For the CEO

Some CEO legacies are built to stand the test of time. Take David Packard, for example. Back in the mid-20^th century, when he was growing Hewlett-Packard from the original scrappy garage startup into a Silicon Valley icon, he had the radical idea that a company not only had a responsibility to its shareholders but also to its employees, customers, and broader society.¹ 1 David Packard wrote about HP’s founding principles and its management techniques in his classic business book The HP Way: How Bill Hewlett and I Built Our Company, published in 1995. Notes: 1 David Packard wrote about HP’s founding principles and its management techniques in his classic business book The HP Way: How Bill Hewlett and I Built Our Company, published in 1995.

Those values—and the innovative management techniques and products they inspired—not only delivered 40 consecutive years of profitable growth. Packard’s legacy continues to endure more than half a century after he stepped down as CEO.

History, of course, does not always remember chief executives so fondly. Even those who leave the C-suite festooned in favorable earnings reports, press accolades, and long lists of philanthropies to their credit can land in the crosshairs of changing business and social norms. Case in point: the 19^th century robber barons, men who built great business empires and cultural institutions but whom later generations would criticize for unethical business practices and exploitation of workers.

In the end, what separates a great CEO like Packard from an infamous, average, or forgettable one often boils down to three things: the actions they take—or don’t—on the job; the culture and senior leadership they cultivate; and the impact their leadership has on society.

Four Steps for Building a Lasting CEO Legacy

While that list may seem deceptively simple, the environment in which today’s CEOs forge their legacies is far more difficult to navigate than in years past.

“We have increasing uncertainty and increasing enterprise volatility,” says Christine Barton, a BCG managing director and senior partner and the firm’s CEO Advisory lead in North America. “There is a set of skills that you want to see in future leaders that were probably not as required in past leaders.”

Legacies are not created overnight. CEOs start building them from their first day on the job and every day thereafter. Though they may face a faster-moving, more complex landscape than their predecessors, they can learn from the regrets of former CEOs. If they complement those lessons with a few key actions and a healthy dose of boldness, they can make the most of their privileged time at the top to deliver for their shareholders, employees, and society—both during their tenure and long after they’ve moved on.

The Power of CEO Regrets

Former CEOs are often asked about what they did right. But sometimes, the most valuable insights come from asking them what they wish they had done differently.

“One of the very useful, quite understudied emotions is regret,” says Julia Dhar, a BCG managing director and partner and the global lead of the firm’s behavioral science lab. “As human beings, we are very invested psychologically in avoiding regrets. So, pursuing a strategy of regret minimization is powerful.”

Dhar surveyed 70 former CEOs, C-suite executives, and board chairs from across industries about their biggest regrets. More than half of them cited not acting swiftly enough when setting goals.

“Sometimes they say, ‘I knew what needed to be fixed from the beginning, but I allowed the organization to go on a glorious journey of self-discovery and spent a year doing that,’” says Dhar.

Delaying a necessary restructuring, digital transformation, or game-changing M&A deal can indeed undermine a CEO’s legacy.

“When we do empirical studies on a CEO’s impact on total shareholder returns, those who made moves in their first or second year have better outcomes,” says Barton. “In part, that’s because of the compounding effect. You make the change earlier, you build off that strength, and more value is created.”

Sometimes, the need for fast actions is obvious—for example, if a CEO takes the helm of a company that is losing market share. But when the company they’re tapped to lead is doing well, CEOs need to consider whether a big, bold change is warranted or whether they are pursuing change simply to make their mark.

“If a new CEO said to me, I want to step out the shadow of my predecessor, I would say, ‘Ask yourself: Why are you even thinking about this?’” says Bryn Davies, director for the Oxford High Performance Leadership Programme at Oxford University’s Said Business School.

When a CEO does take over a high-performing company with a sound foundation for future strength, Barton advises they focus on taking swift actions to prevent growth from plateauing.

“If you’re in a situation where the company’s TSR is top quartile or top third, you know that it’s an extension game,” she says. “The question then is, ‘How do I extend this and how do I plant the seeds for new incremental growth and profit that add to that trajectory?’”

Hand in glove with not acting quickly enough is failing to act boldly enough—another top CEO regret that Dhar’s research reveals.

“Those [regrets] are often expressed as ‘I had an opportunity, for a brief moment, to take substantial action on behalf of something I believed in or on behalf of other people,’” says Dhar. “‘I didn't do enough, or I didn't do anything, and now no one cares.’”

Another prominent regret Dhar’s research uncovered centers on a trait that is often overlooked in CEO leadership literature—kindness.

“Nearly everyone says, ‘I could have been kinder to people along the way,’” she says.

