4 Traits of the Most Talented Job Candidates

Traits to look for when you need to find talent

I recently wrote that hiring “oddballs” can give your company a competitive advantage. Non-conformists bring a diversity of talent, thought, and skills that can boost creativity and productivity. But what traits do you search for and how do you evaluate them in each candidate?

To find the most talented employees, I seek out four traits in every candidate. But first, it’s important that your culture is healthy and open enough to accommodate anyone – even oddballs. If your organization is all about performance, then employees will be accepting of talented people, period. Exceptional individuals want to work with other outstanding individuals – not in a culture where politics eclipses performance.

Cultural fit is still important, but turn the usual approach on its head: Instead of hiring people who conform to a certain mold, ensure that there aren’t any barriers to cultural fit. Interviewing for the following four traits will help you determine this and hire the best talent.

Four Traits That Signify Talent


1. Exceptionalism


Exceptional candidates have the capacity to push beyond their basic job responsibilities and be a valuable contributor to the business. For this trait, look for patterns of greatness: Great people often apply their skills in unique ways outside of work. Ask about their hobbies, volunteering, and other activities that may demonstrate their exceptionalism. For entry-level employees, inquire about achievements outside of school work.

2. Job-specific motivation


For this trait, Seek candidates who don’t just want a job but are motivated to work specifically for your company. Talented people are intrinsically motivated, which means they want to work for an organization where they can advance their skills and make a difference. If they cannot clearly communicate why they want to work for your business, it may not be a good fit.

Motivation is a two-way street: Your company also needs to sell the opportunity you are offering. What will motivate a talented individual to work for you? How will the job help the candidate advance his career goals?

3. Creative initiative


Talented, motivated employees don’t have to be told exactly what to do. They consistently take creative initiative, finding ways to do their job better, developing great ideas, and generally moving the organization forward. One red flag is candidates who say they were bored or stifled at their last job and as a result cannot point to any evidence of their creative initiative.

A question that will help you identify a person with this trait is: “If you were hired, what would you do on day one, in the first week, or in the first month?” Outstanding people will give you an action plan.

4. Value


Look beyond cost when hiring. Instead, determine the business value a candidate provides. Inexperienced hiring managers often get fixated on salary and forget that their responsibility is to bring on employees who will produce more economic value for the company than they cost. 

Value depends on your organization’s needs. Sometimes it makes more sense to hire three $40,000 employees than one $120,000 professional. If you have a problem that requires some creativity but not much job knowledge, then three less experienced but talented candidates may be better. If you need someone with experience who will help the company grow, then a $120K person may be the right choice.

Prioritize Talent


The sum of all four traits is talent. Given the choice between a person with job knowledge and talent, I go for the talented individual every time. Knowledge is not particularly important in many jobs: People hire knowledge when they want someone to come in and get the job done without a lot of coaching or bother on anyone else’s part.

Knowledge can be taught. Talent is what is important because it drives businesses forward. Looking for these four traits will help you find it.


|15 Dec 2020

Conformity Kills: Hire Outliers to Create Strong Cultures

Strong cultures are built upon diversity of thought and perspective. Cultivating a shared focus on talent and performance above all else gives CEOs a competitive advantage.


“Is your desk neat or disorganized?” the hiring manager asked my colleague during a phone interview. Our company prefers to hire people who keep clean desks, the interviewer explained. Well, my colleague – whose workspace gives new meaning to the word “clutter” – politely ended the call and never pursued the position.

Their loss. Your company’s interviewers are probably not asking such trivial questions. However, are you inadvertently hiring individuals with similar traits and personalities? This could be putting your organization at a competitive disadvantage.

Here’s why hiring “outliers” creates a strong culture and is better for business.

Top companies hire for talent, not conformity

A focus on talent over conformity builds strong cultures. This is driven from the top. Achieving the company’s goals is the top priority. CEOs must own recruiting and ensure that HR and other interviewers hire accordingly.

As Kirsta Anderson, global head of culture transformation for Korn Ferry, told The Wall Street Journal: “What most interviewers are looking for and acting on is more of an intuitive sense of, ‘Would I get along with this person?’ and that often isn’t very reliable.”

Talent + strong culture = a focus on performance

Organizations with strong cultures tend to value creativity and openness. The more open the culture, the less political it is. When politics are at a minimum, people are motivated by performance, period.

The better the culture, the more accepting of all talent

When it’s all about performance, employees welcome top performers even if they are outliers. All of us have worked with people who are a little out there, but they have a specific set of really good skills. In other words, they have talent, and talented people are often outliers.

In strong cultures, these kinds of people can fit in and excel. Your employees will accommodate their quirks without being threatened by them. In a weak, ill-defined culture – for example, one built on shallow tenets such as desk tidiness – employees will be threatened. They may try to emulate or compete with the outlier instead of working as a team.

A quote from one of the “outliers” I hired sums it up as only an outlier can: “When I came in, I was the weird guy with the crazy ideas. Now, I haven’t gotten any saner, but the other people around me have become more insane. I think that’s a good thing.” It was!

Diversity is good for business

The empirical link between diversity and business success is strong. A talented, creative group of people are more likely to solve complex problems and develop innovative solutions, especially when crises or disruptions occur.

For example, the Boston Consulting Group (BCG) found that organizations with above-average diversity on their management teams earned 19 percent higher innovation revenue than their less diverse peers. The researchers surveyed 1,700 companies in eight countries across six dimensions: gender, age, nation of origin, career path, industry background, and education.

McKinsey & Company research this past May revealed that executive teams with the highest diversity were more likely to have above-average profitability (analysis of 1,000 large companies in 15 countries). In the context of the pandemic, the McKinsey researchers concluded that: “Companies whose leaders welcome diverse talents and include multiple perspectives are likely to emerge from the crisis stronger.”

Strong cultures improve recruitment

A high-performance culture enables you to hire a wider array of people. It’s a perpetuating cycle: When you hire the best people, it attracts the best talent. Top performers want to work with other top performers.

While it presents challenges, the recent increase in remote work is a boon for employers. Many companies are discovering that it offers a bigger talent pool – national and even global. The flexibility of remote work appeals to many people, including – and maybe especially – outliers.

Judging Talent for Cultural Fit

This is not to dismiss cultural fit. However, it’s more important to determine the hurdles to cultural fit versus seeking a candidate who fits a particular model exactly. But how can you judge if such a talented individual will fit in with your company’s culture?

I look for four traits: creative initiative, exceptionalism, motivation, and value. I’ll cover those in my next post.

In the meantime, here’s a cheat sheet from The Wall Street Journal article:

Defining Cultural Fit

What it is:

  • Shared enthusiasm about a company’s mission or purpose
  • A common approach to working, together or individually
  • A mutual understanding of how to make decisions and assess risk

What it’s not:

  • A common educational, cultural or career background
  • A sense of comfort and familiarity with co-workers
  • Shared enjoyment of such perks as ping pong and craft beer
|22 Sep 2020

Data Center Flexing: Flexential CEO Chris Downie

How is COVID-19 impacting the data center business? What can rugby teach us about leadership? How does a company compete with the likes of Google and Microsoft for technical talent?

I discussed all this and more with Chris Downie, CEO of data center and hybrid IT company Flexential. This is his second CEO role, having served in the top job at Telx Holdings until Digital Realty acquired it in 2015. He joined the chief executive ranks after a 25-year career in finance and operations.

Downie has led Flexential for the past four years, overseeing an expansion of its business that now includes 40 data centers spanning 21 markets. Most recently, the company announced that it will add to its presence in Portland, Oregon, constructing its largest-ever data center, and a third one in Hillsboro, Oregon.

Joel: Was becoming a CEO always a career goal for you or did it happen organically?

data center

Chris Downie

Chris: “Not necessarily, but I certainly had the aspiration to build something. I didn’t come from any real foundation of wealth or legacy as I was growing up and growing into my career. So I had a strong desire to build a legacy of some form. I don’t necessarily mean money in that regard. Money is an outcome. I wanted to build a reputation and accomplishments that hopefully will last well beyond my time as a CEO.”

Joel: What led you to the CEO role? 

Chris: “I started my career as an investment banker and spent about 10 years analyzing different businesses from a modeling perspective. I learned what makes them tick and how they build value from an investor’s perspective. I focused on raising private equity debt capital for a whole host of communications and infrastructure companies. That gave me a foundation for understanding the key considerations for capital-intensive companies in particular.

After that, I jumped into a startup telecom company as a CFO at a relatively young age. That was a great experience, but it didn’t necessarily have the greatest outcome. As any folks involved with communications around the early 2000s can appreciate, telecom went through a pretty difficult time. So I got my feet wet the hard way, if you will. We built the company quickly and had a lot of capital, but then also had to shut it down quickly. It was a good lesson in terms of how the winds of change can impact the result.

From there, I did a bunch of different consulting exercises from the CFO perspective. I ultimately landed in a data center company called Telx in 2007. While I began as the CFO, I graduated to the president role relatively quickly and ultimately became CEO of that company. As I went through each stage, there was an evolution of focusing just on the numbers, to focusing on the operations to then focusing, as CEO, on culture, strategy and how we could grow in the most dynamic, efficient way possible.”

Joel: How would you advise a CFO to prepare for a transition into a CEO role?

Chris: “Financial strategy is key to growth. CFOs who are classically trained in accounting tend to live within highly defined parameters. I came in through a more non-traditional route. I knew corporate finance, but little about accounting. So, as a CFO, I put strong accounting capability around me and was the liaison between accounting and financial strategy. I made sure that the financing strategy supported the business strategy.

My advice would be to ensure that your aperture is wide in terms of how you are effectively managing from a financial perspective. How is that either impacting or impairing growth? Because if you take too stringent of an approach and don’t make resources available in a way that allows the business to perform, then that can obviously keep growth from occurring. And vice versa if you’re too loose with resources.”

Joel: Is there a time you remember switching over from the finance hat and feeling comfortable in the CEO role?

Chris: “As president of Telx, I gained an understanding of all the operational aspects of the company. When I transitioned into the CEO role, it was an interesting time of observation for me, as I was now the decision maker on strategy, direction and so forth. As CEO,  obviously you have a board that you collaborate with and a team. From one perspective you might think having this level of responsibility would be more stressful. But I actually found it to be less stressful, because I could influence the direction of the company without having to execute someone else’s agenda.”

Joel: It’s interesting you say that. I have a responsibility gene. If I’m associated with anything and going to be responsible anyway, I’d rather be in charge. How do you explain what you do as a CEO to a new employee?

Chris: “There’s the formal part of it, which is that I help set and guide the strategy. Then, I ensure the company has all the resources and organizational capacity it needs to deliver on that strategy. I can obviously implement a board who can help from a capital perspective. And we have a whole host of constituents who are supporting what we do from an equity and debt perspective.

When I’m out in the field, I try to emphasize with people that, in a lot of ways, I work for them. Obviously we all work together, but their critical input lets me know how to help, such as providing all the resources they need to be successful.”

data center

Chris at a Rugby Sevens championship game

Joel: How has being a rugby player and fan influenced your leadership style?

Chris: “As CEO, strategy is critical, but infusing strategy into the organization at large is one of the most critical requirements for success. I played rugby both in and after college in clubs for a number of years – I just have a love of the game. It’s not necessarily the physicality of it, but the strategy and teamwork involved.

It’s different from many other sports from the perspective that to make forward progress in rugby you have to pass backwards. That is not necessarily how people normally think. Rugby requires a level of teamwork and solidarity to stay focused on the outcome even if you have to take a step back to move forward.

There are some key principles that are important parts of how I look at leadership and development. USA Rugby has tenets built around integrity, passion, solidarity, and discipline. I try to infuse all these into how I engage with our leadership and the company at large. I’ve done a few videos at Flexential with a rugby ball in my hand, so I think our employees as well as our customers appreciate how the game’s key principles relate to business.”

Joel: What made you excited to join Flexential and stay in the data center industry? 

data centerChris: “I believe it’s very much early innings for the data center industry, and Flexential is on the leading edge of that. Telx was my first foray into the data center landscape. The whole concept of the data center was relatively new at that time. Companies had data centers, but in 2007 the industry was just growing up in terms of an investment vehicle for public and private investors. So, after nine years in the space, I certainly became an expert in some regard and gained an appreciation of the forward opportunity.

There’s a tremendous amount of infrastructure outsourcing that continues to occur from the enterprise. Obviously, we all appreciate the advancements of internet-based applications and technologies that have revolutionized how we go about our day-to-day business and personal lives. And our business operations revolve around the infrastructure that Flexential provides.

I like to say we’re the home by which the infrastructure that supports digital transformation resides. It’s our job to keep it secure, give it room to grow, and also provide all the utilities it needs to live and breathe. What I mean by that is power and network and cloud and compute resources, otherwise known as cloud, that enable the infrastructure to flex when it needs to.”

Joel: You mentioned the word utility. Customers today expect everything to always work perfectly, similar to turning on a light switch or faucet. How do you meet that high standard in the data center business and deal with challenges?

Chris: “Our value proposition is 100% uptime and redundancy for when there is an interruption. We built the business for that. To your point, nothing’s always one hundred percent perfect, but we’ve got redundancies built into our platforms on all fronts.

There is obviously the security, facility, and the power that supports it. There’s the networking that allows it to federate or communicate with the outside world. All of that has built-in redundancy.

Where we see that in real time is during a crisis. I’d say, fortunately and unfortunately, a crisis can take many forms, so we are prepared during times like this with COVID-19. We have a lot of facilities in the Southeast where there are storms and hurricanes and tornadoes. We are very mindful that those things can happen every year. Our environments are built with redundancy, but we also have people and procedures to respond to these disaster situations.

We’ve got “Go Teams” that come in when there’s any indication of a pending crisis, and that’s extended to this time period. Clearly, access to on premises infrastructure is a challenge for enterprises today. We are helping customers effectively manage that through this crisis.

There are also instances where failure of client infrastructure creates an issue with cloud services, for example. At Flexential, we have procedures to get those back up and running as quickly as possible. So while we have SLAs with our customers, we’re always reminding them that the responsibility is sometimes as much on their side of the equation as it is on ours. We work as a team to ensure that their applications have all of the uptime that they need for the rest of the time.”

Joel: Speaking of COVID-19, how has it impacted your workforce?

Chris: “Fortunately, our people have been safe and secure through this. As COVID set upon the world, that was our primary focus because people are our most important asset. While our infrastructure is built to be resilient, it’s the people who keep it secure. There are a lot of moves, adds, and changes that go on every minute of every day, so our employees are vital to ensure that the mission-critical infrastructure for our customers remains intact.

We took some immediate actions to enable our corporate personnel to work from home, but our data center personnel can’t work from home. As a result, we had to make sure that they were safe and secure. We implemented access restrictions and other measures that our customers certainly could appreciate since this pandemic has impacted everyone.

We remain focused on our front line personnel, because there’s a level of complexity now on what returning to work means. It’s a new normal for everybody. We have to think about access and collaboration on a go-forward basis, because there’s a fair amount of activity in the facilities themselves, such as sales tours and all those kinds of things. We’re actively working through those plans right now.”

Joel: What about from a customer perspective? Have you seen increased demand for data center and hybrid IT services?

Chris: “Yes, definitely. Clearly from a networking perspective there is a lot of increased usage during this time period. That will probably normalize at some point, but there’s clearly a recognition from our customer base and their customers that they must have the ability to network far beyond the office and the structure.

There are also a lot of queries about disaster recovery and backup. Customers are realizing that they don’t necessarily have the right recovery capabilities in their companies when they have to go through situations like this. It certainly heightens everybody’s awareness of whether they’re prepared or not. One of our core competencies is to increase preparedness via customer IT infrastructure through our solutions and applications.

So there’s immediate growth. But I think that it also will lead to long-term growth.”

Joel: You are one of the industries that has a growth prospect in 2020. However, you may lose some customers or business as they suffer losses. How do you plan in this time for what to expect?

Chris: “There was a lot of uncertainty early on with this virus. We’ve had prior experiences confronting crises and other situations, like the financial crisis, so we appreciate the resiliency of our business model. Unless a company is going out of business, they need to have that mission-critical infrastructure. But since COVID-19 is unprecedented, we had to keep a very watchful eye on areas of risk. We have active customer risk assessments going on including in-depth communications with our customers.

I reminded our organization that while we might be fortunate to be more resilient, some of our customers are being impacted materially (think about airlines and hospitals and so forth). The sectors that are less impacted, such as technology and SaaS, support a lot of how we communicate and interact today.

So I think we need to keep a watchful eye as we assess the impact of it. Obviously it’s not quite over yet. It may not be over for an extended period of time. We need to honor that and ensure that we’re managing our liquidity if we’re going to be impacted from a revenue or profit perspective. Because, as I mentioned earlier, part of our value proposition is having the capability for our customers, and their customers, to grow. That takes the form of facility expansions, network augmentations, and also just general meetings of our environments. We need to make sure that we have the resources to maintain that.”

Joel: Your biggest challenge six months ago was probably finding employees. I bet that’s flipped now. Do you think you’re going to be hiring in 2020?

Chris: “Well, I think that’s right. There’s certainly a lot of competition for talent and, in particular, technical talent. We’ve done fairly active assessments about how to procure and retain talent for the long term. Given some of the advanced technical things that we work on, we compete for resources with folks like Google and Microsoft. Because those are fairly dynamic organizations, we have to have an active strategy on talent and retention.

With COVID-19, the expectation is that attrition will go down significantly. I would say it has, but as I mentioned, the companies that are most resilient right now are technology companies. While we might have a brief period of lower attrition this year, I suspect we will continue to have those pressures in the relative near term. We’re hiring where we need to, but don’t want to overextend our expectation of growth in this uncertain time. So we’re keeping a watchful eye on that as well.”

Joel: You have a unique view in your industry. What data center and IT trends should CEOs be paying attention to now?

Chris: “We’re focused materially on what’s next and the advancement of technology, which is happening at much brisker pace than ever before. I think with the COVID-19 situation, there will be a lot of requirements for low-latency edge applications. 5G is a technology that’s going to enable things that, quite frankly, have never been possible in the past. AI is going to infuse itself into just about everything that we do.

I would recommend that businesses pay attention to those things, because there’s been evidence over the last decade in particular where long-tenured, strong enterprises have been disintermediated fairly quickly by the types of advancements I just mentioned. I think that’s only going to accelerate as companies try to figure out new ways to collaborate and conduct business in a post-COVID world. It’s important to pay attention to how it might impact your own business model.”

|24 Jun 2020

HR & CHRO Evolution: Jason Hanold Q&A Part 2

In part one of my interview with Jason Hanold, CEO and co-Managing Partner at Hanold Associates, we discussed his journey to the CEO chair, how the HR field/role has evolved over the past decade, and what CEOs seek in their HR professionals today. In this post, we discuss what makes an opportunity desirable for CHROs and other HR executives, how they should spend their first 100 days on the job, and the relative importance of regional differences.



Jason Hanold

What are you seeing that HR candidates are looking for today? You’ve got to call people and say, “Yeah, I know you’ve got a job, but I’ve got a better opportunity for you.” What makes it a better opportunity these days?


“What’s most important for people today is purpose and mission and impact. When I first got into executive search, there was a pivot point. I remember helping Laszlo Bock build Google’s first ever HR organization. At that point in time what was compelling to the best of the best talent was a “wealth creation opportunity.”


Most people now want to bundle a solid living with something that’s meaningful to them. It’s a way to blend vocation with avocation. We see that with companies such as Patagonia and REI that have an altruistic purpose in ethos, in the way they conduct business. So when you can combine a competitive pay, a phenomenal culture for them to work in, and an organization that is mission-driven, that’s a trifecta that equals a compelling, great opportunity in the marketplace.”


How do you advise HR clients to prepare for the first 100 days of a new job? Should they spend the first six months observing and gathering data, or should they immediately make some changes?


“That’s a great question, and it’s always culturally specific. Some roles are set up with a built-in transition period. The incumbent may be retiring or going to do something else and are going to be there to provide air cover for the first few months. That provides a better opportunity in a normally paced organization for the HR person to come in, learn, and understand before weighing in.


Then there are organizations that describe themselves as flying the 747 while they’re constructing it, and they need results. They have a strong action orientation. They want outcomes and will embrace failure and mistakes. In a culture like that, a candidate who expects a months-long advisory or questioning period may not survive.


When Hanold Associates is launching a search, we leverage a tool called Predictive Index at the front end. This gives us a sense of 1) Are the stakeholders who are going to be interviewing a candidate aligned? and 2) Does the candidate fit the micro culture of that leadership team? That helps us pick up things around formality and informality, but more importantly pace. How much information do they need before they make decisions?


That particular measurement also applies to how companies ought to structure their onboarding. We frame referencing differently to help with this. Historically, referencing is about whether a company should hire a person or run the other way. I use referencing as an opportunity to provide our clients with guidance from people who’ve worked with these folks to give them a sense of how to generate a successful onboarding process. It’s about what the candidate needs and how they’ll learn best at a new organization to have impact fast. That should set the tempo for how one approaches onboarding into a new role once we complete a search, if that makes sense.”


It does. I have a question about regional differences. For example, the Austin Chamber of Commerce* recently conducted a nationwide search to replace its President, who is retiring after about 20 years in the role. Austin has changed a lot in that time. I’m concerned that if they hire the “best” outside candidate, this person will be set up for failure. On day one, he or she won’t know many people and not understand the unique Austin culture. Instead, because of the importance of relationships and everything else, I think this organization should be looking inside Austin. How important are regional differences in terms of fit for people in organizations?


“Well, they’re very important, and sometimes important for different reasons. For instance, we’ve had some organizations where there’s a sameness and they’re attempting to be more diverse. They might have ethnic diversity, but I’ve had situations where maybe all employees have been from New York and the CEO says, ‘You know what? We’re a wholly domestic organization. We have more revenue coming from California than we do from the East coast, and I want a diverse lens from geography.’ So in that particular case, it’s a good thing.


To your question, I’ve never had a search yet where regional implications were not at the center of determining what a great fit equals. I often ask clients, who create descriptions of their ‘ideal candidate,’ if they are needlessly narrowing the talent aperture before they start the search. In the case of what you just described in Austin, the first thing I would have challenged the stakeholders on, whoever the hiring managers are, is to ask what’s easier to learn: Is it easier to learn the nuances around key stakeholders, culture, and resources in the Austin market or the nuances of a chamber of commerce?


I’m aligned with your intuition on this, because you may bring in someone else who’s run a chamber of commerce, but the learning curve on the things that matter most might be a much steeper climb. A local person who knows Austin well and has relationships that sometimes take decades to establish can learn the ins and outs of running a chamber.


We tend to look at it objectively once the client tells us, ‘Here’s what we want.’ Because one thing I’m not and have never been is an order taker. We work best with clients that are thirsty for counsel, because I’ll give it.”


*The Austin Chamber of Commerce hired Austinite Laura Huffman earlier this month.


What makes Hanold Associates special, other than what you’ve already said?


“We just feel incredibly blessed to have the firm we do. We have 15 wonderful people who make up our firm, and we’re serving some of the most interesting clients on the planet. I’m also very proud that we happen to have the most diverse retained search firm in the country, and over 74% of our successful candidates happen to be diverse candidates for those particular leadership teams. As a result, we’re doing a lot of these searches for chief diversity inclusion officers.


I feel like I have the best job on the planet. As a recruiter, if you’re thoughtful about it, you get to play a role every day in bettering someone else’s situation in life. I’ve hired people at Hanold who share that value. That’s what we set our mind to doing every day, but we probably put more people into roles that have nothing to do with our retained search or a fee that we are receiving. We just love connecting good people to a great opportunity.”


|24 Apr 2020

Personality Assessments: New Book Explores Using AI

Personality assessments are common, but Crystal CEO Drew D’Agostino has pioneered a new approach – Artificial Intelligence – as outlined his new book “Predicting Personality.”

I’ve always been fascinated by how personality impacts business relationships, even encouraging my employees to take personality assessments such as StrengthsFinder (now called CliftonStrengths). I think a better understanding of yourself and others leads to better communication and talent development. So I was excited to speak with Drew D’Agostino, the CEO of Nashville-based technology startup Crystal, about his “Personality AI” app and new book: Predicting Personality: Using AI to Understand People and Win More Business.personality assessments

Crystal uses artificial intelligence to predict anyone’s personality based on their answers to a questionnaire or existing information they created, such as biographies, resumes or social media profiles. By analyzing millions of data points within this information, Crystal is able to provide personalized, situation-specific advice. Thousands of professionals globally use Crystal to communicate more effectively, write more persuasively, and build trust faster with new people.

Crystal’s revenue grew by 100 percent in 2019, doubling the size of the company. They have raised $7 million in funding from Salesforce, Hubspot and more, and have 3,000 corporate customers. Drew and his co-founder Greg Skloot were recently named to Forbes’ 2020 list of the 30 Under 30 in enterprise technology.

How did you get into this whole world of personalities? That’s not a subject most people major in at college.

Drew: “I got into this world from my first company. My co-founder and I were 23-year-olds running our first venture-backed software company. We didn’t really know what we were doing. So our executive coaches taught us about DiSC®, which is a common personality framework. At first I was pretty skeptical. I saw personality types as kind of horoscopes, and I didn’t really put too much stock in them.

But then I saw them play out in the workplace, helping us communicate with investors, customers, and our team. I saw how it helped me understand myself better. This was further backed up with more understanding about the scientific research behind personality models. So I became kind of addicted to that and could not unsee them in every conversation or every interaction. It just is fascinating to me how these individual tendencies could impact communication and relationships so much. It also unlocked a lot of really key things to understand about my own personal relationships and to help them improve, like with my family.

So I dove into them while we were working on that company, kind of as a user of personality models. And then when we were fired from that company, as I outline in the book, we decided to try to build a product that could do that automatically. It could tell us what other people’s personalities were like before we met them and open up that data for anybody. So that’s how Crystal emerged.”

There’s been work in this area for many years. Why do you think now’s the time for more widespread adoption of personality assessments?

Drew: “Yeah, there has been lots of work in the area of personality assessment and training and coaching. There are companies that have been around for decades doing that. The reason why now is really interesting, because there’s never been enough data to get personality types or personality profiles without assessments. So it’s always been restricted by who you could get to participate in the big assessments.

But now that everybody has a lot of data online and available, with different communication and social media channels, it opens up an entirely new area for AI to predict personality. So that’s what we built Crystal on and what we wrote the book about. It’s all about how you can now analyze data instead of just relying on assessments, and you can understand people on a whole different scale. Within the world of personality assessments, that’s a complete paradigm shift. That’s what Crystal is leading forward.”

Tell me more about the “Predicting Personality” book.

Drew: “We got the opportunity through Wiley to write our first book last year. We put together an overview of the best personality models for business and how they work. It includes a lot of practical insights about using personality data in sales, marketing, recruiting, and leadership, and also a compact overview of technology and where the technology is going. So for instance, how is AI actually helping people understand each other and win more business? This is the title of the book. We’re seeing it as kind of like the core foundation of all of our thinking. And we hope that it’s a really good guide for a lot of people into the world of personality data and personality insights for the first time.”

So you are looking at personalities of employees in your company, and also potential customers and partners, vendors, the whole gamut. What information do you need to do that?

Drew: “We just need a text sample to get the minimum of around 200 words. And that text sample can come from bios or LinkedIn profiles and resumes. The more structured, the better. And those have varying degrees of accuracy, but we just need a solid text sample.”

I’ve preached for years that while most CEOs spend 70-80% percent of their expenses on people, they don’t focus enough on people management. Years ago when equipment or something was the biggest expense, organizations would have a whole, dedicated crew focus just on its maintenance, building up tons of expertise. To me, the first step is giving people a language to talk about people. Is that what a Crystal helps you do?

Drew: “That’s a really good way of describing it. Yeah. It’s a language to describe behavior, communication styles, motivations, and tendencies. So these are things that bubble up every day anyway, either beneath the surface or explicitly. But it’s very hard to talk about it when you don’t have a standard, because everything seems very subjective. Crystal puts that standard together and then makes it available for everybody on a team, so they can all use the same language.”

Do you have a good example maybe in your own business career of where your understanding of personality helped you with a problem?


personality assessments

Drew D’Agostino, CEO, Crystal

Drew: “Yeah, I would say Crystal has taught me a lot about interacting with people. If we’re talking in DISC terms, I’m a very high I (Inclusive, Creative, Outgoing, Talkative). Crystal has helped me really form solid relationships with people who are on the opposite side of DISC: C (Accurate, Analytical, Structured, Purposeful). Previously, I would send emails with a lot of expression, really short and very casual. I tend to work in a very creative kind of chaotic way. That would be very frustrating for my C colleagues.

The best example is with my business partner, COO Greg Skloot, who is a very strong C. Understanding each other better frees both of us up to dig more into our strengths without expecting the same of the other. So Greg knows that I’m not going to provide everything in a very structured, organized update every week. It’s kind of an ongoing joke. We have these weekly updates. He makes them very methodically and very thoroughly, and I forget to submit mine half the time.

But then on the other hand, he knows that a lot of times my more chaotic, spontaneous style leads to product innovations that he could not stumble upon in a more structured, predictable way. Because we’re not in a fully mature market, we have to be comfortable making decisions with limited data. That’s where I excel. Because we know these things about each other’s personalities, we can basically understand the downsides and blind spots that each of us has. We do the best we can to cover up for them and let the other lean into his strengths and take advantage of that. That’s the best and most frequent example I have.”

Have you used it from a hiring perspective of “Hey we need more of this type on the team or we’re looking for a particular personality to fill a particular role?”

personality assessmentsDrew: “Yes, but it’s with a caveat. With most roles there’s not just one personality type who can excel in the role. It’s more about understanding the expectations of how we’re going to want that person to behave. So before every hire we do a full role assessment to understand exactly what we’re looking for. Let’s say we’re hiring a new customer support representative. We try to understand our perspective on it, the people who are going to directly work with them, and anybody who’s been in that role before. Then we get a full DISC profile of the ideal person. That could be influenced by a lot of different things, not necessarily intuitively either. And we also might not agree. So we actually created a tool that helps us do that to narrow down the profile of the person for that role. And then we can look at other candidates’ personality profiles and see how stressed out or how energized they might be by getting the role.”

Now, it has to be a little interesting going to work. Do any of the potential hires worry about going to work for a company that specializes so much in personality?

Drew: “I think we attract people because of it. I mean people are endlessly fascinated by personality. We tend to attract people who are just very curious, very interested, and very relational too. So overall it’s been a very net positive for recruiting.”

How do you see the industry developing? What would you expect to see five or 10 years down the road in terms of CEOs using personality assessments?

Drew: “I think there’s an overall awareness of personality models that’s picking up. DISC has been kind of a constant for a long time, but you’re starting to see the proliferation of tools such as the Enneagram and a few other of these newer models. It’s not a new thing, but just the distribution of it is becoming more widespread. People are starting to lean on these things more and having more open conversations about personality types and understanding why people behave like they do. So I’m not sure I can really predict exactly how it’s going to shake out. But I do know that more and more people are becoming aware of these real psychological differences, and then trying to use those in their management, hiring, recruiting, and sales.

Our goal is to become the leader in the whole personality space. When you look up personality information online, we should be a number one source for that stuff. When you’re looking up information on a specific person, Crystal should be the best way to find that. People are using this for all kinds of things right now. We’re trying to create that generalized source to find anybody’s personality, and to support them with that data.”

How would you suggest a CEO get started in this whole world, who maybe hasn’t done much with personality assessments before but wants to better understand his or her team?

Drew: “Well I’m biased towards Crystal, and we’ve created this little path, so the way to do it would be first to sign up for a free account and get the team to sign up for a free account. And then you can create a group report. Before you make any decisions, you should really understand the lay of the land personality wise. You should understand where you are strong and weak, and where you are balanced and imbalanced. You can see if, for example,  you’ve been hiring people who are just like you. If so, there are going to be weaknesses, because you’re going to have a company that kind of mirrors your own strengths and flaws. It’s something you probably know at a gut level but have never really looked at quantitatively.

So that’s the first step. Look at the personality map, and see where everybody falls. The next step would be to start using personality data in communication. So prepping for every really important interaction. Just taking a second, checking what their personality profile is and saying, okay really, how should I be approaching this? Should I be approach it in a way that I prefer or is this person very different from me in how he or she thinks about something? That could be the difference between having a conflict or a misunderstanding vs. having a breakthrough or really clicking in a conversation.”

There are lots of consultants out there. Should a CEO engage one, or can the typical CEO manage this largely alone?

Drew: “Well the industry so far has been very dependent on consultants, and they’re still really an important part. But I think one of the beauties of Crystal is that it’s so simple. Personality models are not that hard to understand, at least the popular ones. You can get it from just a little bit of reading, and tools like Crystal help use that in practice in a way that has never really been possible before. You’ve needed consultants to interpret any of the personality assessments and get everyone talking about it in a certain way. So I believe consultants and coaches will continue to be the backbone of the personality assessment industry, but Crystal is kind of like a front door to it that was never there before.”

With so many personality models, why did you head down the DISC path? Why do you think it’s the best or maybe the easiest, or do you think it’s the best and easiest?

Drew: “Well we started with DISC for a few main reasons. One is DISC is the simplest of the models, with four main types. Then you can break it down into 16. But really its simplicity makes it very friendly to machine learning. You can get very accurate responses most of the time. If you’re talking about something like trying to predict accurately the 16 types every time, the numbers kind of explode and you have a lot more inaccuracy. So DISC is very helpful just in the structure of it for making predictions. It’s also open source. So you don’t need any licensing or anything to use it. It’s very old. A lot of people know about it. It’s been used and tested in companies for decades.

And then also DISC is the only other model that’s validated to the Big Five pretty closely, not perfectly. But it has a lot of backing in the Big Five personality traits. I’d call the Big Five personality traits the most scientifically valid personality framework. It’s just that Big Five traits are not useful for business directly. So yeah, those are the main reasons. But now we’ve expanded the product to have more personality assessments in it. So DISC is where we started, but we’ve gotten into Enneagram and Myers-Briggs, and some other things.”

What’s the biggest pushback you hear from people about personality assessments? I remember when we did some things at one of my companies, some people refused to take them. They didn’t want to be put in a box with their comments. Do you see any of that? Maybe that’s just a certain personality.

“There are definitely people. I mean we get thousands of assessments each day, and hundreds of accuracy feedback points each day. Very few people who are just resistant to personality assessments as a whole are using Crystal, because I think those people self-select out in the beginning. They’re probably not even signing up. But once they’re in, there are definitely people who send inaccuracies in the algorithm. We are 85 percent accurate when we provide a prediction, which means that about 15 percent of the profiles will not be accurate. And then we try to get the feedback in there so we can understand where it’s inaccurate, where it’s accurate, and then feed that back into the algorithm to make it more accurate in the future. We get lots of feedback like that, and it’s built into the product because it’s really important to improve it.

And then there are also people who have broader concerns about the nature of communicating based on personality. They wonder if it is really good to be changing the way you interact based on someone’s personality. That’s more of like a deep philosophical question, which as evidenced by us building this product, we believe the answer is yes. Because you have much better interactions when you take the time to be empathetic and understand the other person. But there are others who think that it’s more manipulative or adding some kind of artificial layer between people, which I think is a really good conversation to have. But ultimately it’s a good conversation, because thinking about what others think is actually a really good and productive habit in business.”

|27 Jan 2020

Why Texas? 19 Business Leaders Answer in New Book

Why Texas for business? Ed Curtis Jr. delivers some answers in his new book out today – “Why Texas: How Business Discovered the Lone Star State.” He interviewed 19 CEOs and entrepreneurs who shared stories about how and why they relocated to Texas. Luminaries such as Tim Ferriss, Andy Roddick, Kendra Scott, and T. Boone Pickens give enlightening stories and commentary.

I spoke with native New Yorker Ed – who got to Texas as fast as he could – about why he wrote the book and what he discovered. As a Texas commercial banking executive for 20+ years, he witnessed an increasing number of clientele relocating their businesses to Texas. Ed spent most of 2012 with then Governor Rick Perry and his Office of Economic Development, where he visited with businesses interested in relocating and expanding into Texas. As a result, in 2013 Ed founded YTexas, an elite Texas business network that helps support, promote, and connect companies that want to move or expand into the state.

What is your aim with the “Why Texas” book?

“The book identifies six reasons why companies and individuals are not only moving to Texas, but staying here. The goal is to educate employers and entrepreneurs, and the employees and families being asked to relocate here, on what to expect and how to successfully transition. We hope it will be educational even for people who chose not to move here and are just interested in the Texas Mystique.”

So, why Texas? You’re an import. Why did you come to Texas?

“So I was kind of a country boy to some extent, because I grew up in upstate New York. I moved to New York City in my 20s to pursue my career like most people do. It was great and I loved it. But I looked at it and said, ‘I can’t spend the rest of my life here.’ I chose Dallas because I had a client there, which I write about in the book. It was kind of a test run, and the next thing I know I moved.”

What were the big shocks and the big pleasant surprises when you got here?

“What was interesting to me was obviously how nice and welcoming people were. I don’t like using this word because it’s overused, but I liked the ‘can do’ attitude. It really hits you as soon as you land here. I think a lot of people don’t expect it until they get here. As soon as I got bitten by that entrepreneurial spirit, that kind of kicked my life into gear. That was probably the biggest surprise to me.”

People perceive cultural differences between Texas entrepreneurs vs. those in say Chicago or New York. Do you agree?

“Yes, I mention this in the Why Texas book. In the big cities, I think the way you call on customers is a market share play, right? You knock on enough doors, and you’ll make the sales. It’s very impersonal, and obviously the markets are vast so you can be extremely successful. In Texas, it’s not that way. When you knock on the door, they want to know what problem you’re trying to solve, and how they can help you. Whether it benefits them directly or not, they’ll help you if you strike a chord with them. The way you market and gain presence in Texas is really more about what you stand for. Whether I know you or not, I will give you a shot if I like what you’re doing.”

Yes, there’s a certain small town aspect to it: Who you are is maybe more important than what you do, or where you come from. My perception about New York is that it’s more about what firm you work for or the offering. In Texas, it’s really more about dealing with the person. Would you agree?

“One hundred percent, and what I found interesting from my interviews is that it’s present in every major region. You see it in San Antonio and Houston and Dallas and Austin. It’s very consistent.”

Why Texas by Ed Curtis

“Why Texas” by Ed Curtis

You make some comments in the Why Texas book about the different cultures in each main city. How would you describe those?

“Ironically, every person I interviewed said that their city was the most giving, most caring, and most collaborative of any city in the state! And of course, you know Austin, they definitely put themselves on the mantle for that. But every other city thinks the same, and in reality they are. I mean, every city is facing its own challenges of course. People who reside in those cities are passionate about helping it solve whatever issues exist.

I think Austin and Dallas are also seeing that it’s a global economy now and are extending their hands out to other regions. For example, the Capital Factory and other organizations that you thought would never venture outside of Austin are now doing business in other Texas cities. Then there are other cities that don’t receive as much attention, like San Antonio. They have historically been much more low key on purpose, and I think they’re realizing that they need to come out of their shell.”

Are there some people you visit with who just say, “I’m not going to Texas,” and write it off?

