Most new CEOs come from operations

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If you think you’re leadership material and have worked in the operations function, chances are you’ll rise to become a chief executive officer (CEO). Experts say this could be a reflection of a post-Covid world where operations and supply chain management have become an important part of a business.
In a study conducted exclusively for TOI, leadership research firm Executive Access (India) found that 34% of first-time CEO nominees in the past year were from operations. This is followed by other functions such as sales at 28%, IT at 10% and marketing at 9%.
Executive Access (India) Ronesh Puri, MD said, “Operations are generating more CEOs than in the past. A number of organizations prefer to make aspiring CEOs COO (Chief Operating Officer) first as they get a better grooming while being exposed to different facets of the business as well as a deeper understanding of internals. This is also validated by the data, as a large number of new COO CEOs have been successful.
This trend, Puri said, is likely to become even more popular in the post-Covid world, as internal stakeholder management will become more important. “Furthermore, today’s world is much more performance driven than it was in the past. Therefore, for an organization there is less risk when the incumbent is exposed to a variety of areas functional,” Puri said.
Sandeep Pal of Aditya Birla Fashion and Retail, Deep Jaggi of IndoStar Capital Finance, Mahesh Aiyer of Lemon Tree Hotels, Nilesh Iyer of Natixis and Akhil Ravi of Aurigene Pharmaceuticals are among the first CEO appointments from operations during the last year. .
Lupine President (Global HR), Yashwant Mahadik, said, “Operations and supply chain, as an integral part of the value chain, have never had the prominence they deserve. But it has to do with the evolution and cycles of business and industry needs. When an organization is in the process of building a brand, it needs a CMO (Chief Marketing Officer) as CEO. On the other hand, if a company is in a cost architecture restructuring or fundraising, then a CFO (Chief Financial Officer) is a suitable candidate to lead the organization, or when an organization needs ‘innovate quickly and develop its product portfolio, then a CTO (Chief Technology Officer) may be the most appropriate.
Today, Mahadik said, supply chain and operations have become very critical. “Even when we’re talking about data science, data warehousing/management, or blockchain mining, it requires strong, highly analytical process and operations capabilities. Operational skills bring excellence in terms of setting up processes and digitizing these processes for effective work, whether it is a physical organization or a digital startup in the Internet of Things. Thus, competence for operational excellence does not necessarily mean knowledge of how to acquire, establish and use machinery. But all of your ability to design an effective operating model of content/product development for the supply chain – which is aligned to deliver a platform, product or service to customers – is a critical skill,” said Mahadik said.
There are three types of businesses today: old-economy brick-and-mortar businesses, pure digital businesses, and traditional businesses evolving into a physical and digital hybrid. For all three, Mahadik said the knowledge and ability to design and execute a business operating model is key to running the business.
Besides operations, the other popular stream that has always had the most new CEOs has been sales. “In the past, about a decade ago, the number of new CEOs coming from sales was over 80% because sales contributed directly to revenue. Over the past decade, organizations have realized that factors other than revenue are just as important. Hence a shift in the global trend to look at other functional areas as well,” Puri said.
The performance of new CEOs from other functional areas has also been good. As a result, this trend is likely to accelerate. “New finance CEOs are growing in popularity as, among other things, the number of organizations considering inorganic growth increases. Strategy CEOs are also attractive given its importance to business growth, especially in new areas,” Puri said.
There was also a CHRO (Vinay Sakri of Seppin Labs) to appoint as CEO, showing how people management is becoming an important strength for the office corner. Globally, CHROs (Human Resource Managers) becoming CEOs are more common than in India. Puri said the number of CEOs appointed by HR could more than double over the next two years.
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