In my post, Selecting a CEO (two posts below this one), I suggested that there was nothing to beat the systematic screening of insiders for the post of CEO. Some people have asked me how I square this with my known position on selection of directors of institutions of national importance, which is to have a transparent, competitive, global search. This obviously means not confining the search to insiders (but by no means excluding them).
Well, this could, perhaps, serve as a quiz question in courses on leadership. The answer, of course, is that, in a company, it is possible to study the leadership potential of an executive by putting him or her in charge of business units, subsidiaries, etc. In an academic institution, there is really only one leadership position, and that is the director's. How somebody fares as a professor may not offer clues to whether he or she can lead the institution; indeed, an outstanding academic may be singularly ill-suited for a leadership role. It becomes necessary, therefore, to look at outsides who have headed academic institutions or led initiatives elsewhere.
That said, what I have stated is not a comprehensive answer. It does not explain why Harvard Business School often chooses an insider for the job. The more difficult thing to explain is what Booth Business School (of Chicago) or Stern School have done in the recent past, which is to import an academic from another institution (both from Stanford) and both very young. Sudhir Kumar, who is dean at Booth, had served as Senior Associate Dean at Stanford.
These two appointments, I must confess, took my breath away. Neither Booth nor Stern lacks first-rate academics. Some of them would also be very good administrators and entrepreneurs. And yet the two schools reached out to outsiders for the dean's job. I take it as proof of greatness.
There are other schools that have brought in people from industry in the past- Insead and London. That fits more easily into what I have said. So does Insead's most recent appointment of Dipak Jain as dean- Jain has been Kellogg's dean in the past.
The key to the director's appointment is the same as the one for a CEO's. The board needs to be clear what the institution needs most at a given time- entrepreneurial skills, academic ability, managerial qualities or dealing with business and government? Once the profile is set, the choice becomes a little easier.