The Good, The Bad, and the Ugly CEO.

“The sooner a company tries to be what it is not, the sooner it tries to “have it all,” the sooner it will die.”                          

― Yvon Chouinard, CEO, Patagonia.

When I was a kid, my older brother and I owned a tree service company. We'd remove old trees, clear stumps, it was hard work. In the late 80's, he asked me if he should give up the business and go work with his best friend in tech. We spent a few hours drinking beer sitting on the back of our old truck, and we talked through what his life would look like if he was still climbing trees at 30. He eventually went on to become a successful executive in semiconductors, and I went to play hockey at a prestigious boarding school. I have always looked back at that time and joked that he was my first client.

A few years later, I ended up worked in the commodities market. I eventually went to University in Boston, and then later, quit law school to take my first gig during dotcom1. I have always been positioned in an advisory role. I  spent the next decade in corporate strategy, and the last five as a technologist, and  management consultant. Along the way, I can say I've learned a few things about advising CEOs.  Since I've been the "trusted advisor", I never felt the need to take the reigns of my own firm(until recently). I understand the pressures of leadership better than most. It is not an easy job. Most CEO's I've met and advised, though they are often well-intentioned, are doing the following three simple things wrong.

  • They will ignore good advice to save face. 
  • They think emotionally, short-sightedly and not strategically.
  • They actually interfere with the day-to-day operational aspect of their business.

First, my clients pay me to offer my point of view, and it is never casual. Be it preparing a competitive analysis, actual financial modeling, offering workflows and processes, or suggesting a critical hire to a client--I am coming from a place of compassion. I want my clients to succeed. I do not want people to fail. I want my clients to be successful and happy. However, the responsibility for execution belongs to my clients. I can only show them the path, they must lead and do so with utmost seriousness. 

Most of all, I believe CEO's need to be realistic. As simple as that sounds, it e eludes about 75% of the CEO's I've worked for. 

A few years back, a client asked if I could scale a small tech company here in the Silicon Valley. We talked about the competitive set, the amount of investment required, and the time it would take. The project was underfunded and doomed from the start. We did not fail for lack of ambition, we failed for lack of a realistic perspective about the competitive set, and a strategy for differentiation. No matter how many times I told the over-zealous CEO to temper her expectations and think more strategically--she refused to listen and forged ahead instead. In the end, she came away feeling as if she had been had. But by whom? Me, or her own lack of perspective and planning? 

I've told every single client I engage for a very long time that I will not mince words, that I am not an impulsive deal jockey, and if they wanted quick wins that the could throw a rock out the window and hit a biz-dev kid on the forehead; especially here in the Valley.  I bother otherwise busy executives in my network with pie in the sky offers. When I do bring a prospect, investment, or project forward it has been vetted for at least 90 days to see how the market will respond and what deal flow around it looks and feels like. If it's not the right time, I cut bait. That might seem harsh--but it's not. It's real. If a CEO hasn't got the chutzpah or the patience to let the opportunity unfold, I am certainly not going to rush headlong into the ditch with them. 

No matter how many times I insist we discuss the competition and map a strategy that could differentiate our offering, some CEO's press on with only one six-shooter in their holster; raw ambition. As any gun-slinger knows, you might use up those six bullets right quick and be left standing there holding smoking lead.

No matter how many times I call, or emails I send, some CEOs fail to follow up with interesting, potential opportunities which have an expiration date on them. In my own experience, if someone says to me, "Lou, you ought to reach out to so-and-so today." I do it THAT DAY. I don't wait. In the end, I realized that what many CEOs expected me to do is grow business development out of the ground like a magic beanstalk. In the end, my response is the same. "You hired me to be strategic, not a sales guy. My name is not Jack, and a successful tech business in the Silicon Valley (or anywhere) will grow from a long-term strategy, investment and patience, not beans".

These conversations go over swimmingly, as you may imagine.

Don't get me wrong, I am the very last person on the planet to dampen anyone else's dreams. I remind myself frequently that I am an Italian-American kid from a small New England town. A former, scrappy left-wing who grew up skating on pond ice, and who paid his own way through higher education. I know the meaning of "grit" better than most.  It took me a lot of time and patience to get where I am and I never forget my roots.

