Source | https://hbr.org
More than 15 years ago the management writer Jim Collins introduced the flywheel as a metaphor for the enduring power of strong business leadership. A company doesn’t shift from “good to great” overnight, he wrote in his 2001 book of that name. Rather, it achieves excellence by “relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough, and beyond.” And once that flywheel starts spinning, Collins said, it tends to keep going.
The power of momentum is evident in our 2017 ranking of the world’s best-performing CEOs, a list that is remarkably consistent with last year’s tally. Two of this year’s top three CEOs were among the top three leaders in 2016, and 16 of the top 25 were in the top quartile. Seventy-two of last year’s 100 leaders are repeats, and 23 are appearing for the fourth straight year. Of the 28 CEOs who fell off the list after last year, 11 retired from their companies. (Most of the rest, including the CEOs of Heineken and Vodafone, dropped off because of a significant decline in stock price.) On average, these 100 CEOs generated a 2,507% return on stock (adjusted for exchange-rate effects) during a 17-year tenure, for a 21% average annual return.
There are reasons for this consistency. Unlike rankings that are based on subjective evaluations or short-term metrics, our list relies on objective performance measures over a chief executive’s entire tenure—numbers that often hold steady. We continue to view the ranking as a work in progress and to look for ways to improve the methodology—but this year we made no changes to our measurement system, which accounts in part for the lack of big surprises. (For more on our methodology, see “How We Calculated the Rankings.”)