I feel like the CEO could have changed tactics a bit to avoid the visceral response Steve experienced. Instead of assuming that he wasn't the right person for the job, he could have just said that the approach needed to shift. He ended up making it personal. The fact that Steve had to ask if he could be the person (irrespective of the CEO saying he could be a candidate and finding him a coach), is the problem. The CEO should have lead with "you've done a great job, and here's what we'll need from you to take things to the next level". That makes it more about trying to help him grow into the person the company needed by finding the coach, and only then deciding whether or not he needed to search for a new candidate. And it seems like the employee would have a better understanding at that point of what was needed and if he/she could live up to those responsibilities and expectations. While it was a story about personal growth, it feels more like a failure of leadership to me.