According to entrepreneurial counselor Michelle McQuaid, misguided leadership cost businesses $360 billion in lost productivity every year. Good CEOs who are right-sized about themselves and their businesses won't push the boundaries past a certain limit, they won't feel the need to posture or prove anything to you (or themselves)--not where they went to school, or what their resume says--their acumen (right then and there) should speak for itself.

In my opinion, good CEOs are primarily strategic and product-driven. They not only know how their product will beat the competition but why. Aaron Levie of Box, though a young man, is a perfect example of a leader who knows exactly what his product can, and cannot do and where it belongs in the market. Levie has done a masterful job of scaling an organization, growing it's ranks and exceeding the market's expectations. We all know to be leery of anyone pitching anything that sounds too good to be true. Even more of the reason for job-seekers and consultants to do thorough due diligence of a CEO who offers them a big job or consulting assignment that sounds a little out of whack with reality. 

In the course of making one organizational audit, a staffer told me that he'd leave feeling good on Friday, but when Monday morning strategy meeting came around, he inevitably felt that a bomb had been dropped. The CEO would stomp around and grimace before the meeting making everyone uncomfortable. Great way to start a week, right? When an otherwise well-intentioned CEO lacks the temperament, acumen or focus on operational issues and fails to connect authentically with their team--morale slips, fast and easily.

Listen to your colleagues.

If they are frustrated and miserable-something is wrong at the top. Unhappy, confused team members are only mirroring their leader’s ability to follow through on commitments and get real. Inevitably, disgruntled staffers go outside of the standard routes, (almost always they go directly to a more human, objective person in the org) and even all the way to the board, to resolve their issues.

I've discovered that overly-ambitious CEO's (the good & bad ones) who concentrate on "wow" instead of "how and why" are not well liked by their employees. I've also begun to see that bad leaders tend to have one thing in common--an over-zealous commitment to their own ideas, but not to cultivating the wealth of opportunity in their people. These leaders display a complete lack of ability to be objective on the one hand, and to connect with their teams on a timely basis on the other.

These two poles represent the spectrum of responsibility of a leader. If a CEO spends all their time plotting and projecting, they forget the single most important fact that a good leader can possess- their people, their humanity. You might very well have great ideas, but if you cannot lead and execute at the same time, you will not win. The same goes for the "hail-ye-well-fellow", CEO who is too busy slapping people on the back that he can't think competitively. Beware the jackass who says things like, "We want ROI, Give me value! Just get out there and do it!" Be assured his expectations are divorced from the reality of the market. Instead of saying "Yes, sir!", ask "How, sir?", and see what plan he has in place for you to succeed. Sometimes, there isn't a plan, and he or she has run out of bullets.  

These are the "ugly", CEOs. It is unhealthy to work for them and toxic to be everyone around them. They will run their business straight into the ground if you let them. Far and few between, these are the folks that make working with them a living hell.  Usually you are dealing with a self-absorbed individual enthralled with his unrealistic ideas about revenue, growth, and productization. When queried they are actually unsure about the core competency of the company, what their strategy is, and what their main product is. Compounding this problematic egoism is a lack of buy-in and support from his/her people. If this sounds like Martin Shrekli, Elizabeth Holmes, or Marissa Mayer, you would be an astute CEO-follower. However, these people have billions of dollars to lose and did. Small business owner do not have that luxury. I don't have that luxury either. 

Out of touch leaders tend to think that their people know what is required, but often lack the wisdom to sit down and cultivate a strategic outlook with them. When revenue or growth is mapped to the stars and not towards the current offering and the reality of the marketplace, you can count on lagging sales. When investment in business development isn't strategic, count on frustrated staffers. Making matters worse, an ugly out of touch leader will blame their failure on ill-prepared, poorly managed staffers instead of taking responsibility onto themselves. 

