Learning From CEOs: What It Takes To Get To The Top And SucceedKnowledge Wharton
Author Elena Lytkina Botelho and Andrew Silvernail, CEO of IDEX, discuss how leaders can deliver results.
Most first-time CEOs tend to play it safe. That, however, could be a mistake. CEOs who succeed focus on their company’s performance, its culture and employee engagement in a way where everybody is driven to cater to the customer at the frontlines. Those were among the insights that helped Andrew Silvernail, CEO of IDEX, a Lake Forest, Ill.-based maker of specialized fluidics systems and components, and fire and safety products.
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Silvernail shared these lessons in a conversation with Elena Lytkina Botelho, co-author of The CEO Next Door, and Knowledge@Wharton. Silvernail is one of the leaders featured in the book. Edited excerpts from the conversation follow. (You can listen to a complete podcast of the discussion using the player at the top of this page.)
Knowledge@Wharton: Elena, when we spoke about a year ago about your research on the CEO Genome Project, you told us about four behaviors that define great leaders. Your book, The CEO Next Door, is about those behaviors and much else. Could you tell us about the book and also the reasons why you believe Andy is a leader who illustrates its principles?
Elena Lytkina Botelho: With the book, we sought to apply 21st century analytics to this holy grail of leadership, which is who gets to the top and why and how, and what does it take to be successful at the top. We took our database of 17,000 leaders that we’ve assessed up close and personal, took a sample of 2,600 leaders, and then did follow up interviews with about 100 CEOs to look at the patterns of what it takes to get to the top and succeed there.
One surprise is that 70% of the CEOs didn’t intend to become CEOs when they set out on their career paths, or even mid-tenure in their career. It was only when that role became within striking zone for them that it became a relevant career aspiration.
These CEOs master the balance of getting extraordinary results and getting noticed for those results. There are few people who have mastered both sides of it as well as Andy has. If you look at the stock chart of IDEX … he has had the privilege and pride, I hope, of being a CEO who delivered the hockey stick. [IDEX was] trading [just below] the 40s in [August] 2011 when he took the reins, and now it’s $140 (as of February 26, 2018).
“I realized I liked business because it was about people. Fundamentally when it was all said and done, everything was about people.” –Andrew Silvernail
Knowledge@Wharton: Andy, clearly we want to talk about the results at IDEX and how you got noticed for them. Could you also take us through the arc of your own leadership journey and some of the inflection points that helped you get to the position that Elena was talking about? You grew up in a small town in Maine. Did you even intend to go into business?
Andrew Silvernail: I grew up in a small town in Maine, and my dad was a social worker. I’m the youngest of four boys, and my mother passed away when I was very young, so my father was in charge of raising four boys as a social worker. It was a rough and tumble environment as you might imagine. When we moved to a mill town when I was seven or eight years old, what I knew about business was a mill – a paper mill. And what I knew [is that] people who worked in the mill were folks who worked on machines.
But my perspective wasn’t about going into business at all. I went to college with the idea of being a doctor; my grandfather was a physician and I admired him immensely. In my second term of chemistry I realized I was not cut out for being a physician. I did some soul searching around what I wanted to do with my life. It took quite a while.
By happenstance, I ended up doing an internship through a friend [whose parents ran] MacClean-Fogg in Chicago, which is a family-owned business. Here we are 30 years later and I sit on the board of that company. I realized I liked business because it was about people. What I realize now is that I am just a really highly-paid social worker, and in some ways very much in the line of the work that my father did.
I had my first real job out of college [as] an equity analyst for Fidelity Investments. But I realized early on that I was not cut out for being an investor. I didn’t want to be a reporter, so to speak; I wanted to be in the game. I had a series of experiences [and] went back to business school, and ended up with an internship at Danaher (a Washington, D.C.-based maker of industrial, health care and consumer products.) What I saw at Danaher was this interesting combination of process and people – a fabulous combination. I spent several years at Danaher and then, frankly, I made some mistakes along the way. I went to work for a business that I won’t name. It was a mistake – the people were a real challenge, the culture was a challenge, and it didn’t fit.
Then I was recruited by the former CEO of Danaher. He had retired, and I was recruited to a private equity-backed business and I went in as a president of a business. We had a lot of success; we ended up selling the business to another private equity company, but myself and my boss – not the chairman – had a very difficult time from day one. We did not connect in any way. Ultimately, we had a tough parting of ways. It was tough, and frankly, they fired me, and that was not fun. That was a very tough time in my life. That is when I came to IDEX.
