Tuesday, May 10, 2011

A CEO Age Debate

Last week I was fortunate to participate in one of those lunch meetings that you wished would never end.

A prospective client connected me up with a long-standing relationship who bills herself as a HR and operational management consultant for emerging growth companies.  Admittedly, I wouldn't typically jump at a lunch get together like this as I tend to prioritize my time for colleagues, clients and prospects.

I sure am glad I blocked out an hour though because the entertaining and informative conversation made the somewhat greasy Chinese food more easily digested.

It turns out this consultant was part of the operational team that helped build Sun Microsystems into a global powerhouse.  She has since consulted with start-ups that collectively raised more $7B in the public markets on top of the hundreds of millions of dollars in private equity funding they attracted.

Perhaps the most interesting part of the conversation was when the topic turned to the preferred age of a client CEO.  I shared that Strategic Communications Group (Strategic) tends to shy away from companies led by top executives under the age of 35.

They lack discipline in the execution of a strategic plan which creates stress for their executive team, staff and external consultants.  The aggravation simply isn't worth it, I contended.

She fired back that CEOs who are in their 20s, 30s and (even) 50s are preferred.  It's those in their 40s who she struggles with the most.

Her explanation was crisp and logical.  Younger CEOs take the necessary risks that create value for entrepreneurial start-ups.  They embrace the prospect of  failure.  These youthful executives believe they'll have another opportunity if their current venture implodes.

CEOs who are 50 years+ share this tolerance for risk, although for a different reason.  They've most likely already made their money, so any success at this point merely adds a nice zero to their personal wealth.

She argued it's the 40 something crowd that is often the most gun-shy when it comes to executive risk taking.  If they have yet to make significant money, this could be their last run at wealth creation.  And that can make them nervous and overly analytical.

This perspective has given me something to ponder.  As a CEO in his 40s who has yet to generate significant wealth, pondering is what we do.


Rick Lowrey said...

Great blog post Marc. I wasn't quite ready for the connection to personal wealth creation when I was reading it. However, your lunch conversation does make sense to me as I reflect on the CEO's that I've either worked for or those that I worked with as we helped grow their business. I was going to say I didn’t think there is an "ideal" age as long as the connection to the business is real, the passion for the solution is genuine, and the commitment to employees and customers is truthful. Thanks for getting my brain started this morning with a good post!

Marc Hausman said...

Hey Rick, thanks for the comment as you certainly speak from a position of authority about this topic.

The "personal wealth creation" issue was unexpected for me as well. Yet, it's a good point and certainly helps explain the decision-making I've seen from some of Strategic's clients.

(Full disclosure: Rick and I have known each other professionally for the better part of a decade. I consider him a friend.)

Micheal said...

While I'm not a CEO, I do think that we're starting to see an interesting trend with 20-somethings making better choices. Part of that example comes from Google, which decided to keep the founders (the creative team) on task while hiring a more seasoned and risk-averse sounding board. For Google, it's worked amazingly well and for young entrepreneurs, it's a case example of how to balance unbridled creativity with seasoned business acumen.