BrainTrust Query: So You Are a CEO – Now What?

Through a special arrangement, presented here for discussion is a summary of a current article from Getting Personal About Business, the blog of Zahn Consulting, LLC.

Corporate employees making the transition to being self-employed — perhaps due to layoffs, following their passions, starting a new business in their spare time to supplement their income or for any other reason — will often take great pride in referring to themselves as the "CEO" of a business. With visions of grandeur dancing in their heads, the new business owner will see themselves as taking their rightful place alongside luminaries like Richard Branson, Michael Dell, Donald Trump and others.

While the thought of having minions doing their bidding for them and being able to direct staffs to immediately react to any new opportunities is tantalizing, the reality of the role is very different. The chief executive officer role is less monarch and more of a cheerleader, often performing flips and gymnastics to solve problems, keeping people focused and motivated, and creating a vision for both customers and employees.

A recent article that appeared on the blog On Startups covered the topic well. The chief executive officer should consider him or herself to be the chief experience officer. The role is to transfer the passion and vision that they have for the company, products and services to customers, suppliers, and employees. The goal is to strive to create an experience that is superlative in all of the following facets of the company:

  • Product – What is it the customer experiences when they use the product? How does the product add value to the tasks it is designed to address?
  • Purchase – How easy is it to do business with the company? How intuitive is it to identify the right product needed for a customer’s "job" or reason for choosing the product?
  • Brand – Does the brand align with the buyer’s lifestyle, image, interests, etc.?
  • Post-sale support – After the sale, what is the feeling a customer has with the product, brand, company? Is it difficult to contact the company?
  • Exit – When a customer chooses to leave and use a competitor, cancel a subscription or maintenance agreement, etc., are they communicated with to understand why or are they merely removed from the database?
  • Employee – How are employees treated? Is it consistent across all levels (or regions, or functions) of the organization, or are some treated better/differently than others?

While being the CEO of a company may initially be thought of as the land of private jets, limos, fine dining, and hobnobbing with celebrities, the truth is that there is an awful lot of work that has to happen in the trenches.

BrainTrust

Discussion Questions

Discussion Questions: What role should a CEO take on within an organization? What are the typical early shortcomings of newer CEOs?

Poll

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David Biernbaum
David Biernbaum
12 years ago

Real CEOs work ON the business, not IN the business. CEOs need to devote their time to strategy, networking, direction, growth and development, new products, and brand building. CEOs should spend time cultivating strategic relationships and associations with other companies, and other people, that can help out with joint goals.

Max Goldberg
Max Goldberg
12 years ago

Most people leaving a bigger company to become entrepreneurs do not jump into a situation where they have staff and perks. They usually are starting a business alone or with a partner. As such they need to carefully plan for the first two years of the business, keeping an eye on expenditures vs. realistic potential revenues.

They also need to be ready to roll up their sleeves and do every aspect of the job, while not losing site of the company’s core story.

Finally, they need to be flexible. Businesses rarely run as planned. Being flexible and having contingency plans in mind will help the new business owner weather rough times and setbacks. 80% of new businesses fail, many times because the owner/CEO could not recover from a setback and implement a change in course.

Ian Percy
Ian Percy
12 years ago

I guess things have changed since I set up my business a zillion years ago. Back then it was called “Ian Percy and Associates” — like I had any. Calling myself a CEO never crossed my mind. The brutal reality was that the difference between ‘self-employment’ and ‘unemployment’ was a cheaply printed business card a friend made me as a favor.

Frankly in looking back, because I started my company while still an undergraduate, I wonder where I got the nerve. Pick any title and I held it!

Ryan Mathews
Ryan Mathews
12 years ago

CEOs need to provide vision, passion, build culture and serve as stewards of the brand and business.

In my experience, many new CEOs are almost apologetic for having reached the top of the tree and tend to confuse leadership with participatory democracy.

The big difference between being CEO and anything else is is that the buck stops with you. That means that while they can — and should — seek advice from those around them, those around them are ultimately responsible and so don’t — or shouldn’t — have an equal vote.

After all, companies change CEOs a lot more often than they change middle managers.

Warren Thayer
Warren Thayer
12 years ago

I suspect that most folk heading off on their own, as my partner and I did nearly three years ago, won’t have any full-time employees for awhile — they’ll be too busy doing all the work themselves, from writing marketing plans to licking envelopes and (above all else) creating cash flow. There also won’t be time to take care of a lot of the (sometimes important) details that you would like to have taken care of. But if you’re reasonably smart, have a good idea and a good work ethic, things should be fine. I found it helpful to figure out what I didn’t have time for, and then farm out to part-timers I hired. You reach a point where you just can’t do it all yourself, and sometimes that’s a hard thing for an entrepreneur to admit. The ONLY thing I miss about the support I had from when I was “an employee” at a corporation is the computer support. When my computer goes haywire, there is no IT — I’m it. Those of you who know me realize what a laugh that is. (Yes, I hire people for that now, too.) As for flying first class or other such nonsense, those things never crossed my mind. I remember boarding a plane with a part-time employee a few months back, and as we passed through first class, she said “You guys are doing well and ought to start flying first class now.” I laughed and instinctively said “That would be really stupid!” Oops! Shoulda seen the dirty looks I got from the first classers!

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
12 years ago

Some CEOs are entrepreneurs who have had an idea for a product or service and start a company with little experience with or knowledge about the skills necessary to be a CEO. Being CEO is not about doing product development, or creating promotional material, or keeping the books, or establishing HR policies, unless you are the sole employee or co-owner. In that situation you are involved in or doing everything. If there is a staff or as the company grows the CEO needs to help create the vision of the company, motivate employees to work toward the company goals, and to ensure that the employees have the resources necessary to do their work.

