Sparking Change: How BTS Spark and Tostan are building grassroots leadership for sustainable impact

A large financial services company promoted a key leader into the position of CEO. Two of their peers were also vying for the top job. Almost immediately, the other two executives left the company. This created an unexpected leadership vacuum that cascaded within their respective departments, where no one on either team was able to step up into the suddenly vacant leadership spots. The lack of “ready now” successors required the company to look outside to replace those executive leadership roles, significantly disrupting their critical strategic transformation effort and creating additional chaos at the top of the company at a time when they could ill afford to slow momentum.

Similarly, a global manufacturing company promoted a key leader into the CEO role who lacked sales and marketing experience – an area where his predecessor had deep expertise. This expertise was a critical driver in the company’s success to date, and the gap at the top was stalling revenue growth and impeding the new CEO’s ability to deliver on the Board’s expectations. In order to fill the CEO’s knowledge gap, the company reorganized the head of sales and marketing role so that it was led by two executives instead of one. This unanticipated restructuring created confusion across the C-Suite and the rest of the sales and marketing organization regarding roles and responsibilities, which compounded their challenges in driving growth. The unexpected increased salary costs accompanying the additional executive role further impacted the bottom line, as well.

What these two examples illustrate is the Domino Effect. The Domino Effect occurs when a star performer is promoted, and there is no “ready now” successor to fill the role they are vacating. With so much attention placed on getting a new CEO into the role, the Domino Effect can cascade down through the organization and is an often hidden and unanticipated outcome that can hinder even the most capable chief executive from successfully taking the reins.

Assessing the impact of the Domino Effect

Conventional wisdom and the literature suggest that CEOs sourced internally outperform CEOs that are sourced externally. For example, in Harvard Business Review’s “Best CEOs of the World” top 100 list, 84% came from internal promotions1. The majority of leaders who ascend to the CEO role are COOs, CFOs, divisional CEOs, and some are “leapfrog” leaders identified below the C-Suite2. A question that has not been addressed is: what happens to the performance of the company when there are no internal candidates for the new CEO’s previous role? In other words, what is the impact of the Domino Effect on company performance?  

To answer this question, we compared the S&P 500 twenty best performing companies3 with the twenty worst performing companies4 based upon percentage change in stock price.  

‍What happened at the Best Performing companies?

Within the top 20 best performing companies, 75% of the CEOs were internal with 5 of the CEOs being founders of the company and 10 being promoted into the role. For their former positions, from which they were promoted, four were filled by internal candidates, and two were replaced with external candidates. Examining the leadership teams on the company’s websites, it appears that in three incidences, the role that the CEO vacated no longer exists. In one case the role was restructured and split into two different positions.

‍What happened at the Worst Performing companies?

70% of the CEOs at the worst performing companies came through promotions or being founder led (12 and 2 respectively), which is nearly identical to the best performing companies. All things being equal, one would expect a similar trend regarding the number of internal vs. external replacements for the CEOs’ previous roles from which they were promoted. However, we found that there were differences. Only three of the backfilled positions were placed by internal candidates and four were placed by external hires. In three of the companies, the position no longer exists, and two of the companies restructured the position.

Understanding the impact: disruption and worsening performance

The research shows little difference between the best and worst performing companies in relation to internal promotions and external hires for the CEO position. However, we do see more organizational disruptions in the replacement of the previous roles held by the CEO. A disruption is defined here as either the company was required to hire from the outside, restructure the role, or eliminate the role altogether. All of these create added turmoil and challenge for the new CEO as they try to move quickly to onboard and start delivering impact.

We found that disruptions were present in 60% of the top-performing companies, compared to 75% of the poorest performing companies. While more research is needed to uncover the nuances, our research suggests that companies with a stronger bench for newly promoted CEOs’ previous positions have less organizational disruption and outperform those who do not have a strong bench.

Tackling the Domino Effect before it falls

While CEO succession garners the greatest amount of the spotlight in the press, among board members, and in public sentiment of the health of a company, our research underscores the need for CEOs, CHROs, and Boards to focus on the Domino Effect as part of their C-Suite succession process. That is, creating a bench of potential successors targeted specifically for the CEO’s previous role, and the roles deeper within the organization that could replace those who are being elevated in the company at the time of the new CEO transition.  

