New CEOs face a critical strategic choice. Should they settle into the job, spend a year or more getting to know their businesses, and then start shifting the portfolio? Or is it better to act quickly and boldly early on to divert resources from mature activities to a new generation of corporate opportunities?
McKinsey & Co observe CEOs following both approaches, but one appears to deliver superior results: between 1990 and 2010, chief executives who reallocated corporate resources early in their tenures generated materially stronger returns for shareholders than those who waited. In the process, these active CEOs also seem to have prolonged their own time at the top. What’s more, a similar decisiveness in changing the composition of the top team also brought disproportionate longer-term rewards.