Matthew Keylock
Matthew Keylock
12 years ago

I like Ryan’s comment. This resonates a lot with my experiences in working across many retail and CPG businesses. CEOs without a point of view who operate via consensus seem to foster inertia and bureaucracy that can lead to loss of innovation and focus.

Kai Clarke
Kai Clarke
12 years ago

The CEO is actually a misnomer, since it really should be the “Head Janitor” or the “Chief Execution Official”. Heads of small businesses are expected to do, fix and create almost everything. If the small business owner doesn’t position themselves as the person who can get things done, fix, or anything else, they will be in for a shock! Preparation, Planning, Purchasing and Presentation (the small business 4 P’s) should be the simple mantra that all small business CEOs live by.

James Tenser
James Tenser
12 years ago

While I have been in business for more than a decade, I have always preferred understatement when it comes to taking a job title. Hence, “principal” not “CEO”. I figure that no discerning client will be fooled by an inflated title anyway.

Yes, I am also my own IT guy out of necessity and stubbornness. I dust my own office and make every significant strategic, marketing and financial decision for my firm.

After so many years away from the corporate life, I suppose self-reliance is baked into my being. So is impatience with bureaucratic process. New escapees should be realistic about these factors as they contemplate a future at the top of a tiny organizational pyramid.

Roger Saunders
Roger Saunders
12 years ago

New CEO’s have to be certain that they keep the “vision” in their head, on the white board, on their business card, and then plant it in the hearts and minds of their associates as they bring them into the organization.

They have to know What’s Important Now — the W.I.N. — because things can and will change. When it does change, a focused effort has to be made, be it on sales, finance, personnel, or product quality. Easy to say, tough to do. However, it’s the execution that will make the vision and strategies a success

Dan Raftery
Dan Raftery
12 years ago

Many great insights here relating to the transition into entrepreneurship and to the skill sets needed to be a lone wolf. Another path is when the new company is successful enough to need more people to manage and grow the business.

In these fortunate situations, I’ve seen some of the biggest personal struggles as the CEO is faced with the decision to hand off or keep key functions. How a person handles this dilemma determines how or if the company moves to the next level.

Few can make the transition to entrepreneurship but fewer can make the transition out. Many of those who do tap a trusted adviser, such as those represented herein.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.
12 years ago

For the 20 years until I “retired” 2 years ago, my business grew at an annualized rate of 30%, with a few not so good years, and some much better. A few thoughts on that:

Business is a three legged stool. The most important leg is sales and marketing. Nothing happens till somebody sells something — selling is the cutting edge of the business, and marketing that defines what is being sold is the partner to that. I have always included R&D as an integral part of marketing.

The second leg is production. Somebody has to produce and deliver whatever the customer is getting.

And the third leg is administration — somebody that does everything possible to assist the other two functions by making their jobs just as easy as possible — it is a support function, ultimately driven by the guy out front selling. EVERYTHING is oriented and focused on the mission of growing the relationship to the customer, personified by the sales people.

I mentioned R&D as a component of marketing. 40 years ago I learned in a financial management class that all profits are a direct consequence of DEMAND for products or services. Any break-even curve shows you clearly that real profits come beyond break-even, at an accelerating rate. Beyond break-even is the battleground of demand, the source of all real profits.

Not that I ever achieved it, but a business plan I read, back in the early days, made the comment that “there is no substitute for exorbitant profits!” Exorbitant profits occur in “beyond break-even” land, as a direct response to DEMAND. And bear in mind that DEMAND can NEVER be too high, because profits can be harvested by moderating demand with price! This is the only way to exorbitant profits. CREATE DEMAND, harvest profits by moderating it with price!

There are two ways to create demand: better marketing and sales; and/or a better product or service — the better mousetrap. I always invested in marketing and sales. Back when I was first starting (with a mistaken partnership,) we were discussing whether we should spend any of the money we didn’t have, to make a sales tour around our market area. My elderly senior advisor told us that we were not making a decision as to whether to make the sales tour, but whether we were closing up shop. What a shock! One of my first experiences in learning the solid principle: never try to cross a chasm with two small hops. 😉

The second way to increase demand is to develop a better mousetrap. I ALWAYS invested excessively in R&D, because that is the way you get a better mousetrap. I say I invested excessively, because that 30% growth over 20 years was driven by razor edge management with no cushion (profits) for error. Every penny of profit — and often more — went into growth. Insane? Probably. But not unreasoning.

At one point another senior adviser, a few years into the evolutionary process, recommended more retention of profits. At that point, the discussion was that if I had been more financially conservative, I would probably have half the business size I did, but probably a million dollars in the bank. So my question was, what would I do with a business half the current size and a million in the bank? Given my obsession with growth and profits (although I was spending them), I would want to spend the million to double my business. Guess what, I had already done that and would continue to drive growth and profits — without retention — until it didn’t interest me any more.

Well, of course there is a lot more to that. But two more important points: One is that all the issues about personnel management, etc., were never neglected! My company was always organized and managed in a business-like manner throughout, with errors mostly made in favor of the employees. For example, I didn’t know anyone else in our market research industry that was ISO 9000 certified.

Secondly, my own style of leadership is to run like hell and hope the troops can keep up! But what this means is that my management team did all this stuff, not me. I am a terrible manager, personally. But I’m inspired by Andrew Carnegie, the steel magnate of 100 years ago, who said he wanted on his tombstone, “Here lies a man who was able to get around him, those who were more clever than himself.” Not a bad epitaph. 😉

Ralph Jacobson
Ralph Jacobson
12 years ago

Work strategically, however, live tactically. Visit your stores regularly, without an entourage. Create a true retail strategy. Most retailers don’t have one.