What’s in it for me: learn how to develop into an incredible CEO.
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CEOs endure greatly while they are solely responsible for the future of their company and have to make critical choices every day. They anticipate full responsibility for the situation while keeping an eye on the future, even if it means cutting their closest friends or closing an entire factory. You may read about the lessons Ben Horowitz learnt from starting a business, serving as its CEO, and selling it for $1.6 billion in these blinks.
When required, you’ll learn how to fire someone with the lowest possible level of animosity.
You’ll learn why it may be a good idea to choose someone who has a few flaws as well.
Finally, you’ll learn what it takes to succeed as a “wartime CEO.”
The Struggle is a challenging period for CEOs, where aspirations of success collide with reality. This stress and difficult choices impact the CEO’s entire life, including mental and physical health, career, and social life decisions. Despite the exhaustion, the Struggle is where greatness is formed, as the CEO is ultimately responsible for resolving business issues, which can lead to rewards or termination for failures.
The Struggle is a critical challenge faced by every CEO. To overcome it, it is essential to involve as many people as possible, even if it is the CEO’s responsibility. For example, in Opsware, the author organized a meeting of employees to inform them that a complete product makeover was necessary for the company’s survival. The company’s share price increased from $0.35 to $7 due to the tenacity of the remaining employees.
Being creative is crucial when dealing with The Struggle. In Loudcloud, the author took the company public after falling short of its revenue goal of $75 million during the dot-com boom. This allowed the company to raise the necessary funds.
Managing personal psychology is the most challenging aspect of The Struggle. CEOs must focus on the issues at hand and the problems in front of them, rather than the answers. By following the example of racecar drivers, CEOs can overcome The Struggle and thrive in their roles.
Breaking bad news is crucial for success as a CEO, as it spreads quickly and can destroy trust and demoralize employees. Instead of hiding it, the CEO should promptly announce the news to prevent rumors and focus on addressing the problem. For example, a corporation experiencing a crisis due to a significant market technological shift should not keep the problem from its employees, as they can quickly investigate the new technology.
Many CEOs avoid breaking bad news due to the optimism delusion, believing their staff can handle the reality and focus on positive news. Employees are typically better at handling bad news than the CEO, as crises are always the CEO’s fault. By bringing issues to the attention of those who can address them, the CEO helps to put problems in their hands and ensures a smoother transition.
When faced with the responsibility of firing employees, it is crucial for CEOs to act quickly and treat them fairly. Postponing layoffs can lead to a sore that can fester, affecting the business. It is essential to announce the layoffs immediately to avoid misunderstandings and undermine trust. Treating departing employees fairly with respectable severance packages and positive references boosts morale and facilitates future recruiting. CEOs should clearly state that the company has failed employees, building trust between the CEO and the remaining staff. Acknowledging failure builds trust and allows everyone to understand that the company needs to move on. In real life, it is not necessary to use the excuse that the company is improving its performance to fire employees, but rather to state that some excellent personnel must be let go due to the organization’s inability to meet its goals.
In times of financial difficulty, CEOs may need to terminate executives as well, which is a more serious responsibility due to the company’s financial and cultural risk. To dismiss a manager, the CEO must be accountable for the initial employment decision and inform the board. They should investigate the reasons behind poor recruiting decisions and prevent them in the future.
Thoroughly prepare for the conversation with the executive, considering language choices and severance package structure. Avoid making the other feel inferior, as Bill Campbell once said, “You cannot let him keep his job, but you can absolutely let him keep his respect.” Treating the departing executive honestly and professionally improves their morale and performance, ensuring business continuity even after the employee leaves. Public criticism can also lower the drive of those who stay on. The most important aspect of any executive termination is to keep the business feeling as though nothing has changed.
A successful organization relies on its employees, who are more important than offerings or revenue. To better care for employees, companies should have a strong human resources department that can identify hidden issues within the company and reevaluate compensation.
Training employees is crucial for effective job performance and achieving objectives. Practical training should provide the necessary knowledge and skills for employees to perform well at work. Additionally, management staff should be trained on management techniques, such as teaching employees how to teach and provide performance feedback. A strong HR department and ample training are the cornerstones of caring for employees, ensuring a successful organization.
Hiring the best candidate is crucial for a business’s success. Focus on hiring people for their talents rather than flaws, as their strengths will enable them to thrive in their position. For example, Mark Cranney was the author’s top choice for a sales manager, despite having all the necessary qualities. When hiring CEOs, consider whether their experience matches the scale of the business. Executives in small businesses have different responsibilities compared to those in large companies, such as initiating their own projects and overseeing their work. Mismatches in rhythm and skill set can occur due to these differences. An executive moving from a larger company may experience a rhythm mismatch if they expect a busy pace and are surprised when their desk is not flooded with new duties and projects daily. Conversely, an executive moving from a smaller business may find themselves in a position where their skill sets don’t match.
