What is the most important data point on any map? You are here. Without an accurate assessment of where you are, you can’t chart an accurate path to where you’re going. For new CEOs, misdiagnosing where an organization stands can set them up for failure, because their approach and focus will be 20 degrees off across their decisions and priorities.

Michael Watkins outlines this brilliantly in his book The First 90 Days  through the STARS Model. This framework provides new CEOs with a diagnostic tool to quickly understand the organization they’re inheriting and, therefore, where they need to focus their most precious resource: time.

But here’s the challenge: What happens when you were hired under a misperception of where the organization actually stands? Understanding both how to use the STARS framework and how misperceptions occur is critical for any incoming CEO’s success.

The STARS Framework: Your Diagnostic Compass

The STARS model helps leaders diagnose their situation and match their approach accordingly:

  • Start-up: Building something new from scratch
  • Turnaround: Fixing a troubled unit or organization
  • Accelerated Growth: Scaling rapidly growing operations
  • Realignment: Revitalizing something drifting into trouble
  • Sustaining Success: Maintaining and advancing already successful operations

Why Accurate Diagnosis Matters: Different Situations Demand Different Leadership

It seems obvious that a new CEO taking over a well-established, soundly operating organization will have different priorities than one taking over a startup. But where it becomes critical—and more nuanced—is when a CEO and their executive team disagree on where the organization actually stands.

Consider the dramatic differences in approach:

Turnaround vs. Realignment: A Case Study in Misalignment

Imagine a CEO who believes they’re walking into a turnaround situation. Their approach will be:

  • Make tough decisions quickly, including potential restructuring
  • Focus intensively on cash flow and operational efficiency
  • Drive dramatic organizational changes decisively
  • Over-communicate the crisis to build urgency
  • Prioritize quick wins to stop the bleeding

Now imagine that same CEO discovers their executive team believes the organization is actually in a realignment situation. The team expects:

  • Selective, targeted changes rather than wholesale transformation
  • Cultural renewal and reenergizing initiatives
  • Strategic repositioning with careful market analysis
  • Collaborative diagnosis of root causes
  • Innovation-focused solutions to emerging challenges

This misalignment creates friction, confusion, and potentially undermines the very changes the organization needs.

Start-up vs. Sustaining Success: Another Critical Distinction

A CEO approaching a start-up situation will:

  • Move fast with incomplete information and higher risk tolerance
  • Stay hands-on and close to operations
  • Focus on vision-setting and resource assembly
  • Establish culture and values from scratch
  • Spend significant time with external stakeholders

But if the organization is actually in sustaining success mode, the team expects:

  • Stewardship mindset that preserves what’s working
  • Incremental innovation without disrupting success factors
  • Investment in developing the next generation of leaders
  • Measured improvements and careful risk management
  • Respect for existing culture and proven processes

How CEOs Get Hired Under False Premises

Understanding how situational misperceptions occur during the hiring process is crucial for both incoming CEOs and the boards that hire them. Here are the most common scenarios:

Board-Level Misdiagnosis

The Rose-Colored Glasses Board: Board members may genuinely believe the organization is in better shape than it actually is. They see high-level financials that look acceptable but miss underlying operational issues, cultural problems, or competitive threats brewing beneath the surface.

The Crisis-Averse Board: Some boards are reluctant to acknowledge serious problems, either due to their own reputation concerns or because admitting crisis means admitting their oversight failures. They hire a “growth CEO” when they actually need a “turnaround CEO.”

Information Asymmetry During Search

The Departing CEO’s Spin: The outgoing CEO may have painted a more optimistic picture than reality warrants, either to protect their legacy or because they genuinely believe their initiatives will bear fruit. The board and search committee base their hiring criteria on this skewed assessment.

Limited Due Diligence: External search firms or board members may not have conducted deep enough organizational health assessments. They focus on financial metrics and market position while missing cultural decay, talent flight, or operational inefficiencies.

Timing and Market Dynamics

The Delayed Reality: Market conditions or competitive threats may have shifted dramatically between when the search began and when the new CEO starts. What looked like a “sustaining success” situation six months ago is now clearly “realignment” or “turnaround.”

The Seasonal Illusion: Organizations often look different at different times of year. A retail company might look healthy during peak season when the search happens, but the new CEO arrives to discover underlying structural problems.