“That’s another great question. And, yes, I experience that a lot. I’ll tell you where I experience most of it is with trailing spouses. If it’s a meaningful enough proposition for the family to move, the spouse moves reluctantly, and in many cases either leaves a job and/or family behind. But then, they’re usually the ones who say this is the best move we ever made. They end up reinforcing the fact that they’re never moving again. And that’s nice. One chapter in the book is about family and how it’s extremely important to your transition to ensure that the entire family is happy here, and most of the time they are.”

How would you encourage CEOs to engage with employees’ family members? Often you can’t tell people about a move much in advance, but you discuss how Toyota got to tell people three years in advance. Most of us don’t know if we’re going to be in business in three years!

“Yes, the chapter right after Toyota is about a company called Corvalent, and that’s a great chapter to read on this issue. Having a great culture makes a big difference. Toyota’s culture is all about family and taking care of the employee, so it was easier even though they had a three-year lead time. Granted, three years makes it a hundred times easier!

Corvalent CEO Ed Trevis had a situation where he had 50 employees to relocate, and initially only five agreed to move to Texas. So he started at the top like Toyota did and flew all the key decision makers to Austin. He took everyone to the Bob Bullock Texas State History Museum, where they watched a movie about Texas history and culture. After spending a lot of time educating the staff and flying additional employees and their families to spend weekends in the city, more people wanted to relocate than he could afford to move.

So, the long-winded answer to your question is if you can afford it, try to get some people to come visit and bring the spouses and the kids. Help them understand the community you’re moving into or considering moving into. It makes a world of difference.”

You’ve got famous names in here and a few that people may not recognize. Who had a particularly interesting story that you didn’t know before starting the book?

“Andy Roddick and Kendra Scott were great. Andy is a very down to earth person, and from a very young age, he fell in love with Austin. What I wrote in the book is literally two days after he won the 2003 U.S. Open, he flew to Austin and bought a house. The reason he had to wait until after the U.S. Open is that’s really when he could afford it. And so, obviously, it’s been great getting to know Andy. He was definitely one of my favorites.

And then Kendra Scott, I mean, if anyone could sell Texas, it’s Kendra. She’s from Kenosha, Wisconsin, and moved here as a teenager. She got bitten by the entrepreneurial spirit from an aunt who was a fashion director at a Milwaukee department store. Kendra basically said the secret to her success was starting her business in Austin, Texas. So, it was interesting to hear the two of them – Kendra and Andy – very humbled by the state.”

Are you concerned about anything that might slow this migration of people and businesses to Texas?

“It’s important to keep that entrepreneurial spirit and independent mindset that you’re responsible for yourself. Keep our friendly culture, seek collaboration, maintain our high quality of living, and never lose pride in our state. If we lose that, it could definitely hurt us. Also, Texas is a problem solving state. I mention in the book that when people move here, they’re pretty surprised not so much by the limited government, but how the government just doesn’t get involved in things that maybe some think it should.

Then usually what happens is the private sector figures it out. The next thing you know, we’re innovating in industries we never would have if the government had tried to help solve or subsidize the problem. However, as we grow it’s a balancing act. The last Texas legislative session gained bi-partisan support in managing our escalating property tax rates while also investing in education.  These are paramount issues we will continue to face as our population grows.

I think if we can manage that balancing act and be true to our state, it will sustain what we’ve got here. You see what’s happening in California with people leaving because of the cost of living. Many highly intellectual people and high net worth people are coming here. Losing them to other states could hurt us as well.”

Ed’s book is available here: https://www.amazon.com/Why-Texas-Business-Discovered-State/dp/1612543316


|05 Nov 2019

Randstad CEO: The Future of Staffing Part 2

Randstad CEO Karen Fichuk is in her first year on the job. In this second part of our interview, she discusses coming into the role as an industry outsider, how she applies her unique set of skills, what tools she uses, and some important advice about workforce management. See part one of our interview here.


Randstad CEO Karen Fichuk

Now that you’ve been in the job as Randstad CEO for a while, are there work experiences or training you wish you’d had?

More experience in the staffing industry obviously would have helped! More experience with the HR function would have been helpful since they are important stakeholders.

In the CEO position you draw upon lots of different skills and experiences. I was fortunate that I have a finance background. I’ve also had several functional rotations and opportunities in operations and marketing. I spent a lot of time on the client side. I’m a client-centric manager in both service and account management and also within sales. All of that has served me well.

The other thing concerns leadership styles. People envision a traditional CEO as someone very authoritative, decisive and charismatic. This is changing, maybe because of more women in leadership roles. I have some of the softer skills such as being able to connect with people, having empathy, and being a good listener. I think this has helped coming into an organization at this level and being so new. It just would not be possible for me to come in without having a lot of those characteristics and being a bit more humble and willing to learn. I think that goes a long way.

In business today, nobody has all the answers. Even one company can’t do it alone. Everybody’s working in an ecosystem, which highlights the importance of not only clients and suppliers, but also partners. Acquisitions also require that we’re able to make connections and build relationships and use some of those softer skills that have not always been attributed to a CEO.

Do you notice people treating you differently than they did in previous roles?

Well, I’m new here, so that’s a little hard to gauge. Certainly in my previous life when I moved from one leadership role to more of a general management position, then yes. There’s a responsibility that comes with the CEO seat. You need to be very aware of what you say and how you say it. People are watching you. That goes with the role and the responsibility.

One of the tools that I use here and have used at lots of other leadership transition roles is a leadership assimilation process. This is a formalized, facilitated process that’s been really helpful and useful because I’m new. You bring the team together and give them the opportunity to communicate without me in the room. They have an opportunity to ask any questions or share information they think I should know. Then I have the opportunity to digest that and come back and talk to the team about it.

It requires some vulnerability and bravery on my part, but works really well. It saves a lot of time, because it gets you to a productive place with the team a lot faster by being transparent and open and taking the elephants in the room head-on. This process also helped me create a 100-day plan, which I’m tracking closely to.

RandstadAs you visit branches, how do you respond when an employee asks what you do as the Randstad CEO?

Number one is the buck stops here. Ultimately, I am accountable for making Randstad a great place to work and delivering value to customers and shareholders. Beyond that is the bigger, higher mission to protect and nurture the culture and the legacy of the Randstad brand. We want to lead the world of work and connect employers and job seekers.

Have you settled into your operational rhythm as Randstad CEO, in terms of how you get information from the organization on a regular basis?

Yes; as I said, Randstad is a high-performing business. You’ve got people running the different lines of business who have been here for a very long time and are great at what they do. There’s this operational excellence in this business that is so impressive, coming from the outside. There is already an operational cadence and rhythm and quarterly business reviews. We have all the metrics that we could ever need in terms of running the existing business.

What I can add to that is a bit more headroom for strategic discussions: How do we prepare for the future, as well as manage the business today? Being new and from the outside gives me license to ask a lot of questions and be a bit provocative at times. It helps the leadership team and the organization think about where we’re going and what we’re going to look like in the next five to 10 years and how to lead the industry.

I spent 25+ years at Nielsen. I knew everything about that business. I was an operator through and through. So now coming in and not knowing as much about the day-to-day and being the one to facilitate the longer-term strategy and view has been a lot of fun.

A lot of older companies have a lot of financial data but don’t have as much data about customers and employees. Is this the case with Randstad?

Randstad has a tremendous amount of data, especially data about the employees. We’re in the middle of our employee engagement survey, which we do quarterly across the organization from the lowest levels up. I have a dashboard where I can see the feedback by every possible segment that I want to look at and question. We have Net Promoter Scores as well as overall satisfaction scores with thousands of comments.

It’s a fantastic tool to get a gauge on employee sentiment and the challenges that we need to address. It also highlights the bright spots so we have clarity on what we need to be doing more of across the organization. This all supports the human part of the Randstad culture.

On the client side, part of the change expected when I came into this role was to create a more global client organization. This is being run by a fellow colleague and the intent there is to get closer to those enterprise clients and global clients. We want to bring the full power of Randstad to bear against those relationships. We’re going through a segmentation process to understand the needs of clients and how we should organize to fulfill those. 

We’re also in the process of doing the same thing within the North American business. We’re learning a lot from fellow markets in Europe. Randstad in Europe has a full-blown customer delight program that we’re starting to roll out in the U.S.

Considering your industry and position as Randstad CEO, other CEOs will be very interested in how you are looking out six to 12 months. There’s conflicting economic data in the air, and all of us who have been around a long time know there’s a recession coming at some point. How does that reflect in your planning right now?

Well, you will what you want, Joel, so I am saying we’re not going to have a recession! In all fairness, though, our business is tied to the cycle. I started in February and that initial jobs report came out two weeks after I started. It’s all kind of smoothed out and I have some advisors on this question because it’s so important. We’re also a member of the Conference Board and are doing work with ey. 

The indicators would say that, even though we are slowing in terms of growth, we are not going to hit that full-on down cycle or recession for some time. We’re seeing that in our business and in the numbers so far. You never know, though. It’s a super volatile time with the trade policy and the stock market.

That’s not to say there aren’t some trends that are a challenge for other CEOs in terms of HR. One HR trend is economic and social polarization. There’s the widening of the gap between the haves and have nots, as well as the vanishing middle class. Our data at Nielsen showed this, as well. In the measured consumer purchase information, we could see the high-end luxury brands growing, while the lower private label products also increased growth. This is something we all need to be aware of and take responsibility for.

We talk a lot about reskilling and upskilling and the impact of automation. We need to make sure we’re not only talking about it, but also doing the reskilling and preparing people to work in this economy. The economics work, if you actually sit down and put pen to paper and sprinkle in a little creativity on top of that.

Also investing in resilient and counter cyclical businesses helps protect against the downside. We have our RiseSmart business that does outplacement work, and what we’re finding is that instead of hiring us for outplacement, perhaps it may be better to hire us to identify employees who can be reskilled and redeployed within your organization. CEOs should keep that top of mind from a talent perspective, especially given the shortage in certain areas.

Diversity and inclusion are also important. I wouldn’t be here today if not for the investment, sponsorship, and mentorship of others and all the things that I benefited from in my career. I keep that top of mind. It starts at the top. We must make our commitments and take action to change the workforce and the leadership profile of the future.

|01 Oct 2019

Randstad CEO Karen Fichuk: Leading Staffing into the Future

Randstad North America CEO Karen Fichuk joined the company in February after spending much of her career at Nielsen. This is her first CEO role and she is new to the staffing industry, so I was very interested in her career journey, her approach to the position, and how she plans to lead Randstad into the future.

Karen leads the Randstad’s core business brands in the U.S. and Canada, and has additional responsibilities as a member of the company’s global executive board. With her expertise in data, analytics and technology gained from over 25 years of experience, she plays an integral role in driving the company’s transformation as a data-driven organization with a powerful human touch. Karen also has a strong track record of leading teams where performance, customer centricity, and people development are key pillars.


Randstad CEO Karen Fichuk

How did your career trajectory lead you to become the Randstad CEO? Have you always wanted to be a CEO?

I had a strong cross functional foundation with Nielsen leading up to my general management roles as President of North America and then Developed Markets.  But when I think back on my career, I have made many personal choices along the way that were probably not what most people think of as a traditional path to the C-suite. After I had my first child, I worked part-time for a year. Midway through my career at the VP-level position, I quit to stay home with my children for about five years. That felt like the right thing for our family at that point in time, but I did do some independent consulting.

When I went back to work full time at the VP level, I joke that Outlook happened while I was gone. There were a lot of changes to get used to and some reacclimating/assimilating to the workplace.

I try to share that story certainly with young women leaders when they are thinking about the choices they have to make. Nothing is forever. If you work hard and you’re smart about it, then you can certainly have it all; maybe just not at the same time.

In that consulting role being outside the organization, did you learn some things that you might not have appreciated if you’d stayed in the workplace?

I learned the power of the network and staying fresh on your skills. Those were probably the biggest factors that helped me transition back into the business world. As a consultant, I did anything to keep my skills fresh and stay current in business. I kept my network going. To be honest with you, after summers at home with my children I was ready to do something intellectually stimulating in the fall!

RandstadWhen most people get the CEO job there’s usually some sort of a change mandate. Occasionally everything’s perfect and the former CEO rides off into the sunset. Which situation fits your role?

It’s an interesting leadership challenge for sure here at Randstad, but I’m not sure I’d call it a change agenda. It’s more about preparing our industry for the future. I’m not from the staffing industry, which I think attracted Randstad to me and vice versa. There’s a lot of disruption happening in the staffing industry, so they liked my background and experience in data, analytics, and technology and what I could bring from that perspective.

The goal for me is to add value and lead. It is about this idea of how we continue to run a very high-performing business today, and also be thinking about and preparing ourselves for the future and some of the things that are happening around us.

Digital is the obvious one, with lots of digital disruption – or opportunity, depending on how you look at it. We have to meet people where they are today both on the client/employer side and on the job candidate side in our world. Clearly that’s online. That’s mobile. I think the next frontier that people are talking about is voice recognition, especially with the millennials.

The other challenge that’s happening in the staffing industry is the scarce labor market. We have historic levels of unemployment, and that’s impacting the business model. It used to be that we were all about the client (employer’s) needs. That’s changing quite a bit given the labor market, where we have to be candidate-centric. We have to think about how that opens up new possibilities in engaging with them and creating a relationship. Being both a B2B and B2C business is the new model for us. That’s impacting how we prepare for the future as well.

In general, the future of work is changing, and we all probably see this certainly if we have children. When I started working, work was a place you went to every day. Today it’s much more defined by what we do. It’s the output we deliver to our employers. When we are partnering with talent in this more flexible definition of work, it opens up lots of opportunities for our business. How do we engage with and provide services to the candidates as much as we do the clients?

How much time did you have before taking over the reins at Randstad?

Not much! The whole process went pretty quickly. I did have a one-month transition with the former CEO, which was a gift. She spent a lot of time with me and was so helpful. She grew up in staffing and spent most of her career at Randstad. I felt like I got a primer course before things were official.

I also read a lot and have been meeting with the employees in the branches, which is my operating style. I have a license to do that being new to the position. I try to spend a lot of time talking to people, watching them work, and listening to our clients.

I think every CEO in his or her first 90 days to six months has some surprise that they uncover, which is sometimes good and sometimes bad. What’s been the biggest surprise for you? 

One of the things that attracted me to Randstad was its culture: The fact that it’s a people business and a very human business in terms of what we do, as well as being integral to our Human Forward strategy and branding of the company. That’s all been true and something I’ve experienced every single day in the role.

I think the way that we do the work is also very human and manual as well. So that’s been a surprise and opportunity, and the reason why we are so focused on the digital transformation. I knew about that coming into this industry, but it’s even more manual than I realized.

How do you describe that culture to employees you are trying to recruit? What makes Randstad special?

It’s got a great brand, legacy and history. The founder is still alive. All of that is very present in our daily lives with our branding and messaging. There’s great pride in the organization.

One of the biggest things is our focus on diversity and inclusion. One of my proudest moments in the first quarter was when I attended the DiversityInc Top 50 dinner. For the first time, Randstad was named to their top 50 list, which recognizes the nation’s top companies for diversity and inclusion management, and we were also the first and only staffing company named to that list. You’re sitting there as they’re going through the countdown thinking we might be #40 or 50, but we landed at #30 our first year! That was a fantastic night. It was the result of a lot of hard work by a lot of people and a commitment from the top.

So it’s the branding and legacy and history, but also a commitment to making it a very inclusive workplace where everyone is comfortable and can succeed. An important part of my job is to protect, nurture, and expand upon that.

Stay tuned for part 2 of my interview with Karen!

|23 Sep 2019

Omnitracs CEO Ray Greer: Delivering Results

Omnitracs CEO Ray Greer is a well-respected leader in the transportation and logistics industry, having worked in leadership roles at BNSF Logistics, Greatwide Logistics Services, Newgistics, Ryder Integrated Logistics, and FedEx. Omnitracs is a global pioneer of fleet management solutions to transportation and logistics companies.

Ray shared with me some very compelling insights, including why he thinks he rose too early in his career, his greatest challenge as a CEO, and why cultural transformations are critical but easier said than done.

Omnitracs CEO Ray Greer

Omnitracs CEO Ray Greer

You earned degrees in mathematics and information systems. What was your career goal?

I always thought I would go into aviation. I wanted to design and build airplanes or missiles or things of that nature. I discovered during that initial part of my career that I enjoyed people too much to be sitting behind a computer all day. I ended up taking a management track pretty early in my career at FedEx. Transportation is one of those industries that once it gets into your blood it becomes part of your DNA, and it’s hard to break away from it.

I actually did masters work in aviation, thinking I would get into airport management. Then I got into the coursework on federal aviation regulations and realized just how regulated it is. I couldn’t imagine trying to run an airport where you are told what, how, and when to do things and the creativity is somewhat limited. So I took the tech route, and that has served me well.

Now FedEx obviously has reputation as a well-run organization. At that time did they provide significant management training or did they just expect you to figure it out?

FedEx actually created a leadership institute where they took executives from inside the organization to run it. You had access to it as a way to develop your leadership skills. They did a phenomenal job. I’ve tried to replicate this in organizations, but it’s a hard thing to do in different cultures.

FedEx in the early days would not allow just anybody to get into management. It was a six to nine-month process to determine if management was even for you. Many people go into management not knowing what’s expected and are not prepared. At FedEx you had to ultimately go before a panel of directors to determine if you had a good grasp of what it meant to be in a leadership position and whether or not you were ready. Without their blessing, you couldn’t even apply for a management position.

They did a very good job of not just grooming talent for management but ultimately making sure they had confidence that you were ready for it. I’m very thankful for that time in my career, because it prepared me for things that I’ve used throughout my whole career and still use today.

When did you first think this CEO gig was something you could do?

It was pretty early in my career. With my first job I had the option of being a programmer or project manager. I chose the latter, since I enjoy working with people. Because of the projects I worked on in that job, I learned to connect the dots across the organization from marketing to sales to technology to operations. That was the first time I recognized that I had an ability to not just connect the dots but also work with a vastly broad range of topics and skill sets.

I then got my first management position quickly at FedEx. At that time if you applied for a job at FedEx and were not selected, you could appeal the decision. Several employees appealed when I got the manager position instead of them, because I was half their age. It went all the way to the president, and ultimately FedEx kept me in that job.

When I got to Ryder, they did not have similar leadership programs. I became the head of operations, then the head of technology, and ultimately the president of the logistics group. I think I was 32 years old when I got that position. I felt like at that point I had arrived and that I could be the CEO someday.

I do think I rose too fast early in my career. There’s a lot to be said about learning the ropes and experiencing the lifecycle of economies in and out of recession. So I went through a phase of rapid advancement, but I learned that I could do it. I felt like I could run an organization and drive a strategy. But I know in those early days I was still learning a lot at that kind of C-level position. When you move rapidly you don’t get enough time in any one job to really learn the cycle of a position.

Long story short, I think it’s when I got appointed the president at Ryder that I was ultimately going to have the opportunity to run my own company someday and felt like I had the wherewithal to do it.

Did you have a particular mentor or sponsor who helped along the way?

Fedex CEO Fred Smith

Fedex CEO Fred Smith

Ironically, one of my first mentors was Fred Smith, the founder of FedEx. I never reported to him, but I was the program manager on some of his pet projects. I was fortunate enough to be exposed to him and his team on a frequent basis. He may not have known it, but I was using those moments to be mentored informally. I took the opportunity in meetings to listen to them debate, discuss, and explore issues.

Tony Burns, the CEO and Chairman at Ryder, was also a great mentor to me in those days. He had trust and confidence in me. Part of growing sometimes is having somebody who has enough confidence in you to give you a chance, and then not disappointing them. I’ve always had people along the way that have helped me grow and develop. Most recently at BNSF (a Berkshire Hathaway company) where I was running logistics, I learned great insights and perspectives from Chairman Matt Rose.

Fred Smith is certainly a legend. Do you have a favorite Fred Smith story?

I was always so fascinated with his boldness and willingness to stretch the thinking and imagination of his people well beyond what was reasonable at the time – whether it was technology or the global expansion of FedEx. Fred was always one who valued his people greatly. I felt very welcomed by him. My best times learning from him were flying with him and having those moments where you could ask questions and have dialog. He was just a real stand-up leader and still is. Every chance I get I take the opportunity to listen to him and see what he’s thinking.

When you got the CEO role did you find anything that you wish you’d learned, experienced, or studied before?

Before I became a CEO I had not appreciated what’s involved in leading cultural transformations. At organizations I grew up in such as FedEx and Ryder, their cultures are things you inherited and embraced and worked within. You learned how to navigate those cultures to achieve your goals and agenda.

When I became a CEO, I took over a company with a culture that needed to change. This is very different than starting a company from scratch where you can mold and shape the culture you want. In an existing company, learning how to take the good and throw out the parts you feel should change is not an easy thing to do. You’re dealing with people and what they’re used to, and asking them to change.

They can’t really teach you this in school or grad school. You can’t really learn it on the job. It’s something that you’ve got to learn through experiencing it.

That’s probably the single greatest thing is when you have organizations that you feel need cultural transformation, it’s easier said than done. You can’t master the art of that until you’ve been through it a couple of times. I’ve been through it three times. Omnitracs is the third. It’s a real journey.

Most companies would say our culture doesn’t need changing; we just need people to execute. In some companies culture can be the barrier to progress, transformation, and results. Especially in modern times with the pace of technology, cultural transformation is even more critical than it might have been 15 or 20 years ago. That’s the thing that stands out the most.

What would you tell a first-time CEO stepping into a change/turnaround situation? What kind of mistakes do new CEOs make?

The greatest mistake is thinking you know what the answer is, when in fact I have a saying: Seek first to understand then to be understood. A CEO who goes in reversing that to say, “I want to be understood and then I’ll understand,” later runs the risk of doing more harm than good. In most cases employees, managers, and C-level executives know what is good or what is not as good about a culture. Generally the human condition is one where we all want to be successful and aspire to greatness. I think new CEOs might be surprised if they took more time up front to listen before drawing their own conclusions.

Omnitracs CEODo you do anything to measure the culture/employee engagement at Omnitracs? I figure as a math guy that’s something you’d want to quantify.

I’m big into balanced scorecards. My real training and development in this area came from FedEx. They had a People Service Profit culture – what they called a PSP. The philosophy was that if you take care of people, they’ll deliver outstanding service, and that will in turn drive profits.

That model stands true today. What you have to measure is your people and customer satisfaction and engagement or disengagement. Then of course there are your financials, which tend to follow the other two. If you have a highly engaged workforce, your customers will see it and hear it and feel it. That experience drives a satisfied client.

So on the front end I focus on employee sentiment, with an eye towards trying to improve that wherever it is. Are they excited to come to work? Is that reflected in how customers perceive the organization that they are buying their products and services from?

I try to really filter down the significant few things that can move that needle the most. It can be things that leadership either is doing or not doing, or things where they are demonstrating willful or deliberate ignorance. That’s where they know something’s wrong but have not taken the steps to address it.

I always think about who the constituents of your organization are. Usually it’s people, customers, and shareholders. The inherit struggle of any CEO is finding the balance between those three constituencies. Some businesses have more than that. It’s important that the agenda you adopt and drive through the organization recognizes the importance of those three. You must move the culture in a direction to drive harmony among those three constituencies and make sure your leadership understands that.

Decision Nexus

The Decision Nexus

It’s funny you say that. I wrote a book called The CEO Tightrope where I represent those three constituencies in a “Decision Nexus.” To make good decisions, CEOs must consider the needs of all three groups.

People often ask me what my greatest challenge is, and I say it is balancing the needs of the people within the organization and shareholders. I think tightrope is a great way to characterize it. If any one of those is out of balance or out of kilter you’ll see it. But at the beginning of all that I would say as a math guy you can only optimize one variable at a time. Hands down I would always start with the people.

As a leader in the transportation industry you are certainly in the middle of the economy. Are you seeing anything that CEOs in other industries might want to know?

From an economy point of view, the transport industry has had some of their best years the last two or three. Transports lead into a recession and they lead out of a recession. So when you think about economic cycles, the transport sector is a leading indicator of how good or bad things are or could become.

The greatest challenge this sector deals with is continued regulation. I’m sure regulation hits a lot of different industries. We’re even seeing it in social media and digitization and privacy with the rights and ownership of data. Our industry sees a lot of regulation as it pertains to drivers: Are they fit to drive? Have they been too long on the road without rest? We are under a lot of strain in terms of regulatory changes. At the end of the day, I think these changes are very much needed, because it drives a safer industry.

The other thing I would say is this multi-channel retail change between shopping in stores to shopping online and all the options available to us now. We as an industry don’t completely have an appreciation for how much it’s going to change the industry over the next five or 10 or 20 years. I haven’t seen the most recent numbers, but I want to say that retail is 15% e-commerce now, and that’s growing every year. That has a profound impact on the infrastructure and the companies that serve the transport space. That’s where the technology is going to have to play a critical role to ensure the industry operates efficiently.

The economy right now is good. We’re seeing a bit of softness in the first quarter of 2019, but that’s also coming off record highs in terms of freight volumes and tonnage and just general market demand.

Ray to Joel: How do you think CEOs are different now than they were 10 or 20 years ago?

Joel: I think technology has changed their ability to interact with people. Their one-on-one interactions are worse. Their one-to-many communications might be better, but I think personal connections are worse.

Ray: We as leaders and CEOs have to identify that and find ways to develop those leadership attributes so that whether it is one-on-one or a group setting, that leaders are capable of navigating their way through both. When people ask me what I’m most grateful for in my career, it’s not the money, it’s the people I’ve met along the way. That to me is what makes this job fun. My hope is that this young generation can still place the same value on people as they do the technology that can do some of this work. We must make sure we strike that balance.

Joel: The successful ones will because the human being as an animal didn’t change the last 20 years. We still crave human interaction, so the most savvy ones will figure that out.



|14 Aug 2019

Consultants a Waste Minus an Adaptable CEO

Consultants have a place in business but are no substitute for the CEO

I often say being a CEO is the most personal of jobs. It’s difficult to separate the person from the role, and good character is fundamental to the position. This is why hiring consultants can be tricky territory for a CEO who isn’t open-minded and doesn’t handle it correctly.

Damaging the CEO’s Ability to Lead

It’s common for CEOs to bring in consultants to solve problems in their organizations. Outside eyes can be valuable. They can validate the challenges the CEO sees in the business and act as impartial advisors.

Yet bad management of consultants can tarnish a CEO’s perceived caring, credibility, and competence. These three “Cs” are essential tools of the trade. Losing just one of them in the eyes of their constituents will make CEOs about as effective as a two-legged stool.

For example, depending upon why the consultants are hired, employees and others could take it as a sign that the CEO lacks competence. They could also believe that the CEO doesn’t trust his or her internal team, which hurts credibility. Not taking a consulting firm’s advice could also harm a CEO’s reputation, especially without any explanation.

Communication is key in these situations. Radio silence from the CEO could also be perceived as lack of caring. In the absence of information, employees are likely to create their own theories, leading to more problems.

Using Consultants to Confirm Biases

In addition, many CEOs have ulterior motives for bringing in a consultancy, which could further damage their ability to lead. Helen Lee Bouygues, founder of the Reboot Foundation, recently spoke to Harvard Business Review about how the lack of critical thinking causes a lot of business failures.

Consultants can help, she says, but “…In a lot of situations CEOs seek validation and look for evidence that supports their preconceived notions. And consultants are often trained to agree with their client’s theories.”

Bouygues also says that CEOs will hire consultants to justify their strategic direction and actions to their boards. This is the opposite of critical thinking. She recommends being very specific with consulting firms up front: CEOs should communicate clearly that they are not hiring yes men and women but want unfiltered, objective advice (if they really do).  

Expecting Consultants to Do the CEO’s Job

Another issue I see often is that CEOs bring in consultants to actually drive the change they want. This is unrealistic and shows that the CEO is either unwilling or unable to perform the five key responsibilities of the role: Own the vision, build the culture, provide the proper resources, make good decisions, and deliver performance. It’s important to understand that consultants cannot take on these unique CEO responsibilities.

For example, if you want to change the culture in your organization, it will require that YOU as CEO change your behavior. I recently interviewed Ray Greer, the CEO of transportation software company Omnitracs. He said cultural transformations are one of the most difficult challenges a CEO can face. He didn’t fully appreciate what’s involved in leading them until he became a CEO. It’s not something you can learn in school or train for on the job or outsource to consultants.

“You can’t master the art of that until you’ve been through it a couple of times,” Ray said. He should know, as he’s been through it three times now. Only the CEO has the credibility to drive systemic change within an organization.

Becoming an Adaptable CEO

At the end of the day, being a better CEO inevitably involves being a better person. This includes always working on and improving the three Cs (caring, credibility, and competence). It also involves showing gratitude, knowing where to apply your strengths and how to use your time, trusting your team, constantly learning, being humble, and much more. CEOs who don’t realize this will make many mistakes, such as hiring consultants for the wrong reasons or not managing them effectively.

Consultants can determine what needs to change, provide a plan for how to change, and even track progress. But to transform the company, you must evolve. If you aren’t ready to do this, don’t waste your money on a bunch of consultants.

|30 Jul 2019

Good Decisions Require More than Smarts

Good decisions drive organizations. It’s one of the CEO’s five main responsibilities, yet many take the wrong approach. Some attempt to make every little decision. Others procrastinate for fear of making a wrong decision. Still other CEOs act like a dictator without regard for opinions or evidence. All of these approaches risk slowing down the business, neglecting the role’s true responsibilities, undermining employees, and degrading the culture

CEOs must learn to focus on making timely, informed decisions that only they can make. These include issues with cross-organizational significance, such as M&A activity, resource conflicts across departments, strategic partnerships, and key hirings. This may seem simple, but given the depth and breadth of decisions that cross a chief executive’s desk, it’s a skill to know which decisions to make and which to leave to employees.

This leads to the other important element of CEO decision-making: Coaching employees to make good decisions within their areas of responsibility. CEOs who can build an organization where quality decisions are made at every level are more likely to succeed. It’s always better to have the employees who are closest to the situation, with the greatest knowledge and expertise, make decisions.

The challenge for CEOs is ensuring that employees make these decisions in support of company strategy. It’s the CEOs job to clearly communicate the strategy to everyone, which is another key responsibility (Own the Vision). This is much easier than having employees send detailed knowledge up the chain. The goal is to have employees make the same decisions the CEO would make in their position. This leads to better, faster decisions that drive the corporate strategy and results.

While CEOs must cultivate this decision-making approach in their organizations, the following infographic from the Mint.com blog reminded me that coaching should go beyond just the process. It features seven tips for employees to overcome “decision fatigue” – especially when they’re overloaded with information and deadlines. These include being focused, well rested, and organized, using the right tools to simplify basic tasks and minimize distractions. Click on the image to read their full article.

good decisions

|27 Jun 2019

AppNeta CEO: It’s All About the Team

Unlike most chief executives, Matt Stevens always wanted to be a CEO. He took the tech route to the job, starting out as CTO before becoming CEO of network performance monitoring company AppNeta in 2014. Since then, he has put some interesting programs in place to keep employees aligned and engaged. Read on to learn about his leadership approach as well as why he puts team “at the tip of the pyramid.”

AppNeta helps customers such as Amazon, Netflix and Boeing monitor their network performance. Their technology provides end-to-end application monitoring for better end-user experiences, whether that user be a Marriott guest trying to check out or an employee in a remote office.

AppNeta CEO Matt Stevens

AppNeta CEO Matt Stevens

You had a tech career path. How did you think about the CEO role? Did you want to become one?

I always wanted to be one honestly. I knew I wanted the opportunity to run an organization in some kind of leadership position. I don’t know that I necessarily wanted the CEO title. I wanted to be a founder or principal helping to shape the direction in a business. So yes, from my early days.

We share that then. It’s interesting because most CEOs don’t have that as their career goal. Was there something in particular about the role that interested you?

The number one thing is that throughout my entire career I’ve really enjoyed being part of a team with a common vision and goal. It is awesome to achieve any level of success however you measure it. When you have more than two people trying to solve something together and work towards a common vision, it feels incredible. I felt that in school and with sports. I really wanted to have that same kind of feeling in business.

Looking back, would you have taken any different courses or done other things to prepare you for the CEO role?

I’ve never thought, “I wish I’d done more ‘X’.” I think I probably would’ve gotten more involved in programs, clubs, and committees like student politics to understand how they were solving problems. I believe it would have taught me some of the subtleties required to build and be part of an effective team. When I started my first few jobs, I realized it was a lot different than I expected.

It’s kind of funny: We reward students for individual achievements in school. Then in the workplace we reward them for group achievements, especially leaders.

On a side note, I’m the lucky father of four boys. I’ve seen a very big shift in our education system. They are trying to be a lot more group focused rather than individual focused. Schools in the Northeast focus on that a lot, which I appreciate.

That’s good. It certainly was not the case when we were growing up. How much early warning did you have on getting the AppNeta CEO job? Did you have years to prepare or did you learn one day: “Congrats! You start in two weeks!”

I’ve been very fortunate in my career to work with some outstanding mentors who help me think about different things. This is my fifth start-up. I was a founding employee of NetApp back in the 90s. A senior sales leader named Tom Mendoza became our President. He still gives very worthwhile advice to all members of the former NetApp team. When we started AppNeta in 2011, I became the co-founder/CTO and my co-founder became the CEO. As you know, start-ups are a struggle. You are wrestling with product market fit, funding, hiring, competition, etc. Frankly, it’s exhausting. Three years later the pace started to get to him, and he gave the board a 60-day notice. I knew the board would ask me to either do a CEO search or maybe keep the job in house. They took the latter route, and 60 days later I became CEO.

Usually when the board makes an internal selection for CEO, it’s a sign that things are going well, and they are not looking for a huge change. Did you have different priorities when you took over?

It’s funny when you think about your background and the challenges you’ve solved. You have a certain point of reference that at the time feels right to you. As CTO of AppNeta, I was focused on customers and technology. The team was always important, but I was fortunate that we had a strong engineering team. It was only after being in the CTO role for two or three years that I realized some of the things we weren’t focused on as much.

When I became CEO, the whole wheel pivoted. I put team at the tip of the pyramid. With team first everything is possible. If you put tech or customers first, you still need the team to solve either of the other two.

As CEO I wanted to ensure that we had a common mission across our team. I needed to understand better for myself who my peers were going to be in leadership and if we had the right pieces in place for the broader team. At the time we were having good growth and financial success, and we were getting lots of competitive wins. We had the luxury of time to figure out the team. When I took over in July of 2014 the leadership team was myself, the heads of product marketing and engineering, and a part-time CFO. That was the group, and we were fortunate to build from there.

Did you notice any changes in the way people treated you when you made the CEO transition?

Not with the team already there. I had strong cross-organizational relationships. AppNeta wasn’t huge when I became CEO. We had 65 employees, and I knew everybody.

The change I did pick up was during our next growth phase. When new employees came in and discovered that I was the CEO, they acted a little differently around me. I noticed they did not want to bother me with too much detail. There was just a little bit of distance is the best way to describe it.

This actually helped shape the next wave of how we grew the team, and those fundamentals remain true to this day now that we have 130 employees. We call it TPT: Transparency, Performance, and Trust. Transparency is the one we work hardest on. Regardless of your title or role or length of service – whether you just joined or have been here for a couple of years – you conduct yourself with transparency. You should also expect transparency bidirectionally from everybody else. This goes to your question: This transparency took the new hires aback. They were not used to seeing it in previous organizations.

How do you help a new employee develop that comfort level with you as CEO?

Some little things and some big things. Making yourself available is the most basic and obvious. Things like keeping your door open unless you are in a meeting or on a phone call. I have to remember to consciously get up from my desk and open the door. It sends an invitation to employees and is something that moves the needle.

The second thing is to respond. We have many modes of communications at AppNeta: e-mail, chat, text. If people take the time to ask you a question or include you, don’t bypass them. Respond. It shows you’re listening. Some of the bigger things we do is schedule all kinds of meetings: one-on-one meetings, company meetings, etc. As a leadership team, we make ourselves available. It’s not a broadcast down from the mountain type of approach. No one wants a lecture.

Do you have a lot of remote employees?

AppNeta is generally centralized in two locations: Boston or Vancouver. We’re split about 50/50. There are a handful talented employees in other places. Truthfully from an inter-office/intra-office perspective, this has given us an advantage. From our inception in 2011 it forced us to be good at communicating remotely. We have to be inclusive to two offices. It instills good work habits for inside the company and for working from home. You are already good at being online and being responsive.

Appneta CEOWhat’s the next step for AppNeta from a culture perspective? How do you maintain it?

It takes an increasing amount of effort to keep it strong. When you get 25 percent bigger, it takes 50 percent more effort to maintain the culture. We have a healthy culture with our three-pronged approach of TPT (Transparency, Performance, Trust). As the organization gets bigger, transparency is harder to maintain at the same level. We think we are pretty transparent, and then things happen and people do things within their group or department that they may not think to explain to the wider organization. We need to ensure that it comes full circle and understand why people are doing different things, not just the what and how.

Performance and trust are equally important as you grow. As an employee, you have to understand that you have taken on a responsibility and own your own performance. The onus is on all employees to perform for the business, their teammates, and their department. If AppNeta has a tough quarter, we want to ensure that we don’t point fingers. For example, that product isn’t blaming sales or sales isn’t blaming marketing. You have to trust in your fellow AppNetians, as we call each other.

I’ve found that somewhere between 100 to 200 employees, a whole new level of management emerges. These managers are responsible for supervising arguably the most important employees in the business: The first-level employees who are touching customers and getting the day-to-day work done. How do you maintain a consistent management organization at your size when you are no longer in close touch with those managers?

Our senior leadership team has bi-weekly meetings and an off-site meeting every quarter. Then every other quarter we get the full leadership team together. During this meeting we share information from the senior leadership team off-site. Then we challenge everyone on the broader leadership team to determine how our quarterly goals impact them and their groups. We have a broad management by objectives (MBO) program. Every team member’s quarterly MBO’s directly align with our business strategies, whether it’s to increase customer retention, improve win rates against the competition or understand a new market. We’ve done this for six quarters now and have received positive feedback from managers and teams. They feel much more included and confident that they understand why we’re doing things. There is trust in the process.

Do you use a system to drive your goals process?

From a tool perspective, about 40 percent is Google docs and the rest is a people ops application called Namely. But the real key to the whole process is the managers and the transparency by which we arrive at each person’s MBOs.

As you mentioned,  the more people you add, the harder it becomes to instill your mission, vision, and values. How do you educate new employees?

It varies by role. Everyone goes through a base-level orientation, which is not too unique. As part of the process, every employee gets to meet all the leadership team members. We spread this out over three weeks. I spend some time with every new hire as well. We do this in small classes of three to five employees so they can bounce ideas off each other and verify what they are learning.

Then they go back into their respective groups. Sales has a long cycle of 12 weeks of sales enablement training. Conversely, the engineering side has a different, eight-week on-boarding process. We have an agile development process where we push updates out every two weeks. Engineers learn everything involved in delivering our SaaS-based solution. For instance, we are hyper-focused on security.

When did you put that in place? What did it take?

I learned from my great mentors, so I’ve done this in previous companies as an engineer/VP of engineering/ CTO. We had great results with it. When I took over as AppNeta CEO, we did the first version for non-tech teams. However, I did it through an engineering lens. It didn’t always work out.

This was a two-year learning process where eventually we knew the right questions to ask. Now we do it slightly differently by the expectations of each department and role. This took until 2016. I think we’re at a B right now, and I would love to get it to an A but it’s really hard. It’s funny, we have a new director of people ops. We ran him through our process, and he came away saying two things: It was a great way to learn about the company, and now I know this will not be dumped on my lap now that I’m here!

