5 Things Every Aspiring CEO Should Know, From the Coach Who Advised Disney’s Bob Iger
America’s corporate chiefs have long sought the counsel of outside advisers. A Fortune 500 CEO will often rely on a trusted investment banker for guidance in clinching a merger, or a favored consultant for help in framing and selling a strong strategic vision, or a brand-name attorney who serves as an all-around consigliere.
But while most leaders have a circle of confidants, no one else today is playing that role for as many top executives as Marc Feigen. You’ve probably never heard of Feigen, but this former McKinsey consultant has lifted the role of c-suite counselor to an entirely new dimension. Call him the CEO Whisperer.
Feigen (pronounced “FIGH-gen”) currently acts as a kind of alter ego for a dozen of America’s top bosses, an A-list that includes Walt Disney CEO Bob Iger, Estée Lauder’s Fabrizio Freda, and The Hartford CEO Chris Swift. When a crisis strikes, the first person a corporate titan calls at 3 a.m. may well be Feigen. And in a conversation with Fortune—Feigen’s first-ever interview with the media—he shared some of the principles and lessons that have guided so many of his corporate-chief clients to major success.
When a leader is bent on disruption, Feigen is expert at helping the boss frame a plan for disrupting at just the right pace so that a rushed, undersold upheaval doesn’t endanger a successful core business. Say a CEO encounters a big threat such as an activist attack: Feigen will arrange a dinner with a renowned current or retired CEO who’s weathered a similar challenge, drawn from his exclusive “kitchen cabinet” that includes DowDuPont CEO Ed Breen, former Time Warner chairman Dick Parsons, and retired Hallmark CEO Irv Hockaday.
Feigen, working in tandem with his firm, Feigen Advisors, fulfills three main roles. First, he advises boards on best practices and potential pitfalls in choosing a new CEO, and ensuring a seamless transition. He’s worked on a dozen CEO successions at Fortune 200 companies, including those at Estée Lauder and Ford.
Secondly, after a CEO-in-waiting has been picked, Feigen becomes that execs coach. CEOs are often seconds-in-command whom the board informally favors to succeed the current CEO. Feigen typically works with these lead candidates for a year to 18 months prior to their official appointment. He prepared Iger for his ascension at Walt Disney in 2004 and 2005, and around the same time readied Estée Lauder’s CEO-designate, William Lauder. In 2008, he advised Lauder’s successor, Freda. And in recent years he worked on two successions at the Hartford: first the appointment of Liam McGee during the financial crisis; and then the transition to current CEO Swift.
In fact, two of Feigen’s clients, Swift and Mark Fields of Ford Motor Co., became CEOs of Fortune 500 companies the same day, on July 1st, 2014. His current client list encompasses an additional half-a-dozen FTSE 10 and S&P 250 CEOs in energy, healthcare, consumer products and financial services. (Several of those clients confirmed their involvement with Feigen but chose to keep that work confidential.)
Lastly, Feigen continues advising those top candidates after they take the top job. His style of counseling is different from the consultants’ approach. “A consultant says, ‘Here’s the problem, and here’s how to fix it,’” says Feigen. “My job is listening a lot, then helping the CEO refine his or her own ideas into a strategy that will convince the board and his or her lieutenants, and advising them on how fast to push radical change.”
His soothing, unobtrusive personality is well-suited to the job. “Marc incarnates the adage, ‘Don’t speak unless you can improve on the silence,’” says Hockaday. Adds William Lauder, “With Marc, it’s not ‘Do this or that,’ it’s ‘What are the issues? Who are the players with stakes in those issues?’”
Feigen spoke with Fortune for five hours over the course of several recent interviews to share his insights. Here were the five big takeaways for other leaders and aspiring leaders.
Boards want insiders as leaders
One big trend that’s transforming corporate governance is a shift towards promoting from within. “Today, companies almost always favor insiders, much more so than in the past,” says Feigen. “When boards recruit from the outside, it’s almost always where the company is under-performing.”
Feigen’s annual survey, The Feigen Advisers New CEO Report, follows trends among arriving and retiring CEOs in the S&P 250, and the most recent edition confirms his observation. Of the 81 newly named CEOs at those companies from 2014 through 2016, 62 were “lifers” who’d spent most of their careers with the company. Another 10 had been hired primarily as CEO candidates, and served several years at the company before being appointed. So overall, over those three years, 89% of the new leaders (72 out of 81) were insiders.
The main reason: “Boards reckon that the markets are changing far too fast for a newcomer to learn the business on-the-job,” says Feigen. “Even if the CEO is an outsider in the same industry, it could take them two years to master the nuances of the new company’s markets, whereas an executive who’s been running a major division can grab the baton at full stride.”
CEOs need prowess in technology
Today’s boards are demanding a skill that older candidates often lack: A mastery of technology. “They don’t have to know how to code,” says Feigen. “They need to understand how technology is reshaping their industry from top to bottom.”
For example, Mark Fields’s track record of innovation as chief of Ford in North America was a major attraction to the directors; as CEO he went on to shape Ford’s new mobility strategy and delivered record profits in 2015 and 2016 that allowed the manufacturer to invest in the future. (He was let go by the company earlier this year amid unease over the performance of Ford’s stock.)
Similarly, Swift’s expertise in applying cutting-edge IT impressed the Hartford board. “A generation of management, mainly top execs, could get skipped over because they’re not comfortable enough with technology,” Feigen says. Feigen predicts that, as a result, many newly-minted CEOs five years from now will be tech-savvy forty-somethings. (Among new executives named to S&P 250 companies in 2016, the average age was 54.)