Common STARS Misperception Scenarios

Hired for Sustaining Success, Actually Need Realignment:

  • Board sees stable revenues and market position
  • New CEO discovers: talent exodus, declining innovation, emerging competitive threats
  • Reality: Gradual drift that requires strategic repositioning

Hired for Realignment, Actually Need Turnaround:

  • Board acknowledges “some challenges” but believes in fundamental business model
  • New CEO discovers: cash flow crisis, major customer losses, regulatory issues
  • Reality: Organization is closer to crisis than anyone admitted

Hired for Growth, Actually Need Operations:

  • Board sees market opportunity and wants aggressive expansion
  • New CEO discovers: broken internal processes, quality issues, scalability problems
  • Reality: Foundation must be fixed before growth is possible

Hired for Transformation, Actually Need Stability:

  • Board believes disruption and innovation are needed
  • New CEO discovers: recent changes have created chaos, people want consistency
  • Reality: Organization needs to stabilize and execute basics well

Bridging the Perception Gap

Whether the misperception comes from the hiring process or emerges after you start, the gap between a CEO’s assessment and their executive team’s reality must be addressed through candid diagnostic conversations. Here’s how:

1. Conduct STARS Alignment Sessions

Have each executive team member independently assess where they believe the organization stands using the STARS framework. Compare results and discuss discrepancies openly.

2. Ask Probing Questions

  • “What evidence supports your assessment?”
  • “Where do you see the biggest risks if we’re wrong?”
  • “What would need to be true for this to be a [different STARS situation]?”

3. Determine the Root of Disagreement

Is the executive team member:

  • Unaware of critical information the CEO possesses?
  • Working with outdated or incomplete data?
  • Offering valuable perspective that should recalibrate the CEO’s approach?
  • Resistant to acknowledging difficult realities?

4. Align on the Path Forward

Once you’ve diagnosed the situation together, align on the appropriate leadership approach, timeline, and success metrics.

Red Flags and Prevention Strategies

Red Flags During the Search Process

Smart CEO candidates can watch for these warning signs:

  • Vague or inconsistent answers about organizational challenges
  • Board members who seem disconnected from operational realities
  • Executive team members who are overly positive or defer all questions to “later”
  • Financial data that doesn’t align with market trends or competitive dynamics
  • Recent departures of key executives that aren’t well explained
  • Reluctance to provide access to middle management or front-line employees

Prevention Strategies

For CEO Candidates: Ask probing questions about organizational challenges during the interview process, request access to operational metrics beyond financials, independently research competitive positioning and market dynamics, and insist on meeting with at least some direct reports of the CEO role during final rounds.

For Boards: Conduct honest organizational health assessments before beginning the search, use external consultants for objective situational diagnosis, align search criteria with actual organizational needs rather than aspirational ones, and ensure the search committee includes members with operational experience.

The Mixed Portfolio Reality

Most CEOs don’t face a single STARS situation across their entire organization. Different business units, product lines, or functional areas may require different approaches simultaneously. The key is to:

  • Segment your strategy across different parts of the business
  • Allocate resources according to each situation’s specific needs
  • Communicate context so your team understands why you’re taking different approaches in different areas
  • Avoid one-size-fits-all solutions that ignore situational nuances

Your First 90 Days Action Plan

Weeks 1-2: Initial Assessment

  • Conduct your preliminary STARS assessment based on available information
  • Begin one-on-one meetings with executive team members
  • Review financial and operational data with fresh eyes
  • Compare your initial assessment with what you were told during the hiring process

Weeks 3-4: Team Alignment

  • Facilitate STARS alignment sessions with your executive team
  • Identify discrepancies between your assessment and theirs
  • Dig deeper into areas of disagreement
  • Begin customer and stakeholder conversations

Weeks 5-6: Reality Reconciliation

  • Reconcile different perspectives with additional data gathering
  • Make preliminary adjustments to your approach if needed
  • Finalize your situational diagnosis
  • Communicate any major shifts in direction to your board

Weeks 7-12: Implementation

  • Implement the appropriate leadership approach for each identified situation
  • Monitor for signs that your diagnosis needs updating
  • Build systems for ongoing situational awareness
  • Establish regular check-ins with key stakeholders

Day 90: Reassessment

  • Conduct a formal review of your situational diagnosis
  • Adjust approach based on new information and results
  • Plan for ongoing STARS assessment as conditions change

Conclusion: Navigation Over Perfection

Remember: Getting the diagnosis right isn’t just about being correct—it’s about ensuring your entire leadership team is rowing in the same direction. The STARS model provides the common language and framework to make that alignment possible.

Your success in the first 90 days—and beyond—depends not just on having the right strategy, but on having the right strategy for the right situation. Sometimes you’ll discover the situation isn’t what you were hired to address. That’s not failure—that’s navigation.

The key insight is that situational misperceptions often aren’t malicious—they’re usually the result of cognitive biases, information gaps, or wishful thinking. But they can be catastrophic for new CEOs who build their entire 90-day plan around the wrong situational assessment.

Start with “you are here,” verify that assessment rigorously, and chart your course accordingly. The map may not be what you expected when you took the job, but with the right diagnostic tools and honest conversations, you can still reach your destination.