What’s your best advice for CEOs?

Nothing profound other than it is important to focus on your immediate team, especially the leadership team. You must be aligned on your mission. It’s so easy to just sit back and say of course you all know where we’re going. It’s shift vs. drift. Make sure and test that everyone is aligned and that you have alignment in roles. We work with smart, motivated people who sometimes will stay in a role just because they are being a loyal soldier and are good at it. This may not be a role that really excites them though. We want to ensure that they are in a role where their passion has a chance to come through. We do not want to take them for granted. That is my best advice.

|04 Jun 2019

Minimizing Uncertainty by Dr. Tasha Eurich

This is a great story by organizational psychologist Dr. Tasha Eurich about workplace situations that trigger our reward/threat response (sometimes with funny results!). As the SCARF Model® explains, we try to minimize uncertainty in our environments. For example, in the absence of information, employees often just fill in the blanks. CEOs, leaders, and managers can take lessons here about communication, transparency, and influence.

Reprinted with permission by Dr. Tasha Eurich

Tasha Eurich

Dr. Tasha Eurich

I was once hired to coach an oil and gas executive. The project began, as it always does, with my interviewing about 20 of his colleagues.

My client set me up in a huge corner office on another floor of their building, and for two days, people shuffled in and out at regular intervals for their interviews. 

When I returned to review my client’s feedback with him, he shared a rather interesting rumor that had cropped up since my visit.

Apparently, the employees who sat outside “my office” had concluded that I was a recruiter—and that I was meeting with everyone on my client’s team to decide who would keep their jobs!

This initially funny story revealed a deeply sobering truth. As human beings, we have a powerfuneed to make sense of what’s going on around us. And when we can’t, the psychological—and physiological—havoc that ensues is no laughing matter.

In one study, researchers scanned the brains of participants placing bets on a card game: some made risky bets (where there was a low, but known, probability of winning) and others made ambiguous bets (where the probability of winning was unknown).

Surprisingly, the ambiguous betters were worse off than the risky betters—in fact, their brains experienced the same “fight or flight” response that would be activated by coming face-to-face with a grizzly bear.

Clearly, humans are hard-wired to avoid uncertainty. It follows, then, that if we don’t have the information we need, we are more than happy to make it up!

To put it another way, in the absence of information, people create conspiracy theories. This can be especially true in times of change, where uncertainty is a permanent fixture.

The origins of the oil and gas recruiter rumor were completely understandable. The conclusion that I was one of the Bobs from Office Space was definitely far more dramatic—and creative—than the truth. But because we didn’t communicate the real truth, this conspiracy theory became their reality.

There’s an important lesson here for anyone who wants to improve their influence. Regardless of your place in the organizational pecking order, your colleagues will be on the lookout for the “why” behind what you do. If you don’t provide this information, they will make it up, often with a far less charitable outcome.

If you do make it a habit to regularly communicate the context for your decisions and the intentions behind your actions, you won’t just have a positive effect on those around you, you will become more trusted, respected, and effective in the process.

Whenever we can reduce uncertainty for people we work with, it’s faster, easier, and far more enjoyable to do our jobs. After all, as author Norman Vincent Peale once observed, “understanding can overcome any situation, however mysterious or insurmountable it may appear to be.”

Dr. Tasha Eurich is an organizational psychologist, researcher, and New York Times best-selling author of INSIGHT and Bankable Leadership. Her life’s work is to help leaders become more self-aware and successful. She offers many helpful tools and approaches. I highly recommend her Organizational Leadership Assessment.

This piece was originally published in Tasha’s monthly newsletter, The Insight Bulletin

|16 May 2019

Evolving Syncsort: CEO Q&A with Josh Rogers (Part 2)

In Part 1 of my Q&A with Syncsort CEO Josh Rogers, we covered his background and journey to the chief executive chair. In this second half, Josh discusses how he manages culture, acquisitions, communications, and his unique role as CEO – and why you shouldn’t believe the negativity about millennials.

Culture is important to most CEOs. How do you measure and monitor the pulse of culture at Syncsort?

Syncsort CEO Josh Rogers

Syncsort CEO Josh Rogers

Everyone has a culture. The question is: Is it the one you want? As I mentioned, we have grown aggressively both organically and inorganically. We’ve had the challenge of outside individuals and groups coming in via acquisition. To do a better job of assimilating these acquisitions, we hired a CHRO last year. She has put a few different things in place to help.

In the fall of last year, we administered an engagement survey to get an initial understanding of how employees feel about the company – what we’re doing well and not so well. Based on that, we launched a program to develop an explicit set of values this spring. It is important work. This is not something we’re making up from scratch. We want to harness what the culture really is. As a CEO you have to shape it. One of my themes is to strive for transparency, engagement, and collaboration. These are things we are doing well, but there is an opportunity for us to be more explicit and programmatic.

In addition, Syncsort has organically cultivated an R&D team that is about 40 percent women. These high percentages set Syncsort apart from most other tech companies and have attracted more women to apply.

What role does the CEO play during an acquisition?

The CEO needs to understand what the strategy is and ensure that the entire executive team is bought into it. Then he or she needs to ensure the company is executing against the integration plan. Post-acquisition, the CEO should be an ambassador to the newly acquired employees. They need to know what the rationale of the combination was and why there is a great opportunity in front of them. This is something I spend a lot of time on. Last week I was in Raleigh visiting a new team from an acquisition we made in November. I spoke with the CEO, CTO, and each individual employee to learn what’s going well and what’s frustrating them. It’s a great opportunity to learn from each other. If you take the time to do that, from my experience the acquisition employees appreciate it. What we’ve seen in our acquisition program is that there are great benefits from leveraging the talent that’s brought in via acquisition. Some of our senior leadership are contributing well beyond their original role and are great success stories of our acquisition strategy.

What do you tell these newly acquired employees when they ask what do you do as CEO?

SyncsortFor me it’s a couple of things: I try and understand what is working in our business and what’s not. What products are selling? Is our campaign messaging resonating? What development activity do customers care about? My job is to help us keep doing things that are working and stop those that are not working. We’ve developed a cadence in the way our executive team operates. With reporting and analysis we put resources behind things that are working and things that fit into long-term trends as well as our long-range planning. I ensure that the machine operates as efficiently as possible. Then I look a little bit further out to determine, given our capability set, what longer-range opportunities we need to exploit.

At your company size you are removed from the frontline workers. How do you ensure they are reflecting your values and vision for the organization?

It’s about that cadence. We have lots of town halls at the local office level and on a regular basis companywide. For our all hands meetings, the video is streamed to all offices. We send out a survey beforehand and during the Q&A portion, we answer every question. Some are questions that no one wants to ask and some are frankly fairly tactical. What we’ve found is that this level of transparency drives good response from the employees. Everyone knows they have a voice and the ability to ask questions, and that the executive team will give them an honest answer.

You’ve spent 10 years in management at Syncsort: How has your management approach changed over that time?

Patience is a virtue: My Grandfather ran a business and always said his number one goal was to be “impatient slower.” The reality is the more you can listen, the more you can sit back and really hear what employees and leaders in the company have to say. You can create the right environment from a cadence and culture perspective. If you do that, the answer will emerge. As a CEO your job is not to provide that answer. It’s to provide a system to help the team answer the question.

With your unique perspective, what trends or issues do you think other CEOs should be aware of?

I want to address the millennial topic. I read a lot in the press about the dynamics of hiring and retaining millennials. I think Syncsort needs to do a better job bringing young people into the organization. Those who we have brought in are unbelievable. I’ve been impressed with their work ethic and desire to learn and contribute. If you create the right opportunities for engagement and real contribution, you’ll see amazing results. That’s what we’ve seen. So I don’t believe the negative stories about millennials. The talent and intellectual curiosity we’ve brought in will serve us well for years to come.

|30 Apr 2019

Evolving Syncsort: CEO Q&A with Josh Rogers (Part 1)

Josh Rogers is CEO of Syncsort, a B2B software company that helps businesses organize their data. Since taking the helm in 2016, this first-timer has led three years of major growth, both organic and via nine acquisitions that have quadrupled Syncsort’s size. He has quadrupled revenue, increased their customer base to 7,000+ (including 84 of the Fortune 100), and expanded their solution set.

No stranger to evolution, the 50-year-old company is looking steadfastly towards the future of data under Josh’s leadership: They are exploring how they can support blockchain, AI, and machine learning.

Here’s how Josh got to be CEO after a long career at Syncsort and how he leads.

Syncsort CEO Josh Rogers

Syncsort CEO Josh Rogers

When you were starting out in your career, did you aspire to be a CEO? Either way, how did you end up becoming one?

I went to Davidson College, which is a small liberal arts institution. I was an economics major and directionally found the business world interesting. Based on classmates ahead of me and my recruiting options, I pursued a role in finance. I ended up getting involved in M&A for a regional boutique bank and then at Wells Fargo and Bank of America. These were great opportunities to learn about business.

Was there any point where you thought the CEO role might be interesting? 

When I worked at a private equity firm (Bank of America Capital Investors), I had the opportunity to attend board meetings and got excited about the operating side of business. I heard the CEOs of our portfolio companies discuss their various strategies. It seemed like an exciting role they were playing. It was challenging but their success was gratifying. That was something I wanted to be a part of in my career.


You’ve had a long career at Syncsort, starting in sales. What was it like to take your first real multi-functional role with the President title? 

It was a great experience, because I could steer the ship faster than in my VP of sales role. I originally joined Syncsort as a regional sales leader for the Americas and quickly became VP of sales. It was an exciting time for me. In my executive sales role I always had a bigger influence on the company than just my function. That was partly because I was a very curious salesperson/leader. I wanted to know why customers were making decisions. Why did we lose a deal, for example?

In general, I studied industry trends and knew there was a bigger opportunity for Syncsort in the big data space. I partnered with the heads of product, technology, and marketing to craft what that strategy could look like. When I proposed that strategy to the board, they liked it and asked me to implement it as President. I became responsible for all of the business line functions, including development, support, marketing, business development, sales, and more. You can make decisions a bit more quickly when you have a single leader in charge of the entire strategy.

In my experience, sales leaders have had strong ideas about what I should be doing differently as CEO. Today, is there anything you told your CEO as a sales leader that you now realize was not correct?

That’s a great question. We were always a pretty collaborative leadership team. That continued as I took over the President role. I did not get it exactly right out of the gate. One difference when I became President was a focus on data. For example, when we lost a deal we analyzed why and learned from that. It wasn’t about which function was doing things right or wrong, but what is the data showing us? Then we would adjust the strategy to win the next deal. This resulted in the Big Iron to Big Data positioning of Syncsort today.

Is there one area that you’ve found more challenging as CEO?

I would say that each of the functional disciplines has been a great learning opportunity for me. All are complicated in their own right, so I’m not sure I could hold up one as being the most challenging. Being a liberal arts graduate, you learn how to learn, so that’s what I’ve tried to focus on as CEO. Since I came up through sales, probably my biggest challenge is that I spend more time on the other functions.

Are there areas you would have studied if you’d known you would become a CEO?

Deeper technical expertise would have been useful. In our development process, it would make it easier understand what is and is not possible. Although this has not been a major hindrance for me.

What would people say has changed with you as CEO of Syncsort compared to your predecessor?

That is a dangerous question, considering my predecessor was Lonne Jaffe who is currently on our board of directors! In many ways I am executing a strategy that Lonne put in place. It’s a dual strategy, both organic and inorganic. We have evolved that pretty significantly. The biggest change frankly is that we’ve figured out with a high degree of conviction that the strategy is working. We’ve been able to put significant resources towards it and figured out how to scale those components to execute quickly against the strategy. As a result, we have quadrupled Syncsort’s revenue and employees since I became CEO. We’ve been able to anticipate where the market is going and figure out where Syncsort can help bridge that gap for our customers, using their existing solutions as a base. We’ve also focused the sales force on targeted sales plays where Syncsort has competitive differentiation.

How would you categorize how you spend your time? Internal vs. external facing?

I recently did an analysis on where I’m spending my time: It’s about 40 percent external and 60 percent internal. That is about right. There are times where I’d like to be higher on external. In Q2 and Q3 I am about 50 percent external. In Q4 and Q1 where we are planning for the year, I’m about 60 percent internal. Generally I’d like to run even, but it runs a bit more internal.

On strategy vs. tactical issues, I spend about 25 to 30 percent of my time on strategic issues. I wish it was closer to 40 percent. We made several tactical moves last year to propel our growth, including several transformational acquisitions. That’s why I spent more time on tactical to ensure those larger acquisitions were seamlessly integrated. In the future, hopefully I can shift my time to more long-term strategic planning.

Stay tuned for Part 2 of my discussion with Josh next week!

|23 Apr 2019

CEO Academy Starts April 10

I’ll be leading the annual CEO Academy in Austin starting on April 10. CEOs with successful, growing businesses are invited (not start-ups). This is a great chance to learn a systematic approach to the CEO role and network with your peers.

The course will based on the five CEO responsibilities I outline in my book The CEO Tightrope. Here’s a sneak preview:

The CEO Academy will be held at Concordia University’s IncubatorCTX once a week for 8 weeks during the lunch hour (90 minutes each except for the first class). Attendees will receive a signed copy of my book.

Here’s what we’ll cover during the course:

Session 1. Intro session, The Job of a CEO (April 10: 1:15PM – 2:45PM)

Session 2. Own the Vision (April 17: 12PM – 1:30 PM)

Session 3. Right People on the Bus (April 24: 12PM – 1:30 PM)

Session 4. Providing the Right Resources (May 1: 12PM – 1:30 PM)

Session 5. Build the Culture (May 8: 12PM-1:30 PM)

Session 6. Make Good Decisions (May 15: 12PM – 1:30PM)

Session 7. Deliver Performance (May 22: 12PM – 1:30 PM)

Session 8. Stories from the Journey and How to Improve as CEO (May 29: 12PM – 1:30 PM)

To register for the CEO Academy, visit https://www.eventbrite.com/e/building-a-world-class-company-ceo-academy-with-joel-trammell-tickets-57882611

I’ll be giving a free information session about the CEO Academy today at 6:00 p.m.: https://www.eventbrite.com/e/information-session-ceo-academy-with-joel-trammell-tickets-59336108899?aff=ebdssbdestsearch

|02 Apr 2019

Citrix CEO Leads Business Model Pivot (Part 2)

In part one of my interview with Citrix CEO David Henshall, we discussed how he became CEO and his successful, three-pronged approach to transforming the company. In this second half, David outlines how he leads strategic alignment and communications, why Citrix is a great place to work, and his advice for other CEOs.

Citrix CEO

Citrix CEO David Henshall

If I am an individual contributor at Citrix, how is my experience different today vs. 18 months ago when you started as CEO?

We measure across many dimensions and have never been more aligned, focused, and collaborative. I think employees have a better understanding of their team and core goals. Citrix has been recognized as one of best places to work. One reason for this is that we have the type of infrastructure that allows for career development and different types of opportunities.

I also think having a more aligned strategy is a factor. Employees want to be connected and engaged to a strategy they believe in and view as important. Our long-term goal is to have Citrix be the preferred way to work for 1 billion people worldwide.  Our internal surveys show that over 75 percent of employees understand our strategy and how it connects to their jobs. This is up from less than 50 percent 18 months ago. Our employee Net Promoter Score increased from 20 at the end of 2017 to 45 in our last measurement. Teams are more engaged in the business. Success creates a lot of opportunities.

In regard to pushing the strategy to the team: How would I as an employee learn about it and how applies to my particular role?

What I’ve recognized over the years is that it is a continuous engagement process. We draw out our vision on a multi-year basis, including where the company needs to go and why. Then we communicate it to our board and all our stakeholders: What it means for individual employees; the financial goals to our investors; where our solutions are going/what problems we are solving for partners and customers. The multi-year term provides context for all short-term activities and how they are connected to the business. We have monthly conversations with the entire company where we repeat the goals and discuss how we are progressing. Repetition matters. On an annual basis, we refresh the strategy on a page with overall priorities. This cascades down to the functional organizations so they are aware of where we’re going and how the roles line up.

With your background you have a good feel for the financials of the company. What other data do you collect to find out what’s happening at lower levels?

Via a business intelligence layer we create reporting and instrumentation to understand different operational elements and the strategy changes that need to evolve. P&L is almost a given. Those are results after the fact. On an operational basis, I rely on a scorecard for core strategy and look at metrics such as net new customers; retention rate of cloud services; active weekly use of cloud services; etc. This lets me know if we are delivering value and engaging with our customers. As we transition to a cloud services company vs. a product company – moving from selling something once to a SaaS sale – we are proving our value every day. Mentally the shift takes time.

Looking back, is there anything you would have done differently or studied for the CEO role?

I try to never look back. My overall philosophy is your eyes look forward for a reason. I may do a short-term retrospective and learn from it at times. In general, I think people should be more open about their career paths, especially within a dynamic industry like tech. If you are more methodical, you run the risk of being disappointed or missing out on opportunities that you may not have thought of. My guidance is to approach new opportunities with curiosity and passion. Be open and try to understand new areas of the business. Don’t assume the direction you have to take. If I have one regret in my own career, it’s that I never took an international assignment. I haven’t really needed it but wish I’d done it for personal reasons.

Citrix CEOThis is a difficult labor market trying to hire and retain talented people. Why would someone want to work at Citrix?

We just celebrated our 30th anniversary. We have reinvented ourselves many times, like all great tech companies do. We have a great vision for the future of work, employees who are highly engaged, and an exciting roadmap. We have a unique culture where we embrace curiosity and different opinions. The best idea rules the day. It’s a great place to build and drive careers. In the last year, we have doubled our revenue rate and are financially strong, with a runway to drive higher-level relevance in the industry. It’s an exciting time to be at Citrix.

What trends or changes are you seeing that you think other CEOs should be aware of?

I am biased about tech, but it is critical to the future of organizations. Work styles have changed forever, and it’s not just about demographic shifts or millennials. Today half of all jobs are in non-traditional offices. People are working from anywhere. Companies are tapping talents pools from around the world. In a tight job market, companies that don’t hire this way are destined to fail. Employees are usually the single most valuable and expensive resource. We must cherish it. Looking at the landscape: We are entering the 4th industrial revolution or natural evolution of tech: The pace of change is accelerating faster than any time over the last 30 years. Even with our advances in computing and connectivity, businesses that put human capital in front of problems and opportunities will be rewarded. Companies have to be a new level of fluid and dynamic.

Do you have any advice for future CEOs?

CEOs need to be very direct, humble, and transparent. This will drive authenticity. It’s more about getting people to align against a strategic vision than operations or infrastructure. It’s a very visible role. Everyone’s a critic and has an opinion. You can’t take things personally. Focus on doing the right things with clear, honest, transparent communications and making people part of a team.

|26 Mar 2019

Citrix CEO Leads Business Model Pivot (Part 1)

David Henshall became the President and CEO of Citrix in 2017, after working there since 2003 as CFO and then CFO/COO (He served as acting CEO in 2013-2014). He has more than 25 years of technology management experience. During his tenure over the last year and a half, he has led the company through a massive business model pivot and made a significant investment in its technology. The results are impressive: Citrix has expanded into new markets while remaining profitable and consistently beating earnings expectations quarter-over-quarter.

Here’s part 1 of my discussion with him about taking on the CEO role and transforming Citrix. 

Citrix CEO

Citrix CEO David Henshall

How did you become a CEO and did you always aspire to be one?

I did not imagine being a CEO as much as I had an inherent love of technology. The fascinating pace of change cuts across so many different industries. I wanted to drive that change and create something new and unique in the world. This is what drew me into tech originally. I’ve now been in the tech world for nearly 30 years and can’t imagine being anywhere else. My background is in finance but more of operational finance. It’s much more impactful long term to be working not just in the tech discipline but on the operational side. It encompasses breadth of strategy, execution, customers, and the entire business end-to-end. Over the years I’ve continued to raise my hand any time something new came up to learn.

Was there a key break or a job that accelerated your career, but you weren’t sure you were ready for it?

I began my career in Silicon Valley in 1990. The industry was evolving so fast and growing quickly. I’ve always had an innate curiosity and wanted to take advantage of any opportunity. The best leaders aren’t necessarily always fully prepared to stretch into something new. Throughout my career, I’ve been fortunate to have people willing to take a chance on me and give me the opportunity to step into roles I was not ready for. Any role I’ve ever had was the first time I’d done that job. At a younger age it may have been discomforting, but over time I’ve grown to see new roles as one more interesting challenge.

What role have mentors played in your career?

I’ve been fortunate to have several mentors and sponsors. The president of Rational Software gave me my first CFO job in my early 30s. Tom Bogan was a long-time member of the Citrix board and served as a mentor to me. Mark Templeton was the long-time CEO of Citrix and recruited me. He was my partner in crime for over a decade transforming Citrix as the technology and customer needs changed.

Did you get a long runway knowing you were going to be CEO? Or was it dropped on you one day?

It actually happened twice: I was asked to be interim CEO when Mark had a personal tragedy. I was the COO and CFO at that time. The board told me that I was the acting CEO and that we were going to make the announcement that night, so get ready. It was a trial by fire, but my operational background within the company allowed me to manage it effectively. I knew the business inside out as well as our customers and partners. In addition, I was a known entity within the organization, so it was seamless from a team standpoint. Then about 18 months ago the board asked me to step back into the role on a permanent basis.

What most surprised you coming from the CFO chair? Was there something you did not realize the CEO had to deal with?

The clichés about the CEO role are true: It’s a lonely job. You are ultimately accountable. The key is not to try to do everything yourself but make sure we have the right people in the right jobs. It’s about setting the tone and prioritizing bigger picture items. I am responsible for broad-based communications to the board and investors. The role is more about directing strategy than owning and driving execution. It’s an interesting transition for someone like me who’s been operational. Yet my background gives me a more instinctive knowledge of how the company operates.

You’ve now faced the challenge of going from being peers with your co-workers at Citrix to the executive team to CEO. Have you found that your relationships have changed with people you used to be close to in the company?

To be successful, you need strong relationships with all leaders. Over the years I’ve moved through being a subordinate to a peer to taking on larger responsibilities. I’ve maintained a hierarchy for the benefit of scaling but otherwise I take an egalitarian approach. You must trust and empower your leaders and employees. You have to support them so they can be successful. It’s about alignment and collaboration.

Citrix CEOWhen you took over as permanent CEO, was there a clear mandate for change or did you figure out what Citrix needed to do and let the board know?

There was not a clear mandate. I agreed to take the job after I presented to the board what I think needed to happen. I was only going to be successful in the role if the board supported that direction. I proposed transforming Citrix in three areas: One, accelerate to the cloud. We needed to build a portfolio of cloud products that mirrored our traditional products. Our customers are all on some form of cloud journey, whether it’s deploying their first SaaS app or fully embracing public clouds and services. We needed to meet them on that journey.

Two, we needed to align our portfolio from building products to solutions. We have moved away from business units to a functional structure. We have new leadership in many areas as we transition to a more horizontal workflow solution type vs. building point products. We’ve up-leveled the messaging, branding, and engagement with C-level customers.

Three, we needed to use that fundamental platform to expand into new areas of growth. As we’ve adopted cloud, we’ve grown into new areas such as network services and analytics. Our core portfolio mission now gives us a runway for future growth.

That sounds like an aggressive change agenda. How many executives that you started with as CEO are still with you?

Only two current members of the leadership team have more than three years of tenure. They were hired when I was COO or CFO. As we transform from a product to a cloud company, it requires different leadership skill sets along the way. With the move from business units to a functional structure, we now have more global leaders for areas such as product, sales, and engineering. We’ve recruited people from companies such as Microsoft, SAP, and EMC that have operated an organization at the scale we’re driving right now.

In part 2 David discusses how he leads Citrix as CEO and advice for current and aspiring CEOs.

|19 Mar 2019

Fake It Until You Make It? Not for CEOs

Recently I’ve heard a lot of people in the startup community discussing “fake it until you make it” for CEOs. I certainly understand how the concept started. Anyone with a lick of self-awareness recognizes that he or she is not fully qualified to be CEO on day one. There are so many things you can’t possibly know.

So is the fake it until you make it approach the right answer? Unfortunately, I don’t think so.

Why Not Fake It Until You Make It?

There are two words I most want my team members to use to describe me as CEO: “authentic” and “transparent.” If I am running around faking it my team will see this. I will never establish the trust and credibility necessary for true leadership.

This is also true with investors. As my colleague Gordon Daugherty of Shockwave Innovations and Austin’s Capital Factory recently wrote, to earn respect and credibility you must understand the differences between “aspirations, exaggerations and outright lies.”

The truth is that almost no one is really qualified the day they take over as CEO of a company – even experienced chief executives. Yet if you can’t “fake it until you make it,” you also can’t run around saying, “I am clueless and shouldn’t be in this job.”

So what is the right approach? It’s dealing effectively with the normal level of self-doubt that any self-aware person has. I think the two most important traits to predict the success of new CEOs are: 1) how fast they can implement new learnings and 2) their level of self-awareness. Here’s how to cultivate both.

Learn the Job and the Business

CEOs must put in the work needed to understand their role. It’s the ultimate learn-on-the-job position. Few first-timers understand exactly what the CEO’s responsibilities are and how to spend their time. Start there. Even experienced CEOs need a refresher now and then, especially as fire drills compete for their time.

Chief executives must also understand the business. Being effective requires a deep understanding of the employees, customers, and shareholders as well as the product, market, and sales channels. This takes time. Build learning into your daily routine.

However, don’t go into the role assuming you have to be the smartest person in every room. Being a constant learner requires commitment and humility. This is especially true in this era of fast-moving technology innovation, evolving business models, and specialization. CEOs must absorb all they can to set the strategy and make good decisions, and let their experts do the jobs they were hired for in the first place.

I have found though, that most CEOs spend too much time studying the details of their own businesses and not others. Otto van Bismarck famously said, “Any fool can learn from his mistakes. The wise man learns from the mistakes of others.” Good pilots review the accident reports of other pilots. Similarly, CEOs should spend significant time examining other businesses – even other industries – and integrate those learnings into their organizations.

This is also about applying creative ideas and best practices to your organization. Great businesses owe their competitive advantage to doing a few things uniquely. However, the vast majority of their processes shouldn’t be reinvented. If you are bringing best practices into the organization, even if they are not your original ideas, the team will see you as competent.

Build Self-Awareness

Self-awareness skills are critical for CEOs. It’s valuable to understand how you think and react in different situations. By knowing what your strengths and weaknesses are, you can make the most of your talents and hire people to fill the gaps. You can also seek to improve in certain areas that are the sole domain of the CEO, such as communicating to the board and shareholders.

Analyze Decision-Making

One area where you can gauge your self-awareness and overcome self-doubt is in decision-making. CEOs have to make decisions across a wide range of issues. They often encounter problems where they have little background or expertise. 

As a result, I often see self-doubt show itself in a leader who takes too much time making a decision. He or she studies, ignores, thinks, consults others, and waits for more information – everything possible to avoid making a decision. Research by The CEO Genome® project shows that it’s often the highest IQ CEOs who delay making decisions – they assume they’ll figure it out eventually.

Speed It Up

When probing CEOs on this issue, I often find that their challenge isn’t really in making the decision but acting on it. They’re afraid of what may happen if they pull the trigger. However, bad things are usually inherent in the situation. These don’t get better by delaying decisions. Meanwhile, all the bad things related to NOT making the decision continue to compound, such as lost opportunities, missed deadlines, and staff wasting time waiting.

Decisions fuel an organization and, within reason, the more fuel the faster the organization runs. Very few decisions are permanent and can’t be reversed if new information is uncovered. If you are struggling with making quick decisions, ask yourself what some great leader you admire might do in the situation and then DO IT! That would be a better way to use your acting skills than taking a fake it until you make it approach to the CEO role.

I will leave you with this one little secret: I have been doing this job for over 25 years and most days I don’t feel like I have made it yet.

|20 Feb 2019

How to Approach the CEO’s First 100 Days

Friday, January 11 was my last day as CEO of Black Box, following its acquisition by AGC Networks Ltd. This was my first role as a public company CEO, and I plan to share my experiences with you all over the next few months. Here is how I approached the first 100 days.

I became the CEO of Black Box in November 2017 after serving on its board of directors for four years. The company faced significant issues that I knew would present a challenge to me. While it’s hard to ever be fully prepared for a CEO job from day one, I had an advantage that many new CEOs don’t possess: I already had a relationship with most members of the executive team, due to my time on the board.

Where to Start


The first responsibility for a CEO is to own the vision, and that’s where I think every CEO should start. When there is a new CEO, the employees immediately want to know what changes will be made. While you may not be ready to lay out a five-year plan, you must communicate a clear direction.

It is tempting to say, “Give me 90 days to figure things out,” but I think that is a mistake. Ask yourself questions such as: Where do you want the company to be in one year? Do you have the right strategy? In general, I thought the basic strategy at Black Box was solid. So in my initial conversations, I looked to reinforce the direction and test my own verbiage to see if it resonated with key constituents.

People and Resources

Do you have the right people on board? Do you have the right resources for each department? One of the unique aspects of the CEO role is the responsibility to balance resources between groups and items that are dissimilar. For example, how much should you spend on marketing vs. HR? How do you balance between resources for sales and resources for product creation?

Because of my experience with the executive team, I knew that most were solid. While we ended up making two changes (one left voluntarily and one was asked to leave), the majority of the team stayed with me through the entire journey. That was important, as losing key executives during a time of turmoil can lead to a downward spiral.


One of Black Box’s challenges is that it’s comprised of more than 100 acquisitions. Many of these were never fully integrated into the company. When I got there, it was pretty clear that we didn’t have one culture that needed to change: We had many cultures that needed to be unified.

It’s worth spending a lot of time on culture. And you must start quickly, because culture takes time to change. In a large organization like Black Box, I could never personally meet the majority of the employees. The biggest impact on most would be their manager, so the real question is: How do I drive a consistent culture all the way down to every manager? Culture must permeate everything you do, including who you hire, how you hire, and how you treat them. This also applies to how you treat and retain customers.


As a CEO, you have to decide what you are going to value in the organization. To be meaningful and help people make decisions, a value must communicate not only what you value but conversely, what is less valuable. Here’s a good test of whether something is a meaningful value: Can you can imagine a company upholding an opposite value? For example, some CEOs uphold “honesty” as a value, which is not very valuable. I’m still looking for the organization that claims “dishonesty” as a value!

One value I uphold is running transparent organizations. There is very little information that can’t be shared with employees. Many organizations fail by withholding information, such as how the company is doing. Some don’t communicate well or paint too rosy of a picture, which is another quick way to lose credibility.

In my next post about the CEO’s first 100 days, I’ll cover strategy.

This article is based in part on an interview with Sales Benchmark Index: https://salesbenchmarkindex.com/insights/your-first-100-days-as-a-ceo/

|23 Jan 2019

Why CEOs Have a 24×7 Job

It’s common to hear about CEOs behaving badly during work hours. Yet their personal time is being scrutinized as well, especially in this era of social media. People notice how they treat their families, what they do in their spare time, and how they spend their money. All of this can impede their ability to lead an organization.

Here are three reasons why CEOs are held accountable for their actions, even when they are off the clock, and how to balance the personal vs. the professional:

1. The CEO is the public face of the company

There are many unique aspects of the CEO role, but few people appreciate the job’s personal and public nature. The CEO is the one person whose every action reflects on the company. Many new CEOs don’t realize that employees, shareholders, customers, media, and others will analyze their every move and utterance. An offhand comment can cause people to spring into action or make them wonder about the future of the company. One CEO told me that when his company went public, it was like he had personally gone public.

2. The company’s brand and the CEO’s personal brand are often hard to separate

Jeff Bezos is synonymous with Amazon, as is Elon Musk with Tesla and SpaceX. It will be many years before people will think of Apple and not think of Steve Jobs. Jack Welch is still tied to GE in people’s minds, more than 15 years after he left the company. People are more likely to know the name Warren Buffett than Berkshire Hathaway.

3. The CEO’s behavior can dramatically impact the company

The CEO’s personal views and behaviors are invariably tied to how the business operates. The CEO is held to a higher standard by everyone. If a VP does something foolish that reflects badly on the company, he or she can be replaced without much notice. If a CEO acts poorly, it can negatively impact everything from the company culture to employee engagement to reputation to stock price.

So how should CEOs manage their public and private lives? Here are three simple rules:

1. CEOs should always protect their personal brands

In the modern world of cell phones and social media, CEOs might as well assume that they are on camera everywhere and always. Anything that plays to the idea that a CEO is not a nice or stable person will damage his or her brand. Consistency is key. Acting contrary to the set of values the CEO espouses for employees degrades credibility.

2. CEOs should separate the company’s mission and vision from their personal brands

Many CEOs enjoy the attention that comes with the role and wrap themselves up in the company flag. Yet the mission should be bigger than any one person. CEOs need to be driving the company’s growth, not their own cult of personality. Great CEOs create great companies that they merely steward for a period of time. They are concerned about their replacement’s success from their first day on the job.

3. CEOs should avoid political activism

If some political policy directly affects their business, then CEOs must engage. It’s also fine to make donations or support candidates. However, using the CEO position to get media coverage, drive an issue or encourage employee action around non-related issues is asking for trouble. It can cause the company to lose focus as well as alienate customers, employees, and investors.

In short, CEOs shouldn’t do anything they wouldn’t want on the front page of the newspaper – or blasted all over social media.

This post is based on an article published on Entrepreneur.com, September 27, 2017

|13 Nov 2018

4 Reasons to Resuscitate Your Org Chart

Years ago I toted around an 11×17 double-sided sheet of paper like it was my third arm – a source of endless mirth for my executives. Yet this org chart with 300+ names was a lifeline for me as CEO of a fast-growing software company. It helped me maintain a handle on our growth and requirements as we constantly adjusted our organizational structure to fit our personnel and business needs.

With today’s flatter hierarchies and multi-disciplinary teams guided by “need it now” and “fail fast” mentalities, is the humble org chart still relevant? The answer is yes. Fostering creativity, innovation, and growth at speed requires management discipline and – done right – the organizational chart can be a powerful leadership tool.

Here are four reasons to reanimate the organizational chart and keep it alive:

1) Reinforces the mission.

Despite the hype around
flat management structures, CEOs must ensure that every employee: 1) has a specific job role; 2) a direct supervisor; and 3) knows how his or her day-to-day work supports the overall company mission and objectives. With these three as a foundation, a clear and current organizational chart helps employees understand the overall company structure and how everyone else contributes to the whole.

If the CEO has communicated a well-defined vision and aligned everyone around it, the org chart can be a rallying point. Employees know each person’s area of responsibility and who to contact if they have a question or need help. The tool becomes a uniter, not a divider. 

2) Facilitates good decision-making from the top down.

One of a CEO’s top responsibilities is to
 make good decisions. High-performing CEOs decide with speed and conviction, according to a study by the CEO Genome Project. The org chart expedites informed decision-making by depicting many issues, such as gaps in critical roles or an inefficient allocation of resources.

For example, my team and I consulted our org chart to help decide who should head up a new project or who had spare capacity to lend a hand. In addition, it showed me where we had too much hierarchy. I could see supervisors who had too many direct reports for effective management and take action to create a more agile organization.

3) Facilitates good decision-making from the bottom up.

I am a firm believer in empowering decision-making at the lowest level possible, which starts with aligning everyone around that common vision, mission, and goals. The org chart helps train employees to make good decisions in line with company strategy. Employees are often torn between making a decision themselves and consulting their boss.

The organizational chart offers an at-a-glance answer. Any issue that has implications beyond an employee’s piece of the org chart – to the people adjacent to or above them – warrants a consultative decision-making process. For example, a marketing specialist should not make a decision that commits a customer care representative to do something he or she hasn’t agreed to do.

In addition, employees should never punt a decision up the org chart that affects only the people below them. They must take responsibility for decisions within their area of expertise and authority. For instance, asking the CEO about the layout of the company’s business cards or which snacks to stock in the kitchen should be nonstarters.

4) Teaches employees when to escalate decisions.

One of the most difficult behaviors to teach employees, managers, and even executives is how to quickly escalate decisions to the right person. Yet this is critical, especially in fast-growing organizations. Here again, a clear org chart – ideally with written job responsibilities – proves valuable.

To refer a decision to the appropriate person, employees should understand which role has responsibility for the full scale of the issue. If a decision impacts multiple groups, employees should move up the org chart to find the leader responsible for all the various groups. For example, a sales associate should not unilaterally choose a new CRM software suite that affects the marketing team, the customer service group, and other people in sales.

There are some decisions that only the CEO should make, and employees should know to quickly escalate issues such as strategic partnerships, M&A activity, high-level personnel decisions, corporate policy, and resource allocation conflicts between departments. The org chart can help train everyone how to make the right decisions at the right level, resulting in faster, higher quality decisions.

Just Keep the Org Chart Livin’

I no longer carry around that tabloid-sized org chart. At Black Box we maintain ours online using
Khorus. The organizational chart can help everyone do their jobs better, but only if it’s comprehensive, updated frequently, and easily accessible to all. Even if it’s kept online, everyone should have access to physical copies for quick reference. Just keep it alive!

|17 Oct 2018

Successful Exit: 4 Things Most Startups Ignore

This is a guest post by Jock Purtle, the Founder and CEO of online brokerage service Digital Exits. His firsthand experience with online startups, combined with his work buying and selling online companies, makes him an expert in high-growth internet companies. When he’s not working with investors and business owners, he’s contributing to the growing community of entrepreneurs and CEOs who have been such a useful resource throughout his career.

successful exit

Jock Purtle, Founder & CEO of Digital Exits

While exiting your startup might not seem like the goal in the beginning, it soon will be. Growing businesses with a premium product and a tested business model are always on the radar of both investors and large companies looking to diversify their investments and expand their reach. And while you might think you want to run your business forever, the reality is that the time to move on will eventually present itself.

So the issue at hand should not be deciding whether or not to sell, but rather deciding what you can do now to make sure your business is acquired for as much money as possible. And while large companies and investors won’t overpay for something, they will hand over big sums of money for something they consider valuable.

For you, this means that securing the best exit for your startup starts with thinking about your business in the same way those considering buying it will be. In other words, you need to think like a CEO. Obviously you need to make sure your numbers are strong and that you have a long-term strategy in place, but there other factors that lots of business owners overlook.

Here are four of the most important points to remember as you start planning to exit your business.

1) Systems and Processes Matter

One of the most common misconceptions when talking about startups and their value is that ideas are worth something. Sure, you can’t start a successful business without a good idea, but to think this is all you need is simply incorrect. How you actually turn this idea into a business will determine first how successful you are and then how much you’ll be able to sell the company for when the timing is right.

As a result, it’s imperative you begin looking at how your business runs, working to optimize everything you do in support of business growth. Investors and CEOs will be interested in more than just the growth numbers. They will dig deep so that they see how every aspect of the company works.

Doing this will require a number of different things. For one, you may need to establish a more clear management structure. Startups tend to shy away from the idea of installing a bureaucracy into their business, but it’s a necessary component of building a business that runs effectively and profitably. One of the first things any investor will look for is who makes up your team and how they are organized.