Consider these best practices to get ahead of the Domino Effect:

• Build the backfill into the identification process. When identifying potential candidates for the CEO, simultaneously consider who may replace that candidate for their current role.

• Focus on the role rather than the person. You may not be able to replace the next CEO’s position with one individual, but you may be able to replicate their skills with people who can excel in the role with complimentary skills.

• Expand the purview of success profiles. Create success profiles for the CEO and those roles that are likely feeder pools for CEO. Ensure that the success profiles are future focused rather than focused on what is important today. Business realities change over time. What makes someone successful today may be different than what is required in the next 3 to 5 years.

• Leverage the power of data for determining future success. As you look at your bench, use structured assessment processes to assess individuals against the success profile, reduce the risk of biases towards individuals, and determine their readiness to address the future business challenges that the organization will face.

• Comprehensively build the right bench. Look broad and deep within the organization when identifying potential successors. You may find those “leapfrog” leaders who would otherwise be overlooked.

• Continually refresh your succession slate. Given the cascading impacts of the Domino Effect, it is more important than ever to ensure your slate is up to date with viable candidates for higher level positions. Consider doing so on at least an annual basis.

• Ensure that succession is seen as a strategic imperative across the leadership of the organization rather than a single event of placing a new CEO. The CEO and the CHRO should own the succession process, the Board should be involved, and the focus should stay equally on the CEO role and the successor leadership roles throughout the organization.

Finding, placing, and ramping up a new CEO is a momentous decision with big outcomes at play – for the CEO’s own success and the viability of the organization. If you embrace the opportunity to turn the Domino Effect into a strategic gameplan, you will be positioned both for accelerated success and impact.

‍References

1 Harrell, E. Succession Planning: What the Research Says. Harvard Business Review December 2016

2 Harvard Business Review Staff. November 2009. The Best Performing CEOs in the World. Harvard Business Review 41-57.

3 https://www.fool.com/investing/2023/10/10/invest-sp-500-stocks-market-portfolio/

4  https://finance.yahoo.com/news/20-worst-performing-p-500-200036146.html

The accelerating pace of change in the modern workplace has necessitated a proactive approach to envisioning the future and what will be required to support organizations as they evolve and adapt.

To advance the conversation, we recently facilitated a future-storming session to reimagine the future of work and talent strategy.

Future-storming is the process of identifying risks and trends that might affect your business or industry vertical, combining them in new ways, and thinking of solutions to mitigate these risks. The ambition? To break the chains of traditional thought, sparking insights into the evolving domain of talent strategy.

Here are five transformative themes that surfaced during the session:

1. Fluidity of talent:

Gone are the days when “talent” described a fixed set of competencies an individual brought to the table. In today’s world, talent is an amalgamation of adaptability, resilience, and the capability to evolve. AI and automation, while replacing routine tasks, can't replace the human capacity to grow, reimagine, and pivot.

The traditional talent pool, defined by rigid skill sets, is making way for a reservoir of potential. It's about harnessing the innate human ability to unlearn, relearn, and traverse uncharted territories. Recognizing this fluid nature of talent can redefine how organizations recruit, retain, and nurture their human capital. The future will prize the ability to learn and relearn, shifting from fixed competencies to a reservoir of ever-evolving potential.

2. Skill evolution, continuous, embedded learning:

The gig economy drives continuous learning, demanding flexibility and growth. The concept of learning in organizations is evolving beyond formal training modules. Today's employees are in a perpetual state of growth, thanks to digital platforms, cross-cultural collaborations, and the changing demands of their roles.

No longer can learning be a one-off event. It must be seen as a journey where every experience, every interaction, and even every failure is an opportunity to grow. This shift to continuous learning also means embracing failures as valuable lessons, promoting a culture of curiosity, and embedding learning in everyday tasks. Organizations that foster curiosity and value each failure as a learning opportunity will lead the way. The pathway to career progression is increasingly carved by demonstrable capabilities.

