A few years ago, a Partner at one of the big search firms told me, “we know that people with breadth of or cross industry experience will, on average, outperform someone with only depth of experience. However, our clients want us to find someone who has done virtually the same job at a competitor, are surprised when the new hire cannot think ‘outside the box,’ and ends up replacing them fairly soon.”

Advantages and Disadvantages of Cross Industry Experience

There is something reassuring about hiring someone who already knows it all and can “hit the ground running.” Sadly, someone who has spent too much time in a single industry may actually be a high risk hire if the company wants new thinking or someone capable of dealing with change. When we hear that someone has “25 years experience in this industry,” we should be asking three questions:

  1. Is the industry changing and are many of those years out of date and not only irrelevant but dangerous?
  2. If the industry is not changing fast, are many of those years simply the same year all over again?
  3. Will “received wisdom,” of the things “everybody knows to be true” be a barrier to new thinking? Will “we’ve tried that before and it failed” dominate even though it was 20 years ago in very different circumstances?

Someone with cross industry experience and moving from a different industry has some disadvantages:

  1. They have to learn the “lexicon of terms” used in the new industry.
  2. They do not yet have an extensive number of contacts in the industry.
  3. They may not yet know products and processes deeply but, while learning, may ask “naïve” questions that lead to improvement.

However, they can bring freshness, even if they are merely transferring, in some cases, what is routine in another industry but unknown in their new one. Even then, it can often stimulate creative thinking in the new company which can foster innovation. Critically, of course, someone who has successfully moved between industries, countries, or functions before has proved that he or she is adaptable and flexible. So while this is mainly about cross industry experience, anyone who has experience in one or more functions is also likely to perform better than someone who has only been in one.

However, while companies that genuinely want to change will be interested in a breadth of experience, most companies do not want to change (a possible explanation for the short life of many Fortune 500 companies).

Stagnation versus Change

In the case of a company that is stagnant, in danger of becoming so, or in actual trouble, new thinking is essential, and it will not come from someone who “knows how things are done” without questioning them. Even a company that is growing is eventually going to slow and stagnation of growth lags stagnation of thinking as momentum continues even when the company has stopped innovating—Sony was a great example of that, as was General Motors before it was bailed out.

Good financial performance continued even when fresh thinking had died. It happened with Gateway, Dell, Motorola, and Nokia and people are asking if it is happening with Apple.

While a company can reinvent itself with insiders, 182 year old Procter & Gamble shows how it is very difficult and how bringing in smart people with very different experiences can be invaluable. This is why managers who were trained at Procter & Gamble, GE, and McKinsey are in such high demand.