CEO Hold the Key to Unlocking Entrepreneurial Culture in SMEs

As the old adage goes ‘Change is the only constant’, founding CEO of startups or SME at some point of the company’s growth would have to exit for one reason or another. A new CEO in a company often brings hope, energy, perspective and possibly new strategic objectives.

In order to for an SME to grow, develop and maintain its competitive advantage it must constantly innovate. A new CEO especially has to prove his mettle hence must focus on an entrepreneurial strategy underpinned by innovation.

The debate of whether to hire externally or internally comes into play especially on the question of which hire would best drive the entrepreneurial agenda for the company.

Research has shown that CEO hired from outside the company have a high degree chance of shifting the company’s strategic focus while an internally hired CEO are likely to adopt new entrepreneurial strategies faster.

Regardless of how a CEO is recruited there are strong reasons why they must adopt an entrepreneurial strategy. First the company board of directors expect the CEO to take the company to greater heights most probably through new product development, new market development etc, The new CEO will be giving a clear signal to all staff that it’s not going to be business as usual and that he/she intends to achieve a strong and immediate impact.

This fact is crucial insight to board of directors and shareholders seeking to recruit a CEO for their company. They can leverage CEO replacement to arrest its current failing strategic direction and increase its innovativeness. Similarly they must be cognizant that a CEO transition may involve quite a bit of time, money and unwanted changes that they might not have envisioned. A new CEO would want to mark their territory and this may involve making dramatic changes that a conservative board did not expect.

Board of directors and shareholders need to take into consideration; whether the current strategic plan is working or not, whether change is needed and the speed at which the company would need to shift. These questions would answer whether to recruit their next CEO from outside or within.

CEO recruited from outside although brings great and diverse experience, energy, hope and experise would need time to adapt to the new company and the company would need to adapt to their ways of doing things meaning that it would take at least two years for the new CEO to start changing things; hence any meaningful changes are expected between Two to Four after taking charge.

Probably if the board is looking for an immediate strategic shift they may best be served by an internally recruited CEO