Goodwill and generosity are a bedrock of a positive legacy, because exceptional leaders are often remembered for bringing out the best in the people around them.

“He or she helped me to become a better leader, or a better person, or he or she helped me to achieve more than I ever dreamed of,” says Davies. “Those are the things people say about great leaders.”

CEOs can practice regret minimization by scheduling regular windows to reflect both individually and with their senior leadership team on whether their actions align with their long-term goals. They also need to be brutally honest with themselves about how much time they’re likely to have to make their mark.

“There is a bit of magical thinking here that the [CEO] job will either last forever, or it will last as long as you want it to,” says Dhar. “But many CEOs do not control the timing of their departure, and it would be wise not to assume that the role is yours as long as you like.”

Culture and Senior Leadership That Endures

CEOs aren’t judged solely on how well a company performs on their watch. Their legacy also hinges on whether it continues to thrive once they’ve moved on to their next act. In both instances, the culture and senior leadership team the CEO cultivates are decisive success factors.

“A lot of CEOs come in and they bring in their own people, while some just stick with the existing team, neither of which is usually the right answer,” says Jennifer Thomas, a BCG partner and director who leads the firm’s executive coaching business.

This is especially true for corporate chiefs who did not come from the existing management of a company and may not have enough time to gain a full understanding of the organization, its politics, or its culture.

Whether homegrown or recruited from outside, Thomas advises CEOs to kick off their tenure by assessing how members of their senior leadership team complement each other.

“What are those ways of thinking, those strengths that each brings to create the right portfolio?” she says. “Is there enough diversity in perspective? Are you going to have people who are going to challenge you and debate openly?”

Thomas adds that it is vitally important for the CEO to create an atmosphere in which it’s okay to voice alternative ideas, flag issues, and try something new—and fail. “People need to be comfortable coming to you with problems and to be honest about saying I tried this, it didn’t work. Here’s what we learned from it.”

While frank views are often forthcoming at the start of a chief executive’s tenure, over time, the dialogue can drift toward what they want to hear as opposed to what CEOs need to hear—a phenomenon that Rich Lesser, BCG’s global chair, describes as “the CEO bubble.”

“Without proactive intervention, leaders are likely to be sheltered from the reality of a difficult situation at a critical juncture or until it’s entrenched,” Lesser recently wrote.

And no matter how talented individual senior leaders may be, the CEO needs to ensure their top team members do not place individual agendas before broader organizational goals.

“Look at every single key piece of work that’s being done and ask, is this or is it not in support of my vision and strategy?” says Thomas. “Why are we doing it? Is this a pet project that we should just be killing?”

CEOs can set the tone by embodying behaviors and mindsets that create a culture where transparency, collaboration, and innovation thrive. “You model the behavior you want to see from other people,” says Davies. “Leaders who say one thing and do another lose trust and loyalty.”

CEOs who build a nimble, collaborative senior leadership team further support their legacy by fostering a rich pool of talent that can one day yield their successor—someone with the knowledge, skills, and temperament to keep leading the company from strength to strength.

“You want to be remembered, but what if that legacy becomes undermined by the next CEO?” says Davies. “What about the idea that a legacy could be enhanced, improved, strengthened, or turbocharged?”

When CEOs do identify promising successor candidates, they can invest in developing them. “Board mentorship or funding a coach or designing a set of experiences can all build up a sufficient number of credible people for the [CEO] role,” says Barton.

The Win-Win of Social Impact

CEOs are not just leaders of companies. They are leaders of their communities as well—a position that affords them a unique opportunity to have a positive impact on society while also delivering for their employees and shareholders.

“The private sector’s core job of growing the economy, creating jobs, and innovating is an incredibly important mission,” says Rich Hutchinson, a BCG managing director and senior partner and leader of the firm’s Social Impact practice. “So creating a thriving company that creates good jobs for its employees and creates great value for its customers is something that we regard as a social good in and of itself.”

While companies have traditionally set aside a budget to contribute to good causes and community pillars like a local university, CEOs can deliver even greater impact—and gain an edge over their competitors—by building a socially transformative business.

Hutchinson advises CEOs to look across their value chains—at their products and services, supply chains, and organizations—to identify social impact goals that also create a business advantage. For example, companies with operations in lower-income countries can deploy strategies that “create economic development that is inclusive for those countries,” says Hutchinson. They can also foster a more inclusive working environment. “[This] tends to raise the boat for everybody and create talent advantage, which creates increased productivity and retention,” he says.

CEOs should also consider driving broader objectives that no single company can achieve alone. “You absolutely see CEOs shaping their legacy by being part of first-mover coalitions on climate or other societal impact goals,” says Hutchinson. “There’s a $100 to $150 trillion economic energy transition that’s got to happen over the next 30 years. That means there is a huge amount of profit to be made by helping that transition happen.”

