When a Leader from Outside the Box Steps into Your Circle

Katy Caudle, Director of Research

“We want someone who can think outside the box”. All but cliché in business, this phrase can illicit groans from hiring executives and executive search consultants alike. But after the particularly difficult times of the last couple years, candidates who bring innovative ideas to the table and a fresh pair of eyes from outside the industry can be highly coveted.

Hiring an executive from outside your industry, at least at the highest levels, has been a popular way to accomplish this for a while. In 1983, John Sculley left Pepsi for Apple. As PepsiCo’s youngest-ever President, he’d had considerable success and Apple had faith that his marketing prowess was just what they needed to sell personal computers. In 1993, IBM brought in former Nabisco CEO Louis V Gerstner Jr. as their new CEO. He knew nothing about technology, and though shares in IBM dropped considerably when his appointment was announced, he was a seasoned executive with a strong history of organizational leadership, and he was thus able to successfully deal with the internal problems affecting a company with a solid product. In 2002, United Airlines recruited a ChevronTexaco and Dynegy executive to be their Chairman, CEO and President. Though he had little experience outside oil & gas, they believed that someone from outside the industry could revitalize the struggling airline. Just recently, The Alexander Group conducted a CFO search for a law firm where the successful candidate came not from another law firm, but from Playboy.

So what’s changing about this long-established hiring strategy? It’s that it’s finally making it out of the C suite. As consultants, we’re starting to see clients open up to the idea that the best person for the position at the VP or regional level may not be hiding in the most obvious places. Like their C-level counterparts, companies are finding that the most important skills for someone on the front lines of management aren’t necessarily tied to knowledge of the company’s product or sector. Depending on what the new individual is being brought on board to do, cultural leadership and functional skills may be more important than direct industry experience. For example, a manufacturing client looking for a Regional Vice President of Human Resources isn’t nearly as concerned with the candidate’s experience in heavy industry as they are with his or her previous work history with companies known for their outstanding human resources practices. Similarly, a law firm looking for a Global Operations Director would rather see candidates with strong experience managing multiple global offices in a corporate environment versus those with a direct competitor who may not have the international leadership background.

Obviously this can’t work for all companies and certain industries haven’t been able to jump on this trend. In particular, positions in healthcare, energy and engineering require specific technical knowledge and skill, and the company could actually be hindered by someone without contextual knowledge and an understanding of the industry. Moreover, you have to be comfortable with a certain level of risk. It can feel chancy to hire someone who isn’t from a similar environment and you have to know if your company can afford to take that chance. Ultimately, the hiring manager has to make the time commitment to help fill in the gaps for the outsider coming on board. However, if you’re willing to have a little faith, this strategy can breathe fresh air into a team at every level of management and allow for the best possible candidates to be found by broadening the candidate pool. As one of our clients said “Our new VP of HR brought many best practices to us that our industry has not yet embraced. Coming from outside our industry, he looks at what we do with a different set of eyes. We realized it would be a risky move for both him and us but we have been richly rewarded with a visionary executive who has had significant impact.”

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