CEO Failure Modes: Balancing Total Responsibility with Limited Control

CEO must balance between total responsibility and limited control

Photo Credit: winnifredxoxo via Compfight

People react in different ways to the burden of responsibility the CEO role entails. In my last two CEO failure mode posts, I painted two extremes between the Total Control CEO who tries to control everything, and the Master Strategist who gives up all control after communicating a grand strategy. The question is: How do we balance the inherent tension between having total responsibility but very limited control? The key word that comes to mind for me is influence.

While controlling very little, the CEO must influence the entire organization to act in the way that is best for the company. Influence is defined as the act or power of producing an effect without apparent exertion of force or direct exercise of command. To be great, the modern CEO must have tremendous influence over their organizations while in some sense seeming to do very little.

Guide the thoroughbred

A CEO is like a jockey guiding a thoroughbred

Photo Credit: Travis Isaacs via Compfight cc

This is a far cry from the very active and commanding CEO that is portrayed in movies and the press. I picture this subtle but active management as a jockey riding a thoroughbred race horse. The jockey and horse must work in a consistent rhythm, and while the thoroughbred is running at 40 miles per hour, no one would say the jockey is in total control of the horse. But he does have influence.

The best jockeys are the ones who know how to move the horse around the track and subtly position it for victory. While they carry a whip, they will only deploy it as the last resort. Modern CEOs should think of themselves as jockeys trying to influence their team to maximum performance. But how do they do this?

Embody the company vision

One of the best tools a CEO has to exert influence is stewardship of the company vision. The CEO must be able to develop and communicate the vision of where the company is going to all constituents. Other people may help create the strategic vision, but the CEO must tell the story of that vision in a way that is engaging and exciting. She must be able to give the pitch at the appropriate level for employees, customers and shareholders. She must ensure that everyone in the organization is clear on the direction of the company and how that direction impacts each individual job.

The best CEOs set up a communication infrastructure within their companies that promote consistent information flow both to and from the executive office. The size and geographic dispersion of the company will influence the exact form of the communication methods, but a consistent direction from the top is critical to driving superior performance.

Channel Your Inner “Hellfighter”

RedAdair

Red Adair; photo credit: The Red Adair Foundation

When my wife and I started NetQoS in 1999, we saw a clear opportunity to be identified as the “network performance experts.” At the time we started the business, there was no existing company identified with this vision. To communicate this vision to employees I showed them the movie, “The Hellfighters.” Made in 1968 and starring John Wayne, the movie was loosely based on the life of Red Adair who built a company fighting oil well fires. Adair established his company as the leading experts in the world on oil well fires. If you had a fire and you wanted the best, you called Red Adair.

This position of being clearly identified as the best in the world at what they did was the same position I wanted for NetQoS in the world of network performance management. I would often refer to the movie in company presentations to remind people of the vision.

Relate the Vision to Tangible Goals

With this vision of “network performance experts,” it was now important to relate this to a series of goals. After receiving our first round of funding, I asked one of the venture partners what they hoped to achieve with NetQoS. He said, “Hit a homerun.”

Being an engineer, that wasn’t specific enough for me so I asked, “Can you quantify that for me?” He quickly threw out the number $200 million as an appropriate homerun valuation. In order to get to that valuation in a reasonable amount of time, we would have to grow very rapidly. Typically in our industry companies growing at 50%+ annual rates could expect to achieve exit multiples of around 4-5 times revenue. That meant we would have to grow to $40-$50 million in revenue.

The marching orders for the company became pretty clear and could be summed up in one sentence. The consistently repeated mantra at NetQoS was “grow as fast as we can without running out of money by becoming the network performance experts.” This one sentence gave employees clear direction as to what the company valued and made decision-making much easier.

Achieve the Balance

By communicating a tangible goal to my team, I knew I could count on them to make the right decisions most of the time. When we sold nine years later for $200 million we had accomplished our goal, reached “success” and achieved our vision for NetQoS.

Creating and skillfully communicating a compelling vision with a tangible set of goals will set the stage for successful leadership and help achieve balance between the CEO failure mode extremes of Total Control and Master Strategist.

How do you balance total responsibility with the human tendency for total control?

Related article: The 5 ways CEOs should spend their time (Fortune)

5 thoughts on “CEO Failure Modes: Balancing Total Responsibility with Limited Control

  1. I enjoyed this article and your prior two articles on the controlling and master strategist CEO types. I have experienced working with both types. It can be very challenging for employees to reach their potential and do their best work in those kinds of environments.

    It’s certainly not easy to balance responsibility with limited control. From my observation/experience, it takes a lot of constant self-analysis, observation of people around you, humility, soliciting of feedback, and making slight course corrections on your methods as it relates to different people/personalities you work with. This is why, as I’m sure you’ve noted, there are very few good CEOs and very few really well run companies.

    • Thank you Aruni for the kind words. I am glad you are enjoying my CEO failure mode series! I would add to your great list that CEOs should develop a group of mentors and peers that they can engage when needed, and establish relationships with employees at all levels to understand the impact of their behavior. Anonymous employee surveys are also a great way to gain feedback.

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