2) Outsourcing and Automating

On top of your management structure, you will also want to make sure your systems and processes facilitate productivity, meaning they do not take away from people’s abilities to do their jobs. Solutions to this include automation and outsourcing. All sorts of processes can be automated, from marketing to payroll to production, and implementing this strategy will thin down your business and make it look more efficient to any potential investors.

Outsourcing is also important. Think about it: if your business gets acquired by a large corporation, there will be lots of redundancies. They likely have their own IT, accounting and HR departments, meaning yours will no longer be needed after the acquisition.

As such, consider taking steps now to optimize these functions, such as employing the help of firms that specialize in them. For example, you could outsource parts of your HR duties to a professional employer organization (PEO), freeing your current staff and giving them more time to work on higher-value aspects of HR, such as your employer brand, candidate experience and onboarding process. These types of decisions will not only make your company more efficient and profitable, but they will also help make your business a far more attractive investment option.

3) Data, Data, Data

When handing over a large sum of money to acquire a business, CEOs and other investors want to be as sure as they can of a return. And while neither you nor them can predict the future, you can come pretty close these days with properly-used data.

Because of this, to set your company up for a successful exit, make sure you’re doing everything you can to collect any and all relevant data. This includes analytics numbers about internal performance, as well as market data and risks. Make sure to fully automate things such as your CRM system and website/social analytics, as this will be information investors and CEOs will want to see when they begin examining your business for a potential acquisition.

Most business owners tend to go after only the data they consider to be relevant at the time. But this causes them to overlook lots of valuable information. Install robust data collection systems into every function of your business so that you can be in the best position to grow now and sell later.

4) An IPO Isn’t Likely

The first thing every startup owner needs to get out of their head is that their business is likely headed for an IPO. The news headlines surrounding IPOs are tempting, as are the individual pay days that they produce, but expecting this to happen is simply not realistic.

To give you an idea, consider the study of tech startups in America conducted by TechCrunch.com. By looking at a random sample of 1,000 tech startups, they concluded that only one out of six will end up making it to the acquisition stage. And the startups that make it to this point are 16 times more likely to sell out via a merger or direct acquisition than an IPO.

So even if you’ve made it past the stage where your startup is no longer in danger of going belly-up, the chances of you exiting the business via an IPO are still slim to none. As such, it’s important to simply push this idea from your mind and instead focus on other ways of getting out of the company in an effective and profitable way.

Your Competitors Are Your Friends

Once you recognize that an IPO is not the way to go and that an acquisition or merger is therefore more likely, it’s time to start thinking about who you might want to sell to. And in this case, your competitors will start to feel a lot less like adversaries and instead more like collaborators.

This occurs for three reasons:

– First, your competitors are in the same market/niche. Acquiring you may help them expand their reach;

– Second, acquiring you means they no longer have to compete with you, which fortifies their position and gives them the chance to carve out even larger chunks of the market; and

– Third, an acquisition means an expansion of their team, giving them access to new talents and new people that can help drive success.

Keep Your Friends Close

However, while it’s important to maintain a relationship with all your competitors, there are three things to remember when looking for a potential buyer for your business:

– Go after those who are best able to acquire you, not those you like the most. Target competitors with deep pockets and solid management structures, as these are the people who will realistically be able to acquire you for a price that reflects your business’ value.

– Expand your reach beyond just your competitors. There may be only one or two other companies in your niche, which means there won’t be much of a market for your business if you only target them, resulting in lowball offers or wavering interest. As a result, make sure to expand your scope to other markets and industries with the goal of identifying firms who would benefit by gaining access to your market and client base.

Get to know people at these companies. It’s not enough to just know about the companies who could acquire you. Instead, you need to actually have relationships with these people you can later leverage into genuine acquisition offers.

Planning Starts Today

Whether you’re looking to make an immediate exit or are still working through your long-term strategy, it doesn’t really matter. The time to begin planning your exit is now. Try as best you can to get into the heads of the CEOs and other investors who will be looking at your business, and then take steps to make your business more attractive in their eyes. Doing so will make exiting your business far easier and profitable when the day finally comes.


|12 Sep 2018

How to Overcome Your Company’s Lame Goals Management System

In the spirit of the book “Applied Empathy,” by Sub Rosa CEO Michael Ventura, this article helps CEOs and other leaders put themselves in the shoes of a regular employee striving to succeed despite an inadequate goals management system.

Let’s face it: Many goals management systems are ineffective. They’re often handled as an administrative check box using outdated, once-a-year processes. Some leaders create quarterly goals, which is ideal. However, they don’t always communicate them well, link them to business operations and results, or help employees understand how their day-to-day work can support them.

So if you work for one of these companies instead of a Google that has effective goals management systems, don’t despair: Here are four steps to hack your organization’s process and become a more valuable employee.

#1. Discover Your Leaders’ Goals

The best CEOs create five to seven corporate goals for the company every quarter. A quarterly cadence ensures relevant, timely objectives that they can measure and adjust for the next quarter. If you do not know what these goals are, you should ask.

If your company and department leaders don’t have a set of ready-made goals that they are willing to share with you, then your job just got a bit harder. However, you should take the initiative to quiz your manager, department head, and other executives about what their business objectives are. Go all the way to the CEO if you have to but learning what exactly these goals are is important.

#2. Set Your Own Supportive Goals

Once you know the corporate and department goals, you can determine how you will contribute to them by setting your own goals. There are two types of goals that you can set. The first type is a priority goal. This is a new initiative to be achieved during the quarter. At the corporate level, these are goals such as, “Generate $20 million in revenue this quarter,” “Launch new product X,” or “Complete the facilities move.” Your goals should link up to these as relevant.

The other type of goal is a sustaining goal. This focuses on the normal whirlwind of operations that occur every day in a business. A sustaining goal is especially applicable if you work in a department that does not directly impact revenue, such as customer service or human resources. You still need a way to tie in to the corporate strategy and show your influence.

A sustaining goal could be “Continuous improvement in operational excellence.” Your individual goal could be to explore and choose new systems in your area that enable you to continuously improve. Another one could be “Maintain a Net Promoter score of 45 or better.” You could research low scores to find a common customer complaint that you can improve. Personal training and development also fall under a sustaining goal.

#3. Choose the Right Metrics 

The next step is to consistently measure progress on your goals using the right metrics. A good metric has five characteristics: easily measurable, correlated to business performance, isolated to factors controlled by you or your group (e.g., the sales team shouldn’t be held fully responsible for a subpar product), and predictive of future business performance. While it’s difficult to achieve all of these, strive for as many as possible.

For example, if you are in sales, revenue is not often the best metric. The reason is that it is historical. While it is fairly simple to measure and correlated with positive business performance, it’s not predictive of future revenue.

A better metric is predicting your sales accurately each quarter, which shows your mastery of the sales process and ability to achieve revenue even as market conditions fluctuate. Another valuable metric for sales could be to “set 10 qualified meetings each quarter.” This is something you can do that makes it more likely to achieve your end goal of hitting a certain revenue number.

If you are a product manager trying to deliver a high-quality product, you could set metrics for ease of deployment, a high conversion rate from demo to purchase, fewer support calls, and a higher renewal rate. While some of these depend on the skills of other employees, they do meet several of the other criteria for good metrics.

#4. Communicate Status Updates

Another key goals management action that can set you apart is regularly communicating your progress on each one. This means going beyond vague statements such as “I’m about 65 percent done with this goal,” which doesn’t tell your manager much of anything. Be more specific by relaying metrics such as the likelihood of achieving your goal during the quarter and the quality of your work.

Likelihood is the one business performance metric that captures your confidence in attaining your goal. This information helps your manager and leaders better plan for the future and address any roadblocks. It also helps them understand the additional resources and information you may need to reach your goal on time. You start to become a better predictor of your work schedule, which is useful to the entire organization.

Another valuable metric is your perception of your work quality. By providing this information, your output becomes no longer about merely getting things done but getting the right things done at a high quality. This also guides leaders in how to better support you and resolve any issues before they become bigger problems.

Take Goals Management into the 21st Century

Ideally, your management team is doing goals management right. If not, you can take the initiative by finding out what the company and department objectives are, setting the right individual goals, choosing the right measures, and regularly communicating your progress.

This requires an element of trust on both sides, but the results are worth it. You’ll become more aligned with the company’s mission and better able to support and advance it with your work. You’ll be a more engaged, valuable, and valued employee.

This article is based on one published in Fast Company.

|23 Aug 2018

6 Ways to Make a Successful CEO Transition

The CEO transition is a tough one. New CEOs especially face a steep learning curve. There are many things I wish I had known going into my first CEO job.

Together with input from two experienced CEOs – Seth Birnbaum, the CEO and co-founder of EverQuote, and Phil Friedman, the founder, president and CEO of Computer Generated Solutions (CGS) – I’ve put together six tips for anyone transitioning to the CEO role.

CEO Transition #1: Understand the job responsibilities

The CEO job is unique. There are
five responsibilities of the CEO role that rest solely on the chief executive’s shoulders. Entrepreneurs who know the duties of the position will understand where to spend their time and how to be most effective.

CEO Transition #2: Realize you won’t be prepared on day one

Because of the role’s uniqueness, very few are ready for it, making the CEO transition that much harder. Most people have risen to the top job because they had a stellar career in another area, such as sales, marketing, R&D, etc. Once they get to the CEO chair, they are bombarded with issues they’ve never had to confront.

“When I initially became a CEO, I felt a lot of internal pressure to know how to be a CEO out of the box,” said EverQuote CEO Birnbaum. “I think what I’m learning, especially as we scale and grow, is that you shouldn’t feel like there’s an expectation that you are going to know how to be a CEO on day one. It requires a ton of learning.”

What kind of learning? I’ve narrowed it down to 15 essential CEO skills, but anyone making the CEO transition should have a wide base of knowledge. 

CEO Transition #3: Cultivate a diverse educational background

While no one can be fully prepared for the CEO transition, there are many areas that candidates should study and be proficient in before taking on the role. These include fields such as emotional intelligence, game theory, communications, history, and organizational development.

Friedman of CGS had this advice: “In today’s world, the role of CEO is very demanding. You are required to start with a base of knowledge. I don’t believe anyone is born to run a company. You have to have a good understanding of such things as the law (labor law in particular), finance, accounting, and technology.”

CEO Transition #4: Resist the temptation to micromanage

Many new CEOs get caught up in the power of the top job – or perhaps simply not knowing what to do – and start trying to micromanage everyone’s time. Others fall into the trap of trying to put out every fire personally. Fulfilling the true responsibilities of the CEO job from the start will help avoid the tendency to micromanage.

Friedman put it this way: “When I started CGS in 1983, we had five employees. Like any entrepreneur initially you think that you can do everything yourself, such as sales, delivery, quality control, HR, legal. It takes some time to realize as the business is growing that you cannot. So if there is one thing that an entrepreneur or businessperson needs to realize, it’s to start delegating and surrounding himself or herself with a lot of smart people.”

CEO Transition #5: Realize it’s all about people

When I first started out as a CEO, I thought I could solve every business problem logically using my engineering background. I soon learned the error of my management ways during my CEO transition: It’s all about your people.

Engineer-turned-CEO Birnbaum said, “It’s shocking how much management of people and personality matters in terms of results and output. From an engineering role we tend to approach everything by asking what the problem is and coming up with a solution in terms of bits and bytes and force pounds per square inch. It was very novel to me that this had nothing to do with success. It was all about the people.”

Friedman agreed, “The most important element for a CEO is having the skill to interact and manage people, especially in a larger company.”

CEO Transition #6: Ask for advice

One trait of the best CEOs is humility. Humble CEOs don’t believe they have to be the smartest person in every room. They aren’t afraid to ask for feedback and advice.

“It took me awhile to get comfortable with the notion that you can reach out to the cast of people around you and work with them to learn to be a better CEO and manager,” said Birnbaum. “There are a lot of people around you who want you to succeed. If you reach out to them for help vs. approaching them like ‘I know what I’m doing,’ they’ll give you more help than you have any right to expect.”

One thing is certain: “The learning never stops,” as Friedman said. Great CEOs have a zest for learning, which is a necessity in today’s world. He summed it up well:

“There is no one single thing you have to do. You have to be well-rounded and keep up with things like the latest in technology. Things change very dramatically, very quickly. It takes time to be proficient at the CEO role.”

Follow these six recommendations for an effective CEO transition. Thanks to Seth and Phil for sharing their experiences and great advice. For additional insights on the CEO role, be sure to read my interviews with them if you haven’t already:

Seth Q&A: https://theamericanceo.com/2017/07/26/ceo-interview-seth-birnbaum-everquote/

Phil Q&A:

This post is based on an article I published on
 Entrepreneur.com on October 4, 2017.

|17 Jul 2018

4 Imperatives to Prep Your Team for a New Hire

New hire rejection: Don’t risk your team shunning a new employee because you did not prepare them ahead of time. What I call “first positioning” is just as important as first impressions in hiring, but too many CEOs and managers neglect this critical step. This entails paving the way for a new hire to be successful, starting with your existing team before a candidate is hired. The negative effects of bad first positioning are felt at the employee, team and department levels but are amplified when the CEO gets it wrong — I should know since I’ve done it wrong many times.

Here is first positioning done wrong: Springing a new employee on your existing staff with little notice or context. As a leader responsible for hiring, you may see that your existing team isn’t performing some key function. You identify the need and move quickly to hire the perfect candidate. You then introduce her to the group and are shocked when they don’t embrace their new colleague.

What happened? You assumed that your team perceived a similar need in the organization, even though on a day-to-day basis they don’t have your management perspective. Worse, people may feel threatened, thinking that this interloper is taking over parts of their own jobs. Others may be hurt that you didn’t appoint them to the position, especially if they believe it would have been a promotion.

Your lack of context-setting puts the new hire in a difficult situation: On day one, many employees already resent him or her. The good impression you and your company made on the candidate during the hiring process is quickly tainted.

So how do you get first positioning right? Here are four steps to help you avoid the same error.

  1. Socialize the need for a new hire

Spend time visiting with your team about the need you see in the organization. It can be as simple as, “I’ve been thinking it would be good if we had someone who could spend more time on X. What do you all think?” This gives the group an opportunity to consider this and speak up if they see it as their own responsibility or have a different perspective.

  1. Ask for names

Give the team a chance to refer candidates. This gesture may not only give you a good lead but also ensures that they are more invested in the new person’s success. Also, this gives anyone who thinks the position should be theirs a chance to apply.

  1. Clearly define the job’s responsibilities

Draw clear lines on the new employee’s duties. A formal job description will provide clarity to the entire group and help you hire the right candidate. It will also prevent him from straying into what is rightly someone else’s turf.

  1. Enlist the team’s help in onboarding

A formal onboarding program will facilitate more swift and effective collaboration between the new person and the existing team. Enlist the group’s help to ensure their new colleague has everything needed to hit the ground running. Department welcome lunches, a mentor or buddy, and meetings with every executive will help them quickly feel connected to the team and the company.

Moving fast to fill a void in your organization is a good thing. Lack of good first positioning is not. Use these tactics to not only set up your new employee for success but also maintain a cohesive team dynamic.

This post is based on an article I published on Entrepreneur.com on January 3, 2018.

|13 Jun 2018

Why Good Management Requires Some Bureaucracy

Management requires policies, procedures, and bureaucracy if entrepreneurs want to grow their companies

A Rocket Mortgage/Quicken Loans Super Bowl commercial featured actor and comedian Keegan-Michael Key translating jargon and slang for people. In one snippet, he tells a woman perusing a dating web site what the word “entrepreneur” really means: Unemployed.

This strikes a chord because it holds a grain of truth. It’s a mark of progress in our society that virtually anyone can create a business and call themselves an entrepreneur. Yet when it’s easy to start a company, it’s easy to think you can also run it. Even the smartest entrepreneurs often devalue the knowledge and discipline that founders and CEOs need to build companies.

This is because they are frequently escapees from corporate America with all its systems and processes. Their newfound freedom can lead to an odd management philosophy: a complete rejection of structure and bureaucracy.

This “bizarro world management” doesn’t work. Here’s why.

Entering Bizarro World

Entrepreneurs who subscribe to a “bizarro world” management approach have one tenet: Do everything the opposite of what their former employers have done. This may be referred to as the Seinfeld philosophy: If everything their former employer did was wrong, then the opposite must be right! 

There are several reasons for this approach. Entrepreneurs often feel stifled by what they perceive as too much bureaucracy in traditional companies. With an idea germinating, they create a business, convinced they can run it better than their former employer.

Then, without the expertise and skills needed to be an effective CEO, these founders simply do the opposite. For instance, they may champion flat organizational structures, no titles, and minimal processes and systems.

Also, to avoid the mistakes of past bosses and management teams, many entrepreneurs tend to micro-manage every decision, no matter how big or small. These are often in areas where they have no experience or expertise. Undaunted, they think they will eventually figure it out and take time to do so.

The Problem with Bizarro World Management

These tactics may work fine for a while, since employees will feel empowered to do their jobs. In a startup’s early days, talented people can overcome the lack of bureaucracy. However, this doesn’t scale, and with everyone doing things differently, it becomes difficult to set any performance standards or make any progress.

In addition, micro-managing slows the company down. Employees are in stasis mode waiting for their leader to make decisions. Analyzing interviews with more than 17,000 CEOs and executives, the CEO Genome project found that those with the highest IQs often struggle the most with lags in decision-making. They get bogged down in too many details and variables.

These issues often lead to founding CEOs being replaced, because they struggle to deliver growth. The problem is that knowing what NOT to do is not the same as knowing WHAT to do.

Accepting Some Bureaucracy

How should entrepreneurs approach their role as CEOs and leaders instead? Here are five suggestions.

1. Have respect for the CEO role.

PandoDaily contributor Bryan Goldberg once wrote that, “Building and running a business is very hard, and doing it well is an act of craftsmanship no less sophisticated than engineering.” He was speaking to engineers who think the CEO position will be a piece of cake compared to their profession, which requires the hard skills. Yet everyone contemplating founding a company should understand that the CEO role is its own profession that requires a unique set of skills and knowledge.

2. Know the five CEO responsibilities.

There are five core responsibilities of the CEO role: Own the vision, build the culture, provide the proper resources, make good decisions, and deliver performance. While entrepreneurs often have to do everything at first — from taking out the garbage to hiring to paying the bills — eventually they must transition into a full-time CEO role. Knowing these five responsibilities sets the parameters for the position and how entrepreneurs should spend their time.

3. Be decisive.

Decisiveness — deciding with conviction and speed — is one of the four behaviors that the highest performing CEOs exhibit, according to the CEO Genome project. The CEO responsibility to make good decisions is related to this, but not exactly the same. Determining whether a decision is good, bad or simply adequate requires first making one. The sooner entrepreneurs make a decision, the sooner they can reverse or correct it if it’s wrong.

4. Don’t go it alone.

Entrepreneurs should select a partner who complements them. This requires some self-awareness about strengths and weaknesses. For example, more technical founders should look for someone with business skills and vice versa.

5. Implement systems and processes.

There’s no getting around it: Growth requires some bureaucracy. Establishing formal processes and systems builds efficiencies and better prepares an organization to deliver on its value proposition. Acquirers look for maturity at all levels in a company, and this is a good first step. 

Granted, many entrepreneurs prefer to start companies rather than run them long term. There are different skills sets required at each level. But building a company requires a touch or more of bureaucracy and a strategic management approach, no matter how badly entrepreneurs want to invert the work environments from past jobs.

This post is based on an article I published on Entrepreneur.com on March 6, 2018.

|26 Apr 2018

Numbers Don’t Drive Businesses, People Do

Business is a numbers game: That’s what I would have told you when I started my first business over 25 years ago. As a degreed engineer whose father was a college professor, I was exposed to many mathematical concepts and analytical approaches. I thought all you had to do in business was gather the data, apply the math, and voila! – there was the answer.

After 25 years of running companies, I will tell you that numbers are mostly just the result of a bunch of little actions people take every day in your company. Business is about people. Improving a business is accomplished not by looking at numbers but by changing the behavior of people. And that is very hard. My wife moved the drawer where we keep the utensils in our kitchen over a year ago, and I still sometimes reach in the wrong drawer.

I found this article from Matt Blumberg to be a great explanation of how knowing the numbers is a small part of running a business, just like reading a map (or using a GPS) is a small part of driving a car: You Don’t Know How to Drive a Car Because You Know How to Read a Map

Being “Master of the Spreadsheet” has its merits, he says, but: “It is not the same as actually getting yourself from Point A to Point B. Driving a car in and of itself is a skill that requires a lot of learning and practice. And it certainly doesn’t forecast traffic or road hazards that require a last minute detour. Being right about what roads to take is a lot less important than actually getting yourself to the destination safely and in a timely manner.  The value of having experienced executives operating a business is those things – the actual driving of the car.  The knowing of the customers or the employees.  The skill of managing change and emotions.”


|21 Mar 2018

CEO Genome Project: What Constitutes a High-Performing CEO Part 2

In this second part of my interview with ghSMART principals Kim Powell and Dina Wang, we discuss common mistakes CEOs make and why boards often hire the wrong candidate. In part one, we covered how their CEO Genome project, based on a decade’s worth of research and interviews, has identified four behaviors exhibited by the best CEOs: decisiveness, reliability, adaptability, and the ability to engage for impact. The findings will be published in the bookThe CEO Next Door” available on March 6.

Joel: What are the implications of your CEO Genome project from a training perspective?

CEO Genome projectKim: In terms of preparing future CEOs and individuals who want be CEOs, we’ve done a lot of research around common paths and experiences that help accelerate and build these behaviors. After doing all of this work, we’ve found that the single biggest underused asset in business are mistakes and things that don’t work. One piece of advice for CEOs is don’t waste your mistakes. The hardest thing for people to do is turn that lens objectively on something that stings and didn’t work the way you wanted. CEOs need to structure their time to reflect on what didn’t go well. It’s a mindset: Are you looking at it as a personal failure or an opportunity to learn? The best CEOs train themselves to view mistakes as opportunities: Own them, learn from them, and then move forward and address them. It’s a commitment to really think about failures differently. With how fast everybody runs these days, we don’t take enough time to do that.

Dina: For a more tenured executive, this is a reminder to reflect on their mistakes and what they’ve learned. Our research will help people understand which of these four behaviors they’re going to be most naturally strong at and find ways to address the ones that aren’t their strengths. You can see, based on your profile, the types of roles, industries, and companies where you can really shine and be distinctive. As coaches and folks working with CEOs, we help people think through that.

Kim: One of the CEOs we interviewed, when reflecting on his first CEO role, mentioned he did not realize how much he was actually “renting” the founder and former CEO’s antennae for change and ability to adapt. It was not naturally his skill set. Kudos to him, he recognized the need to complement that capability via others on his team to ensure that was filled. Otherwise, he knew they were going to make mistakes when they didn’t adjust quickly to customers and market needs. It’s important to have that self-awareness and know where you are naturally strong or weak. Then you can really think of constructing your team in way that complements you.

Joel: How have the results of the CEO Genome project changed your practice at ghSMART?

Kim: What hasn’t changed is how we continue to ground our work in deeply understanding the business outcomes the CEO must drive. Our business scorecard is still where we begin our journey. That said, this work has enriched and made more explicit how we look for and help coach improvement on these behavioral patterns in the CEOs we work with.  

For example, at first blush it was a surprise to see the research show that the things that lead to hiring are not always the things that lead to performance and vice versa. Upon reflection, it confirmed a lot of what we as practitioners have seen in board rooms that don’t use an objective, rigorous and structured hiring process.

Dina: It’s not necessarily changed our process. However, I have found that with some boards and some executives, this is a really helpful framing tool. Some folks respond better to being shown some of this statistical analysis. Some people just respond and learn in different ways. For those who prefer to see quantitative data, they feel they’re better able to buy into this. It helps message to and influence folks to make the changes that have been hard for them to buy into.

Kim: I think it crystallizes the challenge around boards getting swayed by what they see in the moment when hiring a new CEO. They may be blown away by the charisma of a great salesperson who paints a compelling picture with their words. The CEO Genome research has helped provide more fire-power for boards to say, wait a minute, this isn’t necessarily what’s going to drive the result. I hope this helps democratize our process. Our assessment process forces an objective view, because we are grounded in a results-orientation and set of bespoke outcomes for the business at hand. Hopefully the Harvard Business Review article and now the book will push these findings out more to individuals who won’t necessarily be able to hire us for their critical leadership decisions.

Joel: I agree this is one of the main challenges with boards, where most have never been a CEO and have that Hollywood view of the role. When it comes time to select a CEO, they decide based on what they think a CEO should be. I see this done over and over again. Hopefully your research will guide people to make better hiring decisions. What about the gender issue? Is this something you all address in the book?

Kim: That’s a great question. We do have some insights on gender that you’ll see in the book. We interviewed a number of female CEOs. We’re not going to feature or focus on the gender question, at least not in the book, but we might at a later date. There’s a future set of analyses I can envision that would be really exciting. When you consider other underrepresented minorities based on race and ethnicity, frankly it is difficult to find a large enough sample size to run the research we want to run. With women we do have hopefully a large enough sample. That will be the next continuing wave of work of the CEO Genome project. Our belief is that the research will resonate with some women that they can become CEOs even though they don’t look like or have the background of the perceived “typical” CEO.

Joel: You’ve taken the positive view here. Is there a negative view, with behaviors that correlate surprisingly to poor performance?

Dina: Being too nice is often an issue. Likeable people get hired, but they often strive for affinity as opposed to making an impact. This usually doesn’t end well. We’re by no means advocating that people should be jerks. However, they must face conflict head on and manage through it and not be afraid to make good decisions because people won’t like you.

Kim: One issue we often see is CEOs who do not carve out enough time to think forward into the future. If you have too much of a short-term orientation and are busy putting out fires, you are a lot less likely to adapt and pivot. You must be able to handle today while thinking about tomorrow. I especially see this in the start-up, growth tech, growth equity space. They are growing so quickly, with so much happening today – I must hire 60 people in the next 30 days, for instance. Getting those CEOs to proactively protect some time to be out in the industry with customers and think longer term is really a challenge. It’s something that they need to be doing to create a long-term, viable entity.

Joel: I call that managing the future. It’s the CEO’s job. Nobody else is on it. Everybody else gets to manage the past and present. What about the perceptions of CEOs? Did the CEO Genome project unearth anything surprising around credibility?

Kim: One of the things we saw is that the CEOs who are highly reliable practice what we call “radical personal accountability.” When you look at credibility inside an organization and with employees, these CEO hold themselves personally accountable. That creates credibility. For example, there was a CEO in a turnaround situation who had to do some tough cuts and make some difficult decisions. During that time they collected 360-degree feedback and published it verbatim publicly inside their organization. As they updated this over time, it created a lot of internal credibility. Employees were impressed that the CEO and his management team were willing to accept tough feedback and act on it. When you get the sense that leaders are transparent and doing what’s right for the organization, it automatically increases their credibility. If we had more leaders acting this way I’d imagine we’d make a dent in the broader issue of credibility that many business and public leaders are facing today in our society.

|06 Feb 2018

CEO Genome Project: What Constitutes a High-Performing CEO Part 1

There is such a dearth of research about CEOs that I was excited to find out about ghSMART’s CEO Genome project. They have analyzed a decade’s worth of data from interviews and assessments of more than 2,000 CEOs and 17,000 C-suite executives. From this they have identified four behaviors that high-performing CEOs exhibit:

– Decide with Conviction and Speed

– Practice Relentless Reliability

– Are Relationship Masters

– Are Proactive in Adapting to Changing Circumstances

CEO Genome

Book detailing the results of The CEO Genome project available March 6

I interviewed ghSMART principals Kim Powell and Dina Wang to find out more about their research, which will be detailed in the forthcoming book “The CEO Next Door.”

Joel: What is The CEO Genome Project? How did the idea start?

Kim: First of all Joel, I have to say that your book has been on my bookshelf for quite a while {The CEO Tightrope}. When we first decided to turn our data set of research into a Harvard Business Review article and then a book that is coming out in March, I went out and tried to find all the best books I possibly could on CEOs. So thank you for writing that! You jumped into the seat at a young age relative to what we see as the average age in our data set. We saw a number of parallels between your CEO experience and our research.

To get back to your question, we do a significant amount of coaching, advising, and selection of CEOs. Over the last 10 to 15 years, we have built up an enormous and rich data set in a structured way. So we started on this journey to see what we could glean and learn from a research perspective out of the data we’ve collected as a consulting firm.

We started with a couple of questions: What really gets people hired as a CEO? What does it take to be a high-performing CEO once you’re there? We worked with roughly a dozen statisticians, psychologists, economists, and data scientists to find different ways to glean insights from this research. We discovered that there are some meaningful, statistically significant insights on what gets CEOs hired and what makes them high performing – and they are not always the same criteria. So we figured we’d better start talking about it!

Joel: Any concern about giving away the crown jewels?

Kim: Not at all. Given the level of granularity and specificity that we go into on the background and careers of leaders we work with, it would be difficult to ‘game the system’ in our assessment work. We are pleased that executives want to know how they compare to our data set. More than 9,000 individuals have taken the diagnostic on our web site. It seems to be getting traction and is useful to people.

Dina: Our mission is to help leaders amplify their positive impact on the world. We believe that great leaders really do elevate the quality of teams, individuals, and society overall. When we think about what people perceive a CEO to be like, there are perhaps lofty perceptions based on media and the bios of industry titans. What we found is that so many of them didn’t even think about being a CEO until they felt a calling or mission or need, and then they stepped into that breach. Part of this is to demystify and democratize what it takes to be a great CEO. We want to help people realize earlier in their careers that they too can become a CEO at some point.

Joel: When writing my book, I was shocked that I couldn’t find much accepted thought around the CEO role. I expected Harvard to have its framework and Stanford to have its framework and so on. Have you confirmed that?

Kim: The answer is that I agree there’s not a systematic one-size-fits-all approach to the CEO job. When we work with boards on CEO succession, we are crafting a custom scorecard for that specific future CEO role, which can vary dramatically depending on the company or situation. That’s why there aren’t paint-by-numbers approaches that describe the CEO role. The CEO is there to achieve a set of specific objectives based on the context, environment, timing, and needs and goals of the shareholders, board, investors, employees, etc.

Stepping back from that though, the CEO Genome research shows there are common behaviors exhibited by high-performing CEOs, which we highlight in the HBR article. Interestingly, the mix and weighting of those four behaviors is likely to differ based on the context. The mandate for a CEO of a small growth tech company is going to be quite different than a private label food manufacturer in a staid, more slowly changing industry. The tech CEO who doesn’t have antennas out in the market and close contact with customers in order to proactively adapt is less likely to be successful. So while I’d love to say we have a paint-by-numbers approach, we don’t apply it that way.

Joel: What were the data points that surprised you from the CEO Genome research?

Kim: There were three. First, we found that what gets you hired is not necessarily what drives high performance. The behaviors we saw in high-performing CEOs did not overlap much with what gets you hired. For example, data shows that being likeable is important in getting hired. We did not find a relationship between this and being a high-performing CEO. There are lessons here for boards and others in how they interview and select CEOs. Another example is that we were surprised to see something as presumably mundane as reliability show up as the only behavior important for both getting hired and being high-performing.

The second piece that was surprising is that the behaviors that really matter for high-performing CEOs are buildable and not intrinsic. The stereotype is that CEOs are 6’4” males who look a certain way, have a certain carriage, have an Ivy League degree and an MBA with amazing intelligence, etc. The reality is that the behaviors related to performance are things you can practice. They are muscles you can strengthen over time.

The third one relates to fallibility. There is a myth of perfection out there, but this is not what we saw in our data. Most CEOs are making mistakes and have had blow-ups in their careers – often significant ones. They might have been kicked out of a role or two. These failures did not derail their ability to rise up and lead an organization and lead it well. So, while it is surprising vis a vis what you might read in the press, it is not to us based on our experience. The only perfect CEO I know is one I’ve not met yet. All CEOs have aspects they need to build and areas they need to strengthen.

The story is that these are normal human beings. If we take the CEO role off the pedestal a bit, hopefully more individuals will see that they have the potential. The reality is we spend a lot of time at work. We have more than two million CEOs in the U.S. leading reasonably-sized organizations. If we can get more great leaders into these roles, it will positively impact the economic engine of the country and the world.

Dina: I always find the data around decisiveness interesting. We found that it’s not so much about making great decisions every single time and being perfect. Rather, it’s about the ability to be decisive and then adapt later if it turns out you need to tweak that decision. Making good decisions and being decisive are related but are ultimately two different things. We’ve found that some executives with the highest IQs were the ones who often struggled the most with decisiveness. They are looking at almost too much complexity and end up bottlenecking organizations. When we share this with people it often comes as a surprise. Making a decision is preferable to not making one because you can’t come up with the perfect answer. This is the trade-off you need to make.

Joel: The first thing I teach CEOs is to make a damn decision! It’s by far the most important lesson for CEOs, because our accuracy is not that good. If you know you’re likely to make a mistake, the faster you make it and correct it, the better off you are. The smart ones are the worst, because they think they’ll figure it out eventually. Meanwhile, everyone else is sitting around twiddling their thumbs. Once a CEO is on board, did you discover any common mistakes they make?

Dina: One of the things a lot of first-time CEOs are most anxious about and spend most of their time on is board management. This is the first time they are really on the hook to be that interface between the company and board. This takes up a lot of their energy and thought. What they deprioritize and under-invest in is their team. We found that the single most common mistake is not getting the right team in place quickly enough. About 75 percent of the roughly one hundred CEOs we interviewed in our research said that’s the most common mistake first-time CEOs make.

Joel: The most frustrating thing is every time you step into the CEO chair, you build a new team. It takes about 18 months every time to build the team and get everyone on the same page. A CEO may have two or three years at most before someone expects results. If you don’t start building your team on day one, you are building someone else’s team. 

Kim: That’s a good one! I may borrow that!

Look for Part 2 of our interview next week.


|30 Jan 2018

Being a Second CEO

Les Trachtman specializes in what he calls being a “second CEO,” replacing founders to help grow and scale companies. In fact, he’s done it six times. As the CEO of The Trachtman Group, he also helps top organizations across the globe successfully navigate the founder/successor transition. He is sharing his expertise in his new book, “Don’t F**k It Up: How Founders and Their Successors Can Avoid the Clichés That Inhibit Growth.”

We had a great conversation about the different skills required by a founder CEO vs. a second CEO, what separates great CEOs from merely okay ones, and much more.

second CEO Les Trachtman

Les Trachtman

When did you first realize you wanted to be a CEO?

Les: The first time I acknowledged it to myself was when I was heading to college. Someone asked me what I wanted to major in, and at that time I had to think a little deeply about it. Most high school kids don’t think about that. I tried to decide what would be marketable and enable me to be successful in business. I ended up getting an engineering degree and then graduate degrees in business and law. I wanted to have everything that I thought you needed to run a company.

When did you get the first chance to apply all this knowledge to the CEO role?

Les: I was about 15 years into my career. I had meeting with a VC in Boston and he said to me: “So when are you going to be a CEO?” I was sort of startled by that and replied that I didn’t know. I wasn’t sure I was ready for that. He asked: “Why not?” From that day forward I decided it was time. It was somewhat serendipitous that about that time I was contacted by a small software company in New Haven, Connecticut, which ended up offering me my first CEO role.

What surprised you most the first month on the job?

Les: When you become the CEO you know you’re in charge. However, what you don’t perceive is that you are responsible for everything that happens in the company, even if you don’t control it. The buck stops with you.

Having total responsibility is something many CEOs are not prepared for. One of my favorite interviews I’ve done is with Jim Whitehurst, CEO of Red Hat. He went from being COO of Delta, managing 80,000 employees with 5,000 flights operations per day, to running a company of 1,500 people at the time. That first week he realized he was the man behind the curtain. The job was very different from what he thought and no easier than being COO of Delta.

Les: There’s no wizard anymore right? It’s funny that you say that. I had a mentor who was a VP in the first company I ever worked for. When I took that first job as CEO, I talked with him about it, and he told me, “You will find that being a CEO is so much different then being a VP. It’s the relative difference between being a janitor and being VP. That’s how different it is.” And boy was he right! One of the qualities of a great CEO is someone who’s really curious and always looking to learn. I’ve found the difference between a great CEO and just an okay CEO is this: Great CEOs know they don’t know how to do the job, and okay CEOs think they do.

That’s a good one! You’ve done the CEO gig a bunch of times. Most people don’t get to do the job often in very many situations. If you succeed as a CEO once, there could have been a lot of luck involved. If you become a CEO in a different situation, you may not have the same kind of success. What kinds of systematic things do you do now vs. what you did the first couple of times?

Les: I think every time I do it I get a little bit better at it or at least I hope I do! The things that you learn are things like the importance of culture. It’s so much more important than you can imagine. The first time as CEO you take that for granted. You come to realize that people are more important than systems and processes. It’s the characteristics of the people that matter. As I mentioned, people who are curious and have more desire are the employees that you should rely on. You go from the systems and processes, the really specific things, to realizing that you must focus on the softer stuff to do the job well.

second CEOYour book is about taking over companies directly from a founder. One of the reasons I keep founding companies is because that job sounds really hard to me! As I tell people, the Alabama coaching job is not the one that comes open very often. It’s always the Poughkeepsie State job where they went 1-13 last year. In the case of a successor CEO, there’s usually a reason the founder is stepping away.

Les: Founders do magic. I’m usually a second CEO and perhaps even do a good job at that. But founders create something from nothing. That is hard to do. The skills required to start a company, to create a company, to build something from nothing are very different skills from those required to scale a company. I have found that founder CEOs step down for one of three reasons: One, they self-select by deciding they are not the best person to lead the organization forward. Two, they don’t get really excited about the more mundane things required to do the build/scale part. Or three, their investors and board decide for them.

In the book you almost have a rule that states the founders really can’t stay around after they’ve decided to make that change. Is that right?

Les: It’s not quite a rule. In some unique cases the founder staying around can work. I worked with one who was really good at being the guy that stuck around and mentored the next guy. The hard part is that if you stick around, it’s really hard for the successor to have a boss looking over your shoulder and second guessing you. As a founder, you’re not going to sit there while a successor changes all the things you’ve done and say, “Wow that’s great!” That’s been proven out in a lot of situations.

When you inherit an executive team, it’s probably not full of superstars. You want to give people a chance, but on the other hand you have a limited time frame. Typically boards aren’t super patient. They expect you to make some changes and show some progress. How do you balance those two situations?

Les: I’ve done it wrong both ways, I can tell you that! The very first time I became a CEO, I was talking to a board member/investor and the conversation went something like this:

“Do you want to take on the role of CEO?” he asked.

“Sure, great!” I said.

“What do you think we need to do about sales?”

“I’m not sure we have the right guy running sales.” I replied

“Great! We knew you are a smart guy. What are you going to do about it?”

“We should replace the guy,” I responded.


“Tomorrow?” I said.

“Good answer!”

So it goes from that end – which is probably not necessarily the correct or optimal way to do things – to giving people a chance. You have to make sure you allow people to succeed. Find out who might have been good at their job when the company was smaller. See if they are going to be able to scale themselves. Give them an opportunity. It’s different than when they were part of the founder’s team – where loyalty was perhaps even more important than being extraordinarily competent. I don’t mean that in a negative sense. But founders tend to be very good at what they do and while they don’t all micro-manage (many do!), they have a very expansive set of capabilities. That changes as the company scales. You need people who take on various specific functional roles to make those decisions themselves. That kind of responsibility is often not optimal for the original team members who founded the company.

