Insider or outsider

People coming new to the organisation from outside it are at a disadvantage when it comes to quick and effective performance as they have more to learn and less to draw on in terms of networks and knowing who to go to than insiders moving role. This organisational know-how is particularly necessary at senior levels – a point discussed in some research on the best performing CEOs in the world

"In our analysis of the 1,999 CEOs, we determined that insiders tend to do better. On average, they ranked 57 places higher than outsiders in the full list."

"… industry- and firm-specific knowledge is critical when it comes to generating long-term growth. Among the up-through-the-ranks leaders on our list are Yun Jong-Yong, who joined Samsung straight out of college and worked there 30 years before becoming CEO, and Mukesh Ambani who joined Reliance Industries in 1981, when it was still a textile company run by his father.

This finding is endorsed by the author of The CEO Within: Why Inside Outsiders Are the Key to Succession Planning. In an interview he makes the point that

"The great advantage of an internal candidate is that he or she knows the people, systems, and culture of the company. That means the candidate knows the company's strengths and weaknesses, who can be relied upon to help change things, where world-class competence does or does not reside, and how things can best be transformed."

But the statement is qualified by his observation that:

"(With this) you need an outside perspective to have a true, even brutal, understanding of what needs to change if the company is to succeed in the competitive environment that lies ahead. The inside-outsider knows that if his or her vision of the way the world is headed is remotely right, then real change is needed and he or she has the understanding of the company and confidence of its people to drive that transformation."

However, having an inside-outsider perspective is not a guarantee of success. Even someone with the attributes, skills, and technical expertise to get on and fit in may be thwarted by one or more of the four factors required to fit in and get on in a new role, namely:

  • The ability to learn 'the way we do things round here', including ways of behaving, operating, and thinking as well as norms and values.
  • The capacity to learn this within an acceptable time frame.
  • The support of established employees in helping him/her integrate.
  • The ability and willingess to pay the 'price of membership'

Regardless of whether the newcomer to the role is an insider or an outsider he/she faces a challenging task as a survey conducted at IMD notes:

"Fully 87% of the 143 survey respondents either agreed or strongly agreed with the statement, 'Transitions into significant new roles are the most challenging times in the professional lives of managers.' And more than 70% agreed or strongly agreed that 'success or failure during the transition period is a strong predictor of overall success or failure in the job.''