Today, the CEO’s role is not limited to running the company and stepping down when necessary. However, for many, leaving the CEO position marks the beginning of a “second act” or a period dedicated to mentoring successors, guiding company culture, and ensuring continuity. These second-act CEOs play a crucial role in maintaining stability and growth as they pass the baton, making them indispensable to organisational resilience.
Transitioning Power: CEOs as Mentors
Successful leadership transitions are essential to a company’s future success. A 2022 study by the Conference Board found that only 44% of companies with formal succession plans felt confident in their successor’s readiness. Meanwhile, around 40% of CEO transitions fail due to inadequate succession planning.
Former CEOs provide critical insights, often through structured mentorship. According to a 2023 Harvard Business Review study, 79% of successful transitions involved strong, ongoing mentorship. This support, from sharing operational insights to strategic guidance, gives successors the foundation to lead effectively.
Bill Gates’ mentorship of Steve Ballmer after leaving Microsoft’s CEO role is a glaring example of this approach. Gates continued advising Ballmer on company strategy, helping him navigate changes in the tech landscape, which proved critical as Microsoft grew into cloud computing and enterprise services. This guidance laid the groundwork for long-term success and adaptation. However, the case can be made that this is because Bill is the rightful owner of the company.
Cultural Continuity and Long-Term Vision
A second-act CEO also serves as a beacon of company culture, preserving core values that have driven past successes. This is evident from a research by McKinsey & Company, which indicates that companies with strong cultures outperform competitors by 30%, highlighting the significance of cultural continuity.
At PepsiCo, former CEO Indra Nooyi worked closely with her successor, Ramon Laguarta, to ensure that her sustainability-driven approach would be part of the company’s future. Nooyi’s guidance ensured PepsiCo’s commitment to healthier products and environmental sustainability, aligning the company’s long-term goals with evolving consumer values and securing its competitive edge.
Leveraging Experience Beyond Mentorship
After stepping down, many former CEOs transition to roles that allow them to continue contributing to business strategy, often joining boards or advisory positions. According to a 2023 report by Spencer Stuart, nearly 43% of former CEOs remain on their company’s board, and 25% become venture capitalists or advisors. These roles leverage their leadership experience and insights to guide new business ventures or maintain stability during critical phases of those businesses.
After leaving his CEO position at General Electric, Jack Welch became a renowned business advisor, applying his management expertise to help other companies improve their leadership practices. His contributions in these advisory roles allowed Welch to impact the broader business landscape, highlighting the value former CEOs can bring to the industry beyond their organisations.
At Meta, CEO Mark Zuckerberg also recognises the value of second-act CEOs. By recruiting and consulting with experienced former leaders, Zuckerberg has tapped into a wealth of experience to help Meta’s expansion into virtual reality and other ventures. This approach allows Meta to draw from the strategic insights of veterans who understand the complexities of high-stakes innovation.
The Lasting Impact of Second-Act CEOs
The influence of second-act CEOs extends well beyond the leadership transition itself. A recent study by Deloitte found that 72% of companies see leadership continuity as essential to maintaining growth, especially in dynamic industries. Through mentoring successors, preserving culture, and staying involved in an advisory capacity, second-act CEOs help to ensure that their organisations remain resilient and innovative.
This extended involvement provides more than just support—it offers stability during a potentially turbulent transition. For organisations undergoing significant growth or change, having the previous CEO available as a mentor or board member can be a significant stabilising factor.
Building A Lasting Legacy
The second act of a CEO plays an essential role in an organisation’s success and longevity. By mentoring their successors, preserving core values, and offering strategic guidance, former CEOs contribute to their companies’ resilience and adaptability. This support ensures that even as they step down, they leave behind a legacy and a well-prepared leadership team.
The role of a CEO doesn’t end with retirement; it evolves. Second-act CEOs prove that real leadership extends beyond titles, shaping the future of their organisations long after their official departure. Through continued influence, these leaders underscore the lasting impact of experience, showing that their contributions are as crucial as ever.