Yes, if you have someone who’s an expert, they just need doers who follow their directions. I’ve never been an expert at anything, so I tell everybody I’d be a bad VP! I need good people around me to do all that stuff. In the early days when you have five employees, the founder being able to do a lot of stuff is hugely valuable. At 100 people that loses a lot of value quickly.

Les: I use the analogy of a snake molting. It’s a natural process for a snake to molt, and grow.  It’s the same with an executive team: You probably need to shed members as you grow. It doesn’t mean these execs are bad; they are just not the right people at this time of the company’s maturity. One of the responsibilities of a second CEO is to make sure those people are treated well on their way out.

When you build a company over time you develop deep sources within the organization for information. You know whom to trust. I’ve grown companies into hundreds of employees but still had relationships throughout the company to get information. When you come in as a second CEO, how do you get reliable information about what’s going on?

Les: It’s a real challenge for a CEO at any point. Many founders find that their teams tell them what they want to hear. You have to figure out how to cut through that. I have a couple of techniques. One major theme in getting people to tell you the truth is just to make yourself appear human. I’m not saying CEOs aren’t human, but people like to see that even though you are the boss, you are fallible. I do things like play golf with people. I’m a bit of a hacker. When I get on the golf course, it’s very hard for me to act like a CEO. You make yourself very human when you do things like that. People start to trust you and are more apt to tell you the truth.

I also do things like lunches where we have up to eight people at a time. We start out with icebreakers. It’s like a kid’s game where we ask each person to say something unique about himself or herself that nobody knows. I say things like I went to high school with Dee Snider, lead singer of the 80s band Twisted Sister. When I tell people my hair was longer than his back then, they say, “Wow, you mean you used to be that way?” It helps to form relationships. It’s also helpful to find a set of people you trust who become your eyes and ears. You should use anything you can to get to the truth. It’s a battle that every CEO has: relentlessly seeking the truth and making adjustments based on that.

I’m sure when you go into in a situation like that, people are anxious to hear what your job is. How do you respond when people ask how you are going to approach the job vs. the founder?

Les: I tell them I’m going to listen, because something great happened before I got there. There is never a successor to a founder unless the company is doing well. It’s kind of counterintuitive, but more CEO founders get replaced because the company is successful than not successful. So first, I tell everyone that I’m not there to further my own my agenda. I’m going to leverage the good things that happened in the past.

Second, I always make sure that I honor my predecessor. I don’t care if we don’t see eye-to-eye. I don’t care if he or she hates me. They did magic that I couldn’t do myself. That tends to help and establish credibility. Third, I let people know that it may not have been this way before, but the company is now a meritocracy. It’s often more of a family when I come in: They’ve been through wars and worked in the trenches together. Camaraderie is good, but what you give up in lack of camaraderie you gain in opportunity. You may not be able to be best friends with colleagues, but you can be friendly with them. I tell people they now have the opportunity to grow their wallet, their title, and their capabilities in return for giving up some of their familial relationships. That’s what you give up when you move into a meritocracy, but it’s also about what you gain.

When it comes to the culture, people, and vision, where do you start when you walk into a company? Where are you thinking you’ve got to work first?

Les: I think you always have to start with people. You have to have the right team. I’m a big believer that a flawed strategy can work with a great team, but a flawed team can’t work with a great strategy. Whatever your strategy is, it’s going to fail somewhere down the line when you encounter a competitive situation. “No strategy survives first encounter with the enemy.” Unless you have great people who can make those adjustments, it will be at best a short-term success and at worst a disaster. You need to make sure your employees know how to do their jobs and again, are curious enough to discover new things as your market and competition change.

What caused you to write the book?

Les: I’ve been a second CEO six times now. I saw some very clear patterns emerge in myself, in the founders I replaced, and in the organizations I led. I thought if I could put those down in a book, I could save people a lot of time and agony. It was a bit of a death wish: I had to get it written down in a way that people would understand it. You wrote a book so you know the agony. When I went back and read it, I thought this actually does tell the story that I meant to tell.

What’s your status? Are you looking for the seventh and eighth one? Or are you retired on the beach?

Les: I don’t think retirement will ever happen. I’m fully entrenched in number six right now. We’re about 15 employees and growing fast. I’m getting to exercise all the things I talk about, including making sure you have a successor. I’m a year and a half into the gig, and I’ve already hired my potential successor. I’m giving him that runway.

Is there anything you are seeing in your industry that you think CEOs in general would be interested to know?

Les: We’re a tech company, so I’m very focused on tech. What CEOs need to know the most is this thing we call the cloud. A lot of people talk about it. As a CEO you need to realize that if you are going to be or grow into a multi-location environment, which most successful companies end up being, you should consider putting your apps into the cloud sooner rather than later. It’s more important than I ever imagined.

My company Khorus is a similar size to yours. We did an inventory one day and discovered that we have 52 cloud-based apps of one form or another and wondered, “How can that be?”

Les: The difference between the cloud and keeping things local is that you have a closet full of stuff to maintain that is probably not your core business. When you give it up to someone else, you can focus on the core aspects of your business. It’s an important lesson in every business but definitely in IT.

For more information about Les, see the case study Harvard Business Review wrote about his career titled “Les is More, Times Four.” 




|28 Nov 2017

CEO Interview: Chuck Runyon, Anytime Fitness

Chuck Runyon is the co-founder and CEO of Anytime Fitness, the world’s largest co-ed fitness club franchise. With more than three million members worldwide at 3,700 gyms, the company has more than $1 billion in system-wide revenue. Runyon credits the people behind the brand for this success. This is the topic of the new book he wrote with his Anytime Fitness co-founder and President Dave Mortensen, “Love Work: Inspire a high-performing work culture at the center of people, purpose, profits, and play.” 

We had a very engaging conversation about this, as well as leading and scaling a franchise business amid the changing trends in the fitness industry.

Chuck Runyon

Chuck Runyon, Co-Founder & CEO, Anytime Fitness

When you were in school, what did you think you wanted to be when you grew up?

Chuck: I didn’t complete much college. I wanted to do something a bit unconventional. I loved sales. I liked that immediate gratification and the competition within sales. You are competing with yourself and with others. I liked the creativity demanded by sales and in business. I started my career in the fitness industry at a young age and I fell in love with it. I got a rush out of going to a workplace every day that was fun and where you empowered people to be better versions of themselves. It fed my competitive juices.

After we founded Anytime Fitness, the entrepreneur in me enjoyed travelling the country, working with different clubs about every two months. I was helping start a mini-business in every city, helping franchisees generate awareness and memberships for their clubs and increase their profitability.

Then, as Anytime Fitness started to scale, I had to turn that entrepreneurial spirit into leadership and focus on how to grow a team. In the last 15 years, we’ve grown from a start-up to a company now with hundreds of employees. That requires different skills. For me, I am still gratified by learning new skills and adapting them to the business and pushing myself. Can I lead a company this big? Can I lead a team this big? How do I inspire my team to perform? I am still competing. I’m still selling. Those competitive fires are still gratified every day in my job.

As a co-founder, did you lose the coin flip? How did you get the job as CEO?

Chuck: That’s a great question! I own a larger percentage in the company than my partner, Dave Mortensen. We each have our own set of skills that we bring to the company. I may be a little bit better at the vision and communication side, as well as the culture-building side. Dave is a little bit better at problem-solving, especially those immediate problems that nearly every business faces. We both overlap in quite a few areas. So, I don’t want to give myself too much credit here. The CEO title came down to ownership and perhaps I’m just a little better suited for certain roles.

Is there a specific moment where you thought, “This can work. I can be the CEO and build a significant organization?”

Chuck: Yeah, there have been a few of those moments over the years. In 2005, a few years in, Anytime Fitness had a critical mass of 200 clubs and really started to spread and grow like crazy. That’s when we started to add more and more people. I remember at the 50-employee mark it was pretty chaotic. We were hiring quickly. I didn’t know everyone as well. When we were a start-up I knew everybody, and we had an all-hands-on-deck mentality. It was easy to foster team chemistry.

Beyond 50, we needed more discipline and rigor around strategic planning. We needed titles and an organizational chart. We fought titles until we had to implement them. The other mark was 150 employees. We really had to get far more rigorous and have more discipline on things such as the budget, finance, organizational structure, titles, and strategic planning. Now that we’re above 150, we’re operating in a way that’s scalable. The difference between 150 and 500 is not nearly as big as the difference between five and 50, or between 50 and 150.

Yes, absolutely. I talk about this often. Once you learn to fly an airplane, you fly it by wire or computers. When you have a management team in place, it doesn’t matter if it’s a 747 or a fighter jet. The basics are the same.

Chuck: Yes, that’s correct. It’s funny you mention a management team. We’ve got some very smart subject matter experts that we’ve brought together. We’ve largely matured in that regard over the years. Our team was different at 50 employees, 150, and today. We’ve got this nucleus of talent in place that’s going to help drive the business forward. That’s another area where it required time to develop the self-confidence and maturity to find and hire very smart people and let them drive the business.

Anytime FitnessHow has your vision changed over the years from what you pitched at the beginning for Anytime Fitness?

Chuck: If you think about the fitness space, we launched in 2002 around the time when the first iPod came out. There was no social media, no smart phones, no Facebook. We now continue to operate this business in the middle of a disruptive tech era. Everything is now more directed towards consumer intimacy and being consumer obsessed. When we started, our primary stakeholder was the franchise owner. We built tools and processes to help them operate the business. Now we’re far more consumer centric. We focus backwards toward the franchisee, where before we operated from the franchisee first, and then the consumer. From a data standpoint, we’ve got to nail it when it comes to the consumer experience and understanding our consumers.

That’s a good point. What do you think the key challenges are for a franchise business vs. being a direct owner and operator of the clubs?

Chuck: Every business has a stakeholder. Are we B2B or B2C? We are kind of both. We make money from our franchise owners operating successful franchise gyms. On one hand, franchisees are a critical stakeholder. Yet we have to help them fulfill the needs of members. We have this delicate balance of prioritizing tactics and strategies around our three million global consumers and our franchise owners.

We’re not always going to make franchisees happy. When you are looking for uniformity and platforms that scale, you have to limit some of their freedoms.

When we started in the early days, we gave our franchises a tremendous amount of freedom; probably more than most franchise systems. That allowed us to scale and grow fast. But, ironically, around the years 2008 to 2011, this fractured operational system inhibited our growth.

Now, we’re trying to foster uniformity and standardization in our system to assure that the consumer experience is consistent. As a result, we’re strategically limiting some of the freedoms that franchisees previously enjoyed. This especially impacts those who have been with us for a long period of time. So, we go to great lengths to explain the reasoning behind the decisions we make. Still, as you can imagine, sometime there’s resistance. They say, “Hey, you let me do this for years and now you are taking it away.” Our explanation has to be, “Yes, but we need the data and uniformity to scale this and to benefit the entire brand.” We’ve gone from pleasing our franchisees as our top priority to now putting a little more emphasis on pleasing our consumers and operating like 3,500 clubs, not 30.

From a culture perspective, since you have franchisees and not direct employees, how do you make the Anytime Fitness experience consistent no matter where I am?

Chuck: That’s one of our biggest challenges. We’ve grown fast, so we are doing our best to create a consistent experience. We have a diverse group of franchisees and, for many of them, it’s the first time they’ve owned a business or worked within a franchise system. People love health and fitness. It’s a low-cost franchise compared to many other franchise businesses. Because it’s their first time owning a business, some of our franchisees may lack the experience to manage certain business problems. They can be highly emotional. We’ve on-boarded quite a few people in a short amount of time. Some franchisees absolutely knock it out of the park. They really care about their members. For others, that may only be true to a lesser degree. So, we need to be very intentional about building a consistent brand culture. We have training platforms, tools, and software and we are always trying to coach them on how to operate the business and interact with consumers.

McDonald’s is famous for Hamburger UDo you have an equivalent?

Chuck: Yes, the training here never stops. It’s funny, one of my first jobs for many years was at a McDonald’s. It’s arguably one of the best franchises of all time. My Mom was a store manager for 20 years, so I grew up in that system. The Anytime Fitness headquarters is one mile up the road from a McDonald’s my Mom opened. So, this is the second franchise I’ve worked for on this street! I still remember the days when I on-boarded at McDonald’s. They utilized suggested sales strategies and repeatable processes. When I reflect on that, I think we’ve got to do the same. McDonald’s has been around for 60 years. But, yes, we have our own version of “Hamburger U.” We do a lot of training and quite a bit of e-teaching. Whether it’s 2:00 in the afternoon or 2:00 in the morning, a franchisee can get the tools, training, and reporting they need. We also do a ton of in-person training throughout the year.

Chuck Runyon Love WorkWhat caused you and Dave to write the “Love Work” book?

Chuck: I’m a huge believer in culture. Everything about the brand has to start here at the Anytime Fitness headquarters. We have to live it, breathe it, and personify it. Franchisees who come to headquarters have to bundle our culture, put it in their back pockets, and take it back to their communities. They have to behave and work with the same type of culture.

Our culture has developed over the years. I think these four words – people, purpose, profits, and play – are a very interesting mixture that creates a chemical reaction of amplified performance for employees. If you can invest in people, give them a purpose to their work, profit financially and in terms of lifestyle, and have fun, then I think that’s the code for great team performance. We’ve discovered over the years that these four elements can create a successful culture and brand. Writing the book is helping our club owners understand our culture even more and operationalize it into the business.

I assume you have a fairly young average employee base. What has changed over the last 20 or 30 years in your business career culture wise?

Chuck: I think more people are studying it to try to understand why some companies and teams outperform others. They want to understand what it is about a culture that surrounds a group of people or company and allows them to consistently succeed more so than others. Leaders are trying to get closer to the mindset of the employee: Do they love their work or dislike it? Are they engaged or disengaged?

Over the years, there’s been so much attention paid to culture that it’s come to be thought of as a strategic asset that powers a company through the ups and downs of economic or business cycles. I believe that. I think culture is one of our best weapons in a highly competitive industry.

We mention this rather unique term in the book called “Undertime.” Everyone who employs people has it, where employees are not working but rather looking at Facebook or online shopping or whatever they are doing. Anytime Fitness has it, but we have less of it than most companies. If we have less of it, we can perform better. If our company performs one percent better per day over time, over 200 workdays per year, that’s going to make a big performance difference.

There’s a lot of talk about the millennial generation. Are there any differences that you pay special attention to at Anytime Fitness?

Chuck: I think that’s a little bit overblown. I think every generation wants purpose in their work. Everyone wants regular feedback and to provide their opinion on the business and get some alignment. I don’t think it’s just a millennial thing. Every generation responds to the four Ps. They are getting more mobile and want more visibility in the company. They want to go to work for a company with values they can believe in. It doesn’t matter if you are 50 years old or 20, everyone can identify with that.

Now that you are at hundreds of employees, it’s harder to know what’s going on at every level. What techniques have you found helpful for keeping your ear to the ground and staying close to the people in organization?

Chuck: It’s funny you just brought that up. Right before your call I was in a two-hour meeting with our IT group. We call them “coffee chats.” These are super helpful informal meetings and they give Dave and me deep insight into what every team does, their current initiatives, and what they are seeing from their lens of the business. In every meeting that happens here, we want titles left at the door. By that I mean, we want even the newest employees to feel comfortable speaking up and offering their opinions. We want to give everyone a chance to weigh in on the business, give us their perspective, and ask questions. We want someone’s fresh insight, no matter if they’ve been here for three days, three weeks or three years. When you’ve been here for a while, your perception gets clouded, and the work gets in the way. We ask, “What would you do if you were us? Tell us something we don’t know.” We try to foster candor and openness. It doesn’t mean we’re going to go with your priority or suggestion, but we definitely want your input. When newer employees get to weigh in, then they are more likely to buy in to the business.

Do you use any formal tools to make sure everyone is aligned?

Chuck: We have these wall-mounted containers that look like little mailboxes. We call them the “Just Ask” boxes. They are both functional and symbolic. As a leader I’ve noticed that, when we were smaller and everyone knew each other, employees would feel free to walk into my office and ask candid questions about what we were doing. They knew they’d receive open and honest answers.

As we got bigger, many employees didn’t feel like they had the familiarity with me to do this. To correct that, the “Just Ask” boxes give any employee the opportunity to write a question about anything without any fear or intimidation of the CEO title. Every three weeks, we answer every question as honestly and directly as possible. People know that we’re going to be candid and direct about where we’re strong or weak, where we are going, etc. This is one example of how we create an open, candid environment.

You are on the front lines of what’s going on in the economy. I assume you get store data relatively often? Is there anything you think CEOs might want to know?

Chuck: All the trends in wellness and beauty continue to rise. In the last 15 years, this industry has proved to be resilient. It’s an overheated commercial real estate market right now. It’s very difficult to find sites to rent and open. There’s also a labor shortage and a construction backlog. Many units are paying higher rent and higher construction costs. There are delays in openings. This is happening in most places around the globe, not just in the U.S., but also in places like the UK and Australia. It’s more costly for our franchise owners.

What else do you think is important right now as a leader?

Chuck: We really try to approach everything with a “listen-first” mindset. We’re always trying to harvest ideas and input from our franchisees and members. On the one hand, it’s very noisy out there. The flip side of that is, because of social media, it’s easier to listen to members and franchisees directly. It’s also easier for a CEO or leader to communicate what they believe in and the values they stand for. It’s kind of a strength and a weakness. We now have the ability to communicate more often and, hopefully, cut through the noise. I do social media (@chuckrunyon), because I know our employees and franchisees, and hopefully our consumers, follow it. As the brand gets bigger, it’s nearly impossible to communicate too much. I have to communicate over and over again via videos, podcasts, tweets, etc. You have to drive home the message constantly with your stakeholders.

|08 Nov 2017

CEO Leadership: Break Down Bureaucratic Barriers


Every CEO should make it easy for employees to raise a red flag about issues and opportunities

True story: The Austin office of a large tech company once had six levels of management between its site president and the global CEO, who was based in another state. This separation was not only organizational and geographical, but cultural as well. News did not travel up the org chart very well, if at all.

Trouble came when corporate asked the Austin development team whether to create a new product or not. The group spent weeks gathering data and analyzing options. After extensive study, they produced a detailed report outlining why they did not think it was a good idea.

Six months later, word came down from above: Proceed with the product build. The team was flabbergasted and could not understand why the leadership did not heed their recommendation. However, being good soldiers, they went forward with the project and hoped for the best.

About a year later, the Austin site president visited headquarters and ran into the CEO, who began to grill him about the new product and why it wasn’t doing well. Finally the site president asked in frustration, “Why did you make us build it?” The confused CEO replied, “I didn’t make you build it. Your report said we should build it.”

The CEO found the report and showed it to the bewildered president. The report resembled the original from the Austin team, but various, subtle changes had been made along the way. As the report made its way through six levels of management, what had started as a “no” had become a “yes.”

Unfortunately, this chasm between leadership and those in the trenches is not unusual. However, the consequences of this old dynamic are growing more and more dire. Companies must move faster to innovate and adapt to dynamic market conditions. Consequently, CEOs must find a way to quickly and consistently harness information, opinions, and expertise from employees at every level.

The answer is to institutionalize whistleblowing. While the word “whistleblowing” may have a generally negative connotation, in this context it means giving every employee the means to raise a hand when he or she has something important to share – and making that information available to the relevant people, including the CEO. This could be anything from not having the resources to complete a project on time to seeing a potentially disruptive move by a competitor.

Great managers solve this problem by walking around and getting the pulse of their employees. As companies grow, this becomes a logistical challenge. There simply isn’t enough time to have conversations at every level of the organization.

At this point, leaders need to replace walking around with a system to solicit feedback about issues. This could be done via anonymous surveys and/or a system that regularly asks for employees’ perceptions of how their work is going, tied to their quarterly objectives.

Consider asking the question, “How do you feel about your work?” This tends to elicit more qualitative input than a status report, which is often comprised of historical numbers rather than forward-looking insight.

Whatever the feedback system is, it’s critical to consistently monitor the soft side, not just the hard data, of projects. Giving every employee a way to raise a red flag to management can help solve many problems before they become catastrophes.

Organizations can no longer afford for bureaucratic barriers to stifle their ability to pivot and grow. The combination of the CEO’s big-picture view and wisdom plus employees’ domain expertise and on-the-ground insight can be powerful stuff — but only if leaders find a way to continuously solicit and use the information.

This post is based on an article I published on Entrepreneur.com on January 27, 2017.

|18 Oct 2017

CEO Interview: Dave O’Flanagan, Boxever

Dave O’Flanagan is CEO and Co-founder of Dublin-based Boxever. The company helps airlines such as Emirates, Aer Lingus, and Air New Zealand along with low-cost carriers like VivaAerobus leverage customer data to offer a more personalized experience for travelers. 

This is Dave’s first CEO role. He gave some sage wisdom about the tipping points in a start-up, the role of HR, how product professionals can become good founder CEOs, and the mindset of millennials.

Boxever CEO Dave O'FLanagan

Boxever CEO Dave O’FLanagan

When you were starting out in your career, what did you think you wanted to be?

Ah, I wanted to be a pilot when I was a really young kid. I wear glasses and in Ireland at the time you needed to have perfect eyesight. Growing up I was the nerd in school. I studied math at university and I was always into computers.

I started out in the telecoms industry where I worked as a software consultant for a number of years in the analytics space for mobile telcos worldwide. We were looking at helping those guys analyze all call records and making sure everybody got billed correctly. We also did marketing analytics answering questions such as: Who are your high-value customers? Who spent the least in network? Who is making the most calls? We exited that business in 2007, and I moved to an airline e-commerce company here in Dublin. We did e-commerce functionality for big airlines around world, such as JetBlue, United, and Delta.

What I saw in that industry was really big organizations struggling with building direct to consumer relationships. Most airlines always sold flights through intermediaries like a travel agency or a tour management company, which held the relationship with the customer. If you were not in an airline’s loyalty program, you kind of didn’t exist.

With the advent of e-commerce and direct to consumer digital programs, most airlines are still struggling to build relationships with customers. Most airlines don’t have a fully functioning CRM outside of loyalty programs. They struggle with connecting the dots across silos that contain customer data. They want to understand 1) who their customer is and 2) how to best serve that customer in the channel whether it’s on their web site, in the airport, on the airplane, via the call center, etc. I saw this firsthand in some really big airlines globally, so I started Boxever in 2011 with some top guys from my old company. We began this journey to solve this really big problem.

So I never set out to be a CEO. I wanted to build a really great product and sell to exciting brands around world. I wanted to do something that made a difference and help these organizations deliver a step change in their businesses. It happened that I became the CEO at the start. We’ve grown from three guys in a garage to almost 70 in Dublin working with airlines all over world.

When you were starting out, did you all think about bringing in someone else as CEO? How did that happen?

I was an executive in my previous company managing a large number of engineering and product guys. I enjoy leadership. As Boxever grew I grew. When we were just three guys we were writing code and hustling to get our first customer and raise our first round. As the company has grown we’ve developed parts of the organization, and I’ve grown into the CEO role. I don’t think it was ever any intention to bring in someone else. In the early stages for tech co-founders it’s common to bring in a sales guy as CEO to build the company. However, nothing trumps passion for your product and the company you are trying to build. At an early stage that is what the CEO role is all about. To get early commercial traction, you must ensure that you’ve got a product market fit and inspire people to join your cause. I was always really excited about doing that. It’s been a great few years building this organization.

Your road is probably the most common at least in the tech start-up arena: A product type person starts a company. If you were advising a product person who wants to start a company, what experiences would you encourage them to have to tackle the CEO role? 

It depends on the type of company you want to build. What product people need but may not get is having commercial exposure to sales and marketing as well as understanding what it takes to actually bring a product to market. Usually, product people are more focused on the road map and developing specific parts of a product, etc.

Product managers on the other hand are almost acting as VPs or mini-CEOs: They connect their potential customers with a need and build a product to fulfill that. Sales guys are experienced in delivering commercial value to customers. So product and sales are two great areas that CEOs can come from.

In terms of what a product person might need, as the company scales beyond a few people, you should think about hiring capabilities that you may not have yourself. At least initially you should have some exposure to different functions such as finance, marketing, and sales, so that when you start a business you can fulfill those. In a tech start-up the CEO does nearly everything at first. If you are up for that and it excites you, then a product person would be suited to that role.

You mentioned growing into the CEO role: Are there any specific things you did to gain knowledge and develop in the CEO role?

Early on, I found myself some mentors. Those guys helped me identify my blind spots. They’ve been through scaling high-growth companies and some had successful exists. They helped me understand how to interface with investors and engage with VCs. They also helped me discover some potholes in my plans in terms of sales and marketing.

So one of the things I recommend to any entrepreneur starting out is to try to find mentors or advisors who can help you pinpoint your weak spots. As your company scales, you need to learn to solve those or bring in experienced people to cover areas where you might not be as strong. For product CEOs, it might be operational experience. For CEOs with a tech background, it might be sales and vice versa. It depends on who you are and where you come from. Have a mentor early on was hugely impactful in making Boxever a success.

BoxeverAs you’ve transitioned from three folks in a garage to 70 employees, have you noticed any tipping points, where you had to think about how to run the business differently?

Yes, when you go from three to 10 it changes slightly. When you get to 20 it’s kind of a tipping point, where you probably won’t have close personal relationships with everyone anymore. You start to think about how to communicate and engage with the rest of the company. As the CEO you wonder: Does everyone understand the vision and mission? Are they aligned?

As you grow these things become harder. You need to give more thought to how you communicate. You don’t always get it right. As you scale maybe you realize all the sales employees aren’t on message anymore. They are all interpreting the Boxever mission and vision differently. So going from zero to 20 is one journey. From 20 to 50 is another one, and 50-200 is another scale challenge. We’re on that journey at the moment. We make mistakes, and hopefully I’ve learned to try to minimize the impact as best I can and grow from there.

As you stated, at 20 employees you had a personal relationship with everyone and could get information directly from each person. Now that you are at 70 people, have you had to change how you get information from everyone in the organization?

I know that 70 employees isn’t that big in the grand scheme of things. I still feel connected to everybody. It’s important that there’s a two-way communications structure in place that allows us to scale. That’s the biggest thing about going from 10 to 70 people. You have to start putting in structures and processes in departments. We didn’t have departments at 20 people. As Boxever has evolved we’ve got departments such as product development, engineering, sales, marketing, HR, and an experienced leadership team to build those organizations. They work with teams and ladder up communications through the business. We also have weekly leadership meetings and bi-weekly town halls. We use different communications platforms that allow us to get messages in and across departments, and we work with our HR team (what we call People Operations) to ensure we are listening effectively.

Our position ultimately is that we help these big organizations create engaging, powerful customer experiences. In People Operations we are creating engaging and powerful employee experiences internally. The ongoing thing that we’re constantly striving to improve is analysis around our internal communications. For example, are our people hearing what we’re saying? You can’t underestimate how difficult it is to consume all this information. We are constantly asking ourselves: Should there be more video than text? Should we have more face-to-face or less face-to-face time? We continuously reiterate and challenge ourselves how to best interface with employees and teams so that everybody understands where we are and where we’re going.

How do you think about the role of HR in your organization?

We only brought in HR over the last eight months. To me it’s had a dramatic impact. The most expensive thing in a tech company is the people. You spend huge amounts of money on tools and infrastructure and things like that. But it’s the people who make this company. Investment in HR has probably been the most transformative thing in our business. It’s been incredibly important for guiding us in how we acquire and manage talent, identify high performers, give them opportunities to grow, training, etc. In hindsight, I would have invested in HR much earlier.

Say a new employee comes in and asks, “Hey Dave, what do you do here?” How do you give the executive summary of the CEO job?

I do three things: 1) I make sure the company is funded. 2) I try hire the best people I can and inspire my team to hire the best. 3) I make sure everyone understands the mission and vision of Boxever.

If I do those three things really clearly and enable my leadership team to do that for their teams, then we’ll have a business that can function and exceed expectations. There are a lot of other details, but if I can do those three things really well, I believe the people I hire can go execute that, and we can do great things.

On a day-to-day basis I do a host of other things. I’m heavily involved in operations issues and in sales. Boxever has lots of big customers – everyone from Emirates to Air New Zealand. Those guys want to meet the CEO from time to time. My role outside of the three big objectives is being the face of Boxever commercially. If we are doing some big strategic work with an airline, I typically get involved as well. That excites me. I love being in the room seeing how our product helps them and how we can move their businesses forward.

There’s a lot of talk in the U.S. in management circles about the millennial generation. Is there much talk about that much in Ireland? Is there a difference from a management perspective?

It’s interesting, there is lots of discussion about millennials and how entitled they are. As a tech company we’ve got a blend of experienced and younger employees. My feeling is that millennials are super engaged and really want to work for a company with purpose. They want to believe in what they’re doing. It’s not about money although money is a factor. It’s really about, can you create an environment for those guys to feel like they make a difference? I don’t want to be facetious and say that’s all they’re thinking about. All the younger employees we have here are tremendously hard working and engaged. They are doing things that are more than I would have expected in terms of their experience.

For me, I don’t think it’s just millennials. Everybody wants to believe that what they’re doing is making a difference. For me whether its millennials or a little bit older, it’s making sure everyone knows why Boxever exists and believes their daily work helps us move the needle forward. If we can create that platform for our employees, it builds a great culture and sense of getting stuff done. We don’t really discriminate in terms of age or experience. It’s about, can this person do the job? Will they grow into a role? Are they excited about being here? Are they a fit with our culture? If that’s the case then we’re super excited about having them on the team.

|04 Oct 2017

Product Manager: A CEOs Best Training Ground

Product manager – It’s the one individual role that best prepares people to be a CEO. It’s a great training ground for chief executives and arguably the single most important individual contributor position in the company.

Similar to the CEO, the product manager’s primary function is to coordinate among various groups, leveraging the skills of others to produce a great product. This is in contrast to most individual contributor roles, where the focus is on doing some specialized skill, working largely alone or within a small group.

To come up with great products and services, the product manager assesses the needs of customers and the market. This involves a strategic approach by analyzing competitors and anticipating what could be on the horizon. It also requires a tactical element by working with different groups to execute on the plan.

On any given day, the product manager is coordinating with executives to sell a product vision, with R&D to create viable products, with marketing to promote those products and with sales to explain product capabilities and benefits as well as obtain feedback.

CEO Barak Eilam credits his time as a product manager for best preparing him for the job. He became CEO of $1.3 billion company NICE three years ago after working for the company for 15 years. 

“For me actually the most important part of my career at NICE was when I became a young product manager,” the first-time CEO said. “Product management in a tech company, if you are positioned at the right place, is a very interesting junction. Because if you do it well, it allows you to be the bridge between customers and their requirements and market needs and R&D.”

Eilam had worked in R&D at NICE, so he had the experience to interact with that group well: “It takes special skills to make the transition from R&D to product management and become the liaison between customers and R&D,” Eilam said. “Obviously there are other things you need to be a CEO, such as finance, general management, managing people, managing managers, etc. These are all important as well, but this was pivotal for me, and I’m talking about something that happened for me 15 years ago.”

The parallels between a good product manager and CEO are many. For example, the CEO is always working with multiple stakeholders to deliver a product: high company performance. Like the product manager, the CEO must understand the entire market landscape as well as what is happening across the organization. With this insight, he or she creates a vision, a strategy and a plan.

Then, the CEO must communicate all this clearly and compellingly to get buy-in from everyone involved. He or she also ensures that everyone executes according to plan. At the same time, the CEO must be looking forward to identify threats or opportunities and pivot the company accordingly.

The CEO job is unique in many ways, but anyone who wants a taste of the responsibilities should consider becoming a product manager.

This article is based on an article I published on Entrepreneur.com on June 3, 2017.

|20 Sep 2017

New Rule: Act Quickly on Job Referrals

When you’ve been around the tech world as long as I have, you know a lot of people. I am often asked to use those connections to help CEOs fill a particular position. I am happy to help with job referrals, and I try to refer only A players. The problem I have run into several times this year is that after I made the recommendations, the organizations have taken forever to make a decision about whether to hire the person or not.

I don’t expect a CEO to hire someone just because I made a referral. Every organization has unique characteristics that might make someone a poor fit. What I do expect is for the organization to make a timely decision.

There are four reasons it is critical to move quickly in hiring decisions:

  1. It’s important to realize that a candidate is generally most excited about working for you when they first hear about the opportunity. People are flattered that someone would seek them out for a particular job.
  2. Time kills that excitement. If one of my contacts is willing to be considered, every day that goes by decreases his or her interest. Even after a full interview, the candidate sometimes waits weeks to find out if there is going to be an offer, all the time wondering: “Why hasn’t someone called? If they really wanted me wouldn’t they have contacted me?”
  3. Good people have choices in the current market. Once they open themselves up to considering making a change, they will quickly start exploring other options.
  4. The first firm to contact a candidate has the inside track on the competition. However, if a company dawdles, another organization will often sweep in and take the prize.

We had a rule at my company NetQoS that once we engaged with a candidate, we had 14 days to either make an offer or pass. I am going to put in a similar rule for my job referrals: If you want a referral from me, you have to promise you will either make an offer or tell the candidate you are passing. The new rule will make it better for both of us.

Also check out my 10 rules for recruiting and hiring.

|29 Aug 2017

CEO Interview: Phil Friedman, CGS

Phil Friedman is the president and CEO of Computer Generated Solutions (CGS), which enables global enterprises, regional companies, and government agencies to drive breakthrough performance through business applications, enterprise learning, and outsourcing services. He came to the U.S. from the former Soviet Union in 1976 and started CGS nearly 35 years ago with five employees. Today, CGS has more than 7,500 employees worldwide with operations in 18 offices in six countries. The company has customers in more than 45 countries.

As an experienced CEO, Phil has some astute advice for those seeking the CEO role as well as running a global company.

CGS CEO Phil Friedman

CGS CEO Phil Friedman

When you started out, what were you thinking your career was going to be?

Phil: I started working at the age of 16. By the age of 20, I was entrusted to manage 400 people at a military plant producing electronic equipment for submarines and airplanes in the former Soviet Union where I was born. Did I aspire to be a CEO? At age 22 to maybe 24, I was observing the general director of the company, and I remember very clearly saying to myself that I saw a lot of mistakes being made. I thought I could do it better. I knew that one day I wanted to run a company with 5,000 employees. So, in my particular case, yes, I did think that one day I would be able to run a company.


How did you gain your knowledge about the CEO role? How have you expanded your knowledge as your company grew?

Phil: The most important element for a CEO is having the skill to interact and manage people, especially in a larger company. I still remember the time when we had 200-300 employees. I knew everyone’s names — spouses, kids and sometimes the parents. It was a very different environment. Everyone was local.

When you start expanding and you have employees working all over the world in many different industries, you must understand the local environment, customs, laws, and accounting processes. The learning never stops. I think it’s a combination of many different things. I had a degree in economics and finance as well as engineering. That helped but you learn on the job. You make mistakes. You read a lot and interact with people. Sometimes your colleagues are the best sources of information.

If a young person came to you today and said, “I want to be CEO one day of a company like yours,” what would you encourage them to do?

Phil: Lately it seems that a lot of executives, particularly in technology, never graduated from college. Look at Michael Dell, {Mark} Zuckerberg, Bill Gates, and others. Sometimes it’s very misleading, because young kids will point to these execs and say, “Why do I need college? Look at those guys. They made it very big and never went to college.” Any young man or woman who is trying to make a career and grow in business has to have a basic knowledge. They have to understand the ABCs. It’s partly developing the knowledge in the field you will pursue in life.

In terms of what you need to be an entrepreneur, the most important thing is not to be afraid to fail. You must have a fire in the belly to be a businessperson or entrepreneur. You have to try. Many times I meet people who say “could have, should have.” You shouldn’t be afraid to fail. If you have that mentality and a basic education, you will learn as you grow. Do a lot of reading and follow trends and competitors. You have to have a base to build upon. A good education is very important.

CGSHow has your approach to running the business changed, particularly as you’ve added distributed locations at CGS?

Phil: It’s very important to surround yourself with good people. You can’t do things by yourself. You must delegate. Every one of our business unit executives has full responsibility for P&L of the business he is running. Once we agree on what we’re trying to achieve the following quarter or year, it’s theirs. They have decision-making power to adjust as they go along. This is a very important element of our success. Every country manager knows what he needs to do and is empowered to do it.

We do many things to keep our team together. We just finished two days of mid-year reviews where we bring in executives from around the world. We review the first six months and adjust our plans going forward. I over-communicate to make sure the whole team is marching to the same drum. It’s a very strict process in terms of communication with management and employees. Every Friday we get detailed reports from the field on the status of the business. Every Monday morning for the past 35 years, I meet with my executive team. On alternate Mondays, we have an expanded executive team meeting to discuss everything that’s going on in the business. It’s very collaborative in terms of how we run the business.

Do you have a formal training program for country managers before they take over to prepare them for the responsibility? 

Phil: No, typically we have very experienced managers. We never send an expat to run one of our operations in a foreign country. We hire local people to run local companies. I don’t believe Americans should run companies in Chile or Israel, for instance. We always follow that. We train people as we work together.

It’s certainly difficult to learn the nuances of a different culture. Will you expand on the challenges of doing business in different countries?

Phil: As you can imagine, we have facilities in Canada, the U.S., Chile, Romania, Israel, and India. Every country presents a different challenge and opportunity. They are all culturally very different. Someone who used to operate a business in India will not operate well in a country such as Chile without major training. The biggest asset of a company like CGS is the people. People would not take it positively if we sent an executive from the U.S. to run a company in Chile. They, in turn, appreciate the fact that an American company puts a Chilean manager in charge of a Chilean company. They already understand the local customs and language barrier. We take that into consideration when we appoint the leaders.

You’ve mentioned several times that business is fundamentally about people. Are there any systems or theories you use about how to think about and manage people?

Phil: As a privately held company, we use certain tools and approaches that probably would not work today in a large publicly held company. We like to believe as a family-run business that we have created an atmosphere where employees work in a close, family type of environment. We encourage managers to be on the floor and interact with people. We have a lot of activities all over the world for our employees. We meet with them on a regular basis. We keep our ear to the ground to find out what issues might be coming up. Year after year we have a President’s Club where we bring in top performers from our call centers. We take our top international employees on a cruise. We’ve been to 60 different countries together with our team. We do a lot of bonding. Employees don’t see themselves as isolated but feel that they’re part of a much larger company. We also provide a lot of opportunities that our employees appreciate. For example, we bring employees from India or Romania to train in the U.S. We also provide a lot of training, with many tech resources, to help them keep abreast of what’s happening in the world. We also do sporting activities. We have a soccer team in Israel and Romania. I hope it will continue as we grow.

Americans are notorious for seeing the world only through the American lens. Is there anything you are seeing that American CEOs should be aware of from a global perspective?

Phil: Maybe I do have a unique perspective on this. When I was growing up in the former Soviet Union, I was not allowed to travel. I left the country for the U.S. at age 26. I’ve since traveled to 130 countries around the world. It certainly helps you to understand how the world operates. It gives you a perspective that not everything that we do in the U.S. should be followed in other parts of the world. You must understand the business environment and cultures around the world. The challenges are very different in central Europe than in the U.S., for instance. Relationship building is very different in Europe than in Chile. It’s not something you learn overnight. I speak seven different languages, which helps me to communicate with people around the world. Can I point to one single thing? Probably not. Exposure to the world helps you to be a citizen of the world and act like one.