Learning to manage the board
To sell their strategies—and protect their jobs—CEOs need coaching in an area that’s totally unfamiliar when they first reach the top: selling their vision to a diverse, demanding set of directors. Delicate diplomacy is required to build trust with leaders just as exalted, and opinionated, as the new CEOs themselves. “One of the big differences between a COO and a CEO is that into your life comes this entity called a board,” says Dick Parsons. “Before, I worked for a guy or a gal. Now, I’m faced with a whole group with different points of view and levels of knowledge.”
When Fields rose from COO to CEO in 2014, he worked with Feigen on strengthening his boardroom skills. “You get promoted to CEO by running the trains,” says Fields. “I’d done many presentations to the board over the years, but I needed to develop strong relationships with the individual board members. What Marc recommends, you don’t read in business books.”
Feigen’s template: He advises CEOs to build one-on-one rapport with individual board members—while at the same time keeping those relationships highly professional. “The right approach isn’t being buddies,” he says. For Feigen, the challenge is achieving two objectives: Learning the concerns of the individual board members, and using that knowledge to win their support for your strategy. And those concerns diverge widely.
The best guide, says Feigen, is studying the minutes of board meetings. He compiles one-page summaries for each director based on the questions he or she asks most frequently. By reviewing the summaries, CEOs can discern the issues they need to address with each director.
Feigen also advises CEOs to follow a three-part template for checking the board’s pulse, all based on frequent outreach.
First, the CEO should make a practice of calling one or two directors each month, to get guidance about some specific issue. “Those overtures show that the CEO values the director’s advice outside of the board meetings,” Feigen says. Second, Feigen counsels clients to meet with each director for a one-on-one dinner once a year in the director’s home city.
The third rule addresses a crucial trend in corporate governance, the rise of “executive sessions” where only the independent directors are present. Neither the CEO nor any other representatives from management attend, unless invited. CEOs, says Feigen, should make a practice of speaking extensively to the lead director immediately after an executive session to get frank feedback. “You need to follow up right away,” he says, “so that differences are understood, and surface quickly.”
Feigen also acts as a conduit between the board and the CEOs or CEO front-runners he’s advising. Says Hockaday, the former Hallmark CEO, who’s served on six boards and was lead director on four: “He doesn’t ask directors what the hot-button issues are, he’s more subtle than that. He deduces where the differences lie with the board. And in the case where there’s a CEO candidate, it’s a lot easier for a director to send a message by expressing their misgivings to Marc than to the candidate directly.”
Mastering the ‘black art’ of investor relations
The CEO’s special role in dealing with Wall Street is another fundamental task that may be unfamiliar those about to take the top job. Winning support early on from analysts and institutions bestows two advantages, says Feigen: Time to implement a strategy, and what he calls “permission to invest.” “That’s why mastering the ‘black art’ of investor relations is so important,” he says. “If you haven’t worked to convince the analysts and investors your strategy will work, your stock will sell at a discount, and investors will demand that the company pay out all earnings in buybacks and dividends. If investors believe in your vision, they’ll give you the time to invest for the future, and take your side when activists show up.”
Feigen reads every research report, and with permission from the company, meets with analysts one-on-one and listens to their views. “The CEO is the leading salesperson for the company’s stock,” says Feigen. “But the best CEOs don’t say, ‘Buy my stock.’ They say, ‘Spend more time understanding my stock.’” He advises CEOs to avoid bragging about past results. “This isn’t a report card,” he says. “It’s all about a clear strategy you repeat over and over again, and staying focused on what you’ll do in the future. Investors buy the future.”
Along those lines, Feigen advocates establishing realistic financial goals or “proof points” that, when achieved, garner support from investors. He warns CEOs on the danger of over-promising on revenues. “If you’re counting on big revenue growth to achieve profit goals and it doesn’t happen, then you’ll have to cut costs, including investment,” he says. “That hits future growth, and the company enters a downward spiral.” Instead, he emphasizes maintaining strong and rising margins by controlling costs so that profits rise briskly with moderate sales growth.
Knowing when to consult the wise ones
Feigen’s kitchen cabinet comprises around 18 current and retired CEOs, and includes most of the corporate chiefs he’s now advising, as well as such sages as Parsons, Breen and Hockaday. They’re available to advise both sitting CEOs, and chiefs-in-waiting. “He’s good at connecting me with peer CEOs with similar challenges,” says Freda of Estée Lauder.
For CEO candidates, Feigen provides a kind of moveable feast in counseling. “He uses current and former CEOs as the equivalent of adjunct faculty,” says Parsons, one of the informal professors. For CEOs-in-training, Feigen regularly arranges separate dinners with several of the wise men and women that can run three or four hours. “He’s saying, ‘I’ll create an individual curriculum for you,’” says Parsons. “It gives them exposure to people who have been there, and done that. I’ve done at least half a dozen. It’s part of his secret sauce.”
The advice on corporate governance is especially helpful, says Swift of the Hartford. “I met with many of his CEOs quietly in the period before I became CEO,” says Swift, including Parsons and Breen. “I got tips on how to work more tightly with the lead director to keep things current and avoid surprises, and insights on the reasons CEOs can fail.”
Hockaday has worked with Feigen for years, and compares him to a behind-the-scenes whisperer from the world of fiction. “Marc is like Cyrano,” declares Hockaday. To be sure, Cyrano de Bergerac reframed his patron’s thoughts into messages of persuasive power. The difference is that Feigen helps his CEOs learn to do it themselves.