3. Culture, diversity, and the rich tapestry of learning:

Cultural diversity isn't just a buzzword; it's an untapped treasure for organizational growth. There is a burgeoning global talent landscape with increased cultural exposure which fosters innovation and holistic problem solving. Diverse teams, with their unique experiences and backgrounds, bring varied problem-solving methodologies, fresh perspectives, and richer insights, serving as an invaluable asset for organizational growth.

These multi-cultural interactions and experiences act as opportunities for informal learning, introducing employees to different ways of thinking and innovative solutions. Encouraging such interactions not only fosters a sense of inclusivity but also ensures a holistic organizational growth trajectory.

4. Embracing the tech-human synergy:

The technological renaissance envisages a world where computers and robots assume many of our current roles, from documentation to Q&A. The emerging synthesis of technology and biology, including embedded tech and wearables, offers insights, from employee well-being to real-time emotional feedback.

While technological advancements promise efficiency and scalability, the human element's value remains unmatched. The blend of technology with human intuition, creativity, and empathy is the key to future success. The ideal modern professional is one who not only leverages technology but also understands its boundaries, ensuring that technology serves humanity and not the other way around. While technology offers efficiency, the human touch provides empathy, intuition, and creativity.

With advancements come ethical considerations, especially with AI and machine learning. Balancing technological ability with an ethical foundation ensures that organizations remain not just profitable, but also principled.

5. The subtle art of leadership:

Work will undergo an existential reevaluation. The rise of decentralized leadership, the emphasis on enriching organizational culture, and a holistic approach to talent assessment will redefine organizations. With flattened organizational structures, fostering trust and embracing entrepreneurialism are necessities. Leaders will be more focused on collaboration, understanding, and guidance. In this landscape, leadership also means being tech-savvy, yet understanding the nuances of human emotion is also requisite. It's about removing barriers, and being a facilitator and mentor.

Furthermore, as work boundaries blur, leaders need to be agile, adaptive, and always ready to guide their teams through tumultuous waters. The responsibility is to create environments where employees feel empowered, engaged, and eager to contribute.

Reflections

The future-storming session offered a blueprint for navigating the complex terrains of the talent landscape of tomorrow. The future of talent and learning is unfolding, and through sessions like these, we aim to empower leaders to be the sculptors of that future.

Collins, L., Hartog, S., Werder, C. (2023). Future Storming: Reimagining Talent Strategy for Today. Delivered at the Conference for Society for Industrial/Organizational Psychology, Boston, MA.

Context is everything. When you’re swimming in the ocean and see a fin sticking out of the water, your brain concludes: "It's a shark, get out of the water!" But if you're in a pool, you think: "It's a kid with a swim toy that looks like a shark fin." In both situations, the context leads you to reach two very different conclusions and behavioral responses.

How people behave in any given situation is a function of both who they are as individuals (e.g., their personality, skills, past experiences) and the context in which the behavior takes place (e.g., the situation itself). In other words, context matters, and it is difficult to interpret an individual’s behavior without an understanding of the context they faced.

When it comes to using assessments during the hiring process, organizations have a vested interest in making certain that these assessments reflect the organization and job – the context. Doing so helps jumpstart onboarding by ensuring that candidates' assumptions about the organization, the job, and their suitability for both – that they invariably make during the recruiting process – are rooted in reality.

But assessments modeled after the organization and job are superior for another reason: They are generally stronger than generic assessments that cut across job type, level, organization, industry, etc.

1. More predictive. First and foremost, the closer the alignment between the assessment and the specific context in which the individual will ultimately perform (i.e., the job at the organization), the better the assessment will do in predicting future job performance. In fact, research demonstrates that highly contextualized assessments have incremental predictive validity beyond situational judgment and job knowledge assessments. This means that even after measuring candidates' job-relevant knowledge and how they would handle particular situations, highly contextualized assessments still reveal candidates' ability to perform the job that we don’t otherwise know from these other tools.

