Here’s a number that should make any CEO sit up straight: 30% of Fortune 500 CEOs last under three years in the role. Almost 70% of CEOs admit they felt unprepared for the job once they got it, and poorly managed transitions erase roughly a trillion dollars in market value every year.
These stats should make you think. If the world’s most experienced executives — people who’ve spent decades climbing toward the corner office, backed by deep boards, executive coaches, and succession planning teams — still feel unprepared once they arrive, what does that say about the rest of us?
Most CEOs running smaller businesses don’t enjoy sufficient infrastructure and supporting resources to support their success. There’s no board with a dedicated talent committee, no in-house leadership development function, often no one else in the building who’s done the exact job before. The leadership “muscles” that infrastructure normally builds for you must be generated organically instead. This creative process is assured to be consuming and there is no guaranty of a positive outcome.
All of these figures come from a recent episode of The McKinsey Podcast, “What It Takes to Become — and Remain — an Effective CEO,” featuring McKinsey Partner Blair Epstein, Senior Partner Carolyn Dewar, Partner Julia McClatchy, and Senior Partner Vik Malhotra.
The conversation maps the CEO journey from preparation through succession, and several points apply directly to leaders running organizations without that deep bench — whether talking about a $15 or $150 million business. The topline revenue of the business matters less in determining CEO success. More often it is whether you have the structural support most large-company CEOs take for granted.
The conversation highlighted five key areas of work that SMB CEOs should engage to enhance their chances of success in the role.
#1 Ruthless objectivity
Epstein notes that the leaders who eventually earn the CEO role have done something uncomfortable first: they’ve held up a mirror to their own readiness with brutal honesty.
This is not aspirational self-assessment; it is ruthless objectivity. For SMB leaders wearing five hats and answering to no formal board, that kind of self-scrutiny doesn’t happen automatically. You have to pursue and actively engage it.
#2 Don’t get lost in politics
It’s tempting to assume office politics is a big-company problem. It isn’t. In a small business, the stakes of internal friction are arguably higher and more intense, because there’s less organizational slack to absorb it.
Epstein’s point — stay focused on delivering in the job you’re in today — applies just as much when your “org chart” fits on a napkin.
#3 Enlist coaches and truth tellers
This might be the hardest one for SMB CEOs. Big companies have boards, advisors, and peer networks built in. Small business leaders often have to go find their own truth tellers — and resist the urge to surround themselves with people who simply agree.
Creating your personal board of directors composed of trusted persons in and outside of the business can create a foundation for success.
#4 Listen well
Dewar’s insight that employees will tell you things in your early days that they won’t tell you later applies whether you’re managing 12 people or 12,000. The window for unfiltered feedback closes fast.
That said, you are well advised to never stop seeking out feedback and listening to the associates around you.
#5 Become the chief storyteller
Storytelling is an effective way to communicate, whether in media or in a corporate strategy meeting. CEOs are well advised to employ short, repeated narratives in lieu of a multi-point (multi-slide) strategy deck.
This approach is especially effective in a small organization where everyone needs to understand the “why” without a layer of middle management to translate it.
The themes that rose up while listening to this podcast centered around the need for self-awareness, adaptability, and continuous learning. These are essential skills for executive leadership at any level, but they might be even more important in organizations categorized as small to medium businesses. It’s good listening if you are in this area of responsibility – or hope to be in the future.
Cultivate your Mindset
The skillset I would add to the list is mindset training. Small business leaders need to possess vision and passion, but also the commitment and perseverance to see the vision through business cycles and challenging times to reach a desired outcome. Developing and nurturing a mindset that makes this unwavering approach possible is critical to long-term success.
Although this podcast focused on statistics about top CEO performance, it also offered valuable lessons that any leader can appreciate. The need for these essential skillsets does not scale down by company size. If anything, demand scales up the smaller and more entrepreneurial the nature of your organization.