From Management Consulting to CEO: The Fork in the Road
You’ve done the easy part! You went through “The Program.” This is the part of your life from college to now that is universally accepted as the way to build your business career – up to and including, management consulting. It goes something like this:
You completed your degree from a top undergraduate school, worked for two to four years in a “positioning job” for grad school, then ground through that MBA or equivalent at another top institution. Then you gave up a “real life” for several years of management consulting, traveling to “East Wherever” and solving other people’s problems.
But now you’ve had enough; you’ve paid your dues. You’re not only ready for a lifestyle change, but it’s time to do something in the real world. You want something challenging, but also that’s “fun.” Of course, it has to keep you “in the money” and have an incredible upside. And by the way, this CEO thing: it has to happen in five years.
And why shouldn’t it happen? You’re a highly trained business consultant who has gone to the best schools and advised senior management at some of the most prestigious companies in the world. Everyone should want to hire you. That’s why you spent 10-15 years of your life killing yourself: to get to CEO. After all, isn’t it guaranteed?
Not quite guaranteed! The real answer is “maybe yes; maybe no.”
Your future CEO status depends in great part on your first professional move out of management consulting. This is truly the fork in the road of your career, and your decision at this time is critical to your ultimate success.
Management consultants are among the most broadly trained professionals in business. But your diverse set of skills could leave you with too many options. Do you go corporate, pre-IPO, VC or private equity? Product or service? Established industry or new economy company? Strategy or operations? Staff or line? What about your title? How important is it? And how many people do you have to manage to be a “player”?
So many options! How do you make the right decision? Hopefully, the following will provide a roadmap, especially if you are thinking “CEO.”
Your path to CEO is constructed upon a solid foundation of building blocks. These building blocks in your career started way back in grade school and successfully positioned you for the top college, B-school and work environments, including management consulting, which rapidly moved your career forward. Because you’re not going to be a CEO now (except in entrepreneurial or exceptional circumstances), you must continue to create solid career building blocks to escalate your professional status until ultimately reaching CEO. This is your No. 1 strategy to CEO.
The choice you make now will impact and determine the rest of your career, so it’s crucial you make a good one. In the vast majority of cases, your first job / employer out of consulting will not be the final stop in your career. So it’s critically important that this stop becomes a successful building block for the next job and / or corporation. By following this logic throughout your post-management consulting career, you continue to control your own destiny to CEO.
The Fork in the Road to CEO
If you want to be a CEO of a mid-sized to a large company, know that the majority of chief executives’ backgrounds have common links. Almost all of these CEOs come from one of two worlds: they either trained in a big corporate organization, or they started the company. Period.
The Major Corporate Route
Once you’ve got your sights set on CEO, the question becomes, Where to start? Because most corporate managers of mid-sized to large companies trained in bigger, corporate environments, the best place to begin is often with a large company. Choose one that’s either product or service-based, but make sure it’s big. The large corporate world can give you a number of advantages that other companies can’t:
Scale– Major corporations operate on a large and often international scale. Their systems and procedures that encompass the process are usually state-of-the-art, and you get paid for learning how to use and run them. In most large companies, the geographic scale also includes both domestic and international business, a major plus in broadening your background.
Training and Mentoring– As much as you learned about big companies in college, business school, and management consulting, it was nothing compared to what you’ll learn on the inside of a major corporation. As a consultant, you simply advised senior management, and your reputation left when you did. Here, there’s continuity. You’ll have a chance to work with and learn from the top personnel in the company and ultimately implement a real-world strategy.
Promotions and Raises– Big company, big opportunity. It’s that simple. Large companies have more levels on the corporate ladder, which translates into broader, large-scale responsibility with each promotion.
Less Risk, More Security– The pre-IPO is sexier but often riskier. The corporate world is more stable and offers many more opportunities for generic skill acquisition, scale, and training, plus visibility to the executives in your industry. There are naysayers who complain of too much bureaucracy, but those who have large-company experience are often better qualified for positions in medium-sized and smaller companies, where they will prosper and have a greater impact.
Equity with a Track Record- No disrespect to the biotech, Internet, and telecom startups that produce instant millionaires with their IPOs, but the subsequent 80% stock plunges have proven that the bloom is off the rose for many. Major corporations are rocks. Their stocks have been around for years and they provide more security over the long term. Options, if offered frequently, can be the major wealth provider in your life and should be considered when making your decision. Granted, the stock may not post huge gains, but it promises to be less volatile over the long run. Many companies do restrict stock grants rather than options, so there will always be some value to the equity grants.
Visibility, Skills Transferability, and Recruitability– The top players at successful, big companies are well-known within the industry and coveted by other companies. Their skills are transferable to companies of all sizes, and they are often needed to fill top positions (including CEO) of smaller firms and pre-IPO startups. It’s extremely rare that a person trained in a smaller company can secure a senior level position in a major company at the corporate level.
