Which type of CEO is better?

CEO departures spiked this year to higher levels than ever before.

This massive change-of-guards swept through every business sector.

Digital. Technology. Insurance. Banking. Travel. Retail. Food. And others.

As a result, significant swaths of the economy are now led by new leaders.

As businesses go through massive leadership turnover, one question becomes critical.

What type of CEO works best for these companies?

In other words, do companies hire the right CEOs?

New research published in the Journal of Financial Economics offers invaluable actionable insights—for technology companies as well as for non-tech companies transforming into tech-enabled digital businesses.

The research looked at the CEOs leading U.S. high-technology firms.

Turns out that one in five of U.S. high-technology firms are led by CEOs with hands-on innovation experience as inventors.

The key finding shows that companies led by “Innovation CEOs” produce higher quality innovation, generate a greater number of higher-value patents in the domains where the CEO’s experience lies, and deliver stronger business performance.

And in case you wondered, this impact is not a matter of correlation but actually one of causation.

In other words, it’s about the CEO.

The reason is Innovation CEOs have superior skills that enable them to better identify, evaluate, select and execute innovative investment projects and strategy.

What’s the takeaway, then?

  1. Executive leadership in the innovation economy must focus on executing innovation and must have strong innovation skills

  2. As every company must transform itself into a tech-enabled, digital-oriented business, putting an Innovation CEO at the helm is critical to their future

  3. Larger companies face the most urgent need for Innovation CEOs because of the negative relationship between size and innovation


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