Diageo CEO Plans Executive Overhaul Amid Trend of External Hires
The new chief executive of Diageo, Dave Lewis, is planning a sweeping overhaul of the executive team, a move seen as emblematic of a broader trend. Boards are increasingly favoring external CEO hires, particularly from big tech, to drive transformation and are backing rapid leadership changes in the first 100 days. This trend corresponds with CEO turnover reaching a 15-year high as boards prioritize leaders with perceived "AI agility."
- New Diageo CEO Dave Lewis is reportedly planning to replace several members of the company's 14-person executive committee in a "wholesale change." This move is intended to address cultural issues, including perceived complacency and "convoluted decision-making processes" within the spirits maker. - The planned overhaul at Diageo comes after the departure of CEO Debra Crew in July 2025, after just two years in the role. Her exit followed a profit warning five months into her tenure due to a sales slump in Latin America and a 43% decline in the company's share price during her leadership. - The trend of hiring external CEOs is particularly pronounced in the S&P 500, where external hires nearly doubled from 18% in 2024 to 33% in 2025, the highest level in eight years. This shift suggests boards are prioritizing fresh perspectives for transformative efforts over internal experience. - Boards are increasingly looking for external candidates with specific skill sets, favoring those with STEM degrees and MBAs. This is driven by a need for leaders who can navigate technological shifts and implement AI as a strategic asset for long-term growth. - CEO turnover is rising even at high-performing companies. In the S&P 500, successions at companies in the top three performance quartiles increased from 7% in 2024 to 12% in 2025, indicating that boards are proactively making leadership changes to align with new strategies, not just in response to poor performance. - Externally hired CEOs often make bold moves, like a significant acquisition, early in their tenure to signal a strategic shift and reduce stakeholder uncertainty. By the third year, an outsider CEO's likelihood of announcing a large acquisition is almost 270% higher than that of an insider. - While external hires are on the rise, internal promotions remain the more common path to the CEO position. In 2023, internal candidates accounted for 77% of CEO appointments at global publicly listed companies, and in the S&P 500, 74% of new CEOs came from inside the company. - Boards are now regularly questioning CEOs on their AI strategy, focusing on how it creates a sustainable competitive advantage and how its return on investment is measured. This pressure extends to workforce strategy, with some boards pushing CEOs to replace up to 20% of their workforce with AI-driven efficiencies.