The Entrepreneurial Route
Coming straight out of management consulting, attaining CEO in the first job is “not gonna happen” in a major corporation; however, it could be offered in a smaller firm (especially in a client from management consulting days) or a startup. Although a bit risky, you have to consider it if:
1. You run the show, or at the very least the day-to-day as COO, with a great CEO or VC firm behind the effort;
2. It is in a true growth industry;
3. It is well capitalized;
4. You get a “boatload” of equity (including grants as well as options).
A “sign-on bonus” is a plus, and a contract (with a severance agreement) is also extremely important. But you have to think “two years max to pay dirt” (see Two-Year Rule below) or your career could be in serious jeopardy.
Well-known entrepreneurs like Michael Dell, Bill Gates, and Mark Zuckerberg had an idea, took a chance, and became legends. They had their fate in their own hands and made an impact right from the start. Some of the original people with them made fortunes, and the first wave of hires was set for life.
The next several tiers of entrepreneurs who started and run mid-sized and smaller but successful companies aren’t quite as wealthy (not that they have to fly with non-refundable tickets). And the second and third layers of management are probably comfortable, but not rich. Of course, if these smaller companies are acquired, there is a windfall for the owners, but the others have only moderate cash-outs.
What’s the bottom line here? Starting your own company is one path to CEO, but if your startup doesn’t become a Microsoft, Dell, or Facebook, don’t count on earning millions of dollars. In fact, the money you make at a modestly successful startup probably won’t be any greater than you are making now as a management consultant.
Narrowing the Choices
You have the skills, and you have the résumé. So how do you choose a new job? When making your decision, the most important point to remember is to control your own destiny by continuing to construct those building blocks. By doing so, you continue to keep the majority of your options open. Take a job that opens more doors through functional and managerial skill enhancement. Some things to consider:
Industry– For large companies, almost any industry can provide an excellent career for the management consultant. Of course, if you had an industry specialization as a consultant, you have a decided advantage going with a major player in that field. For non-specialists, consider industries with long track records of growth (consumer, financial services, pharmaceutical, computers, some manufacturing), or those poised for growth in the new economy (telecom, Internet, media, biotech, health care, etc.), both of which have a corresponding stock appreciation. Although it’s generally perceived to be easier to transfer skills from product to service-based firms, those barriers are now coming down (for example, ex-McKinsey consultant Lou Gerstner trained in service, then ran both a food and a computer / services company).
Position– This decision may be among the toughest you have to make. It generally comes down to a staff versus line job, with the compromise being a line job in a functional area. All are solid choices if there is a track record of promotion from these positions into senior management. You’ve got three basic ways in:
1. Strategy- A strategy position often leads to a promotion into a functional or general management line position in an operating unit, or into a more senior, corporate role. But each company is different. To get an idea where you may land, find out where some of the strategy alumni ended up, both within and outside the company.
2. General Management- Positions in operating units of large companies are attractive, although sometimes harder to obtain. They provide real management and P&L experience. Look for jobs that have a major strategy component, as well as positions that will give you an opportunity to grow. Any position that gives you a chance to make an impact is a definite résumé builder and should be considered at or near the top of the list.
3. Functional Management- Positions such as Director or Vice President of Marketing, Finance or Operations are excellent jumping off points into general management or very senior functional roles. Look for functional management positions in either corporate or divisional settings that will give you visibility and a chance to make an impact.
Corporate Breadth– If possible, choose a global company. Working for one will give you valuable knowledge and international experience. The company should also be publicly traded so that you can obtain substantial equity. Privately-held firms can almost never make up for public equity with cash. Your company should have a track record of mentoring and promotion, and a history of innovation and growth. Don’t consider a turnaround unless it has a new and dynamic CEO, a household brand name with a solid image, or a stellar product. Rising tides lift all ships. Ebbing tides do the opposite.
Reputation and Standing in the Business Community– Look for recognized leaders and developers of top talent. Has the company produced executives that have gone on to run other companies? Companies like GE, PepsiCo, Ford, P&G, American Express, Disney, and Google have.
Consultant-Friendly– Groundbreaking may be fun, but it’s not exactly safe. Go to a company with a track record of promoting management consultants. You’ll need all the allies you can get. The common bond you share with these potential hiring managers could help you when you go up for the promotion against a non-consultant or an external candidate. And never take a job with a company that has never hired a major management consulting firm. You’ll most certainly be an outsider there.
The Ability to Make an Impact– Take a job with clout. To accelerate your career, you’ll need a position that lets you make a recognizable impact. Visibility to senior management is key, and being in the middle of major issues and corporate initiatives are critical. Strategy roles should have CEO buy-in. General management positions should be within divisions that are important to the company. Functional management jobs should give you the opportunity to make decisions that impact the bottom line.
The Paycheck– Those dollar signs a potential employer dangles in front of you may look attractive, but you should never take a job based solely on money. What’s critical is that you position yourself for a senior management role down the road. The difference between a few thousand dollars extra now in a mediocre job, and the millions later in senior management, is worth the wait. Also, if the company is in such a position that it literally has to “buy” talent, there may be deep issues within the organization that will bubble up within a year.
Giving Yourself An Edge
Several other key factors can make or break your ascension to CEO. They are often tough to swallow, but while ignoring them may not mean career suicide, it could allow others who do address them to leap ahead of you. Pay attention to the intangibles.