Why is this true? Because the best predictor of future behavior is past performance. For many years, this adage has been dubbed "the Golden Rule of selection." Think about it: What's the best way to predict whether an individual will be a good salesperson at your organization in the future? Answer: Observe them in the job of salesperson at your organization. The only problem in the pre-employment context, however, is that you cannot observe a candidate perform a job they do not have… Or can you?

Assessments designed to reflect the realities of an organization and job often take the form of a simulation – sometimes completely automated; other times involving role plays conducted by trained assessors. In essence, these assessments let candidates "try the job on for size" – explore the situations and challenges faced, engage in dealing with the situations, etc. Such work samples provide the opportunity to, in essence, perform a job that candidates do not yet have, thus enabling conclusions about how they would perform the job if hired.

2. Less adverse impact. Not only are highly contextualized assessments, such as simulations, highly predictive of future job success, but they also have lower risk of adverse impact. In fact, a seminal meta-analytic research study – looking across many years of other research studies – found that simulations comprising role-plays or presentations have about 50 percent less risk of adverse impact (i.e., sub-group differences) compared to other assessment tools. This decreased risk of adverse impact translates into a more diverse group of candidates deemed qualified for the job, ultimately leading to a more diverse workforce.
3. Higher face validity. Finally, because highly contextualized assessments look like the job, candidates see the relevance of these assessments for the job to which they've applied. Candidates understand why you are asking them to perform some task or answer particular questions because the assessments make sense in their minds given what they know about the job. This is known as face validity, which highly benefits the organization. This underlying concept can decrease the risk of candidates challenging the results of an assessment, improve perceptions and impressions of the employing organization, and increase job offers acceptance rates.

All three areas of highly contextualized assessments are paramount on their own, and together highlight the importance of tailoring pre-employment assessments to the organization and job. They serve the dual purpose of teaching candidates about the job, while also assessing their capabilities and alignment with the organization's needs.

The employment decision is important for both the candidate and the employer, and it benefits both parties to ensure that candidates are assessed in an accurate and authentic manner to make the best, most informed decisions possible.

Each business revolution has reshaped not only how businesses operate, but how they organize themselves and empower their people. From the industrial age to the information era, and now into the age of artificial intelligence, technology has always brought with it a reconfiguration of authority, capability, and judgment.

In the 19th century, industrialization centralized work and knowledge. The factory system required hierarchical structures where strategy, information, and decision-making were concentrated at the top. Managers at the apex made tradeoffs for the greater good of the enterprise because they were the only ones with access to the full picture.

Then came the information economy. With it came the distribution of information and a need for more agile, team-based structures. Cross-functional collaboration and customer proximity became competitive necessities. Organizations flattened, experimented with matrix models, and pushed decision-making closer to where problems were being solved. What had once been the purview of a select few, judgment, strategic tradeoffs, and insight became expected competencies for managers and team leads across the enterprise.

Now, AI is changing the game again. But this time, it’s not just about access to data. It’s about access to intelligence.

Generative AI democratizes access not only to information, but to intelligent output. That shifts the burden for humans from producing insights to evaluating them. Judgment, which was long the domain of a few executives, must now become a baseline competency for the many across the organization.

But here’s the paradox: while AI extends our capacity for intelligence, discernment, the human ability to weigh context, values, and consequence, is still best left in the hands of human leaders. As organizations begin to automate early-career work, they may inadvertently erase the very pathways and opportunities by which judgment was built.

Why judgment matters more than ever

Deloitte’s 2023 Human Capital Trends survey found that 85% of leaders believe independent decision-making is more important than ever, but only 26% say they’re ready to support it. That shortfall threatens to neutralize the very productivity gains AI promises.

If employees can’t question, challenge, or contextualize AI’s output, then intelligent tools become dangerous shortcuts. The organization stalls, not from a lack of answers, but from a lack of sense-making.

What organizations must do

To stay competitive, organizations must shift from simply adopting AI to designing AI-aware ways of working:

• Build new learning paths for judgment development. As AI replaces easily systematized tasks, companies must replace lost learning experiences with mentorship, simulations, and intentional development planning.