Knowledge@Wharton: I want to turn to Elena to talk about what you said about growing up in a family with your father being a social worker in Maine. Elena, one of the things that struck me [is that] Andy does not have a typical background that you might imagine for a CEO. How common is that for CEOs in your book? Does a privileged background necessarily lead to leadership?
“When you look at somebody who has been successful, it is easy to assume that it was an unfettered path to the top, and that it was one success after another, one carefully planned career move after another.” –Elena Botelho
Botelho: The story that [Andy] just told is not the story that most of us imagine. And that in big part is what drove us to dig into the data. The story in many ways is more common than we would expect. Many parts of what you just said resonate with some of [our] research. One common advice everybody hears is, you’ve got to find powerful mentors. Reading a little bit about you, I think you’ve had some of those mentors.
When we look at the data, those who get ahead and those who are more likely to get picked are those who stand out not necessarily because of powerful mentors, but early on in their career, their lives and sometimes even in school, they become mentors to others.
One reason you were featured in the book is how candid and forthcoming and thoughtful you were about your failures. When you look at somebody who has been successful, it is easy to assume that it was an unfettered path to the top, and that it was one success after another, one carefully planned career move after another. What differentiates successful CEOs and those who get a shot at the top job isn’t that they don’t make mistakes, and it isn’t even that they make fewer mistakes than others. It’s [about] how they go through those mistakes, how they process them, and how they learn from them. We call them blow-ups in the book.
Then we dug in and thought – surely their careers took a dive. We were shocked to find out that what separated success from failure long-term wasn’t lack of failure; it was all about how you process it and how you deal with it. We found that CEOs who use the word ‘failure’ to describe their experiences were half as successful as those that were very matter-of-fact and very forthcoming and just used it as a learning opportunity.
Silvernail: When I look at leaders whom I want to groom and I want to put in positions [of responsibility], it’s so critical that people have had serious moments of challenge in their life. That comes in many forms – it may be athletically, it may be in a family, it may be at some point in their work. When you’re at this level, every day something comes up that 20 years ago you would have thought of as impossible to deal with, and yet you have to deal with it today. So that sense of perseverance, of grit, is a very important trait — and it’s a learned trait. It’s learned through experience. We look for people who have had to persevere through things, because it’s a really important part of success.
Transparency and Candor
Botelho: One of the board members I work with said the most dangerous thing you can have is a CEO who has never failed.
Silvernail: Absolutely. When I interview people … I look for people to have transparency and candor about things that didn’t go well. That’s an important part of someone’s character development and the likelihood that they are going to succeed.
Botelho: What struck me in how you described [one] experience is … that your first concern seemed to not be about, ‘How do I save my face?’, but that you wanted to do the right thing. You went to the board that wanted to pay your team and said, ‘No, we shouldn’t get paid full bonus,’ and you went to the team that thought they should get paid full bonus and told them, ‘Well, actually it shouldn’t be quite that good.’ Maybe what helped you power through that failure is that your first concern wasn’t to save your hide, if you will, but how to do the right thing by others.
Silvernail: That’s a great point. Just to be clear, it wasn’t quite as black-and-white about people being paid. It was more a big question mark about should you or shouldn’t you. We didn’t deliver for our shareholders what we said we would deliver; we didn’t deliver for ourselves….
That was not a popular choice. But when you get into these situations where you have real difficulty, especially as a leader, if your first reaction is to CYA, it is going to move through your organization like crazy. If your first reaction is to look at the facts and do root-cause analysis and say, ‘What have we learned? What do we do with this information so we get better as an organization?’ it is pivotal.
“We found that CEOs who use the word ‘failure’ to describe their experiences were half as successful as those that were very matter-of-fact and very forthcoming, and just used it as a learning opportunity.” –Elena Botelho
The Right Corporate Culture
Knowledge@Wharton: You mentioned in your opening remarks [that] you made a couple of career choices that didn’t quite work out. What did you learn from those experiences? What did you learn about being in a toxic corporate culture?
Silvernail: When I say the environment that I was in was toxic for me, that’s very individual. For somebody else it might not have been [toxic] at all. What matters there in the learning is understanding yourself really well, and knowing who you’re going to surround yourself with. All around – 360 degrees – are the people and the culture aligned with who you are authentically? It’s when you’re in those inauthentic situations that you have that friction and it becomes an impossible situation to live in. So one answer is to surround yourself with the type of people that you align with.
As a leader it means thinking about what kind of culture you want to create, and then being very explicit [about it]. That way people can buy in and opt out of the culture, and they know it.