Flexibility– The aspiring executive has to be flexible to new opportunities. It’s not good to sit in one job for too long. You become pigeonholed as a specialist. Continued learning is key, and you’ve got to have a wide range of experience to advance. Ask for and even welcome change.
Travel- If you want to run the company one day, you’ve got to meet the people that make it up. And that means travel – lots of it. Plan to visit operating units and attend important meetings and conferences. You want to encourage travel, not discourage it, even if it means occasionally being away from the family at inconvenient times. If you don’t have a family, use your flexibility to your advantage now, and you can move your travel into maintenance mode if / when you later start a family.
Relocation– You may be attached to the place you live, but to move up, you have to be willing to move on. You’ve got to go where the company needs you. Stay open to relocation and try to grab at least one international assignment during your career. The family may not like moving around, but on the plus side, your kids will probably turn out more well-rounded, and you’ll have had a chance to see new places on an expat package. The right expat assignment can make your lifestyle essentially “free.”
Positioning Moves- Everyone hates to go laterally, but sometimes it’s the most important move. Be prepared to move if it puts you in line for a great job two years down the road. Senior managers can ostensibly do parts of every major job in the organization. If you lack experience in a major functional area, you may be passed over for someone with a more diverse background.
Title vs. Substance vs. People Management– Titles may look nice on a business card but opt for substance every time. Does it really make sense to become CFO or General Manager of a small business, when your goal is to become CEO of a larger company? Probably not, because you’ll miss out on the scale of a larger company. Managing people is important, but not if the job isn’t a building block to the next level of your career.
It’s a Job and Your Career: “Fun is for the Feeble-Minded”– While fun would be nice in your next job, it should never be put ahead of career considerations. Fun is for after work and on weekends, and success in the job buys you fun. Your lifestyle may get easier, and you may never again have the insane hours consulting brought, but save the fun for non-working hours if it conflicts with your quest for CEO. Besides, if you are tracking toward CEO properly, the fun will be built into the interesting nature of your assignments and the excitement of building your career.
By the time you come out of management consulting you usually have a minimum of five to ten years of pre- and post-MBA experience. So how long should it take to make senior management?
Plan on working a total of about 20 years before reaching CEO. In a Fortune 100 company, the time frame could be as long as 25-30 years, although Divisional COO / CEO will come earlier. In a medium-sized company, coming out of a major corporate environment, you could achieve COO / CEO in around 15 years.
Given these parameters, you can’t waste a lot of time making mistakes. Your first job out of consulting is critical to putting you on the right path, and it has to be with a company that will mentor and promote you, in a job with impact, visibility, and support from senior management. You’ve got to cover all functional areas in the next ten plus years and have at least one job that includes P&L responsibility with a large constituency underneath you.
Before you become CEO, you’ll probably be President or COO. Typically, you need to run day-to-day operations before you can plan a strategy for the whole corporation. The position prior to COO will likely be as a divisional President or Executive Vice President of a functional area, such as marketing, sales, finance or operations. Target these positions for career development, beyond your first move out of management consulting.
A Few Other Important Things To Know
While Training, Bigger is Better- Every company, large or small, will be attracted to an executive who has trained in a successful, large company environment. The scale is huge, the systems are more comprehensive, and the level of impact and visibility is tops. You can usually move up a notch from one major to another, or take the quantum leap to CEO in a smaller environment. But it is extremely rare that a person trained in a smaller company can secure a senior-level position in a major company at the corporate level. A smaller division is possible, but situations where small company executives became large company CEOs are extremely rare.
The Two-Year Rule- In general, your most recent two years of experience are most relevant when being considered as a candidate for a position. Building blocks of the past, which got you to where you are now, don’t count as much, so it’s critical that each move is upward (or positioning) on the CEO track. If you take a chance, and if it doesn’t work within two years, don’t make the same mistake twice. Get back on the large corporate career track quickly.
If you opt to work for a venture capital firm, you may be considered more as a deal maker than a consultant after two years. By this point, you’ll have lost part of the identity you earned in management consulting. Many times, if you want to get to corporate, you have to take a step back to the level you were when you went into VC. It’s a big risk if you want to be a CEO someday.
The same goes for pre-IPO and smaller company jobs with great titles. If your company is like most and fails or tops out early, the best thing to do is get back on the large corporate track within two years. If you don’t, your judgment may be questioned. Think about it. Does a senior executive want to take a chance on a person with questionable decision-making capabilities? Probably not.
Never Make an Emotional Career Decision- Listen to your head, not your heart. Make no mistake: a compromise or two based on emotion can knock you off the CEO career track. And you may not know it until it’s too late. Look carefully at every opportunity.
The key to success is to construct your career with the right building blocks, which allow you to control your own destiny at the times when it counts. You can do that now if you take the correct fork in the road. To become CEO of a major company – unless it is that unbelievable, “can’t miss startup” opportunity now as CEO / COO – the rule of thumb is:
Stay with the big firms for your whole career until CEO, or until you can:
– Jump off into a CEO role of magnitude at another firm
– Control your new firm’s destiny
– Secure a major equity position
Don’t give into the temptation of the quick buck or job title. Take the high road to career maximization, personal stability, and financial security.