I recently received an email from Canal Street Talent Management. I've written about Canal Street before -- they are the folks who represent executive talent as if they were movie stars or sports figures. The Canal Street newsletter had the following observations, that I thought were of interest:
We've tracked a major trend during the past year: Tech CEO's (and their direct reports) are being swapped out for higher-quality, more seasoned executives with increasing frequency. Boards and management teams are using the economic lull to upgrade their talent.
Studying the hundreds of such replacements we've seen in the past year, here are some observations:
Founder transitions are happening earlier. In many cases, the Founder is in agreement with the decision to do so. In some cases, they're driving it. More meetings. The number of board members interviewing senior replacement candidates has increased. Search cycle times are lengthening as board members conduct more diligence. Domain expertise is a must. More job specifications are requiring substantial category experience (versus "raw horsepower".) Still, we've seen exceptions made when board members take a liking to 'out of the box' candidates. Succession planning is in style. More CEO's are thinking ahead and recruiting a strong number-two (COO or otherwise) well in advance of their anticipated departure. "Grey hairs" are in fashion. Job specifications are calling for more years of experience.
My sense is that these observations are generally true. Entrepreneurs and investors alike are taking a long hard look at what is most likely to make their companies succeed. Not surprisingly, board members and management are spending lots of time finding the perfect employees at all levels, especially at the most senior levels. Not surprisingly, when given the choice between an excellent candidate with domain experience and an excellent candidate without, board members and management are erring on the side of domain expertise. And, not surprisingly, when given the opportunity to hire someone with significant experience (read "grey hair"), board members and management alike find that appealing. The good news from a company-building perspective is that because it remains a buyers market on the hiring front, it is much easier today to find a "grey hair" with excellent domain expertise than was the case for many years.
That said, for every rule there is an exception. Like any selection process, candidates will be judged by their attributes and each board member and entrepreneur will balance those factors differently. Some board members may value energy and enthusiasm over experience. Some board members may value intellectual curiosity over domain expertise. Some board members may value general management experience over functional excellence. In the end, the candidate hired will resonate best with the most decision makers and smart company-builders will not look for shorthand to get to the right answers.