Leadership challenges, the Nobel Prize and 40 year old CEOs
Gone are the glamour days of being a CEO. Leadership in the 21st century is more complex, grueling and challenging than ever before. Today’s leaders face unique challenges that require a unique approach.
Authors Andrew Cave and Steve Tappin interviewed 100 global CEOs who collectively have over 1,000 years experience. The general consensus was that leadership today is more challenging than it used to be. The definition of business success has changed because a relentless pursuit of money is no longer socially acceptable. It also takes a special type of leader who can create a global organization that is socially responsible, attractive to talented people, financially sound and technologically savvy. It takes a rare personality who is able to balance the demands of leading an international business and also have time for family, friends and personal interests. Few people have the self-confidence, ability and personality to overcome the formidable modern business challenges that lie before them.
With all that in mind, here is something interesting …
Researcher Benjamin F Jones, from Northwestern University, examined the 20th century winners of Nobel prizes in the sciences, economics and technology. He noticed that the average age at which recent winners have made contributions to their field has increased from age 23 in 1900 to age 31 in 1999.
This makes sense because reaching the highest levels is much harder that is used to be. Prizewinners have to understand what has gone before them and need years of preparatory study before they can make a unique contribution.
Ironically, the age of CEOs is decreasing. This doesn’t make sense, considering the unique wisdom, business savvy, courage and adaptability that are required to overcome daunting the challenges the CEOs outlined in their interviews. Research by the leadership advisory firm, Heidrick and Struggles, has confirmed that the average age of FTSE100 CEOs is dropping to around age 40. Are younger generations better equipped to deal with modern, global business issues?
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Perhaps it is not the rigors of the job but the fact that compensation programs have reached the point that CEOs are becoming rich after only a couple of years at the helm. Nardelli got 200 million from Home Depot, Fiorini got a little over 180 million from HP, and both companies did poorly during their times as CEOs, the list goes on and on. Since compensation is no longer tied to performance, tenure is the only requirement to landing wealth. It certainly provides them the independence to pursue other opportunities that may not have the headaches of running a public company. They can come back as Nardelli has or they can go into politics as Fiorini has. It might not be a question of being better equipped, it might just be the old adage, “follow the money”.
The question of whether young people are better equipped than older people to handle the 21st century burdens of a CEO is almost laughable. Look at the track record of young CEOs. On average they remain in their positions no more than 5 years generally due to their ousting and companies are in constant turmoil for years after they have left.
We should take a lesson, once again, from the Japanese on leadership. They grow their corporate leaders from within and they generally have gray hair when they take on the role of CEO. To suggest that someone older than 40 is incapable of seeing a global picture and too set in their ways to keep up to date is ludicrous.
With time comes wisdom and experience that is on-the-job-training by young CEOs. I’ve just left a company that has a 40 year old President that spent her entire career in the headquarters of a major aerospace company. She knows the inner workings and culture of the parent company, but hadn’t been exposed to customers directly or the business she was tapped to lead. It’s been a dismal failure because young people don’t have the ability to listen to experienced employees and they never want to hear that their grand idea or strategy didn’t work the last time it was tried. Their egos interfere with their ability to consider other viewpoints.
I’m 60 years old and am proficient in Microsoft office, have an account on LinkedIn, Brightfuse, and Facebook. I’ve been successful in running business units for Fortune 500 companies. Am I out of touch with today’s business world? Not on your life! The reason we continue to have widespread age discrimination in the U.S. today is because of the misconception, mostly from young managers, that older workers are set in their ways. I had the fortune to have people in their 70s and even 80s working for me in a highly technical profession and I never once found them to be unwilling to try new things to help our business succeed.
It’s time that our society realized the value of mature workers and recognize that maybe the Japanese have the right formula for executive progression. Apparently the Japanese automobile industry has it figured out over the U.S. auto industry.
In addition to the fast moving technical progresses and customers’ sophistication as mentioned, it is true that managing a company in a globally competitive market is much more complicated with many different aspects than CEO’s in a few decades ago who did not experience the global competitions too much in meeting their balance sheets.
If we look back what many Western European CEO’s did in the past, they were struggling to compete aggressive competitors from newly industrializing American competitors. Now many American companies are struggling due to competition from Asia and elsewhere. Many CEO’s in China are much younger than CEO’s here in the US. They are much more energetic with agility and mobilty, but many of them fail due to lack of experiences. At the same time, many giant European and American companies with CEO’s from the old schools are in the fate of American auto industry.
My conclution is that successs of CEO’s does not necessarily depend on ages, but individual capability who can adapt to a landscape in a global market and competitive changes one step ahead of others. Even old guard CEO’s can achieve this by having smart young staff members who can be trusted in their judgements.
Mr. Shin, you’re wise beyond your years. You understand the value of wisdom, but the energy of young people. I believe the old adage of “a person is only as good as the people he surrounds himself with” applys here.