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(This was originally posted on Business Insider on August 11, 2010 with spiffy graphics.Link to BI.com Post)
The people who succeed as start up CEO's approach the position much differently than those who fail as start up CEO's. Not a surprising statement on the surface. It is the way they succeed that is intriguing and perhaps, slightly unexpected. At its core, it is more rock and less talk.
The star CEO's daily activities involve more tactics and sales -- and less strategies and marketing. The successful start up CEO is determined and headstrong but very open to to hearing advice. Continually optimistic but not unrealistic. Tough but fair. Clear on the distinction that innovation isn't an idea alone but creativity backed up by relentless execution.
The rock star start up CEO has a different approach than his or her lower performing peers. The differences aren't superficial or incremental. While no one aspires to fail amongst start up CEO's, some do a much better job of it. This isn't to say that the lesser CEO's were essentially bad people and the better ones good people. It isn't a statement about them as people, it is a statement about them as CEO's.
If you' re thinking about taking the leap into a start up CEO position, you may benefit from the following 5 key characteristics that differentiate the stars and average start up CEO'.
They know hope is not a strategy
The stellar CEO's don't seem rely on optimism with any frequency. They will manage every last detail or oversee every step in any process that is critical to success. The less stellar tend to rely on others and reports about situations. With the company's of the verge of a major sale, the stellar CEO has visited and met the customer while the lesser CEO has not. The stellar CEO owns, I mean owns, the customer's concerns. The sales executive is still empowered to close the deal on an individual basis just as they are with the lesser CEO. They're just more empowered with an informed and involved CEO. It says a great deal to the customer.
The lower performing CEO's are far more optimistic that things would work out well in the end for any given situation. They expect the customer they haven't met to buy.
They don't Inspire Litigation
Whether it was the "principal of the thing" or otherwise, lesser CEO's get sued or are predisposed to litigate and lawyer up in a way that the stars couldn't imagine on their worst day. The lesser CEO's are sued regularly while the stars are rarely if ever sued. This is true even though the stellar CEO group is much tougher on suppliers and vendors. They are tougher and fairer on suppliers and vendors. And they don't provide reason or motivation for suits.
I had one weak CEO commit, I mean commit with a contract, to $200k of expenses associated with fulfillment of a deal that eventually fell through. The supplier sued and won a judgment based upon the original commitment and contract. A stellar CEO just wouldn't have made the original commitment to supplier until AFTER the deal it was based upon was signed, sealed and delivered. Incompetent CEO's get sued a lot more, plain and simple, than their more competent peers because they should be sued more. Weaker CEO's inspire litigation.
Advice is welcomeThe star CEO's don't universally follow advice but boy do they consider it. They may argue or discuss with energy and passion but they are suckers for the truth regardless of its origin.
The weak ones will report back all the opinions they have heard from all the people they've talked to about the subject. Which is to say, it is just noise to them. They haven't truly evaluated any opinion other than their own, which was always good in their view, and still is good. They have a tendency to ignore advice regardless of source, in fact, they will often ignore advice based upon it being externally (to them) sourced. One had what I characterize as world class skills at ignoring good advice.
He resisted and resisted some go-to-market advice and when all else failed, tried it to great success. Well, when similar advice arrived from the same source on a related issue, he resisted again until all the logical alternatives were exhausted. Then, and only then, did he proceed to follow the advice and, again, succeed once more. Would you believe that he continued to do this? Or that his company has struggled for years? Of course you would.
They test, test, test
They are inveterate testers. They tackle tough questions with a data first approach, they lead with discovery and testing , they seek understanding from the marketplace of prospects, suspects and customers. Ask a rock star CEO about some aspect of the company's strategy and tactics and you get the results of tests and discovery. They assume very little inherent understanding of the truth. Though they usually have a great deal of understanding of the truth, they like things proven.
The lesser CEO's rely more on thoughts, impressions and feelings. Whereas the stars are specific and factual, the lesser CEO's are fuzzy.
The rock star seeks every advantage that understanding provides and then, and only then, do they turn their attention to the best possible execution to realize that advantage.
They execute, execute, execute
There is a saying in military circles that the amateurs discuss strategy while pro's talk about logistics. The great CEO's out execute their lesser peers on things small, medium or large or put another way, they out execute them on everything. Great CEO's value tactics equally to strategies. Lesser CEO's are usually focused on strategy. I had a weak CEO that always wanted to discuss strategy. This isn't to say that he didn't have great strategies because he was a brilliant strategist. His views were typically spot on about the market and opportunity. He would arrive at every meeting with a new strategic thought and absolutely nothing about his execution of last month's strategic thought. I finally reached a point where I asked him to come to Board meetings and only discuss tactics. The meetings were much shorter and certainly lacked the lofty, thought provoking discussion of their predecessors. But, nothing was accomplished by the company between meetings because the CEO wasn't ever focused on the minutiae of operating a successful business. Strategies don't implement themselves after all.
The rock stars will discuss the A/B tests associated with the refinement and near perfection of customer acquisition processes. The critical interactions by all the touch points of the company with customers and the incremental improvements to the company's execution are focal points. They know, with precision, how the company is doing in all of its critical processes and initiatives. And finally, they surprise you with their ability to scale a company in growth phases. Opportunities are missed because of operational mistakes, opportunities are seized and realized by the rock star CEO's oriented to never dropping ball.
The irony of these characteristics is that both stellar and less stellar CEO's are smart and effective leaders. And the lower performers could succeed with an emphasis on action over thought, truth over opinion and attention to detail. For the lower performers, there is, in fact, nothing in their way that isn't largely self imposed.
Great post. When you graduate from rock star to Oprah-scale success story, do some of the characteristics reverse, such as #2, a la Mark Zuckerberg, who seems to inspire enough litigation that you might confuse him for a lesser CEO... :)
Posted by: Will Marlow | August 17, 2010 at 10:17 PM
Excellent post. While I see the "pattern matching" value for a VC, I'm curious if it's possible for the individual entrepreneur to recognize their faults and course correct. I suspect the answer is No. I also suspect that great startup CEOs are more likely to have a product / engineering background vs. an MBA.
Posted by: Dlifson | August 21, 2010 at 08:45 AM
Some good points raised here. I would recommend the following book as well: http://amzn.to/9MQyei
Posted by: Arman Eshraghi | September 03, 2010 at 10:38 AM