When a board begins a search, the first instinct is to look at competitors. It is a reasonable instinct, and sometimes it produces the right appointment. But it narrows the field at precisely the moment it should be widest.
Why boards look inside
Sector experience feels safer. The candidate already speaks the language, investors recognise the name, and the period of learning appears shorter. Each of these advantages is real. None is decisive.
What sector experience does not guarantee
Knowledge of an industry tells you that a candidate understands how things are done. It does not tell you whether they can change how things are done. For a turnaround, a transformation or a period of rapid growth, the second matters more.
Where exceptional candidates come from
Adjacent industries. Sectors with similar economics, customers or regulation produce leaders who need little translation.
Organisations that have already faced your challenge. A leader who has taken one industry through digital disruption may be better prepared to lead another through it than anyone within it.
Different ownership models. Private equity, family ownership and public markets each develop different strengths: pace, patience and discipline. The right blend depends on what the next chapter requires.
Managing the risk
An appointment from outside the sector carries real risks, and they should be managed rather than ignored. Assess the capacity to learn as rigorously as the track record. Ensure deep sector expertise sits within the team around the new leader. Allow time to learn the industry before expecting it to be changed.
Seeing both
The most informed decision comes from seeing the finest leaders within your industry alongside those beyond it, assessed against the same evidence. Sometimes the best candidate is the obvious one. Even then, the decision is better for knowing the alternative existed.
It is for this reason that every search I undertake maps both. If you are considering a critical appointment, I would be glad to show you the wider field.