Is there anything else you’d like to add?

Phil: A CEO needs to be prepared to work hard and face challenges. Success is not a straight line up. There will be some failures, which are very important in your overall understanding and how to avoid it next time. Someone who is dedicated and loves what he or she does certainly can succeed as a CEO, because opportunities are endless.

What does CGS do? 

Phil: The business started out in the ERP marketplace. We are the number one solution provider to the fashion industry. We have global customers that use us for everything from manufacturing imports and needs to running the business. We have a propriety product design system and a proprietary manufacturing product. Our main ERP product is called BlueCherry®, which is accepted by vendors as a standard for companies in this field. We sell our product on-premises. At the same time, many customers choose the cloud, so we have two data centers to deliver SaaS solutions. We do a lot of managed services. We manage networks and provide technology solutions to customers. That’s all within one tower of the company.

The second part is elearning and channel enablement. We develop the most sophisticated solutions for elearning. They are typically avatar and gaming-based solutions. We’ve been identified and recognized as one of the top learning companies in world. We also offer channel enablement. We take all the business partners and manage them for some of the largest tech companies in the world. We recruit business partners, enable them and train them. We help them to succeed in competitive situations and close business. Our customers are really large technology companies such as IBM, Dell, and Citrix. We manage hundreds of business partners globally.

The third part of the business is in the area of IT outsourcing and BPO. We have six facilities in Latin America, three in North America, six in Central Europe, and one facility in the Middle East in Israel. At the end of the year, we will have a major facility in India. Our best customers buy many different services from us, such as software, cloud delivery, tech support, elearning, and BPO services all on one contract. That in a nutshell is what we do.

|15 Aug 2017

CEO Interview: Seth Birnbaum, EverQuote

Seth Birnbaum is a serial entrepreneur and the co-founder and CEO of EverQuote, the largest online auto insurance marketplace in the U.S. He provided some good advice about transitioning from engineering to the CEO role. His transition included learning the importance of developing a people-focused culture: He thinks of himself as part cruise director and greatly enjoys working with millennials. Seth also advised that every business should be doing marketing and advertising based on data science.

What did you want to be when you grew up? 

EverQuote CEO Seth Birnbaum

EverQuote CEO Seth Birnbaum

Seth: I was always into science and engineering and sci-fi even as a little kid. When I was seven years old I saw the MIT robotics competition on TV. After seeing it I wanted to be in it. I wanted to be an engineer but specifically go to MIT and be in that competition. About 12 years later I was! I got into MIT and I did compete in that competition. I was semi-finalist so I didn’t win unfortunately, but I had a great time there. The people I met in school changed my life in a lot of amazing ways. I still work with a lot of the folks I went to school with 22 years ago.

Did you think you wanted to be a CEO?

Seth: Around my teenage years I really got into the notion of starting a company. I did not necessarily want to be a CEO, but since I was 12 I wanted to create a start-up. It was a lot about building my own PCs. And of course Bill Gates was very famous at the time. So my entry to building a company was through the engineering interest.

When you got your engineering degree at MIT, what did you think you would do with it?

Seth: I wanted to do start-ups, specifically in biotech and bio-pharmaceutical. I ended up with some guys from school and some folks I’d worked with on summer jobs and research with at school. We started a biotech company in Cambridge in 1997 (NeoGenesis Pharmaceuticals). We sold that business to Schering-Plough in 2002.

What role did you perform in that company?

Seth: I was one of the founders and served as head of engineering. I put together chemistry and a tech screening for early stage drug candidates. We built these automated screening systems that had chemical libraries and mass spectrometry and liquid chromatography screenings for new drug candidates. We actually found some pre-clinical candidates from these automated screening systems that we built. It was a really cool technology. We sold it as research system under contracts with big pharmaceutical companies.

When we were selling we caught some senior scientists who we suspected of trying to steal our data. Tomas Revesz, who is now my co-founder at EverQuote, was running IT at that time and told me he thought these guys were trying to steal data from the company. We confronted them. They were leaving in advance of an acquisition. From that experience, Tomas came up with the idea to create a company that actually prevents the theft of data as an asset. I became the CEO of that company (Verdasys – now called Digital Guardian). It has grown quite large and is now contemplating an IPO. That’s in data security.

While we were doing that company, we ran into a group of MIT alumni whom we had been friendly with for the better part of 20 years. They had done a number of vertical internet companies that had grown very quickly; much faster than anything we had done. They had sold some of them and were working to take some public. We joined with them to start EverQuote. So this is the second time I’ve been a CEO. The prior company is running happily. EverQuote is the largest business I’ve ever worked at, much less run. It also has the biggest market. We really have a great team. It’s been a lot of fun. It’s a very fast growing business.

How many employees do you have now?

EverQuoteSeth: Tomas and I and a few other people launched the company in January of 2011. We now have 240 employees. It’s been a lot of hiring and a lot of growth. We are largely profitable and running cash-flow positive. The compound annual growth is huge. EverQuote is the largest online insurance marketplace in the country. We see about seven million unique visits per month of consumers who are looking to find the right insurance. We connect them to 7,000 different insurance agents and 100 carriers. It’s been an amazing ride. It’s the first large-scale data driven marketplace on the internet.

Are most employees in Cambridge?

Seth: We have 230 in Cambridge. About 120 are either data scientists or engineers. It really is a data and software company.

When you first took the CEO role at your previous company, did anything surprise you coming out of an engineering background?

Seth: Just about everything surprised me about it! Some people are naturally good at managing people. I’m not one of them. I think managing people is very difficult. It was a surprise at how many challenges you have running a business that are people related. This is especially true in tech where there’s just a ton of opportunity and it’s about getting the people and the people management right. This was a big lesson for me as a CEO.

Tomas and I have focused a lot here at EverQuote on culture. It’s not just about people but people who like to spend time together, work together, and have fun. Our culture has been built around people. It’s made the journey very different for me.

What were your influences in trying to build that people culture? Did you use any models to develop it?

Seth: In terms of the data science part of the business, we inherited a bit of that. We launched EverQuote out of a local accelerator called Cogo Labs. Their culture is centered around 100 percent transparency. This means seeing what every individual is doing and being able report on revenue and profit on a daily if not hourly basis. We adopted that at EverQuote. That’s very different from our prior businesses. We look at revenue and profit on a per click basis. It’s been very powerful.

Our level of transparency based on individual ownership has been a big cultural shift. We’ve learned to trust people of all ages with no bias. We have a ton of young people working here. I’ve learned that I should be comfortable working for someone who’s 27. They have a lot of insight, especially around the internet, that I didn’t have. The notion of not ordering people by age and experience but really by talent and almost raw intellect is especially rewarding in a data driven business.

Especially in biotech and in software, seniority is traditionally what matters. But look at Zuckerberg and these super young internet guys. We reflect some of that where there are young people running huge swaths of the business. They are doing it better than I ever could, and I’m overjoyed by it.

You mentioned transparency. Is that a custom system you all have built?

Seth: It is for us. There are components of the business where we use off-the-shelf systems such as Salesforce. We monitor almost any activity a human being can have at the company. We have NOC walls of our marketplace of real-time arrivals, revenue by team, sales goals, etc., instrumented and made available to just about everybody.

It’s made for an amazing culture. There’s not a lot of argument over what we should do. We literally just say, “Hey, let’s try that and see if we get a lift in the business.” It’s enabled a very test-driven culture and reduces the amount of he said/she said that I despise. It’s created more objectivity and fluidity in decision-making than I’ve ever had in prior businesses. I don’t want to ever go back to a more subjective approach. A data-driven approach is a great way to run a business.

What do you tell a new employee if they ask what do you do as CEO?

Seth: Whatever it takes. Whatever needs to get done. Where do I spend the bulk of my time? 1) On the data side looking at numbers in excruciating detail; 2) I focus with my partner Tomas on the products for both consumer and advertising; and 3) An increasing amount of my time is spent being a cruise director to make sure a bunch of people, especially millennials, enjoy themselves at the company. Ensuring new employees are having fun is really a part of my job and something I do quite happily. There are lots of opportunities for talent, especially in tech. If you want to engage best talent, you need to want them to come here and stay here.

If you could go back to school, is there anything you’d do differently?

Seth: Yes, I would go back and take statistics, specifically machine learning, and more coding classes than I did. MIT gave the worst, most commercially irrelevant coding classes. I had to self-tech myself Python and others. But I would focus more on statistics than coding, even if you get an English degree. We have a lot of great analysts who are English majors who taught themselves statistics and coding and are doing extremely well. It’s important to learn at least a few commercially relevant coding languages.

You’ve mentioned millennials several times. How are they different from the previous generation?

Seth: I grew up in an environment where you salute the flag: If your boss says “do it,” then you salute and do it. If they stay late at work, you do too, even if you have nothing to do. A lot of older managers have gotten it wrong around millennials: They’re not that formal. They don’t salute the boss. They are more comfortable questioning authority. They are self-servicing around information. They expect more flexibility. If they don’t have something to do, they’ll be out. On the flip side, they are way more efficient. They get a ton done. If you give them flexibility and respect as peers, the rewards are immense.

There’s a movie called “The Kids Are Alright,” and I give a talk titled that where I discuss how to adapt to the way millennials like to work. As I said, they are more flexible and less formal. They work their asses off and are just rock stars.

So the kids are all right Joel! Many managers out there are fearful or frustrated working with millennials. I feel the exact opposite. The experience is making us very successful. I am very grateful to have the opportunity to work with these young folks.

Maybe these managers are a little jealous of millennials.

Seth: There may be a little bit of that. We joke around and call ourselves “elderly internet entrepreneurs.” We know there’s an age difference and try to make light of it. We wear sweatshirts around the office, almost as an ironic statement. I’m in meetings often with someone who’s telling me what to do in a particular aspect of the business, and I realize I graduated from college before this person was born. You have to get used to it. You have to muscle through it. As tech accelerates this will become more and more true.

What trends do you see in your part of the world that would be generally interesting to CEOs?

Seth: I think there are some big trends not so much specific to insurance but to the Internet advertising world:

1) For the first time maybe ever the internet audience is equal or identical to the general TV audience. Five years ago the consumer you would market to offline was different from the online consumer. Now they are identical. Social media and especially internet videos have dragged in all consumers to the internet. All CEOs should be aware of this.

2) There will be a massive shift almost 100 percent in next three years to individually address and personalize insurance for people. For example, addressing general U.S. consumers or wealthy people in the Northeast is an old way of thinking about your advertising. The internet is enabling you to customize the experience for each individual. You can customize ads, products, and pricing to maximize your click-through or conversion or buy rate. It opens up whole new world to targeted advertising and micromarketing. This is very powerful.

3) If you don’t have data scientists who are functionally growing your business in some area, you are missing out on a vast opportunity. I don’t care if you’re Exxon Mobil or running a restaurant. You should be leveraging data at least in customer acquisition and retention programs and in advertising online.

What other companies you would say are capitalizing on the customer experience?

Seth: The Facebook platform is amazing. EverQuote is a big partner of theirs. Ditto with Google. Amazon is killing it by customizing the consumer experience. The offers you receive from them, even your pricing, is designed to drive sales and long-term value. Your experience on Amazon is very different from mine. It’s driving long-term value and revenue using internet and data sciences. Any fast-growing, successful company is using some sort of individual marketing or sales program based on data.

What’s the value proposition for EverQuote?

Seth: We’re creating a place where folks can, in a relatively easy and simple way, save an average of $536 a year. That’s a good chunk of change for most Americans. They are shopping their insurance in our marketplace not just for savings but also to find the right insurance. We also have an interesting and fast-growing app called EverDrive. It’s a social safe driving app. It’s not linked to selling insurance. It’s a cool way to measure how safe a driver you are and compete with friends and family to be a safer driver. You get some awareness around driving habits, whether it is phone distractions, speeding, braking, etc. We have crossed 250,000 app users and are growing very fast.

|26 Jul 2017

Lance Gibbs’ New Book: Not My Circus, Not My Monkeys

Lance Gibbs' NotMyCircusNotMyMonkeysI just finished reading a brand new book by Lance Gibbs, founder and executive chairman of BP3. BP3 is an Austin, Texas-based company that works with clients to provide simplified and improved business process solutions. The book’s title, Not My Circus, Not My Monkeys, perfectly captures the challenges large companies face in driving productivity.

I often talk about the need to balance the needs of shareholders, customers and employees. Gibbs explores this theme around granting employees the systems, authority, and considerations they need to best perform their work. Too many companies end up neglecting employees and customers in an attempt to chase short-term shareholder value. This strategy inevitability fails over the long term.

In this passage, Gibbs describes how to frame the most important relationship in a company, that between an employee and their manager:

“Bosses need to straight up tell their employees that they are allowed to take action, and that it is okay if they get ‘it’ wrong. Managers and supervisors have to show vulnerability about decisions made in their own careers to ensure that their employees really feel empowered to be authentic. There must be an element of support between bosses and employees—not hand-holding, but real, unyielding support. The support structure must be based on trust. Employees need to be able to trust that their bosses have their backs and, in turn, bosses need to trust that their employees can get the job done. Like they were hired to do! Bosses need to tell their employees that they can and should do their job, and that the only time they need to ask for advice from their superiors is when they feel truly cornered. When there is an honest support structure in place, employees will want to take the reins.” 

Learn more about the book here: https://www.amazon.com/Not-Circus-Monkeys-Transformational-Experience/dp/1619617099/ref=asap_bc?ie=UTF8


|17 Jul 2017

Culture: How to Engage Remote Employees

Culture article originally published on Entrepreneur.com.

Culture is how things get done in an organization. That’s why it’s critically important to get right. More entrepreneurs are realizing this and making great strides in building high-performance cultures. They’re finding it’s easier to manage for the culture you want when most of your employees are in one place.

All the flexibility in today’s business structures poses some unique challenges. What about your dispersed employees working in the field, at home and in satellite offices? How can you keep them engaged?

Not surprisingly, instilling corporate culture in employees outside headquarters requires a blend of high-tech communication and personal interaction. 

1. Use technology.

Technology is a convenient way to continuously emphasize culture and corporate vision. Both are crucial to get your entire team on the same page. Technology also is a means to encourage employees to collaborate across distances and organizational boundaries. Video, email, conference calls, instant messaging, collaboration software and other technologies are necessary tools in your arsenal.

Phil Nardone, president and CEO of integrated marketing and PR agency PAN Communications, recommends several technologies to keep remote workers involved in the culture.

“We are living in a virtual age where face-to-face communication can occur anywhere at any time, with tools like Zoom and Skype for Business making it easier and faster to form trusting relationships with coworkers,” Nardone says. “In a cross-office environment, use virtual staff meetings to announce prevalent company information to everyone at once and utilize communication dashboards such as Namely (the HR platform), for daily updates. At PAN, our weekly happy hours are hosted via videoconferencing tools, and employees stay connected by sharing the PAN Snapchat password to snap daily happenings in our office locations.”

Gene Austin, CEO of Bazaarvoice, also uses videoconferencing to unite global employees across his smart network of consumers, brands and retailers.

“We utilize videoconferencing technology on a daily basis, and not just for day-to-day meetings with our remote colleagues,” Austin says. “We host a global staff meeting for the entire company every other week that all of our remote offices access via video technology. We extend many of our company traditions beyond our headquarters as well. For example, during these staff meetings, we highlight major workplace successes, introduce new hires at every office location and celebrate milestone anniversaries over video.”

2. Get face to face.

While technology is indispensable, there’s no substitute for in-person interactions. Taking the time to travel to employee offices for face-to-face meetings can build credibility, camaraderie and engagement.

Shawn Jenkins, CEO of cloud-based benefits management software Benefitfocus, leads personal-culture sessions each year with his staff. “We did a summer of culture last year. We had over 40 meetings in different offices in groups of 40 to 50 people, max. We just talked about culture like a family. You could do that in one big video or a speech at a conference, but I find even if it takes you 40 meetings versus 1, that personal interaction helps me learn and listen and see what’s important.”

You also can manage by walking around. It’s a great way to get to know your employees, hear their ideas and learn about small issues before they escalate and become bigger ones. People want to like their leaders, but they can do that only if they have some personal connection. Spending time with your employees in informal settings will do much to drive this connection.

Bazaarvoice CEO Austin stresses the entire leadership team must be available and visible to the whole company. His executive team goes on an annual “road show,” traveling to each location to share business updates and answer employee questions.

3. Write often.

Sharing your thoughts in writing is another way to align the team with your vision and build trust. Benefitfocus CEO Jenkins writes regular emails and blogs for his employee audience. Social media can be an outlet, as well. A quick Twitter tweet or Facebook post can help employees feel more informed in an immediate and up-to-date fashion.

In the article, “Why CEOs Need Social Media,” global communications marketing firm Edelman recommends four types of content: posts on company culture; employee spotlights and profiles; personal aspects of your life; and industry insights and advice.

Culture is a social construct, not a process that can be engineered or a spreadsheet that can be analyzed. It takes a lot of work, but actively reinforcing culture among your remote employees builds a more connected and productive team.

|28 Jun 2017

Why Leadership Isn’t Better Than Management

I came across an article the other day that makes a common but misguided argument. In Shifting from Manager to Leader,” Sara Canaday encourages managers to move to a “higher level” and become leaders—implying that leadership is a higher and more valuable pursuit than management.

The distinction between leader and manager is nothing new. In fact, it’s been written about extensively since the 1970s. Canaday’s piece is very much in line with conventional wisdom, which assumes the following: Leadership is the more advanced, honorable discipline. Managers are those taskmasters we see in Dilbert and Office Space, unhelpfully focused on the details. In this paradigm, it’s much better to evolve from manager to leader, transforming into someone with charisma, big-picture vision, and influence.

To be fair, Canaday’s article does acknowledge that management attributes are positive as well, and her other advice—prioritize personal growth, expand your perspectives, etc.—is sound. But she contends that there’s “no contest” between manager and leader characteristics. “It’s like comparing a small pond with the ocean,” she writes.

As someone who’s been in the CEO role for over twenty years, this line of reasoning seems simplistic and even harmful. I agree that there is a difference between management and leadership, and that leadership is a necessary and valuable pursuit. But if I were hiring an executive and you gave me a choice between Jane, who excels at management but isn’t necessarily a compelling leader, and John, who can’t manage well but has typical leader characteristics like the ability to inspire—nine times out of ten I’m going to pick Jane.

How I Define the Difference 

Here is how I think about the distinction between management and leadership:

Management: Making decisions about the things you have control over. This includes deciding how to allocate resources, who to hire, who does what, and how it all moves the team toward the desired end state. It also includes monitoring the organization, detecting issues, and intervening to help people solve them as quickly as possible.

Leadership: Influencing the things you do not have direct control over. This includes how inspired and engaged your employees are, how much effort they put in, and how clear they are on the big-picture vision for the organization.

“Stop Managing”? 

Defined this way, management and leadership are complementary skills that should be developed together instead of dropping one in favor of the other. That applies even to those at the very top of the organization. CEOs are often thought of as the ultimate leaders, steeped in strategy and visionary perspective, but the best CEOs are often excellent managers too. And although you’ll find countless articles titled “Stop Managing and Start Leading,” the idea of abandoning management seems less than wise.

Think of a field army headed into battle. If the general has gotten the troops all fired up with a rousing speech, but he hasn’t ensured that the right people are in the right places and properly trained to do the right things, that army isn’t going to defeat anyone. Yet this is the type of style-over-substance approach we subtly promote when we praise leaders at the expense of managers.

Finding a Balance 

In reality, management and leadership are more intertwined than most of us think. Take a look at the 12 questions Gallup uses to measure employee engagement. By my estimation, they are about evenly split between questions relating to management (“Do you know what is expected of you at work?”) and questions related to leadership (“Does the mission/purpose of your company make you feel your job is important?”). This means that good management can also drive engagement. You could even say that excellent management is itself a form of leadership.

By the same token, “leadership” shouldn’t be restricted to the upper echelons of the organization. Frontline managers and employees can display excellent leadership ability. They don’t need to wait until they reach a certain tier to start working on being leaders.

Ever since Abraham Zaleznik made an influential call for more leadership in the business world back in 1977, the scale has been tipped toward “leader” attributes and away from the “manager.” Leadership may be more appealing to executive and consultant types, but if you don’t tend to the management side of your job, you will not be effective.

As my book “The CEO Tightrope” outlines, I think a balance is best. If you’re a great manager but struggling to have influence and vision, by all means work on developing your leadership ability. But also be aware that the inverse can be even worse: the leader who can’t manage. If you suspect that’s you, seek out ways to reconnect with the day-to-day realities of your organization. Hiring a COO might be a good idea.

I would strongly advocate that we appreciate and develop real management skill in our organizations even as we appreciate strong leadership—rather than encourage a shift from one to the other.

|30 May 2017

CEO Interview: Colin Doherty, Fuze

Fuze CEO Colin Doherty

Fuze CEO Colin Doherty

Colin Doherty is the new CEO of Fuze, a global, cloud-based unified communications platform. He is an experienced CEO, so it was interesting to hear his perspectives on how to approach a new CEO role and why understanding the company’s situation is key. He also had great advice about having the nerve to make changes sooner rather than later, focusing on all areas of the business rather than just your strengths, and why thinking you need all the answers as a CEO is a non-starter.

How did you get into technology?

Colin: I got a general business and marketing degree and then moved to London where I started working in the technology sector. What attracted me to tech is that it’s constantly changing. I didn’t want to stay in one place and become a doctor or lawyer or something that had a fixed pattern or set of drivers that didn’t change. Tech was what interested me.

When was the first time you thought “hey, maybe I can be CEO of something?”

Colin: I remember working in a very large organization. There were several challenges and problems, but no one was stepping up. The big picture didn’t make any sense to me. No one was saying, “let’s focus on these three things that we’re good at.” At that point I moved in a direction towards making decisions on the bigger picture as opposed to staying in a certain silo. That was the late 80s, four or five years after I was in London. That was the first move towards general management as opposed to a specific functional role.

When did you get your first opportunity to serve as CEO?

Colin: My first opportunity arose about 14 years ago. After working for Nortel for many years as the GM of a large business unit I moved to be CEO of a company called Mangrove Systems, which was a start-up in the carrier network space. There were three or four VCs on the board. It was a really good experience of getting out of a big company into a small company and looking at how decisions impact burn, R&D, direction, market, sales growth, focus, and things of that nature. Working with a VC board first-hand was a pretty interesting experience as well.

Were you a sales-oriented executive or did you have a more general operational background before taking the CEO role?

Colin: I started in product and moved to sales and on to general business management. The only function I didn’t come up through was R&D. I’ve been around tech my entire career and I understand it, but I’ve never been a software programmer or developer. It was more the business model, finance, sales, go-to-market, channel, financial model, M&A, partnering, etc. I try to focus a lot of my time on areas that are not my preference. I spend a lot of time looking at the R&D model, because that’s not where I came from. I would view that as tougher homework for me. It’s important to drag yourself to those areas as opposed to focusing on the things you like doing.

From the day you first started as a CEO to now, how has your management philosophy or approach changed?

Colin: I think when you start those roles you feel a tremendous amount of pressure to know everything and have all the right answers. As you evolve in these roles you realize that’s not necessarily true, and that’s why you have a team that’s working with you. I don’t believe that people work for me. I view that I work with them. I find that’s a better approach and pattern.

When you take a new job in any role, if you are honest with yourself, there’s a certain amount of insecurity that comes with that. Can you do the job? Are you going to be effective? Are people going to view that you are capable of taking the role on? That can drive some behaviors that maybe aren’t as balanced as you’d like in the early days. When you start to learn that you don’t need all the answers but you need to find the right answer as the team, that’s when you start to hit your stride as the leader of the organization in many ways.

Do you remember any particular event or problem where you had a success as CEO and you thought “hey, I feel comfortable now, I think I can do this job?”

Colin: One of the early challenges in one company was that the revenue was pretty good and the margin was great, but we had a bit of a cost problem. We had too many people, and I began to wonder if everyone is hugely effective. We ended up looking at the organization and the next 24 months and asked, “do we have the right people for that journey?” Or, had we had the right people for the prior 36 months? We had some legacy scale that didn’t make sense.

The nervousness was making a move and changing that out. We did it, and we didn’t miss a beat. There was more energy in the organization because of that. That was one of those moments where you realize okay, sometimes you have to make a change before you think you need to, as opposed to waiting for it to be obvious. That was a motivational thing. We realized that was a reasonably good call. We can make a difference here and move forward.

Do you do anything to teach your team – new executives in particular – how to work with you?

Colin: Yes, the thing I’ve always said to people I work with or who report in to me is: “Tell me what you really think, don’t tell me what you think I want to hear.” If you think something’s broken or we should be heading in a different direction, or we’re doing something that looks obtuse or odd, let’s talk about it. Let’s understand what both parties think here, and if we’ve got energy in the same direction.

When you come into an organization, as you know, you don’t necessarily have all the institutional knowledge that everybody else has. I try to listen an awful lot and draw conclusions instead of impose thoughts on a model that I don’t understand initially. I try to encourage an open dialogue, if you have a better idea than me, great, let’s do that. I don’t have a monopoly on good ideas. I’ve got a few. If you can exercise the broader machine as fast as possible, that’s always a good thing. It’s about transparency. You’ve got to have people feel comfortable sharing ideas and perspective on where the business should move and why.

There are a couple of different philosophies when you take over as CEO. You’ve had that experience several times, so I’m curious how you think about it. Some spend a lot of time listening before they make any changes because, as you say, they lack institutional knowledge and don’t know where all the bodies are buried, etc. Others come in and start making changes immediately, because they were hired to change the way the organization is run. How do you balance those two competing ideas?

Colin: Good question. I think every business is pretty different. That’s why I find these roles fascinating, because it’s not always the same situation you inherit. Fuze is a massive, high-growth company in the tremendously attractive UCaaS (Unified Communications as a Service) space in the cloud. As you go back and look at the business models of every company, I think there are four things that are generally consistent. One is the R&D model: What’s sustaining the company? What’s innovative? How does that market work? Is it agile or waterfall? What’s the quality of the organization? That’s a huge chunk of the revenue percentage. You may be spending 18 to 25 percent on R&D. That’s a big inspection point.

Second, then you’ve got the sales/marketing/go-to-market model. What does that look like? How large is it? Is it channel? Is it direct? Is it third party? Is it distribution? Is it reseller? Is it software license? Is it a SaaS model?

The third piece is the organization, the talent, and the culture of the company. How many people do you have? Where are they? How balanced is it? What’s the experience set?

The fourth thing is what market are you in? Where do you play? Who do you compete against? What does success look like, and is the view going to be worth the climb when you get there?

These are the four consistent things that exist in any company. What I call the “heat map” is different depending on where that company is. It may be that you have a go-to-market problem in one company. It may be that you have a decent product but the market is not great in another company. That’s when you start to figure out where the pressure points are and what to focus on first in order to get the biggest change in result.

Did you inherit a team at Fuze or did Fuzeyou bring in your own people?

Colin: It was done for me. Steve Kokinos, who is now the executive chairman, had been the founder and CEO since 2006. He is a really, really talented guy who started a lot of companies and has been very successful. He is a big product evangelist on UCaaS cloud. The board along with Steve hired a new CFO, a new legal counsel, a new chief people officer, and a new worldwide service delivery executive. I was hired at the end of that chain about six weeks ago. I’ve inherited a good team and good model. The board is very experienced. The question now is how do we tune the operational model and scale this company for a public offering.

That’s great. Most of the time the CEO is brought in because someone thinks there’s a mess to clean up. Sounds like you got a good one this time. 

Colin: Exactly. Sometimes these can be billed as turnarounds. I’ve done a couple of those. This is not a turnaround. This is a growth/scale opportunity in the truest sense. The market for Fuze is probably $40 billion total addressable market. It’s hard to pin down, but there are 400 million enterprise handsets out there in PBX land in businesses that need to be turned over. That’s a huge opportunity for us.

Speaking of the market, what trends do you see that other CEOs need to be aware of in communications? 

Colin: I think the workforce has changed dramatically. If you go back 10-15 years ago everyone was punching dial pads and seven-digit dial-in codes and sitting on conference calls. There are 2.5 billion millennials in the workforce today. They never talk to anybody. They never pick the phone up. They’ll text, chat, Snapchat, Instagram. They’ll do anything but pick the phone up. So the communications message to CEOs is, your workforce has changed dramatically. Nobody has a desk phone with a four-digit extension that anyone can remember anymore. That’s the UCaaS cloud market we’re after at Fuze where people want to connect on messaging, video, audio bridges, group chat, mobile apps, desktop apps. It’s a very different world. People want to communicate in a more mobile and casual way than punching a PBX and putting in a four-digit extension code. CEOs have to be aware of the mobile, millennial nature of the workforce. It’s a 24×7 world, and making people as effective as they can be through technology is a huge asset to any business.

It’s certainly an exciting market you are in. What else do you want to share about Fuze?

Colin: As I join the company I think there is a huge move of depreciation of 15- to 20-year-old PBX systems being retired for more cloud communications like Fuze. It’s the conversion of these systems to cloud communications and methods of communications such as video and collaboration. With Fuze we can retire five to seven apps in a common enterprise and clarify the IT way forward. We make a complicated situation very simple and very usable. It’s a huge value there. The company grew 90 percent on bookings growth last year and signed about 449 new customers. We now have about 1,500 customers in 38 countries globally, and 90 percent of those have international operations. It’s a great model and huge opportunity ahead of us. Our challenge is prioritization and focus as opposed to widening the lens. There are so many things we can do but a few things we really need to execute on. It’s a really exciting market.

|11 Apr 2017

CEO Interview: Kevin Hrusovsky, Quanterix

Kevin Hrusovsky is Executive Chairman and CEO of Quanterix, a company that’s digitizing biomarker analysis to advance the science of precision health. He has more than 25 years of experience in the life science space, mostly as a CEO. He discussed with me how he got his first CEO job, including how his dual engineering/MBA education prepared him for the role (read on for what Kevin says his MBA program did NOT prepare him for). He also explained how he gathers input from across his organization and the importance of having a greater purpose as a company.

Kevin Hrusovsky

Kevin Hrusovsky, CEO, Quanterix

Most people had a plan when they went to college. What did you think your career was going to look like?

Kevin: I always felt that I would try to use an engineering degree to get into technology businesses. I also planned to get an MBA so that I could play a more influential role in managing high-tech businesses. What’s interesting is that I was a mechanical engineer but I ended up joining DuPont, a chemistry company. I was somewhat out of my element. It’s telling that as I got into it, I realized how much I didn’t know. I felt that all my time was a lot of learning about chemistry, which wasn’t what I was trained to do.

Do you remember a moment when you first thought of the CEO role and your interest in pursuing it?

Kevin: I spent nine years at DuPont. When I started out in the engineering program, it was a rotational program. I would spend two years at one location and then move to a new location. There were circumstances that put me in different positions every six months. I found that very intriguing, because I was learning so many different things so quickly. Even in my second two-year assignment, I had four different positions because they needed help in certain areas. I was learning more and more about probably less and less.

A plant manager at my first site went into running businesses at DuPont headquarters and invited me to move from the engineering program to a product management position. That was my first time to be on the commercial side. I had just gotten my MBA. It was interesting to learn how the actual business ran as opposed to the science and chemistry part of it. That was when I could see my career evolve into a broader business management responsibility.

That’s pretty common to get an engineering/MBA degree combination. Looking back, do you think that’s the right combination for somebody who wants to move into the CEO role at some point?

Kevin: Yes, with engineering you never know everything there is to learn. It teaches you how to learn. That’s what I concluded more than anything. I think engineering is a great way to become technically oriented and plus learn how to learn. The executive MBA exposed me to a lot of other people and companies. It was a great way to get introduced to a broader position and what the possibilities were.

Did you take any courses that were particularly valuable, that maybe you didn’t think were that useful at the time?

Kevin: In the executive MBA, you do work in the job you are in. I enjoyed marketing and strategy due to my product management role. I remember even bringing in some of the teachers from my MBA to help teach my team some of the critical things about strategy and marketing. I would say that as time went on, finance ended up being an area that I really appreciated and probably didn’t appreciate as much at the time. Learning about finance was very important. What they didn’t teach me in my MBA, interestingly, was much about team building or interpersonal relationships or building culture. To me the most important aspect to growing disruptively is forming strong teams.

What was your first chance at the CEO job and how did you get the role?

Kevin: I got my first CEO position in 1996 with Zymark Corporation. Having spent so much time at DuPont, I learned so much about leadership and how to inspire and motivate teams. From there I want to FMC Pharmaceuticals, where I was GM in a very autonomous business unit. I had all functions reporting to me, so I acted somewhat as a CEO inside of a company. A former employee at FMC recommended me for the Zymark CEO job.

Kevin Hrusovsky, Quanterix_Logo_RGB_ColorA lot of CEOs get surprised by things that are going on in their organizations. How do you keep touch with what’s happening on the ground at your company? 

Kevin: I would say three things here: One is that I try to surround myself with people who care about people. If you do that chances are you are going to learn a lot from people who are willing to share. If not then you are asking for a major issue of not learning some critical information that is relevant. Second, I try to conduct a lot of employee meetings to provide perspective on what’s working and what isn’t working. We create dialogue during the meeting but also after the meeting by sending out letters asking those who participated questions about how the meeting went and what questions they might still have, etc. Third, I also do everything I can to reach out to customers directly, either with our sales people or calling them directly. Many times I learn things from the customers about what’s important and what isn’t. That is a vitally important component to the types of businesses I run that are growing, disruptive technologies. I keep those lines of communication flowing fluidly and at a high cadence.

You are in the medicine/health area. What do CEOs in other industries need to pay attention to these days?

Kevin: I would say that having a greater purpose is paramount. I think businesses moving forward need to give back more than they take or they won’t be sustainable. The next generation is very focused on sustaining the globe. You need to be bringing some benefit to society. Honing in on what inspires a greater purpose in your business is going to be necessary for pulling in some of the best talent in the world. No matter what sector you are in that’s very important. Also, there’s a revolution of digital technology that’s been going on for the past 25 years that is transforming at a very rapid pace in every sector of business. You need to be very honed in on whether or not digital technologies can play a role in helping you manage your business better or further enhancing your products that you sell.

Any other advice for CEOs?

Kevin: Having the willingness to bring people into the business who are more capable than you and to learn from them is also vitally important. I’ve been blessed to work with a team of people who are incredibly capable. Many have worked with me throughout my career. Anything you can do to make sure you recognize and attract the best talent in the world, it’ll lead to the best businesses in the world. Most of the focus that I put on any business is the people and what can we do to further inspire them as well as our customers and board members. I have a belief that you have to inspire and measure to a level of 10: Do you think your employees are highly motivated and inspired to a level of 10? Do you have customers who feel that you are bringing so much value to them that they are inspired to be working with you to a level of 10? Do you have investors who understand what you are doing and believe enough in where you are going that they are inspired to a level of 10? All three of those groups should be at a 10, and anything you can do to bring them together is a key piece of our formula. Each year we run summits and invite employees, investors, and customers as a way to further inspire each of those groups together. It’s a way to make them feel united, motivated, and inspired.

|28 Mar 2017

CEO Interview: Kon Leong, ZL Technologies

Kon Leong, CEO, ZL Technologies

Kon Leong, CEO, ZL Technologies

Kon Leong is the founder and CEO of ZL Technologies, the leader in unified information governance and analytics for the large enterprise. During our interview, he pulled no punches about the role of the CEO and how you should prepare for it. 

When you finished your schooling what did you think you were going to be? 

Kon: I mistook my education as the thing that should provide vocational direction. In undergrad I studied sales and IT. Also while in college I started several of my own businesses. Instead of doing what gave me the biggest satisfaction in my career choices, which was starting businesses, I did the lemming thing and followed the group. I went to Wharton, got my MBA in finance, and then went to the hot space, which was investment banking. I then gravitated towards the hottest of the hot, which was M&A and especially hostile takeovers. I spent about 10 years on Wall Street to my eternal regret. I could have invested those 10 years in Silicon Valley and high tech.

What caused you to make the change? When did you decide the banking world wasn’t for you?

Kon: I returned to my state of insanity and said I want to do what I love as opposed to what makes me the most money. Which of course rather perplexed my wife: It involved almost a 90 percent whack in compensation. As I mentioned, I should have gone straight to high tech. That was my original love.

Did you found a tech company first? How did you get in?

Kon: This is my third company. I’ve done a bit of a serial thing. I started a bank when I was a full-time student in college. For me forming a company is like falling off a log. Back in college my first one was a variety store/tobacconist. The third was a delicatessen open 24 hours. Forming companies isn’t a big deal; It’s more about how you pick your battles.

Did you take anything out of investment banking role that helped you?

Kon: Yes, focus on the cash, cash, cash and not so much on the GAAP results. That one is very, very important. That of course requires a very strong understanding of accounting. For all those who want to get a Masters/MBA, I suggest focusing on accounting and finance. It’s a building block: That’s how you read the blood-flow of a biz. If you don’t have that stethoscope, then you are in over your head.

Anything else you’d suggest for training for a CEO?

Kon: Yes! Ask yourself: “Do I really want to be a CEO?” If you think that’s really sexy, try to be parent to a teenager. That will give you a taste of being a manager. Parenting a teenager is similar to being a CEO because it provides you with perspective into dealing with irrational situations and gives you a glimpse of the patience required to succeed.

I see you’ve also been a serial entrepreneur {to Joel}. You and I know everyone is taken up with the sexiness of being a manager. But very few understand the responsibilities that go with it. The babysitting. The handholding. The nurturing. They just look at it like, “Hey, I can be a drill sergeant and bark orders!”

Yes, they have a fundamental misunderstanding of what the role of the leader is and can be in an organization. 

Kon: Yes, and that takes a bit of time to sink in. A lot of people who have been teenage parents get it. The younger folks don’t, so I still have to teach them.

ZL Tech Kon LeongHow do you drive that cultural aspect through your organization?

Kon: I have a simple metric in terms of measuring managers: If you think you can be a good manager, then deliver me this. No surprises. That task is more challenging than many realize.

It’s much more difficult to deliver predictable performance. Sometimes you get lucky, but predictable performance is the ideal.

Kon: I say to good sales people: Deliver no surprises. It’s not about win or loss. It’s no surprises.

Let’s say you have a few minutes to tell a new employee what you do as CEO. What do you say?

Kon: I try to bring the best out of the folks involved. In that process I try to map two circles. One circle being: “What are you really good at naturally?” The second is: “What do you love doing?” Hopefully there is an intersection. My job is to bring out that intersection.

How do you get feedback as to what’s going on in your organization? Do you have primary sources or methods for that?

Kon: Usually one-on-ones but that is logistically gated by the number of hours in the day. I tend not to have more than six or seven sources of touch points or data. Hopefully, from there it cascades downward so there is a tributary of data going up and down.

How many employees do you have and are most centrally located?

Kon: We have 110. Most are in California except for ones who need to be remote (such as international sales). We started a branch office in Hyderabad, India for support and QA. Core R&D is still in our headquarters. I haven’t seen it work well for R&D to be dissipated.

Do you do anything to make sure your various teams are working collaboratively with no silos?

Kon: The silo part is always inevitable. How you de-silo is a constant effort. As an organization gets larger, the tendency to form siloes is even greater. It’s a constant battle. If you are not constantly battling silos, something is wrong and they are forming without your knowledge.

