I recently read Kip McClanahan’s (@KIPMCC) blog post “The 4 requirements for a VC-backed CEO”. It was co-authored by Morgan Flager. The post is certainly worth a read, it is a great discussion of critical characteristics a CEO of a VC-backed company must exhibit. Specifically, the fourth requirement discussed is a CEO’s responsibility to be the “keeper of and spokesperson for the company’s strategic vision.” As a venture accelerator, we have particular insight into this requirement because we spend so much time helping CEOs craft their strategic vision and then working with them to launch it to market. Our experience in the early stage market, and with dozens of CEOs over the last several years leads me to define the following three requirements for CEOs to successfully navigate the challenges of moving their business from Powerpoint to production.
The first requirement is that the CEO must have a simple vision for how the company will address its market need. CEOs develop their vision by analyzing current market conditions and forecasting future scenarios. Their vision addresses at least these three dimensions:
- A problem solving strategy (product or service)
- A customer acquisition strategy (sales and marketing)
- A monetization strategy
It’s rare for a first-time CEO to have enough experience and insight to be able to conceive of, simplify and broadcast a compelling strategy that includes all three dimensions. This is not a fatal flaw, as long as the CEO recognizes he needs help – and finds that support. I’ve seen CEOs fail in recognizing their shortcomings, and I’ve also seen them fail in addressing these shortcomings with outside council. The least successful CEOs we work with spike highly on one of the above three-dimensions and they believe the single pillar can sustain them. This is rarely the case, and in contrast, the most successful CEOs build and broadcast a well-rounded vision for how to address the market need.
The second requirement is for a CEO to know what to delegate, and to actually delegate it. (Kip alludes to a piece of this in his first requirement). The most successful CEOs hire people better than themselves for each of the critical roles in the company. If we assume quality hires, then the CEO must recognize that these team members are not going to accept micro-management gracefully and will become extraordinarily frustrated if their ideas are consistently over-ruled or needlessly modified by the CEO – “because he’s the CEO.” The most common failing of CEOs who have ineffectively delegated is falling in love with iterations. Simply put - they delegate the responsibility of iterating until their vision is met to someone else, as opposed to delegating the creative process. This false delegation just extends the time and cost to get to the answer they would have gotten to if they just did the work, sub-optimally, themselves. False delegation brings innovation and launch processes to a halt because it stifles key leaders’ ideas and capabilities. The least successful CEOs find themselves trapped in brand language, pixels and bits of code – details that they should simply not have time to attend to. In contrast, the best CEOs have excellent talent on their team and have operationally and emotionally delegated critical tasks. This allows the CEO to spend time ensuring the market is receptive to the company’s vision. I should note – as a partner and service provider to early stage companies, it is fair to include expert outside council (consultants) in the discussion. They need the freedom to execute their processes and ideas as well. Why pay an expert to be a spec writer?
The third requirement of a CEO is to be the keeper (thanks Kip) of the company’s emotional energy. In many ways, early stage companies are like toddlers. First, they are highly subject to “chasing the shiny new object.” Second, early stage companies generally have two moods, unbelievably positively excited, or DEFCON 1. Have you ever seen a toddler sitting calmly and quietly playing or reading a book for more than 30 seconds? Finally, just like toddlers, most things early stage companies do are new. Each experience is simultaneously scary, painful, rewarding and exciting. The best CEOs we work with pro-actively create a blanket of calm over their entire organization, and they do it without slowing things down. Through their demeanor, they instill confidence in everyone including employees, investors, advisors and customers. You can easily identify the least successful CEOs by looking at their team. Their team is frequently cranky, or stressed and they struggle to make customer and / or vendor relationships work. They’re extraordinarily focused on details that are costing precious time and money. And they generally do not have confidence to make decisions themselves – too many decisions are put to internal democratic processes, which in early-stage-company-land equals “wait for the CEO to approve / decide.”
I suspect that as Thinktiv matures, we’ll have greater visibility into the relationship between the stage of the company and the challenges facing a CEO. As a CEO, I try to look at what we learn from our customers and apply these lessons to our business, daily. When mistakes are being made, or opportunities are abundant, it can be particularly challenging to stay calm and let team members navigate their way to dry land. However, if you’ve done your job and your team and the market understand your operating vision, you’ve empowered people to succeed and your organization is executing under emotional control, you’re starting off on the right foot.
Note: I edited this post after a conversation with Ian Ragsdale @iragsdale and added 'This false delegation just extends the time and cost to get to the answer they would have gotten to if they just did the work, sub-optimally, themselves.'