The truth is, there is no quicker way to lose respect with your staff than blaming them for your inability to think strategically. If your head is in the clouds, you can be assured that when you come back down to earth--you might not recognize your company. Most of the time leaders who fall into this trap genuinely mean well when they make a promise. They want to be successful, and they intend to do what they agree to do. But personal factors such as ADD style management, poor time management skills, a lack of self-discipline or an overall level of disorganization, and yes, addiction behaviors, leave them falling short of actual leadership. The best antidote for this is a good, strategic consultant who can speak some hard truth, or you can quit. 

One frenzied CEO I worked for in New York complained in meetings that no one was paying attention to him. He asked for everyone's mobile to be put in the middle of the table. Once poor performance and lagging sales were brought up, or one of us said something he didn't like, he sulked into his chair like a four-year-old and start texting on his phone. When I called it to his attention, he exploded. Immature leaders like this guy often commit themselves and their staff to bigger goals than they have the acumen to achieve, setting the stage for disaster. I've found that especially younger leaders in the start-up space lack an accurate understanding of whether or not they will be able to follow through the commitments that might get them there. They lack the perspective of having seen markets, and companies unfold for good or bad. 

"Bad and Ugly" leaders effectively set themselves and their team up for failure, and when their unrealistic goals come back home on the tails of failed pitches and meetings and revenues fall short--they blame everyone around them. Little do they know that it's their credibility that is being damaged. In reality--the responsibility belongs entirely to them. Big audacious goals, followed by too many dropped balls, and an unrealistic attitude is where trust gets broken, and businesses self-destruct. Making matters worse, people will lose their jobs because of the leader's lack of foresight.

That's sad and wrong. 

Another charismatic, wanna-be, self-help guru from Los Angeles I advised fell squarely in the "bad-ugly" category. While his business was floundering for revenue and run by people who were driving it into the ground, he decided it best to fly off to Coachella, Ibiza, or Greece to party. Absenteeism, another huge problem with young owners, is not generally a better way to run one's business than to actually show up, confront the issues and work. When he was in town, he'd saunter into the offices, suntanned and clean-shaven with his perpetually flatulent dog in tow. Smart as he is, he'd inject himself into projects that were far down the line that the team had been working on for weeks. Inevitably people felt violated, interrupted and disrespected. While I had established workflows and made the financial outlook bearable; he'd say one thing and set it all aflame. Add to this that his absenteeism had resulted in the company being beset by lawsuits and low morale. Though it would have been easy to say this leader was simply immature, (which would be true) his actions were plain and simply selfish and disrespectful. When asked to bring a more professional demeanor to the work, he scowled and said, "I'm telling you the dog will be here longer than you." He was correct. I couldn't resign fast enough. I worked to find a way out that took me all the way to Asia, and I believe the dog is still there, serving as the CFO. 

Short of being this mode of savage, when you over promise and under deliver, or put too much responsibility in one person's hands, or you blow through a commitment you’ve made, the message you send your employees is that you don’t care about them. They may forgive you and act like it is no big deal the first or second time you do this to them, especially if you have built a good rapport with them otherwise. But over time, you will get a reputation for not following through on your commitments, and they will begin to take the important issues to someone else who they do trust. And when that happens, you are no longer be an effective CEO. You will have lost your business. It may take some months to see the effect, but in my experience, I have seen entire teams walk right out the door.

Here's something that will not surprise you. I know these things because I've worked with a half-dozen or so "distressed assets" or companies on their way down. If I did my job correctly, regardless of outcomes, the CEO's learned only two things.

CEO's must be present. They must be highly communicative and strategic. They must run their own company and not delegate an ounce of it without having a plan on how to manage that plan and person, that inlcudes advisors. 
Good CEO's are more involved in active human management, they talk to people.  They show up, and show their concern. 

The urgency you possess as a leader should be "now-focused" on the strategy, people, and planning, and not on perpetual ROI and enormous dreams. If this sounds counter-intuitive to the endless drone of entrepreneurial, start-up blather you are hearing, congratulate yourself for actually listening. It's a truly rare gift. 

* Please note that due to the discretionary nature of my practice, certain place names, detail and events have been changed to protect the privacy of my clients. 

The Non-Conformist

Towards A New Economic Paradigm