Playing It Safe, and Death Loops
Knowledge@Wharton: Elena, based on what we just heard Andy say, especially about surrounding yourself 360 degrees with people who become part of your team, what did you find in your research about the ability of CEOs to succeed by managing their teams?
Botelho: One of the fascinating surprises that we found in the analysis is that … CEOs who are just coming into the role … really get nervous about their board. By the time you get to the CEO role, you have been a great general manager, right? You’ve delivered results, and you know how to manage people. Now these people (the board) determine whether you have the job or not, and your compensation, and so it’s very natural to worry about the board.
When we did ex post analysis, we found that 75% of the mistakes of CEOs, specifically pivotal mistakes or make-or-break mistakes, are all about people. It made no sense to us. [As someone said], it’s not things that you don’t know that will kill you; it’s the things that you think you know but just aren’t so.
We spent a bit of time exploring why is it that the one thing that you supposedly know how to do coming into the CEO role is the very thing that will get you in trouble. One reason is that when we’re under the pressure of a new leadership role, and stepping up to something that feels like a big opportunity and a big challenge, we tend to maybe try to play it safe. Then what happens is [we do] what we perceive to be safe, [such as] hiring people who remind you of yourself and bringing in people who were loyal soldiers to you and did well in the old job.
It turns out to be the most dangerous thing to do. Playing it safe, when it comes to your career choices or when it comes to navigating your big leadership role, at times is the most dangerous thing you can do.
Knowledge@Wharton: What you said, Elena, reminded me of something I have heard, that the opposite of knowledge is not ignorance but the illusion of knowledge. Coming back to what Elena said, how have you managed your relationships with the board, Andy? And what lessons can other CEOs learn from your experience?
Silvernail: I would agree with Elena. When people move into this job, there are a couple of issues relative to boards, and I put investors in the same boat if it’s a public company. Most people may have had interactions with the board, and with investors, but they haven’t had to manage the board or manage investors. So they move into this big place of unknowns, and it sucks up huge amounts of time.
“When you get to the phase of doing nothing, and letting people execute, and organically letting strategy develop, and letting people develop that, it might be different from what you came up with, and it’s usually a lot better.” –Andrew Silvernail
Then what happens is the things that actually create output for the business, which are your people, suffer. You start a death loop: business performance starts to suffer, which means you start to manage the board more, which means you start to manage investors more. It’s a terrible cycle that you see people get caught in.
I think part of it is, you’ve got to be aligned with your board, and that starts before you take the job. My board gave me an incredible gift when I became CEO. They decided that there was going to be one spokesperson on the board to me. It happened to be someone who was a mentor of mine. That way I didn’t feel the need to have this really wide conversation. We could have a narrow conversation, and in retrospect it was an immense gift to me because, frankly, I might have fallen into the trap that you mentioned, Elena.
The flip side of that death cycle is the performance cycle. When you’re performing it becomes much easier to build relationships with people, and to put the deposits into the bank account with those people on a regular basis. So you talk to your board regularly, you talk to your investors regularly, not [just] when it’s just a great moment, or an over-the-top wonderful moment, and not when it’s a disaster, but you have that dialogue that is going all of the time.
When I say performance I mean share [price] performance and the financial performance underneath it, and far more importantly the performance of your people, the culture you’re building and employee engagement. Those allow you to build those deep, sustaining relationships.
Knowledge@Wharton: You mentioned being less than 40 years old [when you became CEO in August 2011]. How has your view of leadership evolved from the time when you became CEO? Has it changed as you have grown into the role?
Silvernail: Early on for me there was a real sense of urgency about being very deep and very hands on … because I inherently knew that those first few years are make or break.
[When you are] very hands-on, you are experimenting a lot, you haven’t led at the enterprise level yet so you’re making a lot of mistakes, and you’re having to pivot back and forth on that. With time, you realize that the boat actually sails much better when you’re not moving the tiller back and forth, back and forth. The first step in maturity for me was recognizing that – ‘Hold this thing steady, and go with the breeze, let it take you.’ When you have to move, move once. You don’t have to go back and forth.
The learning phase that I’m in now and have been for a couple of years is around letting go even more, and realizing that you don’t even have to hold the tiller. The real job is looking at the horizon and figuring out how you’re going to do that, and making sure you’ve got people around that. The next phase is getting off the boat.
Botelho: Yes, which is often the hardest, right?
Silvernail: It’s a maturity curve. This is going to sound strange, but a big piece of it is learning how to sit quietly. It is learning how to do nothing, which is a really hard thing to do, because all of us who got this job got it by doing things. When you get to the phase of doing nothing, and letting people execute, and organically letting strategy develop, and letting people develop that, it might be different from what you came up with, and it’s usually a lot better.
