-line growth,” she said. “Leaders can gain this financial expertise and knowledge in a number of ways including attending business school, owning and managing a P&L within a business, and/or being in a private equity environment that is zeroed in on financial rigor, performance metrics, and optimization.”
The Most Common Recruiting Mistakes at the Executive Level
Natalie Ryan of SPMB says that there are simple solutions to some of the frequently seen missteps in finding talent. “Evading the pitfalls will allow you to bring in the right, long-lasting executive talent quickly,” she says, “which in turn, will lead to a healthier culture, happier and more successful employees, and better business results.”
Beyond vetting the experience above, Ms. Ryan notes that she would also dig into how they were able to recruit and build out their executive team to balance out their blind spots, and their comfort level in making critical and bold business decisions. How did they drive those decisions?
5. Founder CEOs:
Who are they and what types of businesses are they best suited for? Entrepreneur CEOs can come from a wide variety of educational and professional backgrounds and because of that, there’s no one size fits all, according to Ms. Ryan. “Since they have the experience of turning an idea into a business from the ground up, a company can benefit from their focus on innovation and likely inspirational leadership style,” she said. “As you’d expect, entrepreneur/founder CEOs can also be an excellent fit for early-stage start-ups where they still need to be hands-on and in the weeds, and the employees need a leader with a lot of enthusiasm to make the start-up grind of intense long hours feel acceptable and worthwhile.”
What are their weaknesses? What should I assess in the interview process? Unfortunately, since entrepreneur CEOs encompass a diverse mix of candidates, their knowledge of their unique business and/or skills might not be as transferable as the other types of profiles, according to Ms. Ryan. “Beyond that, overseeing the day-to-day operations of a business takes a different skill-set than purely starting a business,” she said. “These aren’t typically the CEO candidates we target for our searches unless they’ve had a few big wins under their belt, paired with good executive coaching, and several years of experience to bring to the table.”
To tease out these variables, Ms. Ryan often asks: How have they been able to scale their business? What’s their track record of success? What accomplishments are they most proud of and why?
“Regardless of the type of CEO profile you decide is best for your business, the strongest CEOs across all categories are the ones that have led multiple functional areas but have a key strength in a particular area like engineering, finance, sales, etc. and excel in that one area,” Ms. Ryan said. “Having that experience coupled with management and leadership skills — and the humbleness to surround themselves with key advisors and leaders who have strengths in their areas of weaknesses is the best recipe for a successful CEO.”
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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media