To create a positive work environment, CEOs and founders should reduce business politics and focus on hiring individuals with ambition for the company’s success. This will prevent people from focusing on political scheming and promoters. Establishing rigid procedures, such as performance reviews and pay scales, can help avoid corporate politics. Creating a unique company culture, such as Amazon’s use of old doors, can also make the workplace more enjoyable. To ensure everyone understands their responsibilities and work value, businesses should have a clear hierarchy of titles, such as “vice president” and “manager.”
Avoid the Law of Crappy People, which suggests that the most incompetent individual holding a title determines the value of the title in general. This will prevent undervaluation and demotivation among employees. By implementing these strategies, businesses can create a more enjoyable work environment and foster a more productive and motivated workforce.
Successful CEO biographies are in high demand due to the challenging job of guiding a company. An excellent CEO can identify the business’s path and communicate it to the organization. For example, when Opsware’s stock price fell to $0.35 per share, the author persuaded an investor to support the business. The author’s unwavering commitment to steering the company in the correct path saved Opsware. To communicate the correct course, the CEO must articulate the vision, be genuine and inspirational, and influence the organization to achieve the goal. Steve Jobs, Bill Campbell, and Intel CEO Andy Grove are examples of successful CEOs who have successfully portrayed their visions, communicated the company’s success, and guided the company into microprocessing. These CEOs demonstrate the importance of articulating the vision, being genuine and inspirational, and influencing the organization to achieve their goals.
Great leaders can be classified as Ones or Twos based on their leadership style. Ones focus on outlining a course for the organization, while Twos prefer performance management and execution. Founding CEOs like Bill Gates are Ones, who enjoy researching and playing against opponents, but are less enthusiastic about actual execution. This can lead to chaotic and disorganized organizations.
On the other hand, Twos prefer performance management and execution over planning and research, and dislike making significant decisions, such as strategy reorientations. This can cause businesses to hesitate and slow down. Functional Ones, like functional Twos, focus on execution over outlining the company’s future course, but act as planners in their specific area of responsibility and competence.
To achieve the ideal mix, leaders must continue to work on talents outside their comfort zone, regardless of their leadership style. This highlights the importance of balancing leadership styles to ensure success and growth.
Many management books focus on companies in better situations, but many are in worse situations. The type of management strategy needed depends on the company’s conditions, requiring both a Peacetime and a Wartime CEO. In a Peacetime scenario, a company has an advantage over rivals in its target market, which is a sign of a calm period. The CEO focuses on strengthening this advantage, such as Google’s policy of allowing employees to spend 20% of their time on separate initiatives.
In a Wartime scenario, the company’s existence is in danger due to macroeconomic changes, new competitor threats, and changes in the technology environment. The Wartime CEO has a heavy burden, and her choices determine whether the company survives or not. For example, Intel’s CEO, Andy Grove, had to reorient the business towards microprocessing after being attacked by Japanese semiconductor companies.
CEOs are often elusive and difficult to assess, as they must develop the necessary traits and abilities to lead a company. It is impossible to predict a CEO’s future success, but great CEOs often have universal characteristics that should be emulated. These include being genuine, true to one’s personality and style, providing constructive criticism, and making their jobs seem natural.
For example, the author adopted a policy allowing profanities to be used in his company, but not used to bully or harass others. Providing constructive criticism is crucial, but the “shit sandwich” tactic is more effective for less experienced employees.
Finally, exceptional CEOs must adapt to their roles, making their jobs seem natural and comfortable. Assessing someone else’s performance can be awkward, but it is a crucial aspect of managing a business, and a great CEO has no choice but to adapt.
Many business owners contemplate selling their firm and retiring, but often hesitate due to their emotional bond with the company. To determine if it’s time to sell, consider three types of acquisitions in the technology sector: acquisitions for talent and technology, acquisitions for the target company’s products, and acquisitions for the entire company. It can be challenging to justify any acquisition rationally and emotionally, as it may feel like giving up on the dream and leaving behind a reliable source of money. To avoid this, ensure all stakeholders are aware of the company’s aims and expectations from the start and that the CEO receives competitive compensation. If you have an early mover advantage in a sizable industry, it’s best not to sell, but it’s difficult to estimate and requires an objective evaluation. Ultimately, the decision to sell depends on the circumstances and the company’s goals.