This debate goes on. There are pros and cons for both.
Outsiders bring fresh perspectives to the business, they are unhindered by legacy thinking, they bring newer networks of people, they can make better sense of opportunities and threats, and so on.
Insiders don’t need any time to get started. They can target and mobilise resources quickly. They can get product and delivery issues fixed faster, they are trusted by employees, and so on.
There are examples of successes and failures on either side.
Like IBM’s Gerstner (outsider, a success) and HP’s Fiorina (outsider, who had to go soon).
Like Apple’s Tim Cook (Insider, who seems to be doing well) and RIM’s Thorsten Heins ( a long time insider, but RIM doesn’t seem to be getting anywhere).
My point is that though experience is important, what was learned from the experience and in what manner it is used to define and solve new problems is absolutely vital. This requires a formal leadership development process which can make both the above visible. Excellent track records of CEO candidates might be misleading.
Learning Leadership as aims at providing such a process of leadership development.