This post is written from a slightly different perspective as it is spawned by three conversations of about a year ago wherein VCs asked me what I thought about replacing CEOs and what the ideal process might be.
No, this is NOT the ideal process.
About five years ago, I had a chat with the younger brother of a successful CEO. The older brother was a friend of mine of longstanding and through him I met the younger brother.
The younger brother was in awe of his big brother — All State Basketball First Team kind of awe. We got to talking about his brother, the CEO/Founder, in that capacity. He was, admittedly, very good. Plus, he was a good guy with that aura of a winner that guys like that have.
“I could never do what he does,” said brother younger. “He just knows what to do. He’s a natural.” It was a serious lament, so I told him the following:
1. No CEO/Founder ever knew everything he/she needed to know before they started the company even if it is their fifth company.
Several years ago, I was advising a fairly inexperienced CEO — a terminal condition that everybody eventually outgrows, remember that — who found himself in the midst of a dispute in the 8/10 range — meaning it would not tank the company, but it would change the speed, trajectory, and azimuth of the company’s future progress. It was important.
There was plenty of regrettable behavior on both sides and there was an important legal issue, but it was a heated and contentious confrontation made moreso by the personalities involved. These personalities were not the CEOs’, but the management of both companies.
Push led to shove and they were on the brink of paying off some lawyer’s lake house and turning their fate over to twelve morons with a collective semester of community college amongst them.
They had both talked to their lawyers, but no lawyers had been unleashed. It was still solvable.
I recently had a Chairwoman of the Board client, one of my favorite clients (equally brilliant husband is a former client), cancel a meeting. She is a delight to work with so I miss it when she cancels.
Her reason was that it had snowed in Madrid and she had small children who needed to build a snowman as it did not ever snow in Madrid.
Actual Madrid snowman
[It ended up snowing more than three feet in Madrid, so if she hadn’t chosen that early moment to build a snowman, it would not have happened. As in life, timing is everything.]
If you are the CEO of a startup or small business, the months of November and December are when you must be planning what you will make happen in CY 2021 — and, yes, there will be a Calendar Year 2021 whether you plan for it or not.
You should be following a discipline something like this:
Review 2020 performance — review and discuss with your senior folks with an eye toward segregating the loser from the winners, the saints from the sinners
Based on 2020 performance, create your 2021 plan with input from your senior folks
After a careful review, publish the “preliminary” plan and sit down with your Board to get feedback
Revise the plan
Publish the plan
Brief the plan to the company and get buy in
This can take two weeks or six weeks. It should be started in November, finished in December, and published before Christmas.
If you are a CEO, you will have hard conversations with your people, board, investors, shareholders sooner or later. [Love a good cliche in the morning, no?]
The nature of the conversation isn’t really important. What is important is how you prepare for it.
Pro tip: The preparation for a hard conversation will have more impact on the outcome than the actual conversation because it will set the nature of the conversation.
I took a few accounting courses in grad school. I once knew my debits versus my credits. Knew all about original issue discounts, goodwill impairment, and other such trivia.
Knew GAAP and FASB. Just showing off now.
I ran businesses for 33 years. I needed to know more about accounting so I hired good accountants, retained good accounting firms, hired a good Chief Financial Officer, got second opinions, and I studied the subject on the mean streets of the business world.
CEOs and founders need to know some accounting — financial accounting, managerial accounting, tax accounting. What I knew saved me a lot of money.
One of my interests is the progression of ratios in a graphical manner — pick a financial ratio and graph it such that you can see the trend at the bat of an eye. That tells me something.
This blog post is a revisit of something I wrote some time ago. It was one of the most heavily trafficked posts I have ever written though not at the time I wrote it. I have revised some things.
I have been a CEO for 33 years, before that an Army officer for five years, before that a cadet at VMI for 4 years, and most recently a CEO coach for 8 years. I grew up in a military family.
In business, I have founded private companies and grown them to some recognizable success; and, I have run a public company. My endeavors have been entrepreneurial and I have done a few turnarounds.
I have a lot of experience with both the theory of leadership and the practice of leadership. I have taught leadership. I have developed leaders both in the military and in business.
I have coached good and bad CEOs. I have helped bad CEOs become good CEOs. I have helped good CEOs become great CEOs and I have shepherded them to the pay window.
I have been in the leadership game a long time and at depth.
There is a huge difference between learning from an observer and learning from a practitioner. It is the difference between reading a book and lab work.
You can sit in an airplane in first class for 1,000,000 miles, but you still don’t know how it feels to take off and land a 737. [I have about 3,000 hours flying Bonanzas and find that flying analogies are very comparable to the startup business.]
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