When does the CEO role begin?

CEO role at various company stages

I’ve been using this graphic to describe the stages of a company in the context of the CEO role. In the first two stages, as founders focus on getting the business off the ground, they are essentially acting as a product manager to develop a viable product and generate some revenue.

The next three stages are what I am really interested in, since they require a full-time CEO role. I believe this “CEO job” starts at stage three: Create a Business. This is when a company reaches about 20 employees, and there is a complete organization with all the major functions in place. This transition normally starts at 20 and by 50 people there is a distinct, full-time CEO role.

The skills required for the next two stages – Scale the Company and Deliver Return to Shareholders – are different from the ones needed to start a business. However, it can be done: Just look at founding CEOs such as Mark Zuckerberg, Larry Ellison, Bill Gates, and Jeff Bezos.

The key is to have a zest for knowledge and an interest in all parts of the business, not just the one where you have the most experience. CEOs must become generalists. Any CEO who spends the majority of his time in one functional role – such as sales or marketing – is doing his organization and himself a disservice.

Part of the reason CEO turnover is so high these days is because of the speed of business and the need for different skills at different stages of the company. However, I believe all CEOs can learn the fundamentals of the job and establish at least a foundation for success. This foundation – with the right attitude – can enable them to grow in the role.

My new book – “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO” – presents a methodology for the job, especially for CEOs tackling stages 3-5. Let me know your thoughts on the different stages and the skills required for each one.

 

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