Knowledge@Wharton: Elena, did you encounter other CEOs in your research who have learned to sit still? There is power in silence and stillness.
Botelho: A while back our team sat in a management meeting of John Zillmer, who was a successful CEO of Allied Waste (2005-2008), and is now on boards of many public companies, and similarly has a hockey stick stock chart. We expected that he was going to run the room, and be a really strong presence in the room. He pretty much said nothing in the entire meeting, and we thought, ‘Wow, this is what great leadership looks like.’ To your point earlier that when you build a strong team, shockingly the hardest job in your life may be about sitting still and letting your team do what you’ve wired them to do.
“Playing it safe, when it comes to your career choices or when it comes to navigating your big leadership role, at times is the most dangerous thing you can do.” –Elena Botelho
I don’t know if you realized that you’re a sprinter. I know you knew you were a football player, but did you know that you’re a sprinter, Andy?
Silvernail: No, I am not. You have not seen me run. [Laughing]
Botelho: We conducted an analysis of individuals who got to the CEO role faster than average. It’s hard enough to get into the job, but to get the job at 40 is highly unusual. And so we decided to see: What were the career choices? Was it about pedigree? Was it about some special charisma that they had? What was their special sauce?
We looked for some of the usual suspects. Sure enough, about a quarter of those sprinters had an elite MBA. The surprise came when we realized that 97% of them did one of three things. A quarter of them had a top-tier MBA, with 97% of them under a title we called “Career Catapults.” The career catapults were taking risky career choices that at the time may not have necessarily looked like their path to the top, maybe like Andy’s sidestep from Danaher, but in hindsight ended up being an instrumental path to them mastering the four leadership behaviors, getting the results and getting noticed.
For example, just one catapult: 60% of the sprinters went, “go small to go big.” So they left a Danaher, they left an academy company. They may have done that within their companies as well. It turns out that 60% of the sprinters did things like that.
Knowledge@Wharton: I am intrigued by the idea of the “career catapult.” Andy, have you had what Elena describes as career catapults in your life, and if so what would they be, and what could others learn from those experiences?
Silvernail: Probably the first one was my first general management job. I was 28 years old when I was at Danaher, and I was involved in integration of a platform of businesses that we brought together. I was given the opportunity to take a business, and I had to close it. I had to walk into the middle of a closure that was not going very well, and I had to move it from New York to Colorado, and then I had to build an entire team and I had to set it up.
That was absolutely a catapult, where I very quickly had to realize all the aspects of being a general manager in a very tight timeframe with [all the] pressure you can imagine being thrown at you.
Advice for Aspiring CEOs
Knowledge@Wharton: Elena, do you have any advice for young people who might be aspiring to become leaders maybe in a small way, but ultimately with the hope of becoming CEOs, based on your research for the book?
Botelho: One is, don’t worry if you don’t know right now what you want to do, because neither did Andy at your age, and look how far he has come. Most of us had a hard time knowing what the future will hold 10, 20, 30 years in the future. Frankly, if we do have a perfectly designed career plan, it becomes obsolete the moment you put it on paper. Second, what struck me in this conversation today is that sometimes the most dangerous thing you can do is play it safe.
Knowledge@Wharton: Andy, I would like to pose the same question to you but I also want to go back to the point you made earlier, which is the similarity between being a CEO and a social worker.
Silvernail: I have an incredibly deep-seated belief that all organizations exist and thrive because humans exist and thrive; people, individuals exist and thrive; and then teams exist and thrive. If you are a great leader, your job is to create the conditions under which those individuals and those teams can exist and thrive.
My job in many ways is all about removing the barriers and creating the opportunities where people can thrive. At IDEX, we’re at a very important moment in our history where we’re thinking deeply about how to engage the front line of our company much more dramatically and moving towards full engagement of the entire employment base.
What that means is that the folks who are in middle management think of their customer as the person on the front lines. Then the folks who are general managers think of their customer as those two steps. Ultimately you come to me, and my job is to make sure that I am not the customer. In many big organizations, that’s what happens – the CEOs and boards and investors become the customer. They’re not the customer. The customer is the customer. Organizations exist to help people thrive, and take that customer obsession… to the front lines of the business.
When I think about being a social worker, [I recall] my dad’s job. My dad worked on the Penobscot Indian Reservation for years. It was a very difficult environment. And his job was to help young kids thrive, and help the families help the young kids thrive, and help the Penobscot Indian Nation. [My job] is the exact same job in many, many ways.
Article by Knowledge@Wharton