• Design workflows that require human input. Treat AI as a co-pilot, not an autopilot. Embed review checkpoints and tradeoff discussions. Just as innovation processes have stage gates, so should AI analyses.

• Make judgment measurable. Assess and develop decision-making under ambiguity from entry-level roles onward. Research shows the best learning strategy for this is high-fidelity simulations.

• Start earlier. Leadership development must begin far earlier in career paths, because judgment, not just knowledge, is the new differentiator.

What’s emerging is not just a flatter hierarchy, but a more distributed sense of judgment responsibility. To thrive, organizations must prepare their people not to outthink AI, but to out-judge it.

P R E S S R E L E A S E
Stockholm, May 5, 2025

STOCKHOLM, SWEDEN – BTS Group AB (publ), a leading global consultancy specializing in strategy execution, change, and people development, has agreed to acquire Nexo Pesquisa e Consultoria Ltda., Nexo, a boutique consulting firm headquartered in São Paulo, Brazil.

Nexo has been growing continuously since it was founded in 2017. With revenues of approximately 12 million Brazilian Reales (approx. 2.1 million USD) in 2024, and a highly capable team of 21 members, Nexo has built a strong reputation for delivering transformative projects in strategy, innovation, leadership, and culture.

Nexo collaborates with a great portfolio of clients across sectors such as financial services, consumer goods, and technology, assisting both local and global companies in navigating uncertainty, unlocking creativity, and activating strategy through people. Their work encompasses culture transformation, leadership development, employer value proposition, innovation culture, and vision alignment – supported by proprietary methodologies and frameworks.

BTS currently operates in Brazil servicing both local and multinational clients with a team of 13 employees. By acquiring Nexo, BTS not only increases the Group’s footprint in Brazil but also adds significant capabilities in culture and transformation services. Nexo’s client base has limited overlap with BTS, creating strong growth potential and synergy opportunities.

“Nexo is known for helping leaders and organizations tackle some of the most complex, human-centered challenges with creativity, empathy, and strategic clarity and the Nexo team is loved by their clients,” says Philios Andreou, Deputy CEO of BTS Group and President of the Other Markets Unit. “Their products and services complement and elevate our existing offerings, especially in culture transformation, and we are thrilled to welcome the Nexo team to BTS.”

“We’re excited to join BTS. We’ve long admired BTS’s approach and unique portfolio to support large organizations and leaders in connecting strategy with culture across the organization,” says Andreas Auerbach, co founder of Nexo. “Becoming part of BTS, allows us to scale our impact and bring more value to our clients while staying true to our values and culture,” adds Mariana Lage Andrade, co-founder of Nexo.

Upon completion of the transaction, Nexo’s business and organization will merge with BTS Brazil. Nexo’s founders will assume senior management roles in the joint operation.

The acquisition includes a limited initial cash consideration. Additional purchase price considerations will be paid between 2026 and 2028, provided Nexo meets specific performance targets. A limited portion of any such additional purchase price considerations will be paid in newly issued BTS shares. The transaction is effective immediately.

BTS’s acquisition strategy continues to focus on broadening our service portfolio, expanding our geographic reach, and enhancing our capabilities to support future organic growth in a fragmented market.

For more information, please contact:
Philios Andreou
Deputy CEO
BTS Group AB
philios.andreou@bts.com

Michael Wallin
Head of investor relations
BTS Group AB
michael.wallin@bts.com
+46-8-587 070 02
+46-708-78 80 19

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Work today is too complex for individuals to succeed in isolation. Almost every critical decision, innovation, or transformation depends on teams working effectively together. Leaders rely on their teams to deliver results. Teams, in turn, rely on their leaders to create the conditions where performance is possible. This exchange, what leaders need from their teams, and what teams need from their leaders, sits at the heart of what we call teaming.

When teaming is strong, leaders get what they need from their teams [creativity, resilience, execution] and teams get what they need from leaders [direction, support, and the conditions to thrive]. It’s how strategy becomes action, how uncertainty becomes opportunity, and how businesses stay competitive in a fast-changing world.