Industry-Relevant Experience: Is That Necessary To Have The Most Promising Hire?

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Whenever I come across job postings about hiring a CEO, marketing, sales, or general management professional, I normally see a common pre-requisite for a candidate: Some specific number of years of professional experience in the relevant industry. I'm sure you have the same observation. This sort of requirement keeps my mind wandering around. I used to think about it, but I couldn't find any solid ground to justify such a requirement. 

Is Industry Relevant Experience Really Necessary?

cio.com

A candidate with several years of relevant domain expertise is selected as CEO, marketing or sales manager, or in a general management position, on the assumption that he/she has a thorough knowledge about their industry to excel in the organization, and to use their interactions in the industry to bring business to the organization. Observing this stereotyped practice, some immediate questions pop up in mind:

i.   Is this a rational approach? 

ii. Does the candidate have the potential and ambition to grow and excel?

iii. Do they possess the leadership skills required to lead their team?

iv. What if they are not good team builders?

v.   What if they are not real team players? 

vi.  Do they have the required flare and capacity to initiate?

vii. Do they have the capacity to think out of the box?

vii. What is their perception and attitude toward change?

viii. What if they are a failure to organize resources effectively and efficiently? 

ix.  What if they lack ambition, dedication, and confidence? 

x.  What if they lack the use of relevant technology and analytical skills? 

xi.   What if they are poor decision-makers? 

xii. What if their communication skills, the most required skills, are far below even the normal level?

There are a large number of such reservations and uncertainties associated with this practice. 

Ron Thomas is known as one of the 50 Most Talented Global HR Leaders in Asia, and Managing Director of  Strategy Focused Group DWC LLC, based in Dubai. Ron has a publishing and entertainment industry background, then switched to the aircraft industry, and now managing SFG. In one of his articles, Ron says"

"What data have you used to make the assumption that if you were in a certain industry you would be successful in this job? Can you prove, beyond a reasonable doubt, that the only people who will be successful in this role are people coming from there? If you have that metric and it works for you, so be it."

Will Campbell, CEO of Quantasy  says,

"At Quantasy, we’ve made several non-conventional staffing moves, from hiring a veteran music company executive and a web entrepreneur, to bringing in a screenwriter and a blogger to help with recent projectso. Collaborating with these professionals—none of whom had previous ad agency experience—has helped us develop richer, more engaging consumer experiences while reducing staffing costs and streamlining our internal creative processes."

Dev Ittycheria, a partner at Greylock Partners, says in his recent Forbes article.

“Many times I see companies getting excited about hiring someone from the competition or a related space. While having a relevant background in the company’s market is always a plus, I would never compromise on trading fundamental sales leadership skills for domain expertise. In fact, it’s often very helpful to have someone new come in who will challenge the status quo. Unfortunately, hiring primarily for domain expertise is a common mistake I see CEOs and boards make.”

Claudio Fernández-Aráoz is one of the most influential executive search consultants and a well-known author. He declares that a marketing professional must be “Potential Specific”, “The ability to adapt to and grow into increasingly complex roles and environments, the potential is the hallmark of likely success.”

What Dev and Claudio say about sales and marketing, are equally applicable when hiring a top or middle-level executive to manage overall operations.

Some Brilliant Out-of-Industry Hiring Examples

Edward Whitacre Jr.

Hiring outside of the domain normally proves very successful. The candidate coming from another industry brings with them a mindset that is totally free of any stereotypes the hiring industry is filled with. These people are not from within the box, so they always think of something out-of-the-box, the most needed thing to excel in the organization. In other words, such a candidate brings new ideas and has all the courage to bring unexpected change that might be impossible if someone is hired from within the industry. They normally don’t care about the hiring industry’s norms to let them overpower their own practice. General Motors decided to hire their CEO, after their two CEOs, hired from within, couldn’t succeed in giving GM the required turnaround. So, after a search by the GM board, they decided to hire  Edward Whitacre, a former AT&T board chairman and CEO with no auto industry experience before joining the GM board.  Ed was given the responsibility as the chairman of GM’s board in the third quarter of 2009 when GM was passing through the worst time of its history and they had changed two domain-expert CEOs in the last 18 months.. After a few months, the board elected him as their new CEO. He served GM for 10 months and brought an astonishing turnaround to GM. Tom Ziegler has a detailed story in Fortune as to how Ed made this miracle possible. In August 2010, Ed stepped down and another external professional with no car industry professional, Dan Ackerson, took charge as CEO and chairman of GM. Dan continued till 2014 and maintained and developed more of the growth path set by Ed.

IBM is another very inspiring and extremely successful example of having a Chairman and CEO, who didn’t belong to the IT industry in any capacity. It was 1993 when IBM was on the brink of a complete

break down. The board was desperate to find a charismatic leader to pull IBM out of the disaster they were just to plunge into. Then they spotted Louis V. Gerstner Jr., a former chairman and CEO of a tobacco conglomerate RJR Nabisco. Before working at RJR Nabisco, Louis had worked with certain other industries, doing nothing with any IT industry touch. In 1993, the IBM board took the brave decision to appoint Louis as their chairman, and then CEO, and that was a decision that changed the destiny of IBM. Louis did the unbelievable, turning around an almost bankrupt organization to an IT giant again, and this time, more powerful than ever. When he left IBM in 2002, it had established its supremacy already.

Susanne J. Rhow is a current bright example of successful industry change. She started her career in the body care and luxury goods industry and excelled there. She worked with some high-profile companies like Estée Lauder, Cisco Systems، Sotheby's Auction House, and some other renowned names. In 2014, she switched her industry from luxury goods to real estate. She currently is a very successful professional broker at Brown Harris Stevens.

Byron Hanson of the Curtin Graduate School of Business wrote in one of his Business Insider’s article,

“Industry experience is not as big a success factor as what people think it would be,” 

He also says.

 “My sense of success factors is more context-related or expertise-related. “The drawback of same-industry [executives] is the ‘assumption that you know how this should work’ syndrome.”

How about Me?

The most prominent example to prove that domain-related experience is not a success factor for a professional is my own example. I started my career as a business manager with a construction firm. After a few years, I switched to the footwear industry to manage sales and marketing activities. The footwear industry has nothing to do with the construction industry. Besides, construction is a service-based industry while footwear is goods-based. After, successfully serving the footwear company (you may read my story, as how I did there, by clicking here). Then I took another 180-degree turn by joining a B2B food commodity company. That also was a great career for me. Then I switched back to a construction firm. After serving it for one and a half years, I found an opportunity to serve a big hospital as its manager of operations. I did well there, as I developed many systems for them and streamlined their entire operations. Now, healthcare is a totally different industry, and basically being a marketing and sales guy, managing the general operations of a hospital makes no sense. But it did for me, and I performed well there.

I don't deny the essence of domain experience for certain jobs, especially very technical ones. However, these criteria should not be taken as a rule for every job in a particular organization.

It should be remembered that domain experience is a piece of knowledge. It doesn't reflect the leadership, management, and change-oriented potential of a candidate. A candidate who can make a real turn-around, but lacks the domain experience, can be effectively compensated with some good briefings to equip the brilliance with the necessary industry knowledge. Rejecting an outstanding manager based on a lack of domain-related knowledge is a blunder.

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