Finally, CEOs need to talk about these initiatives to their employees—so they know they are part of a great company doing great things—as well as their shareholders.

“Help investors understand you’re trying to do a really good thing in the world in a profitable way,” says Hutchinson. “It might be a little less profitable in the short run, but if you explain why you’re doing that and say, ‘Our core business is amazing. This is a long-term thing we’re doing. It’s good for growing our markets…or our talent base…and good for the world.’ Then, you actually get investor understanding.”

Four Steps for Building a Lasting CEO Legacy

While a CEO’s tenure will ultimately reflect their unique vision, values, and management style, there is a common set of actions they can take to lay the foundation for a legacy that is more likely to endure.

Pursue a strategy of regret minimization. CEOs who engage in “regret minimization” are less likely to look back, years from now, wishing they had moved faster, been bolder, or treated people with more kindness.

The first step is to involve their senior leadership team. “Start a conversation among them that says, ‘What would a regret-minimization strategy comprise? How would it be different from what we are doing now?’” says Dhar. “‘What would it look like?’”

It’s important to remember that this is not a one-off exercise. CEOs need to block out regular time to reflect on whether and how they are realizing their long-term vision and bringing out the best in those around them.

Regret minimization can also help leaders avoid being too prescriptive and inflexible in a global business landscape increasingly characterized by accelerating complexity and uncertainty.

“You can’t just say, ‘Here’s my five-year strategy, and this is my legacy,’ and go do it,” says Thomas. “That’s not going to work. Your strategy has to account for constant changes and pivots because you don't know the headwinds and tailwinds coming at you.”

Move swiftly and boldly. When it comes to having an impact, CEOs today do not have the luxury of time. “There is a much greater risk of acting later in a CEO’s tenure than acting earlier,” says Barton.

She notes that while CEOs are usually judged in their first year or two on the results of their predecessor’s investments, they can use that time to launch transformations or pursue M&A deals that will reap dividends in years three and four.

“If you don’t make those moves, restructuring or pivoting, or laying the foundations for further growth until year three or four, you are always going to be at a lower shareholder return than the CEOs that made that move earlier,” says Barton.

Build a legacy-cementing culture and senior leadership team. A CEO’s vision needs a fertile environment to come to fruition. This includes building a senior leadership team that places enterprise-wide goals over personal agendas and that feels at liberty to voice problems, alternative ideas, and lessons from failed initiatives.

“If you don't get accurate feedback, you have all these blind spots, and it’s going to get in the way of achieving your legacy,” says Thomas. “You have to have people who are going to challenge you and be honest with you. And it can’t just be your two or three chosen ones. Always be asking and listening and giving the permission to challenge.”

When senior leadership teams do pull together and can fearlessly tell a leader what they need to hear, it creates the kind of culture and values that will live on long after a CEO has left the corner office. It will also cultivate a rich pool of potential candidates who can succeed the CEO, ensuring the company is left in great hands.

Do well while doing good—and talk about it. CEOs who focus on helping society to the exclusion of profits are unlikely to succeed in the long term. They need to deliver for their employees, shareholders, and society.

“It’s about doing well while doing good,” says Hutchinson.

CEOs can start by looking at their own operations. “Find really big material things that your company can do that create an advantage for your company—and a high impact on society,” says Hutchinson. For example, meaningful action on eliminating Scope 1, 2, and 3 emissions can not only drive net zero goals but often creates near-term cost advantage.

“Find something big that matters,” says Hutchinson. “There’s a huge role that private companies have to play in achieving societal goals that are often beyond their own individual company.”

CEOs should not be shy about publicizing these efforts. Sharing them with employees can help them see that they are a part of something bigger that benefits society—and in the process, it can energize the workforce. CEOs also need to show shareholders how these efforts are likely to pay off for the business over time.

“I want to discuss why a company exists in the first place. In other words, why are we here?” David Packard said to a group of HP managers in 1960. He went on to say that while profit is an important result of a company’s existence, it exists so people can accomplish something collectively they could not do alone—something worthwhile that makes a positive contribution to society.² 2 David Packard, The HP Way: How Bill Hewlett and I Built Our Company, 1995. Notes: 2 David Packard, The HP Way: How Bill Hewlett and I Built Our Company, 1995.

That business philosophy—radical for its time—still resonates today.

While not all CEOs will build a legacy as enduring and positive as David Packard’s, they can consider, from day one in the big chair, how their actions can lift society as well as their company. With the right actions, they can build a legacy that might someday be remembered as one for the ages.