Do you spend a lot of time talking about your mission and vision?

Kon: Yes, although sometimes it’s hard to see the true impact. It’s a bit of a non sequitur. I struggled with that for some time until I had a bit of support from something I read in the public domain about two months ago. Someone asked Peter Thiel, who obviously is known for investing in big plays, this question: “How do you know when you invest that this is a game changer?” What he said resonated with me: “That’s when the company finds it very hard to articulate what they are doing.” Which is counterintuitive, but it absolutely resonated. When it’s a true game changer, it’s like explaining cell phone service to a cave man.

Are there any trends you are seeing in your industry that you think CEOs would be interested in or relevant to them?

Kon: Yes. In terms of our vision, we talk about it but no one’s gotten their arms or head around it. The biggest asset of any organization is data and information. While many understand the value of data today, action remains to be seen. Being able to truly manage data for risk and mine analytics is what I consider the second coming of IT. The last six decades were spent in mastering systems data/structured data (dollars, zip codes). The next generation will master unstructured info/messy textual data/Word/PowerPoint. That’s the stuff that humans produce. If you can control that end you’ve basically gotten the key to the human dynamics in your organization.

When we articulate specific, detailed use cases and stakeholders recognize the potential impact of our technology, they almost always respond by perking up and saying, “You can do that?”

Major corporations are already paying the price for litigators, regulators, and more. We argue, that if they’re already spending the money, then why don’t they leverage an overlay of analytics? When that happens, the stuff corporations can answer is mind-boggling. We’re essentially able to provide a rewind button like in the sports field and in a crisis you just press the button and all the information gets collated, analyzed and delivered to your desk in a few hours. This technology becomes essential in the event of a crisis.

Take a CEO for example. He could be interested in what’s happening with the human dynamics. Let’s say he did a big acquisition and spent billions. Quite often it fails and the CEO is in the hot seat. Most of the time the finger points to post-merger integration. You could map all the human dynamics and map the hot spots. Figure out all the communications happenings with some spots lighting up and some dark spots. Failure is happening in the dark spots. You can fix it before it becomes an issue. What’s it worth to the CEO?

The impact of this technology goes all the way down to the lower level managers. In an interesting case one organization’s managers wanted to identify “TSTPs” (Same Ten People). The idea is that the same 10 people are doing all the work in any given department. It seems to boil down to that in many organizations. It’s not very difficult to identify them. Each organization is so different, but it’s very simple: Track communications patterns. People who are doers will have a certain pattern. They are the go-to people. If you analyze their communications, these people light up like Christmas trees. Some of them may not even have the proper titles. In that case, you better be rejiggering your organization.

Are there any roles or training you recommend for a prospective CEO?

Kon: I very, very highly recommend, in fact exhort, all budding entrepreneurs to take on mentors who have been serial entrepreneurs. It is so much easier to have the pothole explained than having to go over them.

|07 Mar 2017

CEO Interview: Shawn Jenkins, Benefitfocus, Part 2

In this second part of our conversation, Shawn Jenkins of Benefitfocus discusses how he overcame some hard times in leading a growing business, what surprised him most about becoming a public company CEO, and some advice for CEOs regarding benefits. 

Benefitfocus CEO Shawn Jenkins

Benefitfocus CEO Shawn Jenkins

You started Benefitfocus in 2000. I also started a company in 2000, so I know that was a rocky road. You were 18 months in when September 11 hit. How did that transpire for Benefitfocus?

Shawn: It was a difficult time. We started a dot-com in June of 2000, which was three months after the NASDAQ crashed – post the dot-com bubble burst. And there was no venture capital. Also, we started in Charleston, which at the time wasn’t known as a tech center, although now it is very special and has a lot of innovation around technology going on. Then came 9/11 and the recession that followed. It was a difficult environment, but it made our company much better. We raised very little capital but became profitable quickly. We had to create products that people actually bought and paid for. It instilled in us a sense of thrift and discipline and that we’re going to do it against all odds. This is still a big part of our DNA. It’s a very healthy approach as we reach new milestones and create new opportunities for our customers and ourselves.

Were there any near death experiences along the way that you had to manage through?

Shawn: The first few years on the job were extremely stressful, especially managing cash flow. But we’ve never missed payroll for 16 years now. Although there were some days leading up to payroll that were pretty tight. Around Christmas we were getting ready to make our first payroll in 2001 but we didn’t have the money leading up to the end of the year. We were able to make a few sales and had a small investment come in from a friend and family round that covered almost to the penny that first payroll. It taught me that perseverance and having these friendships and relationships is critical. Business takes a good deal of faith. If you keep moving forward, those things tend to work out and make you better and stronger in the long haul.

You made a transition that not many people get to go through, from founder to private company CEO to public company CEO. What have you found that surprised you? 

Shawn: I’ve really enjoyed it. Becoming a public company has a layer of cost and complexity. But as a software business we’re building a large platform to manage all benefits in the U.S. and eventually globally. We felt that becoming a public company was good for our associates, especially for compensation and the ability to pay people in stock. It also gives us the ability for larger and larger customers to see the company emerge. The plan worked well. We went public in 2013 and had an extremely successfully IPO. I’ve enjoyed the additional people I’ve gotten to meet and the ability to scale to deploy capital and build our business.

The surprising thing for me is that our original values and culture is every bit as alive today as when we were smaller, even though we are different and bigger, with more than 1,450 employees. My ability to talk about culture and invest in values and fan that flame of creativity is better as we’ve grown, because we’re attracting more people. It’s legitimized the ideas we’ve had. People said it would be the opposite: That going public would harm the culture. It’s like raising a teenager: You would not want to stop them from growing. You want to let the company be all it can be. It’s been fun.

Your area of benefits is of interest to our audience. Do you have any advice for CEOs in other industries about how to think about benefits over the next few years?

Shawn: It’s an extremely exciting opportunity in front of us as a corporation. It might be the first time in human history where we as a society have created a social contract between an employer and an employee. When something bad happens and you cannot work, your employer will have prepaid or funded benefits. That’s your safety net. That safety net has come under question or speculation. About 30% of compensation is spent on benefits. U.S. employers spend $1.6 trillion on benefits. This is a huge investment, and it’s been frustrating for all. I would say to the American CEO: Spend time learning about great innovations happening inside benefits. Look at what can be done with data, analytics, and technology through a company like Benefitfocus. For example, you can get great benefits into an employee’s pocket via mobile technology. Unlock your bragging powers: You are providing all these great programs and a whole host of new ones coming that are flexible and personalized. Getting the right benefits to employees and their families is a huge opportunity for CEOs. Spending more time understanding it and leveraging the benefit of benefits will be terrific for attracting and retaining the right type of people to be successful.

Anything else you’d like to add?

Shawn: I’d encourage other CEOs to think about how their company can be used as a platform for good. One example: In Charleston, our local state medical university is building a new children’s hospital to replace one built in the 80s. My family and company were able to get substantially involved in that. We are also involved in programs in the community for youth, healthcare, and the environment. CEOs have a really wonderful opportunity in the next decade to use their platforms (both personal and corporate) to unlock this social good. Historically that might have been called philanthropy or corporate giving, but now it’s more about time and attention and talking about how we use our business and our careers to help people. That has a tremendous positive economic impact for the company. You can do it for the right reason and also to make your company more attractive to people, which will be economically good for everyone.

|07 Feb 2017

CEO Interview: Shawn Jenkins, Benefitfocus, Part 1

Shawn Jenkins runs Benefitfocus, a leading provider of cloud-based benefits management software. In this two-part interview, he spoke with me about his journey as a CEO. In this part, he discusses how he became a CEO via a nontraditional route and developed his approach to the job. In part two, he explains how he persevered to take Benefitfocus public in 2013. He also has some insight for CEOs into the current quagmire of benefits.

Benefitfocus CEO Shawn Jenkins

Benefitfocus CEO Shawn Jenkins

What did you think you wanted to be when you finished school?

Shawn: I always knew growing up that I wanted to have my own business, and then I wanted to be able to fly my own airplane. I loved airplanes. I actually graduated with an aviation set of certificates and became a commercial pilot and flight instructor. I had some business schooling as well. I didn’t know what type of business I wanted to run but I did not want to be a pilot for a career. I simply love to fly. I felt like if I did well in business that I could pursue aviation on a personal level.

How did you get your formative business experience?

Shawn: Like many business folks I went through a series of trial and error. For my first job out of college I went to work for a nonprofit organization. It was a mission group that sent medical teams into third world countries. We’d organize doctors, nurses and supplies and set up temporary clinics. I was able to coordinate teams and do a good bit of travel myself. For four or five years I really learned a lot about people and fundraising, motivation, service and servant leadership. I watched firsthand how successful people like physicians and business people could use their careers for good to help people in difficult situations around the world. That early experience, although not traditional business, formed in my mind a view of what a business could be and how it could be used for a platform for good. This includes building great products and great wealth creation for all associates and providing for their families. Even more, it’s how businesses can have a social mission.

That was a very nontraditional route to being a CEO. What advice do you have for people who take that route?

Shawn: The advice I give people now out of school is if you can take even six months or a year, go and serve people. It gives you a good grounding of how the world really works and what opportunities are out there to not only use our careers for personal advancement but also to help other people.

As I wrapped up my job at the nonprofit organization, I still had the idea of wanting to have a business. I went through a series of self-taught sales trainings, and I purposely set aside two years to look for sales jobs. I wanted to figure out how to sell by immersing myself in a sales role. I also knew it would help me find out how to hire people who could sell if I had a business someday.

So you developed a functional expertise in sales?

Shawn: Yes, and in the process I discovered my business passion, which is software development and design. I met my partner Mason Holland, and we eventually started Benefitfocus through that work. Success is a combination of learning and getting experience but then also meeting the right people. Forming the right friendships and early business partnerships is critical. I certainly wouldn’t be where I am today without them.

Were there one or two who were particularly influential in your business thinking?

Shawn: The nonprofit I worked for really shaped how I think about creating cultures. At Benefitfocus we put a lot of focus on culture and values. We publish books on it and have a whole series on training. My early experience in helping people be successful as well as this idea of servant leadership really was profound. It stuck with me through software engineering and sales and through my journey of starting companies and growing businesses. That was very fundamental and remains a key part of what our company has become.

You’ve mentioned the idea of servant leadership. New CEOs are often surprised that they don’t have quite as much power as they anticipated. I often say you can only fire people once and it usually doesn’t solve the problem you have. How do you explain that to CEOs?

Shawn: I often quote Zig Ziglar: “You will get all you want in life, if you help enough other people get what they want.” As a CEO we’re in the business of helping people get what they want. At Benefitfocus we have a great culture and are attracting a lot of talented people on a national scale. We’re saying, “Come be part of a team where you can be successful. You can use our company as a platform for good and to achieve your own personal goals.” We say to our software designers and engineers: create great products that make our customers successful. Help them achieve their goals and in so doing, we help more people become successful, then our company becomes wildly successful. Ultimately that helps me be a successful CEO.

Check back next week for part two of this interview!

|31 Jan 2017

Top 10 2016 CEO Blog Posts

Of all The American CEO blog posts I published in 2016, here are the most viewed. Clearly, people like to hear from real CEOs, so three of my CEO Q&As made it to the top 10. The other articles focus on a variety of advice and information for CEOs, from the need for leadership training to how to identify a fake expert to the importance of branding as highlighted by the Presidential campaign.

Interestingly, my most viewed post of all time is the “5 Responsibilities of a CEO: Own the Vision” article. The job of the CEO continues to be a mystery to some, which means my work is still not done.

Here are the top 10 CEO blog posts in order of views:

professional development CEO blog1. We Need Better Leaders: Own Your Professional Development: In this article I list the reasons why the need for leadership training is greater than ever. While it may be true that the only real way to learn the CEO job is via experience, there’s no excuse for going in unprepared.


2. CEO Interview: Jim Whitehurst, Red Hat, Part 1: I began a series of CEO interviews this year and was lucky enough to talk to Jim. He is one of the few CEOs I’ve spoken with who has given serious thought to a CEO methodology. His insights about going from managing a staff of 80,000 as COO of Delta to 2,000 when he began as CEO of Red Hat are fascinating.

3. CEO Interview: Ray Bixler, SkillSurvey: Ray discussed how he handles several common challenges facing CEOs, including the isolation and balancing internal and external constituencies. He also explained how he has changed his management approach as SkillSurvey (cloud-based reference checking technology) has grown revenue and added employees.

4. CEO Interview Series: Fred Goff, Jobcase: Fred described how he went from working in the investment community to starting his own data-intensive company (a sort of LinkedIn for people without college degrees). He also offers advice on employment trends that CEOs should look out for and manage to, including rapid turnover: “Focus on retention-hiring, not filling seats!”

team building

5. Team Building Core to CEO Success: I’ve always thought we shortchange our students by grading them almost solely on individual performance. Then, when they become leaders in the workforce (granted largely due to individual effort), they are judged almost exclusively on their ability to build and influence teams. This is one reason why leadership training is so important (see #1 above).

6. The Expert Conundrum or How to Spot a Blowhard: CEOs need a dose of humility and practicality to get things done. They have to rely on experts. Judging those experts is sometimes difficult, but in this article I present a test that will ferret out the fakes.

Donald Trump brand promise7. Brand Promise, or Why Trump & Sanders Are on Fire: I published this back in March. Looking at the voters as consumers, I knew that the candidate with the strongest brand had a good chance to win. Trump had a big advantage in this area, as the results showed.

8. Leadership Development’s Most Underused Tool: They say that those who cannot do, teach. Really it’s the opposite: Those who seek to “do” must teach. It’s the best way to internalize and really learn something, plus it’s a great way to hone critical communication skills.

9. First-Time CEOs Not Prepared Says CEO Study: Earlier this year The River Group conducted one of the most in-depth studies of first-time CEOs that I have seen. Their results are extremely insightful, with practical guidance that all CEOs should follow. One of the most interesting findings to me is that the CEOs they interviewed felt much more prepared on day one than they did six months later.

frugal not cheap10. Teach Your Team to Be Frugal Not Cheap: It’s easy to be cheap by instituting a blanket moratorium on spending. It’s more difficult to be frugal, but it is better for the organization in the long run. Read my article to understand the difference.

|21 Dec 2016

How to Prevent Budget Tyranny

This column on how to balance the budget with the business was originally published on Entrepreneur.com on July 13, 2016. It is especially relevant now as people prepare their 2017 budgets.

budgetHow do you turn smart, well-intentioned employees into by-the-book automatons? By forcing them to make decisions based solely on the budget. Unfortunately, in some organizations the budget is the only tangible guidance that employees have. When the budget becomes the business bible, it will guide every decision, inhibiting your flexibility and competitiveness.

Here are four ways to align the budget with business objectives. This will help employees become more adaptable in a dynamic environment, exploit opportunities as they arise, and ultimately make the best choices for the business.

1. Give executives and leaders the final say on the budget

Empower your operating executives or leaders to have the last word on budget development and compliance, not the CFO. Your staff must consider any significant spending decision by whether it advances the goals of the department or division and the company as a whole, not just how it compares to a plan. Budgets are static, but business changes on a daily basis. A document written months before can’t possibly predict all the pitfalls and opportunities that will arise.

2. Instill the company vision and goals

Of course, decentralizing power over the budget is not enough. Employees have to know what you are trying to achieve before they can make good decisions. In the absence of other guiding principles (or a vision/mission they don’t understand), the budget will still guide every business decision. Ensure that employees fully grasp the company’s and their department’s overall strategic objectives as well as how their individual job contributes to achieving them.

3. Regularly measure the performance of every group

You get what you measure. If the only consistent feedback your managers receive is whether or not they are meeting their budget, they will manage to it and not the business. Instead, work with your direct reports to create metrics that reflect performance specific to their areas and support company goals. Then, consistently measure them on these metrics to cultivate a culture of high performance.

4. Constantly push on the budget

Ask these two questions of your managers regularly: “What would you do if you had significantly more money to spend?” and “What would you do if you had significantly less money to spend?” These two questions force managers to consider the cost/benefit tradeoffs necessary to dynamically adapt to an ever-changing business climate.

At the beginning of any given year, you may not know what resources will be available six months later, especially if you are a fast-growth company. I have seen managers suddenly receive a windfall and spend it poorly, because they had no plan. I have also seen managers forced to get by on significantly less, yet deliver close to the same productivity.

At the end of the day the company that delivers the most productivity for a given unit of capital will be the most successful. The CEO must constantly force the organization to make spending decisions in this business context instead of based on numbers in a spreadsheet. Cheaper and better is often possible, but only if better is clearly defined.

|06 Dec 2016

CEO Interview: Tom Galvin, Razberi

Dallas-based Razberi makes video surveillance appliances for corporations, public infrastructure, and school systems that want to deploy a high quality networked security system on or near their various locations. I had the pleasure of speaking with CEO Tom Galvin about his transition from an engineer to a CEO, how his role has evolved as the company has grown, and what security issues CEOs need to be worried about (that they aren’t already).

Razberi CEO Tom Galvin

Tom Galvin, Razberi CEO

I see you have a degree in electrical engineering from Iowa State. What prompted you to go back and get your MBA?

Tom: I was inspired by my father. I told him that I was going to enroll in grad school to get a master’s degree in engineering. He said, “That’s fine, but you should consider getting an MBA to round out your education. You can learn more about engineering in your job.” In hindsight that was the best advice I ever received. I went into business school not knowing how to read a balance sheet or really anything about finance. It was a great education for me to get that business degree.

When did you realize you might want to be a CEO someday?

Tom: Honestly as a young engineer I never really aspired to be a CEO. My first job as an engineer was at Boeing. Being a young engineer in such a large company, the CEO position seemed a long, long way from me. What I did aspire to was starting a tech company, and I always had an interest in being an entrepreneur. Becoming a CEO at some point was really just a result of founding a company.

RazberiWhen did you start Razberi?

I’m a late bloomer in terms of being an entrepreneur. I continued to work in management positions, managing engineering and product development in large companies. I never really found the right opportunity to start a company. Then I ended up taking a leap as an entrepreneur and founding Razberi five years ago in 2011 in my 40s. It’s been a great experience, and I’ve never looked back.

How has your approach to management changed and your role as CEO evolved since you started the business?

That’s a great question. This has been very interesting to me. We started with limited resources. Out of necessity, all the founding employees of our business wore multiple hats and had multiple responsibilities, including myself. It was a very hands-on job for me. As a founding CEO in the early days the focus is on getting a company established and surviving.

As the resources in the company increased through fundraising and revenue growth, it has allowed me to bring on a strong management team. My role has become more strategic and in a good way. Now I spend more time looking at where the company needs to be six months from now, a year from now.

And the other role that’s changed for me quite a bit as a first-time CEO is learning how to manage a board of directors and investors. How to keep everybody aligned as we move in a strategic direction. That’s a new element that I didn’t have to worry about before. It’s been a real growth opportunity for me.

What resources have you used to try to improve yourself in the CEO job? As you said, with the technical jobs it’s often pretty easy to know how to get better. How have you found that in the CEO role?

Good question. I think a pivotal moment in the company was the decision we made 18 months ago to raise capital so that we could have the resources to grow faster. In that process I approached someone I had worked with in the past who became my mentor. His name is Ken Boyda, and he is a former retired officer of General Electric. I worked in his organization at one time and approached him because I didn’t know how to raise capital. Ken, to his credit, took me aside and introduced me to some venture capital firms, and guided me in that process. The net result is we had our First Series A capital raise in late 2014 from Live Oak Venture Partners. As part of that process, I asked Ken to join a new board of directors that we formed, and he has served as our Chairman of the Board ever since. I talk to Ken several times a week. He’s been a great mentor to me as I’ve evolved my role as a CEO.

Is there a corporate culture that you’ve tried to push at Razberi consciously or has it developed over the years?

I think it’s a little bit of both. I’ve tried to emulate a culture and attitude in the company. We are very customer focused. We work hard. We have a high level of integrity in how we do business. I think that is reflected in the employees that we’ve been able to hire as we’ve grown. That culture really permeates everyone we work with as well. We have customers that are very loyal to our business.

I was very fortunate in the founding employees I recruited to the business. They walked away from good jobs to take a risk with Razberi. All those founding employees are still here. They emulate the culture. As we bring on new employees the culture instills in them in the right way. We have a very positive culture, with very low turnover. It’s a tribute to the employees that we’ve hired.

How do you find out what’s happening on the ground in your company? What’s your source of operational information? 

I stay in touch with our company leaders daily. In addition, we have several structured operating rhythms to gauge our progress at Razberi. Our weekly operations meeting is used to review customer orders, customer calls, and weekly production. Our monthly sales review includes a report-out of monthly goals and customer engagements from each sales leader. Our weekly leadership meeting reviews our progress toward quarterly goals in each functional area of the company.

In addition to the structured reviews, one of my favorite activities is “management by walking around.” I get some of my best information about the business just by walking around our facility and visiting with employees. It’s amazing to me how casual and unplanned meetings in the coffee room can be so productive. We had a new employee start this week in our assembly operation. I walked back to introduce myself and the employee said, “Oh you must be the Tom everyone is talking about. They said you would come over and ask me questions about what I’m doing.”

What do you tell that new employee?

A few things are important to me. I want that new employee to understand the importance of his or her role in the company. We are at a size where every employee has a significant impact on our company. I always want to empower them to speak up when they see a better way of doing things. 

Is there anything you are seeing in your business or industry that’s a trend that may be enlightening to other CEOs?

Security and protection of people and assets is important to every CEO, but one area that many may not be aware of as much is the vulnerability of the physical devices connected to their corporate networks. As more Internet of Things devices are deployed, whether it’s your security cameras or other devices that are Internet enabled, often times they aren’t properly protected when they are installed. They are vulnerable to tampering or hacking.

The massive distributed denial of service (DDoS) attack a little over a week ago caused outages of major websites such as Amazon and Twitter. Hackers hijacked an estimated 100,000 devices, including network security cameras, into a “botnet” for the attack. These devices were left “open” on the internet, but even cameras on private networks are vulnerable to attack. 

In The Wall Street Journal a month ago there was an article about a major cyber security breach hosted by what the reporter called “an army” of network cameras that were intended for video surveillance and security. Hackers had gotten into these cameras and hosted a denial of service attack on a corporate network. This is a real problem in our industry.

As security systems have evolved from analog devices to internet-enabled devices, the challenge is that security systems have become IT systems. However, the channels of delivery for security systems are different from IT. When you have a security problem in your business, you don’t call an IT guy. You call a security company.

Part of Razberi’s value proposition is simplifying the installation of network systems for these traditional security dealers, with automated cybersecurity protections built into our product.

How do you describe that innovation or differentiation you’ve brought to the market?

Our product is a network appliance that manages systems of network cameras that are used for video surveillance and security. We combine the switch, server, storage and intelligence along with health monitoring and cybersecurity features all in one box and scale up as customers need them. Plus, we deploy all this at the edge of the network, on the customer’s premises or near it, so all that bandwidth from the video footage doesn’t have to traverse the corporate network all the time. This is a huge savings not only in terms of bandwidth but also costs. Security professionals can easily deploy our appliances. Razberi offers the highest quality video surveillance and security at the best economic cost.

How do you gauge your success so far?

What is exciting for our employees is the fact that we created something in our industry that didn’t exist before. It’s a new product category. Being in that position allowed us to attract talent and investment when we needed it. The U.S. government, Fortune 500 companies, and some of the most recognizable public venues in the country use our product to support their video surveillance systems. We further validated what we were doing about three months ago when one of the largest network camera manufacturers in the world signed a deal to license our technology. That confirmed the whole concept and product that we developed. It’s an exciting time for us!

|01 Nov 2016

CEO Interview: Jim Whitehurst, Red Hat, Part 2

This is part two of my interview with Jim Whitehurst, president and CEO of Red Hat, the world’s leading provider of open source enterprise IT products and services. In this post Jim discusses his approach to management at Red Hat as well as the book he published in 2015 with Harvard Business Review Press entitled “The Open Organization: Igniting Passion and Performance.” In the book he shows how open principles of management – based on transparency, participation, and community – can help organizations navigate and succeed in a fast-paced connected era.

Jim Whitehurst, CEO, Red Hat

Jim Whitehurst, CEO, Red Hat

If I were a new employee starting at Red Hat tomorrow, how would I figure out where I fit?

Jim: Red Hat is very much a bottom-up organization. With that, we have a lot of ambiguity, and need people who can self-start. Typically, people join Red Hat because they’re passionate about open source software and the benefit it provides versus closed source software. My role is to create context for people to do their best work. As a new associate (e.g., Red Hatter), you need to be comfortable with ambiguity. Nobody is going to tell you exactly what to do. They’ll give you a general idea of what they want accomplished, and you have the freedom to figure it out from there.

Some people don’t like that and have real trouble with it. That’s what we really try to impress on people when they come in. It sounds fun and everyone thinks they want autonomy. However, autonomy also means you need to use your own judgment and logic to ultimately decide how you are going to accomplish work. Some love it and some don’t. We do our best to attract people who thrive in that open, freewheeling type of culture. 

Do you set up some guideposts for the organization on a quarterly or yearly basis?  

Jim: Once every four years, we update “the house.” That doesn’t mean we update our overall strategic direction every four years, but rather it’s a good time to take a fresh look at “the house,” see if there’s anything we’re missing or need to tweak.

Also, every year we have a set of relatively consumable goals (customer, market, people) that we communicate during quarterly meetings. It’s not financial but more a set of macro KPIs (key performance indicators), such as the Net Promoter Score for customers. We don’t want to make it too prescriptive. We focus on outcomes so people can decide how they get there. It goes back to the concept of creating context for people to do their best work rather than tell people what to do and monitor them doing it.

You are one of the few CEOs I know who has actually written a methodology around doing the job. Who were your influences in learning and thinking about the job of CEO?  

Jim: The odd part about Red Hat is that it is so different from most organizations. The open source movement grew out of a self-participating, not-for-profit kind of thing. There are great books out there on leadership and management, but they didn’t quite apply to Red Hat. When I went on my own journey about how to manage a more creative place, there are several books that were very impactful to me. Gary Hamel’s “The Future of Management” does a good job articulating that managing uneducated people doing rote tasks in a static environment is a very different skill set than managing educated people who have to apply initiative and creativity in a fast-moving environment. Simon Sinek’s Start with Why” was also an influence for me. A newer book – “Team of Teams” by General Stanley McChrystal – is a phenomenal book on how to think about building a more creative, bottom-up networked organization in a hierarchical system. 

Red Hat bookWhat caused you to write a book? Having done that myself, I know it’s no easy task.

Jim: As I mentioned, in his book “The Future of Management”, Gary Hamel nailed the problem: The traditional management bureaucracy was built to measure and monitor rote tasks. That’s not what exists now. I reached out to Gary and said, “You’ve absolutely nailed the problem, but how do we solve it?” He said, “I wrote the book, but I haven’t seen the solutions yet. Red Hat seems like it’s far along. Why don’t you write a book on it?”

It had nothing to do with what I’ve accomplished or done. It’s all about what I’ve learned at Red Hat. I went to Harvard Business School, became a partner at BCG, and ran Delta Air Lines, which is a very large traditional company. I thought I knew a lot about how to lead and manage. I get to Red Hat and initially thought it was chaos. I wondered if they brought me in to clean the place up and bring in some adult supervision! I quickly realized that it’s not chaos. It’s a very different culture and way to manage and lead. It’s about coordinating people’s behavior to get results. There is very much an assumption that people join because they want to and not because they have to. We show the importance of mission as well as the importance of individual interactions vs. lines and boxes. I wanted to share what I found so effective at running an organization with creative people in a fast-moving environment.

In talking to other CEOs, they were complaining that their change management efforts were failing; they were not growing fast enough; their people were disenchanted with the work, millennials all wanted to be CEOs, etc. It’s not a problem with people wanting to change or millennials. The problem is management structures designed for factory workers 150 years ago. There is a different way to coordinate, and at Red Hat we’re doing it at a reasonable scale. The book is much more an articulation of mistakes I made and things I’ve learned at Red Hat. I felt the story needed to be told about how Red Hat has developed a management system out of the principles of open source. And show others that they too could adopt the same model, and become an open organization. 

Do employees read the book and call you on your own words? I know mine do.

Jim: Yes, absolutely. There are people who have read the book and keep us in check when they think we’re not living up to our values. There are also those who have joined the company after reading it. I like to say the book is Red Hat on our best day. While we’re not perfect, we’re constantly striving to be better and be the best open organization we can be. 

Anything you are seeing with your view into the markets that you think other CEOs would be interesting in knowing?  

Jim: The context for leadership is changing. All of the systems and everything we learned in business school was to manage in a different context. It was much more about prescribing what people needed to do and holding them accountable for doing it. We are moving to a world where if it’s easy to prescribe, it’s easy to program. If you can automate it, that job is going away. The jobs that remain are where people have to apply initiative and creativity in fast-moving environment. They have to move from telling people what to do and monitoring, to creating context for people to do their best work.

There’s an analogy I heard from General Stanley McChrystal that applies: Gardeners don’t grow anything. Plants grow. The gardener just creates the best condition they can for them to grow. What would you advise if a 20-something came to you and said they want to be a CEO? What is the right preparation?

Jim: In the end it comes back to do what you love to do, and the right things will happen. Many people choose a job or make a move in their career, because they believe it’s the right next stepping stone. This should take a back set to doing what you love to do with people you enjoy being with. If you do that, you will be seen and will rise to the top. The worst thing is doing something because you think it’s the right next step.

|18 Oct 2016

CEO Interview: Jim Whitehurst, Red Hat, Part 1

It was quite an honor to speak with Jim Whitehurst recently about his role as president and CEO of Red Hat, the world’s leading provider of open source enterprise IT products and services. He is an avid advocate for open software as a catalyst for business innovation and, since joining Red Hat in January 2008, he has more than quadrupled the company’s revenue. In this part one of our two-part interview, I asked him about his journey to the CEO chair and when he first felt like he was getting the hang of the job. 

Jim Whitehurst, CEO, Red Hat

Jim Whitehurst, CEO, Red Hat

When you got through with college, what did you think you wanted to be?  

Jim: I thought I was going to do something in technology, but it never crossed my mind that I’d be a CEO or go down that path. I just did what I like to do and it worked out this way.

How did you get started at Delta?  

Jim: I got waylaid in consulting and ultimately became a partner at The Boston Consulting Group (BCG). My largest client was Delta Air Lines, and at noon on 9/11, the CEO called me and said I need you to be our treasurer.

When I joined I thought I would be doing more finance-related stuff. But, over time, I was given more and more responsibility. Ultimately I became chief operating officer (COO), with the vast majority of Delta employees reporting to me, including sales, marketing, and operations.

When was the first time you thought, hey maybe I should think about a CEO job?

Jim: It started at Delta. I was very much a staff-ish person, running the network covering strategy and planning. The CEO called me in one day and said, “I talked to the board and we want you to become the COO. I’d like you to drive a turnaround plan and run it day to day.”

So I went from having a team of 150 people to having 80,000 people reporting to me. That’s when I first recognized that maybe a bigger role made sense for me. Perhaps, I could actually be a principal and lead.

The River Group published a study of first-time CEOs earlier this year where they asked, on a scale of 1 to 10, how qualified CEOs thought they were for the job on day one. The average answer was 7.2. Six months later, the CEOs said 3.5. How would you answer that question going in to your job as CEO of Red Hat?

When I took the job at Delta as COO, I probably would have started pretty low and gotten lower. When I got to Red Hat, it was less than 2,000 people vs. Delta at 80,000. I came in with sense of “okay, I know how to run an organization.” However, six months later, I realized I was more like a two when I started!

Red Hat Main Lobby, image courtesy of Red Hat

Red Hat Main Lobby, image courtesy of Red Hat

Many people think, “Well I ran this company with X billion in revenue and X number of employees, so running a smaller shop must be easier.” How would you explain to a new CEO that it’s not always the case?

Jim: It’s not true in a couple of regards. Once you’re number one and in the chair, it’s just different. One of the things I’ve found is there is a different skill set required for companies at a different stage. Quick story: During my first month at Red Hat, we were preparing for a board meeting at the end of the month. I looked around at my team and asked, “Who writes the board decks?” Everyone looked at each other and finally someone said, “That would be you.” At the time we had about 1,500 people. I came from Delta where I had a whole strategic planning department who wrote the decks.

There’s a big difference between running a 1,500-person company (Red Hat is now getting closer to 10,000, and it’s still very different) vs. 80,000 at Delta. A lot of people think, “Well if I can run big, I can run small.” The irony is people who run small don’t necessarily think they can run big. There’s a difference between being a player, being a player-coach and being a coach. Most people understand that. The same is true in business.

Being a leader AND a doer is important in a small company. As you grow though, the ability to stop doing vs. orchestrating is important. Working through that transition has been fascinating for me. There are some people, such as Michael Dell, who have been able to do it from startup all the way through.

I think that’s where a lot of companies get into trouble. Small company people can’t run big, because they can’t let go. They can’t stop doing. Most big company people couldn’t run a small company, because they can’t actually do.

Do you remember the first time at Red Hat where you did something that made you feel like you were getting the hang of the CEO job?

My first year we created a strategy document in a bottom-up process, involving a lot of people. We developed a framework that looks very much like a house, although we never thought about it being a house when we were designing it. This felt like a relatively normal thing to do, something I’d done a hundred times at BCG.

Within months, people were calling it “the house.” You could feel disparate people being dramatically more aligned. It became something we could rally around. It wasn’t just a strategy but more an articulation of strategy. Our engagement scores improved.

That’s when I felt like I finally added some real value and understood what role I could play in making the organization more successful.

|11 Oct 2016

CEO Interview Series: Fred Goff, Jobcase

I recently had a chance to interview Fred Goff, CEO of Jobcase, one of Boston’s fastest growing tech companies with more than 50 million registered members and 100 web properties. Their mission is to connect the world’s workforce to empower them in their vocational, professional, and volunteering pursuits.

Fred founded Jobcase on the premise that LinkedIn had effectively abandoned workers without college degrees. I was interested in this as well as his approach to the CEO role.

Fred Goff

Fred Goff, CEO, Jobcase

Did you want to be a CEO when you were growing up?

Fred: What I really wanted to be was a fighter pilot and an astronaut. I thought about being the first person to land the space shuttle on the moon, which was how we thought we would get to Mars years ago. I was accepted by several academies, but health issues got in the way. I scrambled and got into Carnegie Mellon. This turned out to be good luck, because I’m able today to talk about this unbelievable educational institution that’s in my background.

Once I lost the vision of a fighter pilot, I wanted to be President of the United States. My early decisions were really predicated on that, including my decision to get a master’s degree in public policy. I thought my career on Wall Street would give me the right experience and accelerate wealth generation, so that I could be an honest public servant. Somewhere along the line I realized that I couldn’t be the Daddy I wanted to be and keep pursuing public service.

You made the change from the investment community to becoming a CEO. How did that come about?

Fred: I was running $1 billion in proprietary capital for BankBoston Robertson Stephens. I became a big believer in the power of technology to transform industries. However, I felt like I didn’t have the skill set to help lead that. I went back to MIT and ended up forming a machine-learning based hedge fund company, where I carried a CEO role. But it wasn’t until we transformed to Jobcase that the CEO role really was traditional. In Asset management, you can run $1 billion with only a dozen people or so, so the kind of organizational challenges normally associated with a CEO title don’t really apply. Jobcase is on a whole different scale of organizational complexity.  

That said, I never took stock in the CEO title. I did have a bit of an entrepreneurial bug, and I always aspired to leadership roles but I was never one to think of ‘ceo’ in particular as anything special – and still don’t.

Did you found Jobcase?

Fred: Yes. We have a different origin story: The machine-learning based hedge fund I started ran into 2008 like so many asset management companies did. A few weeks before Lehman went bust we went to cash, so we were fortunate to not be one of the blow-up scenarios that went bust. Instead, we forked the company and put the rights to the asset management investment vehicle on the side. We refocused the team that we used to construct portfolios of securities. Instead of predicting markets, we can predict consumer behavior. From there we grew and evolved into the labor market.

JobcaseWhat was the vision for Jobcase?

Fred: It’s rewarding to spend days getting the right content to the right people about their work life. The biggest factor that really launched us and created the vision for Jobcase was our data. It suggested that LinkedIn had abdicated those with an education below a traditional college degree. We thought we knew what was happening in that part of the labor market. It was woefully underserved. People have been thrust into being their own kind of agents. They receive no training in how to manage their own career and work life. We had the vision to open up access, so that everyone’s work life profile is available, and they build connections among people when they have relevant needs. For instance, how do I get a job at Walmart? How do I get promoted at Target? How do I move from being a warehouse clerk to a nurse?

Whatever these questions are, someone has the answer, and people can get advice about how to follow that path from the real experts – other Jobcasers who have already traveled that road. The real magic is the community of people who help people, with tremendous empathy. It is instructive and inspiring for people to help them keep going. We now have 60 million members. It is so much fun when you measure success by who has been helped today.

It reminds me of that Kevin Kline movie Dave about the guy who runs the job service but is asked to be a stand-in for the president.

Fred: Yes, Kevin Kline and Sigourney Weaver! He has that great statement in there about knowing a thing or two about getting people jobs. Not only do I know the movie, but it’s also in the decks that I present to my team.

How many employees does Jobcase have now?

Fred: We’re up to 95 now, almost all software engineers and data scientists and data analysts. The complexity of the platform we need to connect and empower people requires extremely advanced skill sets to build and maintain. We are also affiliated with MIT’s Computer Science and Artificial Intelligence Lab. We are part of an evolution of Big Data impacting Corporate America.

I think that HR in corporate America is in the third year of seven-year turnover where big data insights and proficiency begins to drive its activities. When I was a proprietary trader back in the 90s, I hired a physicist to work on our derivatives desk, and people wondered what I was doing. Twenty years later a guy with my background in economics couldn’t get a job on the derivatives desk – they all require those physicist type math skills. So Big Data moved from transforming Finance to Marketing and now HR in corporate America.

Today there are great entrepreneurs like Aneel Bhusri who started Workday and a few others who are really moving forward on how big data can inform Human Capital practices. Most of the really cool companies that truly do have proficiency in big data are focused on how they can use it to unlock value for companies. At Jobcase we’re focused on how we can take the big data insights and give them back to the individual person so they can help themselves. That’s a big differentiating factor.

What advice would you give to a new CEO?

Fred: Get the people and culture right. Ensure clarity of mission and metrics of success are known to everyone. Ensure links of any individual’s success metrics are linked to the overall organization’s success metrics. Make sure your people have the resources they need to succeed. Be authentic. And think of the role more like a Conductor of an Orchestra than some old-fashioned “boss” model.

For me, being authentic includes trying to create a culture that includes the golden rule, full transparency, consistently triaging the most important things to work on, data-centric and meritocracy. This works for our business because change is so frequent and unpredictable. But perhaps other businesses or other people embrace different aspects that allow them to be authentic in their leadership.

But you must realize – It all comes down to people. So many of us go through business training focusing on marketing and finance classes, and then we get a few years under our belt and realize that the people part – organizational behavior classes – was the only thing that mattered!

You gather a lot of data on your customers and the country as a whole: Is there anything you see going on or trends that fellow CEOs would want to know?

