Going from “Doer in Chief” to “Company Builder in Chief”.
The role of the CEO for high growth companies.
Companies go through various stages in their business life cycle. Arguably one of the most exciting stages is the Growth stage. This is where I have spent the vast part of my career.
I often refer to this stage as Phase 2. As the CEO of a company in Phase 2 your role is to continue the great work the Phase 1 CEO (typically the Founder and “Doer-in-Chief” and quite possibly the person that fills the seat of the Phase 2 CEO) has done — they built a great product and found a small group of people who love it and use it enthusiastically.
As a Phase 2 CEO, you are a “Company-Builder-in-Chief.” You bring scale as a CEO, and scaling is the first step in company-building.
Phase 2 usually begins when a start-up has around 20–25 employees and ends when it reaches 400–500 employees.
As a Phase 2 CEO your focus is on three critical operational tasks to set the foundations for scaling.
1. Hiring a Leadership Team and Making Sure They Work Well Together
Students of Jim Collins will agree that having the “right people on the bus” is one of the characteristics that separates great companies from merely good companies. This is one of the most critical tasks to get right and to put your energy into.
Your focus is to hire a leadership team, delegate the day-to-day activities to them and codify Mission, Strategy, and Metrics well enough for them to operate effectively without your daily involvement. Your reward is the bounty of time to think and plan the future of your company.
Recruiting senior executives takes an extraordinary amount of time. But assembling the team is only one part of the mission. You need to get them to work together toward and on the right things. Focus on managing senior people to longer term outputs than week to week tasks by setting the right destination with annual and quarterly milestones.
It’s also your job to acclimate new executives to the culture of the company. As you build your senior team, expect to spend extra time with new executives individually and as a team on culture and teamwork. You should insist that new executives take the time to build relationships across the organization rather than pressuring them to come in and start changing things immediately.
Your job is never done but you will have met a major milestone when your entire leadership team has been hired, you’ve coached them to work well together, and they can operate at a high level with minimal involvement from you.
Don’t be surprised if more than 50% of your time goes to hiring and managing your senior team; it’s time well spent.
2. Creating Purpose, Alignment and Accountability
The second task that CEOs cannot delegate is creating and advocating purpose and alignment across the entirety of the company.
As a Phase 2 CEO your job is no longer to row. Instead, it’s to define the destination of the voyage, set the direction of the boat, measure the pace and performance of a much larger number of rowers and ensure that each and every rower has a connection to why you are headed in the direction you’ve charted.
In business speak, the CEO’s job is to ensure all of the company’s associates have a sense of purpose and can connect their outcomes to the broader purpose of the company (its “why”). To leverage this purpose to define the Vision (destination), Strategy (direction), and Metrics (pace and performance). These three elements provide the essential context that a growing company needs to be able to perform.
Your destination should feel ambitious and permanent. It should find its roots in the reasons the company was started (Purpose) and should not be something that you change until you get there.
Conversely, you should revisit your Strategy at least twice per year to make sure they remain relevant and right.
Effective metric-setting is a critical part of alignment and accountability. A common mistake is to equate key internal metrics with the business’ most important top line results, like revenue or user growth. This is the wrong approach because top line results like “increase user growth” usually aren’t directly actionable. Instead, you’ve got to dig deeper to understand what drives top line results and set these drivers as the key internal metrics. You’ve got to be tenacious about learning what drives your top line business results and set those drivers as your internal metrics. If you don’t know what drives revenue, customer acquisition, or user growth, you aren’t likely to be successful anyway.
Once you’ve written “Mission-to-Metrics” for your company, and gotten feedback from your leadership and other key employees, you have to start communicating it to everyone regularly. You have to reiterate the Mission-to-Metrics much more than what feels reasonable, which may run counter to your instinct to be efficient. Your employees will not internalize the message unless you communicate it constantly. The real test is not simply whether employees can repeat it, but whether they can make good decisions in your absence based on the context you have provided.
3. Nurturing Company Culture
There are few concepts in company building that are as slippery as culture. Fundamentally, culture is defined by the way people treat one another internally and externally. How leadership act toward one another, with customers, investors, etc. sets a cultural tone that can last for many years.
But unlike the other tasks listed above, creating a good culture is not uniquely the CEO’s job. It is everyone’s responsibility. So unlike Mission-to-Metrics, a CEO’s job is not to go to a quiet room and write up a set of cultural tenets for everyone to follow. This single-author approach usually fails because the resulting words are often disconnected from the reality of how the employees as a whole experience the company. Rather than assuming the burden of sole authorship, CEOs should encourage the leadership team and employees to work together to codify a set of values and behavioral norms that feel authentic and aspirational to everyone. For culture to be self-enforcing, the values must resonate with the ways the company has acted in the past. That’s how they feel authentic rather than contrived. If you really want the company to embody a value that does not reflect past behavior, then set an example and get everyone in leadership to act in that way before you consider calling it a company value.
In Phase 2 — the growth stage — a CEO’s role moves from “doing” to “leading”. Your focus is on building a company. Building companies takes effort and requires systems, processes and focus. It requires setting a strong destination and giving people the responsibility and tools to help get the company to its desired destination in a fulfilling and meaningful manner.
