The Leader Mindset #23

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Why Growing Your Own Leaders Beats Buying Strangers

Build or buy, buy or build—that’s the question organizations have long grappled with when it comes to their leadership philosophy. Do you develop leaders from within, or bring in someone exciting and new from the outside?

The outsider often seems like the easy button: polished, proven, and ready to go. Unfortunately, it is not that simple. Despite all the potential, they might still flame out within 18 months.

In fact, they very often do.

Research consistently shows that over half of new or promoted leaders fail within their first 18 months. That’s not news. What is? It’s even worse when you hire externally. Challenger, Gray & Christmas reported that over 1,000 CEOs left their roles by May this year—a record-setting pace. Unfortunately, a majority of those failures were externally hired.

The revolving door is spinning faster than ever.

So, what’s going wrong?

The Landmines Lurking with External Hires

It’s tempting to think, “They’ve led this function before—this should be a smooth transition.” On paper, it checks out. Maybe they’ve got industry credentials, glowing references, and stories of past achievements.

Here’s the uncomfortable reality: your company isn’t their last company.

Your culture, your quirks, your under-the-surface dynamics—those things can’t be captured in a resume or an interview. Unfortunately, that’s where the risks start stacking up.

Here’s what often gets overlooked:

• Culture fit is incredibly hard to assess from the outside. Sure, they can talk a good game about “collaboration” and “values,” but there’s a big difference between saying the right thing and feeling how things actually work here. Will they thrive in your feedback style? Will they understand how decisions really get made? Interviews can’t simulate that.

• They won’t come with a built-in internal network. Inside hires have had years—sometimes decades—to build relationships, earn trust, and figure out who makes things happen. An outsider starts with zero social capital. And without that network, progress can be painfully slow. They’ll hit invisible walls they don’t even know exist.

• You might be hiring the results of their former team. It’s a tough pill, but sometimes that rockstar from another company wasn’t the driver—they were just along for the ride. Maybe they had a brilliant deputy or an ops lead who quietly made the engine hum. That team’s not coming with them. You’re hiring the individual, not the ecosystem.

• The power dynamics are unknown—and risky. External leaders have to navigate team loyalties, legacy relationships, and existing power structures. If they unknowingly step on a landmine? You could be dealing with a wave of attrition, disengagement, or quiet resistance.

Let’s not forget—people naturally resist change brought in from the outside, especially when it feels like it’s being imposed by someone who “doesn’t get us.” That’s not about ego. It’s about trust, and trust takes time to earn.

Sending the Wrong Message to Your Best People

Let me paint a picture.

You’ve got a high-potential leader who’s been putting in the work—leading stretch projects, mentoring junior staff, jumping in when things go sideways. Then you bring in someone from the outside to take the role they’ve been eyeing. What do you think happens?

They start polishing their LinkedIn.

Can you blame them? Suppose promotions always seem to go to outsiders. In that case, your best people will start asking a pretty reasonable question: “Why am I still here?”

There’s another subtle problem: external hires often feel pressure to make significant changes fast, especially if they were brought in to “shake things up.” Change for change’s sake can quickly grind down morale, especially when your team was humming along just fine.

Wait—Is There Ever a Case for Going Outside?

Of course.

If you’re pivoting into a totally new market or the company needs a significant/transformational change, then a fresh perspective may be required. The same goes if your existing leaders aren’t delivering, and you’ve exhausted coaching and support.

Also, smaller companies can struggle to have a deep enough bench for critical roles. If there’s no one even close to ready, you’ve got to look outside.

Here’s the trick: those situations should be the exception, not the rule.

Creating An Internal-First Philosophy

I want to make one thing perfectly clear: every promotion should be earned. Internal doesn’t mean automatic. A true meritocracy means choosing the best person for the job. With that said, when all else is even, the edge should go to someone inside the company.

Why? Because they know your customers. They’ve built trust across the org. And—maybe most importantly—they already understand what makes your business and culture tick.

In order to make this philosophy work, you can’t wait until roles open up. You’ve got to build the bench early and often.

Here’s how:

1. Stop saying “we don’t have anyone ready.” That’s not a talent problem—it’s a cop-out for those that don’t want to do the hard work. If you’re not actively growing your leaders now, of course, they won’t be ready.

2. Give people real stretch opportunities. Don’t just hand them extra work—give them roles that broaden their capabilities. Have them lead a cross-functional initiative. Get them involved in business strategy. Build their range and scope.

3. Get serious about succession planning. Define what success looks like in your most critical roles. Identify your top talent early and create robust development plans that challenge and stretch them.

You want a formula for being an internal talent first organization? Here’s one:

Talent + Growth + Time = “Ready Now Talent”

Miss any one of those, and you’re back to square one, scrambling for external help.

Internal Doesn’t Mean Insular

Even in an internal-first organization, outside talent has its place. The goal isn’t to seal the doors—it’s to reduce risk, retain institutional knowledge, and reward people who’ve shown commitment.

The sweet spot? A good rule-of-thumb is to have 60–70% of leadership roles filled internally.

For the rest? Be smart about it. Use assessments to test for critical competencies. Involve a diverse interview panel to assess the company culture. And for the love of transitions—don’t just drop them in and wish them luck. Support the ramp-up.

In Conclusion

If you want a resilient, future-ready company, build leaders from the inside out.

It’s cheaper. It’s smarter. And—let’s face it—it sends a powerful message to every ambitious employee watching how you make decisions.

So here’s the challenge:

Before the next leadership role opens, ask yourself, “Who inside is close to ready for our critical roles? What would it take to get them ready?” The time you spend now focused on your internal talent will eliminate the future risks of buying the “stranger.”

It might just be the smartest bet you make.

Free Succession Planning Webinar

Just two days left until the webinar. Register today using the link below.

Register Here: https://events.teams.microsoft.com/event/5188bdd8-447f-43b0-aa20-efe4abf7b800@b1563aa9-779c-43c4-a3b8-29400ca86ff1

Most succession plans look great—until they’re needed.
And in today’s world of exponential change, even the best plans can fall short.

Join us for a free 60-minute webinar:
Succession Planning in the Exponential Age
📅Tuesday, August 5 (register with the link above)
🕛11:00 AM CT
🎯Designed for HR, OD, and senior leaders

Andy Noon, PhD

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Thanks for reading and look forward to seeing you again next week.

Andy