PATTERNS DETECTED

CEOs are highly educated

• 43% of CEOs with advanced degrees have MBAs (33% of all CEOs have MBAs)
• 21% of all CEOs have PhDs

CEOs in larger companies differ from those in smaller companies as follows:

• Larger company CEOs are more likely to have an advanced degree (88% vs. 64% for companies between $100 M and $1 B)
• A larger portion of big company CEOs with advanced degrees have MBAs (55% vs. 24% for companies between $100 M and $1 B)

CEOs with technical degrees predominate (59% of all CEOs in our study) and these are more likely to have advanced degrees.

CEOs with Ivy League degrees were in the minority (40%) but over-represented - not a surprise given the preponderance of Ivy Leaguers in New England.

• They are less likely to have technical backgrounds (33% vs. 68% for non-Ivy League CEOs)

SO, WHERE WERE THE DIFFERENCES?

Not Surprisingly, growth rates were lower at larger companies (61% vs. 93% median 3-year growth rates)

MBAs outperform non-MBAs at companies under $1 B in revenue (159% vs. 89% median 3-year growth rates)

For companies over $1 B in revenue, the results were much closer, 61% for CEOs with MBAs vs. 70% for CEOs without MBAs.

The companies with CEOs holding technical degrees outperformed companies with CEOs who didn’t (99% and 101% vs. 71% median 3-year growth rates)

Even though the median 3-year growth rate was close for technical CEOs whether they had a BS or higher degree, the maximum growth rate CEOs with just a BS degree was over 8000% – a company that grew from $3.6 M to $306 M in 3 years. This outlier underscores the value of identifying and taking advantage of technology trends, which often requires a technical background.

In companies over $1 B in revenue, the technical degree premium was even more striking (99% vs. 47% for companies whose CEOs had non-technical degrees)

Companies whose CEOs have Ivy-League degrees significantly outperformed companies of CEOs without (287% vs. 86%)

KEY TAKEAWAYS

MBA degrees are correlated with stronger growth, but only in companies between $100 M and $1 B. Moreover, the strongest growth of any of the smaller companies was by a non-MBA CEO. An MBA is a useful early indicator of business savvy – and perhaps drive, but as executives build their experience, results should be a larger factor in selecting candidates than whether they have an MBA or not.

Some search committee members favor CEO candidates with strong business backgrounds, which often blind them to excellent candidates with valuable technical backgrounds. Our experience is that technical degrees often correlate with high intelligence levels and also that CEO comfort with technical details helps address strategic issues such as where the market is headed and where the best opportunities are to be found.