Boards of Directors: Consider THIS Before You Select Your Next CEO

Ryan Gottfredson

by Ryan Gottfredson

Share this post

One of the primary responsibilities of boards of directors is to select the organization’s CEO.

Whether or not you are on a board of directors, I have a question for each of you:

  • Board of Director Members: Do you consider vertical development and vertical altitude when selecting a CEO
  • People who aren’t on boards of directors: Do you think boards of directors ever consider vertical development and vertical altitude when selecting a CEO

My hunch, which has been confirmed by many board of director members, is that the vertical development or vertical altitude of a CEO is not considered when selecting a CEO.

But, it can be an absolute game-changer if they did.

In this article, I want to provide:

1. A basic overview of vertical development for those not familiar

In doing so, I am going to present three levels of vertical development that can help a board of directors ask and answer the question: “What is the vertical altitude of this candidate?”

2. An explanation for why it is so important to consider vertical development in the selection of a CEO

3. Additional insights related to vertical development and selection

Overview of Vertical Development

(If you want the full story, purchase my book, The Elevated Leader)

I imagine that you are familiar with Jim Collins’ book, Good to Great. In this book, he discusses the vital importance of “Level 5” leaders. These are leaders who possess a unique level of cognitive and emotional sophistication that allows them to transform organizations.

Level 5 Leadership

At the time Collins wrote Good to Great, he said that while he is routinely asked how to help people become “Level 5” leaders, he was not sure how to do that.

But, in the 20 years since Good to Great was published, we now know how to help people become “Level 5” leaders. It is a process called vertical development. And, “vertical altitude” is simply the level one operates at.

Vertical Development Levels

Vertical development experts do not rely upon Collins’ framework. But, what is interesting (and probably shouldn’t be surprising) is that vertical development experts identify three primary vertical development levels, and they align with Collins’ “Level 3,” “Level 4,” and “Level 5.”

I call them Mind 1.0, Mind 2.0, and Mind 3.0.

Executives primarily operate at one of these levels. And each level represents the maturity and cognitive/emotional sophistication of their body’s internal operating system. Those at the two lower levels are commonly driven by fear, either for self-protection or self-promotion (which is often operating below the level of their consciousness). Those at the Mind 3.0 level are more cognitively and emotionally sophisticated. They have the capacity for the personal humility and professional will that Collins describes.

The table below is designed to summarize these differences:

Differences

Mind 1.0 executives (7%) are internally wired for comfort.

Mind 2.0 executives (85%) are internally wired to achieve outcomes.

Mind 3.0 executives (8%) are internally wired to achieve a long-term purpose that is bigger than themselves.

Why is it so important to consider vertical development when selecting a CEO?

This can be summarized in the three Laws of Vertical Development for Leaders:

  • The culture and processes of an organization is a reflection of its CEO’s vertical altitude
  • Organizations cannot evolve beyond its CEO’s vertical altitude
  • The most effective way of transforming an organization is to select a CEO who operates at a high vertical altitude (or develop a current CEO to operate at a high vertical altitude)

When you look at any organization that has radically transformed for elevated success (e.g., Ford, Microsoft, Walt Disney Animation), at the core, you will find the implant of a vertically developed leader.

The vast majority of organizations I work with are led by a Mind 2.0 CEO. When I do a deep-dive assessment of the organization’s leaders, here is what I find versus what I expect from organizations led by Mind 3.0 CEOs:

Orgs led by Mind 2.0 and 3.0 CEOs

Additional Things to Consider Related to Vertical Development and Selecting a CEO

Vertical development is not the only thing to consider

To be clear, I am NOT suggesting that vertical altitude is the only thing to consider for selecting a CEO. It is a necessary, but not sufficient, element of effective CEO selection.

For example, you can have a really vertically developed person that does not have the experience or skills (i.e., horizontal development) to lead an organization. By adding vertical development to the selection equation, it helps us avoid leaders who (1) have the experience and skills but (2) lack the cognitive and emotional sophistication to employ that experience and skill effectively.

Boards struggle to focus on and investigate the vertical altitude of candidates

If you are a board of director member, you may not like hearing this. But, let’s play this out.

Often, the members of boards are directors are former or current CEOs or executives. If 85% of executives primarily operate in Mind 2.0, what do you think most boards of directors are comprised of? Mind 2.0 members.

Thus, often, boards of directors want to find CEOs that are like them: outcome-focused, afraid of failure, not willing to be vulnerable, someone who can hold on to what has worked in the past, among other things. They struggle to value Mind 3.0 leaders who are more purpose-focused, create space for failure, willing to be vulnerable, and wants to let go of what has worked in the past.

Conclusion

If you are a member of a board of directors, I hope you find this insightful and that you add “vertical altitude” to one of the things you explore when you next select a CEO.

If you are not a member of a board of directors, please share this with someone you know who is.

If you want to partner with me to assess the current state and altitude of your organization’s leaders, I have an exploratory process designed to do that, which will leave you with:

  • My deep-level observations
  • Recommendations for leadership development
  • A roadmap for elevating your organizations leaders.

If you are interested in this, connect with me here: Connect with Ryan

Subscribe for the latest posts