One of the core challenges of being a CEO is that although there’s a perception that you have unlimited power to shape your destiny, in fact, there are many factors beyond your control. It’s how you respond to these factors, both internal and external to your organization, that will determine the level of success you have. The bottom line is that CEOs are people, and they worry just like anyone else.
What do we worry about? Personnel decisions come to mind first. As a CEO, you simply cannot win big without a great team. Part of what determines your success as a CEO is your ability to recruit, retain, and reward top-flight talent, all day every day. The only way to grow is to have people who can carry big loads for the team, rising to challenges of your business in big ways.
Industrious people are hard to find and keep—there are a lot of great jobs out there with great firms. High performers usually aren’t solely motivated by pay and other compensation; they are very concerned about progressing in a career path. They want to be projected one to three levels above the role they currently hold, and they want you engaged with mapping their career development. From the CEO’s perspective, it’s a double positive: you see even greater productivity in them when you invest in their future, and if you’re attentive, you can see early warning signs that they need new challenges—accompanied by new rewards—to continue along their path of fulfillment.
Slowing Growth and How to Pivot
You see certain stages in the business life cycle, and they often repeat themselves. There are times for innovation, duplication, and commoditization. When you’re on the leading edge of innovation, that’s great, and it’s easier to grow. But in most environments, you’ll see the emergence of low-cost providers, first duplicating and then commoditizing what you’re doing.
Regardless of the stage of your marketplace, there’s lots of pressure to meet short term results, while staying well-positioned for the future. As a startup entrepreneur, or even in leading private companies of scale, you have to focus on creating realistic shareholder expectations, shaping them to your long-term view. Even with short-term earnings pressure, you can’t cut corners on taking the time and investing in your people to innovate and take risks based on future customer needs.
A short-term view doesn’t build a special business. You have to have the courage to invest in your company’s future, even though today’s results may suffer a bit. Your shareholders and board must be aligned with your vision, so you can be comfortable making long term decisions. If there are misalignments among key stakeholders—your board, your shareholders, and even your management and employees—it creates a tug of war where no one wins.
Profitability versus Effort
Profitability is important, especially when you’re running a private, self-funded firm. Most companies have to be profitable year to year to exist. To be good at being profitable, you have to manage spending on what I call “unearned amenities.” Don’t fall into the trap that you need “cool stuff,” whether it’s ping pong tables in the break room, free beer on Fridays, or lavish company meetings in order to attract the right talent.
Also, don’t chase every dollar with the same amount of effort. Realize that often you’re able to earn more money through your existing client base than bending too far—and with too much effort—to win new business.
Finally, it’s absolutely critical to invest in first class financial talent as early as possible. We entrepreneurs aren’t typically great finance people. I found out the hard way, paying a steep price for a revolving door of financial talent in my early years. This dynamic left me with bard forecasting, with each new player simply regurgitating last year’s performance. As I’ve matured, I’ve focused on attracting and keeping top CFOs, which allows me to focus on growing the business.
It’s easy to lie awake at night as a CEO. You’ll sleep better if you really focus on teambuilding with great people, investing to remain in front of your completion over the long haul, and aligning your company to sound financial management.
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Written by: Donald Thompson.
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