This article is based on an article I published on Entrepreneur.com on January 20, 2017 titled “You’re a Real CEO When Your Company Is Bigger Than Your Title.”
Are most CEOs just pretenders? Management consultant Steve Tobak certainly thinks so. In his article last fall — Why Most CEOs Are Frauds — he laments the trend of so many people giving themselves the title of “CEO.” He wrote: “I’m being a bit facetious, but you know what I’m talking about. A position that used to be reserved for a real corporate officer with an executive team, a board of directors, an organization to run and mega responsibility has been hijacked by every freelancer and wantrepreneur on Earth.”
This begs the question: When is a CEO a “real” CEO? Here are some specifics.
I believe the CEO job starts when the organization reaches about 20 employees. Prior to 20 employees, the job resembles more of a product management role. CEOs at this stage are trying to develop a viable product and generate some revenue. The real CEO position begins when there is a complete organization with all the major functions in place. This transition typically starts at 20 to 30 people and by 50 people there is a distinct full-time CEO role.
At this point, the CEO must stop acting in an individual capacity so much – pitching in where needed to write code, make a sale, develop copy, etc. – and start being the leader of the entire organization. This entails five key CEO responsibilities: creating and owning a vision, making decisions that impact multiple functions, providing the resources needed across the organization, building a culture, and delivering performance.
Do Founder CEOs Need to Be Replaced?
Some believe that, in order to scale the company, founding CEOs will need to be replaced at some point with a “professional” CEO. I do not necessarily believe this is true. While different stages of a company require different skills, founders can make the leap and are often the best people to grow the company.
An entrepreneur who has the skills to be an effective CEO at 50 to 100 people can certainly adapt and remain as CEO. Many founding CEOs have led their companies to the Fortune 500. Just ask Mark Zuckerberg, Larry Ellison, Bill Gates, or Jeff Bezos.
Can Early-Stage CEOs Make the Critical Transition?
The single biggest factor that determines whether or not a given founder can be a permanent CEO is whether they can make the all-important transition from being a specialist to a generalist. Too many CEOs revert to their comfort zones — the specific areas where they excelled as an individual contributor — and ignore other parts of the business. They fail to take a balanced approach across the whole business.
The two most common backgrounds for early stage CEOs are sales or technology. Those who cannot make it as a CEO are the ones who spend too much time in those areas or others, taking on a “Super VP” role in their organizations. For instance, they spend all their time in sales trying to land the big deal, and don’t care as much about the other areas of the business.
If a CEO spends the majority of their time as a Super VP, they risk undermining their executives while failing to evolve and tackle the unique challenges of the CEO role itself. Jim Schleckser, author of “Great CEOs Are Lazy,” says CEOs must find a way to get out of this Super VP or “player” mode. They need to bring in systems as well as talent to execute the same things they would do as individual contributors.
It’s a Real Job
As Tobak said in his article: “Chief executive officer is not a dumb title. It’s a real job. A real career. A real profession. And it takes vast experience, knowledge and hard work to achieve what used to be the pinnacle of the corporate world.”
However you got the title or if you aspire to have it, being a real CEO is not something to be taken lightly. Understanding the CEO role’s unique responsibilities is paramount. Another key to success is to never stop learning. Some of the best CEOs are those who constantly increase their knowledge and skills in service to their organizations.