Fred:  A couple things. First, a strategic observation: this is an unbelievably fragile, shallow economy. Government economists say we’re at full employment, but labor participation rates are low. Underemployment is still near double digits. We have pockets of 25 percent unemployment. Worse, we have dumbed down the definition of full employment. The stats out of the Fed say that 47 percent of American households don’t have enough money to cover a $400 unexpected expense. Does that sound like a ‘full employment’ environment?

We see this fragility reflected every day in the Jobcase community. Even folks who are employed are nervous. When you look at the Presidential election, Sanders and Trump are outlier candidates by traditional standards. People in a full-employment economy don’t vote for outliers – they vote safety and status quo. So the signals for fragility in our economy are ample. So I have two messages for CEOs: 1) You better have your plan for when the economy turns. If it does it’s going to be a lot quicker and deeper than what’s expected.

2) A more tactical observation from the human capital space on your hiring: Focus on retention-hiring, not filling seats!

So often people are asking the wrong question. They are worried about getting hires in the door, but the big issue is keeping people employed. McKinsey found that it costs $2,500 to turn over hourly labor. And the best way to do this is to focus time on cultural fits. This is best done at the local level. Brands may be national but talent brands are local. A McDonalds in NYC is very different from one on the Ohio Turnpike. Surface local talent culture to raise retention and drop attrition.

And when you have your staff, don’t be cheap on compensation. Retention risk is underappreciated. My experience is there are two kinds of managers: At the end of every pay cycle, one manager says this person is doing a great job, how much can we give to him? The second type of manager says this person is doing a great job, what’s the minimum we need to pay them to keep them from leaving. Be the former not the latter.   Your staff will then be 100% focused on their job, rather than 20% focused on getting a different job and looking around. As a CEO, it’s not just the right thing to do; its also in your own interest to try to compensate your team as much as you possibly can!

|27 Sep 2016

Business Metric Creation in Action

I recently published an article on Inc.com about “The 5 Characteristics of an Effective Business Metric.” This is important, because there is only one way to encourage a high level of performance in your organization and accurately judge whether or not you are achieving it: You need to consistently measure progress on corporate, departmental, and individual goals using relevant metrics.

CEO Skills business metricYou can read about the five criteria in the article (easily measurable, predictive of future business performance, etc.). I also included an example from sales of what I think is a good business metric. But how do you get there? I suggest working with new managers right away to develop three to five metrics that will reveal whether or not they are doing a good job. Here’s a conversation I had with a product management executive to come up with those metrics.

I had not worked with this individual before (he works for an early-stage software company), so I asked him to think about the key responsibilities of his job. He told me that his top priority is to deliver an exceptional product. I agreed. But then I asked, “How would we know if it was an exceptional product?”

He said he thought an exceptional product would be easy and quick to implement. I suggested that it would also have a high conversion rate from demo to purchase. In addition, we agreed that the better the product, the fewer support calls the company would receive, and the higher the renewal rate would be.

Then we set metrics for each of these areas. In short order we progressed from a high-level corporate or departmental goal to specific, measurable, individual goals that highlighted the fundamentals for this area of the business. 

Not every business metric will have all five characteristics, but you should strive for as many as possible. The point is to measure the right things in pursuit of success.

|13 Sep 2016

Teach Your Team to Be Frugal Not Cheap

frugal not cheap

Frugal Photo Credit: investmentzen via Compfight

I was sitting in a board meeting recently and heard a phrase that always makes my skin crawl: Someone said they had instituted a “hiring freeze” in their area of the business. This is a common tactic to get a handle on costs. After all, in many businesses personnel costs represent two-thirds or more of the operating expenses. If you want to control costs, you obviously have to monitor hiring.

The problem is this strikes me as the easy way out. This particular executive manages a services business, where people are the product. You would never hear a product executive say, “Don’t bring any great new products to sell, we already have enough.” But that is effectively what this executive is doing.

The issue is that great people are hard to find, and you must run a continuous process to find them. When you find great people, you need to be able to hire them. You can’t stop and start hiring, and then hope that stars are available on your timeframe.

The executive works for a large organization that turns over hundreds of people every year. Now I am not saying they should just keep adding people regardless of the financial impact. Instead, they need to take a proactive approach to managing the workforce. This starts by rating the performance of every employee each quarter, so you understand who is providing the most and least value.

As business conditions change, you must actively manage the cost of the workforce to ensure maximum value. Sometimes that will mean bringing in potential stars because they are available, while letting go of the bottom performers. Top performers by definition will provide far more value than they cost. As a result, this activity will allow the organization to grow and employ more people than the organization could otherwise support.

As I was thinking about how to explain this, I realized how easy it is to be cheap. Being cheap just means not spending money. While this can have short-term positive effects on the bottom line, it is not a formula for success.

What you want is for people in your business to be frugal. The goal is to spend money wisely, in support of what the organization is trying to achieve. This requires much more training and thought but will lead to greater long-term success.

As CEO you will have to coach people to be frugal, because the easy thing is for them to be cheap. Don’t let it happen.

|25 Aug 2016

Team Building Core to CEO Success

We are doing a disservice to our future leaders: We grade them in school almost exclusively on their individual efforts, and then in the workplace we judge them almost exclusively on their ability to build and influence teams. The skills in the two areas couldn’t be more different. A huge factor in CEO success is how quickly he or she can create a highly functioning team. While hiring great people is a necessary step, it doesn’t ensure that the team will perform well. 

team buildingIn his book “The Five Dysfunctions of a Team: A Leadership Fable,” Patrick Lencioni presents a model for building a successful team. What kills teams? According to Lencioni, the five dysfunctions are:

  1. Absence of Trust: The fear of being vulnerable with team members prevents the building of trust within the team.
  2. Fear of Conflict: The desire to preserve artificial harmony stifles the occurrence of productive ideological conflict.
  3. Lack of Commitment: The lack of clarity or buy-in prevents team members from making decisions they will stick to.
  4. Avoidance of Accountability: The need to avoid interpersonal discomfort prevents team members from holding one another accountable.
  5. Inattention to Results: The pursuit of individual goals and personal status erodes the focus on collective success.

The quality of the CEO makes a huge difference here. Those who understand and adhere to the five responsibilities of the CEO are in a better position to manage healthy executive teams. The building blocks for this are the concepts of credibility, competence, and caringthat are the foundation for leadership.

Regarding the first two dysfunctions, the CEO can build trust among teams and facilitate healthy debate with the right leadership style, approach, and abilities. For example, humility and openness to feedback in a CEO helps establish the trust and credibility needed to lead – and this behavior is contagious. Executives – and employees at all levels – pay close attention to actions such as how the CEO spends his time, who reports to him, and how he balances resources across the company.

The last three dysfunctions are within the purview of the CEO as well. This is where the “deliver performance” responsibility of the chief executive comes into play. The CEO sets the bar for performance in the organization. Only he can create a culture of accountability. This entails setting a compelling mission and vision. Then, the CEO should help executives create metrics that are important and relevant to the business. Each quarter the CEO and executive team should establish goals for the company, each department, and each individual employee.

The cornerstone of all this is consistent measurement. Holding all executives and employees accountable for achieving their goals will instill a commitment to high performance. The CEO should constantly drive and refine the operational metrics as well as verify performance.

I think companies should spend more time training their employees about how to succeed not only as team members, but also in developing and managing teams. I encourage you to read Lencioni’s work in this area. Also consult my book and this blog for more about recruiting and retaining talent.


|12 Aug 2016

Transparency Primacy for CEOs

Technology reporter Rolfe Winkler recently published an article in The Wall Street Journal titled “When Startups Fail, Silicon Valley’s Millennial CEOs Like to Share Feelings.” He examines the penchant for younger CEOs to bear their souls in lengthy blog posts discussing everything that went wrong in their startups. While this might fall under the category of “too much information,” their willingness to be transparent is laudable. Here’s why CEOs should build transparency into the company’s operations on day one.

Transparency helps employees be emotionally engaged and committed to the business. Venture capitalist Brad Feld has a benchmark for CEO transparency: You should share the information you give to your board with all employees. He says, “If you can’t be open with your company about the information you report to your board, how can you actually be transparent?”

I think it’s important to share your board slides and other important information with employees. After all, many start-up employees have stock options at least and deserve to know how the business is doing. Transparency makes them feel more like a trusted part of the team. It also allows you to reiterate your vision, mission, and goals. While I would not share salary information or other sensitive details, I do think employees need to know the negatives as well as the positives.

Some CEOs are afraid that sharing any negative information will demotivate employees or cause them to quit. In reality, CEOs who are too optimistic quickly lose credibility. Employees start to see through the sunshine and roses and realize one of two things: 1) Either their CEO is not being straight with them or 2) Their CEO is too positive and cannot face reality or manage it effectively.

As I wrote for CUInsight.com, transparency is a two-way street. For it to work effectively, relevant information has to flow both from the CEO and to the CEO. When this happens, you get a feedback loop:

  1. Traditional top-down transparency helps employees see into the core of the business and
  2. Bottom-up transparency gives the CEO a clear view of day-to-day operations and the insight of his team.

These two types of transparency reinforce and supplement each other. When both sides understand the reality of the other, the result is a more cohesive, aligned company. This is what Khorus is helping CEOs do.

If you instill transparency in from the beginning, then critical moments are not nearly as jarring for employees. Startups are hard and most will fail. If you are clear with people about that in the beginning, it is much easier when trouble comes. Too many CEOs tell employees everything is going great until the 11th hour. Then employees are shocked when they find out the company is running out of money. Being consistent from the beginning is key to avoiding these “oh sh*t” moments.

|26 Jul 2016

The Expert Conundrum or How to Spot a Blowhard



What is one of the biggest differences between the CEO role and other jobs in a company? It’s the responsibility to make decisions about a huge breadth of issues. If you have spent your whole prior career working in sales, then you have likely acquired enough knowledge to make informed decisions in that area. However, CEOs must make decisions across the whole spectrum of business issues. As a result, they often confront problems where they have little background or expertise. Here’s how to handle it.

Step 1: Admit You Don’t Know Everything

In this situation it is important that a CEO be self-aware enough to recognize that he or she is not the expert. I think most recognize their limited knowledge. However, some CEOs feel they always have to be the smartest person in the room. They fear losing the respect of their team by admitting they don’t know the answer. This is a big mistake that can backfire. Employees will inevitably uncover their deficiencies and lose confidence in their leadership.

Step 2: Seek Advice from Experts

CEOs who are aware of and open about their limitations must seek input from experts. The question then becomes how to effectively determine whether someone is actually an expert. As CEO there will be no shortage of people who will approach you to give advice. Many will be easy to dismiss as people who simply have an over-inflated opinion of their own knowledge. However, there will be another group that is not so easy to dismiss. Since you as CEO don’t have expertise in the area under discussion, you might be fooled by anyone knowledgeable and sophisticated enough to pass a basic BS test. You need a way to directly evaluate their advice.

Step 3: Administer the Test

One of the things I have observed through the years is that the true experts have the same self-awareness that I find in good CEOs. These experts know what they know and just as importantly know what they don’t know. One way to test for this is to ask the “expert” questions in areas where you have strong knowledge and then evaluate their answers. The true experts will either not answer or preface their answer with a disclaimer about it not being their area of expertise. The fake experts will pontificate on any area with the same level of confidence.

If they don’t know what they don’t know, it is hard for them to be trusted advisors. Once you see this behavior, you can write them off. So next time you are confronted by an expert offering assistance, ask them questions in areas where you have special expertise and listen to what they say. You might learn all you need to know.

|12 Jul 2016

We Need Better Leaders: Own Your Professional Development

“You could go to class to go to be an NFL quarterback, you could have Peyton Manning or Tom Brady teach you lessons. But when you walk onto the field you’ll still be completely unprepared no matter how much schooling you’ve had because it’s dynamic and the time you have to make decisions [sic] much much shorter than you think.” Ben Horowitz

Ben Horowitz said this in answer to a Business Insider question about the hardest part of being a CEO. Though I don’t have 300-pound linemen squaring up against me every day, I understand his point. I think this sentiment echoes what many people think about the value of leadership training and advice. While it may be true that on-the-job experience is the only way to really learn to be a CEO, it’s also true that preparation can help you tremendously at every level in your career.

I would venture to say the need for leadership training is greater than ever, and that people need to take responsibility for their own professional development earlier in their careers. We cannot afford for them not to in today’s business climate. Here’s why.

There are more opportunities than ever before to assume a leadership role in business. Writing for SmartBlog on Leadership about why we are so obsessed with leadership these days, Naphtali Hoff said, “The ladder is now a stepstool.” Consider these phenomena:

– Most CEOs are first-time CEOs: The chief executive role is so unique that few are prepared for it.

– Increasing numbers of knowledge workers: According to The Wall Street Journal, the number of knowledge workers has more than doubled over the past three decades, and the trend shows no signs of slowing down. The consensus is that we are creating newer types of knowledge jobs – defined as people doing “nonroutine cognitive work” in professional, managerial or technical fields – faster than automation is replacing us. This creates a higher need for leaders who understand and can adapt to a rapid pace of change as well as know how to motivate this type of worker.

– Flatter hierarchies: Management systems such as Zappo’s holacracy are eliminating managers altogether, enabling those with specialized knowledge and natural leadership skills to step up regardless of experience or tenure.

– The rise of distributed leaders: An article in Harvard Business Review about strategy execution highlights the importance of “distributed leaders,” who are a natural outgrowth of the knowledge economy and flatter organizational structures. The authors write that “execution lives and dies” with this group, which “includes not only middle managers who run critical businesses and functions but also technical and domain experts who occupy key spots in the informal networks that get things done.”

– Growing numbers of remote teams: Leadership skills are critical to helping groups collaborate well across organizational and geographic boundaries, in support of group and company objectives.

– Advent of the cloud: Technologies such as cloud computing have made the barriers to starting a business much lower, creating more new executives/leaders than ever, if only in title.

Whether they become leaders by title or natural selection, the people who are steering our businesses today need more basic training in leadership skills. It is more important than ever for them to take control of their professional development. That goes for you as well, whether you are an entry-level employee or a seasoned CEO. To that end, I penned an article for Inc. recently about 10 ways to take control of your leadership development and keep learning. From reading and writing more to teaching what you know to taking professional training courses, these are things you can incorporate into your regular routine if not daily, then at least monthly or quarterly.

|29 Jun 2016

Leadership Development’s Most Underused Tool

What is one of the most underutilized tools in leadership development? Teaching, writes Ana Maria Sencovici of The River Group: “For leaders who are deliberately practicing their leadership skills, teaching is the surest way of internalizing and applying those skills.”

I wholeheartedly agree. There is nothing like teaching to help you master a subject. Many think it’s simply a one-way endeavor, with the teacher imparting knowledge and the students receiving all the benefit. The truth is that teaching rewards the instructor as much as the students.

I’ve been teaching nearly my entire career, starting with my four-year stint as an instructor at the Naval Nuclear Power School. Teaching continuously improves my communication and leadership skills. It makes me think through the material in a new way, expanding my knowledge of the subject matter. It also helps me develop new and better relationships with all kinds of people. There is always more to learn and new perspectives to consider. My students often teach me more than I teach them.

As I wrote about recently, Kevin Spacey discovered this when he began instructing other actors. The act of teaching reminded him of lessons that he needed to reapply to his own craft. This reinforcement led him to vow never to be “out of touch” again.

Sencovici breaks down the value of teaching this way: “In order to teach something, leaders must extract new information, then process that information against existing mental models and previous experiences, and finally apply it in some successful manner. They must do this enough times, in enough circumstances, to gain the comfort to share it with others.”

The key is repetition. It’s one thing to sit in a classroom for a few hours or days learning about leadership. This one and done approach does not cut it. The best way to internalize the material, besides applying the lessons in a business context, is to teach it to others.

If you are in charge of leadership development, make sure you set up plenty of opportunities for employees to impart their knowledge to others. If you are working on your leadership skills, take advantage of every opportunity (and create some of your own) to teach. In her article, Sencovici lists a few ideas for teaching opportunities, including:

 Create informal chances for people to be able to easily create their own lunch-and-learns.

 Start a social or video channel where people can create their tutorials.

 Have a way of publicly identifying and encouraging experts in particular leadership skills whom others can go to for advice.

 In smaller settings, have leadership team members teach something they’re good at to the rest of the team.

These are easy to set up and yield untold benefits for all involved, at every level. Sencovici rightly concludes that setting up and taking advantage of these opportunities could be the highest return on your leadership development time and resources.

Image credit: 380903 Tools Wallpapers

|09 Jun 2016

First-Time CEOs Not Prepared Says CEO Study

First-time CEOs revealed huge challenges in taking on the role according to a new CEO study by The River Group. Here is a particularly telling finding:

On a scale of 1 to 10, walking into the company on your first day as CEO, how prepared did you feel you were to be the CEO?

Answer: 7.2

Six months later, reflecting back to that first day, how prepared would you say you were, on the same 1 to 10 scale?  

Answer: 3.5

First-time CEOs studyThese results are based on in-depth conversations with 75 first-time CEOs on everything from preparedness to biggest surprises to the best and worst parts of the job. The results were not surprising to The River Group researchers or to me. I have focused my efforts over the last few years on the premise that most first-time CEOs are not ready for the role.

Based on the interviews – with chief executives on five continents with an average of 8,000 employees and $8 billion in revenue – here are 10 key takeaways and recommendations for first-time CEOs, which I agree with:

  1. Know from the start that you are not “the CEO.” Your job is to serve as CEO. Humility goes a long way.

The CEO role is not about power or being the smartest person in the room. It’s about channeling the experience and skills of others in the right ways and providing the proper resources.

  1. On day one your people will expect a message. Be prepared. Deliver. It will be your first impression to those who matter.

Owning the vision is one of the top five core responsibilities of the CEO.

  1. Recognize that you are no longer “you” in the eyes of others. Accept it. Manage it.

The CEO study highlights an interesting phenomenon here. As soon as you become CEO, people will begin to treat you differently. You will be seen as “complete” in the eyes of others; someone who has all the skills and answers. Don’t fall into this trap. The reality is much different.

  1. Engage your Board members individually. Develop a strong working relationship with your Chairman or Lead Director. Establish yourself as the CEO.

The CEO interviewees cited board management as one of their biggest surprises. One way chief executives can help is the CEO scorecard I recommend, giving each board member a way to objectively evaluate CEO performance and provide valuable feedback.

  1. Stay balanced. Your mental, emotional and physical health will be challenged by the job.

On a scale of 1 to 10, respondents judged their overall health prior to or after serving as CEO, on average, as an 8.2. During, the average dropped to 5.7, a decrease of 30 percent.

  1. Form or join a CEO forum. This should consist of no more than 10 to 15 CEOs with no one else in the room. It should be a confidential and “safe” environment to discuss issues of consequence and gain insight and advice.

“Lonely” was one word the researchers said came up frequently during the interviews with CEOs. Fellows CEOs will understand what you are going through and provide objective advice.

  1. Receiving constructive criticism and unvarnished feedback is very rare. But it is very necessary to the most powerful leader in the company.

The average score on a scale of 1 to 10 for quality of feedback the CEOs received was a 4.2. The score rose to 8.6 for those who had engaged a coach/trusted advisor, an increase of more than 100 percent. Also solicit objective feedback from subordinates. Consult “The 2R Manager” by Peter Friedes. Also, Dr. Tasha Eurich has an “Organizational Leadership Assessment” on her “Bankable Leadership” Web site that could be useful. 

  1. You will not know what you do not know until you spend time in the role. Accelerate your learning and avoid pitfalls by engaging those who are, or have been, successful CEOs.

Be open to learning. Mentors and coaches will share expertise, knowledge, and impartial feedback that you might not receive on the job.

  1. A highly functional and aligned leadership “team” at the top is critical to success. The failure to address underperforming or corrosive individuals quickly and decisively is pointed to as one of the most critical mistakes made by new CEOs. As hard as it may be, the consensus is to take action swiftly.

As I wrote in Entrepreneur recently, the fastest path to mediocrity in a company is to allow poor performers to remain and pretend that it doesn’t matter. 

  1. Engage. Engage. Engage. Be visible. Be approachable. From the bottom of the organization up—stay as connected as possible. Stay consistent. Communicate openly, honestly, broadly, transparently and at least three times more often than you think necessary.

“The myth of control” was a major finding, according to the authors of the CEO study. Those who believe a CEO is in complete control of the company don’t know much about being a CEO. In fact, lack of influence is a huge challenge for CEOs.

Engaging others, leading with a clear vision, and providing the proper resources are keys to having more influence. Another is to ensure that you are focusing on the strategic responsibilities of the job and not wasting time putting out the tactical fires of each day. In addition, having a management system is a way to ensure everyone is on the same page.

For more on how to tackle the role, for first-time CEOs or experienced ones, here are various ways to read or listen to my book “The CEO Tightrope.”

  1. Condensed eBook: http://www.khorus.com/the-ceo-tight-rope-abstract
  2. A free version of the audio book (with SoundCloud app): https://soundcloud.com/khorussoftware/the-ceo-tightrope-sections-1-4/s-DXoS3 
  3. Audible version from Amazon ($2.99): http://www.amazon.com/CEO-Tightrope-Master-Balancing-Successful/dp/B0118AAR58/ref=tmm_aud_swatch_0?_encoding=UTF8&qid=1462311095&sr=8-1
  4. Hardcover via Amazon: http://www.amazon.com/The-CEO-Tightrope-Balancing-Successful/dp/1626341060
  5. Kindle version ($7.99): http://www.amazon.com/CEO-Tightrope-Master-Balancing-Successful/dp/1626341060
|10 May 2016

In Praise of the Lazy CEO

A few years ago I wrote an article for Texas CEO Magazine extolling the virtues of “The Lazy CEO.” The concept may seem counterintuitive, but it is an important one: Chief executives must understand their unique responsibilities and focus on them. Those who take a scattershot approach to the role – focusing more on tactics by micromanaging and putting out the fires of the day – are largely ineffective. This is also the premise of Jim Schleckser’s new book debuting today titled “Great CEOs Are Lazy: How Exceptional CEOs Do More in Less Time.”

Lazy CEOJim is CEO and managing partner of the Inc. CEO Project, a coaching and peer advisory organization for CEOs. He is also a friend and mentor who has helped me in my businesses. Here’s how he describes his book:

“The truth is that great CEOs know a secret when it comes to time management. Rather than spending a little time on a lot of things, the best CEOs spend most of their time eliminating the single biggest constraint to the growth of their business. Depending on the challenge, they may play one of five different roles – the Learner, Architect, Coach, Engineer or Player – that together form the archetype for great leadership. This insight isn’t just some theory either; it’s derived directly from working with thousands of CEOs running high growth companies.” 

These roles or “hats” that every CEO should wear on a daily, weekly, monthly or quarterly basis dovetail nicely with my five overall responsibilities of a CEO: own the vision, build the culture, provide the proper resources, make good decisions, and deliver performance. CEOs need to set their employees up for success and then get out of the way (i.e., “get busy being lazy” as Jim says). Those who stray too far from these duties end up not only neglecting the strategic parts of their job but also undermining their people.

Buy Jim’s book today and read more about him and the lazy CEO at http://www.jimschleckser.com/.

See also my six hats of the CEO series and discover which, according to Jim, are the highest value roles (I added the sixth hat: the priest role, which entails maintaining company morale). Jim’s work on these roles influenced me as I wrote my own book for CEOs.

He also did a great series of short videos about the roles of the CEO: https://www.youtube.com/playlist?list=PLCCwm8haVgcr4Luq5_17BxIjp53srOcSQ

|11 Apr 2016

Teaching and Learning Kevin Spacey Style

Teaching is an honorable and worthwhile pursuit for any professional, including CEOs, and learning should be a life-long endeavor. Kevin Spacey embodies both in a recent interview in Harvard Business Review. He discussed his decade-long tenure as director of the Old Vic theater in London and what he learned from it.

Kevin Spacey teaching

Kevin Spacey image courtesy of IMDB

Why would an Oscar-winning actor pause his career to take on this job? He said he wanted to try something different, and it’s clear that he took this role seriously.

He showed the humility needed by CEOs and leaders at all stages by being open to learning new leadership skills. In the interview, he even references Jim Collins’ book “Good to Great” (one of my favorite leadership books) about the importance of taking succession planning seriously as a CEO. One of the best answers he gave, in my opinion, was about teaching and what he learns from it:

“You often work with young actors. What do you teach them?”

Spacey: “It’s incredible to help young people find their own self-esteem and voice and learn collaborative skills. But it’s funny: When you tell them something that’s been passed down to you, some lesson you learned a long time ago, often, in the act of saying it, you think, “Oh, my God. I needed to hear that. It’s really important, and I haven’t been doing it myself.” I recently did a master class with 20 emerging actors over two days, about three and a half hours each day, and there must have been at least a dozen times that happened. I look at these young people and see myself. I know what they’re going through. I understand their desire and ambition and all the questions they have. No matter what happens in my life, no matter what success I achieve, I don’t want to ever be out of touch with that.”

This reminds me of the value I receive from teaching leadership skills to current and aspiring CEOs . I often say that you never really master a subject until you’ve had to explain it to a group of people. I frequently learn more from my students than they do from me. Teaching is also a great way to improve your communication skills and develop relationships with all types of people, including your employees.

Take the time to teach as often as you can. After all, spending time as a coach is one of the highest value roles of a CEO.

|29 Mar 2016

Brand Promise, or Why Trump & Sanders Are on Fire

Super Tuesday is finally upon us, giving us the best indication yet of how each presidential candidate’s brand promise translates into actual votes. Like many, I have been following the presidential election process with some interest. As a long-time entrepreneur, I think it is a fascinating study of the market for American voters. I have read many attempts to explain the surprising rise of both Donald Trump and Bernie Sanders. The standard answer is some form of “the people are angry and want an ‘outsider.’” However, this opinion is from people who spend all of their time inside the political bubble and view the world as insiders versus outsiders. I don’t believe the vast majority of voters see the world that way.

The Presidential election is like any other market, and American voters (customers) make decisions no differently than they do in other markets. Today’s voters are bombarded with multimedia attempts to attract their attention and money. Marketers know how hard it is to penetrate the noise and get the attention of their target consumer. The ability of a brand to communicate a simple promise that people value is critical to success.

As any marketer will tell you, however, this is very hard work. For only the second time in forty years, there is no sitting president or vice president in the mix. Because of this, all of the candidates – perhaps other than Secretary Clinton – must create their presidential brand promise from scratch.

Donald Trump brand promise

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So how have the presidential candidates done in creating their brands? It is clear that some have been more successful than others. While I am no fan of Donald Trump, he has a huge advantage in this area having spent his entire adult life marketing his personal brand. Many people immediately associate his name with “winning.” Of course, as in any other market, Trump doesn’t have to win all the customers. A consistent plurality of the Republican customers will gain him the party’s nomination. Then he simply has to beat one other brand to win the presidency.

Among the other Republican candidates, are there any clear brands? Rubio, Cruz, Kasich and Carson have struggled here. Maybe Carson is the nice guy candidate, but the market for that brand is fairly small.

The brand promise concept offers a pointer for these candidates on how to attack Trump. The only attack that will be effective is one that dilutes his brand promise. This is why it is so important to Trump that people believe his business success and net worth, and why he probably won’t make his tax returns public. Anything that suggests he is not really the winner he claims to be will hurt him deeply. Almost any other issue will only be a flesh wound.

Bernie Sanders brand promise

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On the Democratic side, when I think of Bernie Sanders I immediately associate him with helping the poor. Whether I agree with his plans or not, I know the brand promise and can make a decision accordingly. As for the other candidates in the race, things are murkier. Secretary Clinton, while well-known by the general public, has not established a clear brand promise. Is she trying to recreate the “success” of her husband’s presidency, be the first woman president, or capitalize on her long history of political activism? Simple is better when it comes to marketing.

For entrepreneurs, establishing a brand promise from scratch is really difficult, but if done well the potential payout is huge. Focus on consistently driving the message home in everything you do. If you aren’t sick of hearing it, you probably haven’t talked about it enough. The Donald has pounded his message home and may win the biggest market in America. Of course, it doesn’t hurt when you arrive on your personal 757!

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|01 Mar 2016

CEO Interview with SkillSurvey’s Ray Bixler

CEO interview

Ray Bixler, CEO, SkillSurvey

I recently spoke with Ray Bixler, CEO of cloud-based reference checking technology firm SkillSurvey, about the challenges and responsibilities of the CEO role. He had some interesting things to say about some of the most common challenges of CEOs, including the isolation of the job and the difficulties of transitioning from being a specialist in one area (in his case, sales) to the generalist approach required of a CEO.

What is SkillSurvey? “Our company provides a better way for companies to gather feedback from job references of candidates. Reference checking has been a source of frustration for years and even decades. Most of the time it is done via phone. Most likely, the only information retrieved about a candidate is verifying dates of employment. At the end of the day, everyone agrees that if you were able to gather better feedback, you could make more informed hiring decisions. Our solution helps over 1,400 companies gather better information from those references.”

As someone with a sales background, what would you tell someone trying to transition from sales to a CEO position? “Much of it was natural for me, because selling is a big part of the CEO’s job. SkillSurvey was still in the early-stage growth mode when I came on board in 2006. As a VC-backed company, there was a lot of pressure to get results. My sales background helped me guide the company to growth (and still does). I needed to be able to persuade our employees, investors, prospects, and others that our vision and strategy was right and that we were making the right decisions to move the company forward. Especially at a start-up, everyone is selling early on, so you have to make sure they know how to do it to the best of their abilities. That’s a big part of the CEO’s job, especially when a company is in high-growth mode.”

What surprised you the most about the CEO role? “It can be lonely at the top. As the CEO you often have to be the one to pull the trigger and make decisions. Then you have the responsibility to make sure that all of the parties involved understand the decision and support it. Everyone should agree with or at least support your decision so the company can grow.”

How do you handle that lonely position/isolation and find people to help you out? “I’m a member of a CEO forum group in Boston with about eight or 10 other people. We have quarterly meetings, and each one of us is required to present a member challenge that is usually pretty intimate. This is valuable, because the issues we discuss are often some of the hardest to get feedback on as a CEO. I always greatly look forward to the meetings and get one or two pieces of advice that help me with the decisions I need to make. I also have advisors that I rely on, which is valuable in a different way. When you are with other CEOs, it’s similar to being with other baseball players and getting advice on your swing. When you receive advice from former CEOs who are now consultants, it’s like getting advice from a coach. They have a whole different perspective.”

When I talk to CEOs, they say talent is always #1 or #2. What do you think? “Talent is always at the forefront. The smaller the company, the more talent matters: In a company of 10, making a bad hiring decision can take the company sideways or backwards.”

What have been your management influences? “I remember some leaders telling me to make sure you have an agenda for every meeting you hold, even one-on-ones. I follow that advice to this day. Also, I value transparency. I worked for some people who didn’t share as much as they could about the business or the reasoning behind certain decisions. This was demotivating for the staff. I find that sharing as much information as possible, such as finances, indicates to the employee population that we respect them and we’re all in this together.”

How do you think about balancing internal vs. external constituencies? “They are clearly in most cases interwoven. You should look inward at your employees in a way where you treat them with respect. You need to give them the opportunity to grow professionally and feel motivated. In the end, they are the ones that should help set the direction of the company. From an outside perspective, you should ask clients and advisory boards for their opinions and advice. It’s good to hear their opinions and let them offer an opinion on what they think the company should do. It’s important to hear all sides.”

What do you continue to struggle with as a CEO? “As CEOs, there are so many opportunities in front of us that it’s really difficult to recognize which ones are ultimately the ones we should pursue. It always comes back to something that has made us at SkillSurvey extremely successful and that’s focus. Some leaders think they should go as broad as possible with their product portfolios. In the end, it’s actually not a bad thing to be really, really good at one thing and to execute on that one thing. Doing too much leads to failure more often than doing one thing really, really well. I have to go back every year and make sure I push myself to remember that. While we have opportunities in front of us, we must make sure that we don’t bite off more than we can chew.”

What has changed about your approach as you’ve grown employees and revenue? “I allow others to lead more. I am delegating more responsibility to the people on my team. Also, since I moved from sales to the CEO role, I have to make sure I don’t spend too much time in a sales role. I have to be the one looking outside, reading about what’s going on with the economy or the market, seeing what’s shifting around, and paying attention to that while the company is doing the day-to-day work.” 

If a new college graduate came to you and said they want to be CEO, what would you tell them is the best preparation? “This is timely because my nephew asked me the same question last week. My first piece of advice is: work really hard. Show up to work first, leave last, picking up experiences along the way. Take as many responsibilities as you can.”

Related Articles:

How CEOs Can Prevent the Scourge of Isolation

Why Do So Many Bright Business People Fail So Impressively As CEO?

|16 Feb 2016

Obama and Syria: A Lesson in CEO Credibility

CEO credibility

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Former U.S. Defense Secretary Robert Gates recently released his book “A Passion for Leadership,” and it has a great lesson in CEO credibility. In it he discusses the situation in Syria. President Obama stated in 2012 that the use of chemical weapons would be a “red line” that Syrian President Assad could not cross without provoking military intervention from the United States. Gates says that it was a “serious mistake” when President Obama failed to follow up on this after Assad used chemical weapons against civilians in Syria in 2013. He believes that this action caused a loss of credibility for the U.S. around the world.

While CEOs don’t have to make the life and death decisions the President does, the same principle is at play. The challenge with credibility is that you don’t get many chances to recover. Most people will give you one mulligan, but that is about it.

The most common mistake I see from CEOs is being consistently overly optimistic in their projections. Every time they miss a forecast, they lose credibility. When they lose credibility, they also lose influence with the organization. Without influence, a CEO can’t drive the direction of the organization.

Here are some questions to ask yourself about your CEO credibility (From “The CEO Tightrope”):

  1. Is there any discoverable fact about you personally that would cause your team to question your credibility?
  2. Have others ever exaggerated your accomplishments? How did you respond?
  3. Has there ever been a time, in your communications as CEO, when you shaded the facts in order to provide a more positive spin on performance?
  4. Is the message you communicate to your stakeholders ever different from the message you send to your closest team members?
  5. Have employees ever heard you skirt the truth with external stakeholders or customers?

Related Articles:

The Three Qualities a CEO Must Have to Succeed

How Leaders Can Find Their Mojo


|02 Feb 2016

Responsibilities of a CEO? Here Are the Core 5

What are the responsibilities of a CEO? I get asked this question a lot, and it’s consistently one of the top search engine terms that leads people to this blog. It’s no wonder that people are curious: The CEO role is different from any other in business. Unless someone has been specifically groomed for the role, it is unlikely that they understand what the various CEO duties are.

Chief executives fulfill many roles, but there are five responsibilities of a CEO. These are the core areas where CEOs should spend the majority of their time. If not, they are not likely to succeed in the job. Here are the five:

Own the Vision: The CEO is responsible for the organization’s strategic direction. While others can help create it, only the CEO can ensure that it is indelibly etched in the minds of every employee, customer, and shareholder. After all, it’s difficult to make progress if you don’t know where you are going. Everything the CEO does must support this vision. Too many CEOs allow the vision to be a slogan on a piece of paper rather than a guiding light.

Provide the Proper Resources: One of the main ways a CEO adds value to an organization is his high-level understanding of all aspects of the business. He is uniquely positioned to make decisions that often no one else can make. This is particularly true when it comes to balancing resources – especially capital and people – across the organization. Skillfully allocating capital and staff across disparate groups and initiatives enables the CEO to best prepare the company for success.

Build the Culture: Culture is important, and CEOs who take it seriously are more likely to have engaged employees who perform at their best. CEOs need to manage for the culture they want in their organizations. One way to build their own culture is to ensure that a set of clear values is applied consistently across every department. Constant vigilance is key here: CEOs should also regularly measure culture to ensure the organization is on track.

Make Good Decisions: This one may seem obvious, but CEOs are often surprised at the breadth of decisions that come their way. They can’t be experts in everything. Knowing which decisions to make and which to leave to subordinates is a skill. In addition, similar to providing the proper resources, the CEO is often the only person in the company in a position to make decisions that impact multiple departments. Building an organization that makes good decisions at every level is critical for success.

Deliver Performance: Everyone knows the CEO is ultimately held accountable for the organization’s performance. He or she must take an active role in driving that performance. The CEO sets the standard and must ensure that people are held accountable for performance. This means helping each department set the right metrics and goals and then consistently measuring them. Instilling a culture of high performance is crucial to delivering it.

This was just a short summary of my list of CEO duties. For a more in-depth look at each one, see the following articles in my “5 Responsibilities of a CEO” series:

Own the Vision

Provide the Proper Resources

Build the Culture

Make Good Decisions

Deliver Performance




|20 Jan 2016

Top 10 Blog Posts of 2015

As the classic Frank Sinatra song goes, “It was a very good year.” Khorus continues to grow and become an essential CEO management tool for many companies. I strive to educate both current and prospective CEOs on how to do the job better. This blog focused on that topic again this year of course – along with everything from the state of venture capital, to CEO leadership as informed by presidential politics, to Google as an outlier in business. Here is the countdown of my most popular blog posts of 2015. 

top 10 blog posts

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10. Is Donald Trump a Leader? In this post I apply my three Cs model of CEO leadership to Trump. Does he measure up? The answer may surprise you.

9. Beacon CEO Flies New Airline Service: For this podcast and Q&A, I had the opportunity to speak with Wade Eyerly, CEO of private subscription airline service Beacon. He had some very interesting insights on the airline industry and the role of the CEO, especially about building a good culture.

8. Chasing Unicorns: The Beginning of the End: This article is my lamentation about the glut of money and focus being paid to so-called unicorns. The consequences will be less capital for everyone down the road.

7. 12 Ways CEOs Build Learning into Their Daily Routines: CEOs who say they have no time for professional development are not doing their jobs correctly. This post provides 12 practical suggestions for building self-improvement into your work routine.

6. Under Armour CEO on Decision-Making: Kevin Plank gave the best quote of the entire Austin Technology Council CEO Summit last May. It helped me summarize my thinking about decision-making in a very clear and concise manner.

5. What a Sociologist Taught Me about the MBA’s Limits: This article takes applied physics to a new level. I’ve always thought that MBA programs are lacking, especially for prospective CEOs. An article in Physics World brought home to me why that is.

4. The Top 15 Essential CEO Skills: I believe there are 15 skills that are fundamental for CEOs to master. This article summarizes all of them, which are outlined in detail in 15 Khorus blog posts starting withAttracting People.”

3. Org Charts Essential to Good Decision Making: No matter what your organizational structure, an up-to-date org chart is critical for letting people know exactly who should be making which decisions. I believe in this so strongly that we built an interactive org chart feature in Khorus.

2. Why You Can’t Run Your Company Like Google: Just because all the cool kids are doing it…Or, why Google should not be your business role model.

And my most popular blog post of 2015 was…drum roll please….

1. Why Are VCs Biased Against Me? I’ve had more than 100 meetings with VCs during my career and raised money exactly once. What gives?

|05 Jan 2016

U.S. Startups Languishing According to New Study

startups declining

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There is a disturbing trend in the U.S. regarding startups and the rate of new business formation. More businesses are dying each year than are being started according to the new study “Where Has All The Skewness Gone? The Decline In High-Growth (Young) Firms In The U.S.” The authors – economists Ryan Decker of the Federal Reserve, Ron Jarmin and Javier Miranda of the Census Bureau, and John Haltiwanger of the University of Maryland – found that “Since 2000 the decline in dynamism and entrepreneurship has been accompanied by a decline in high-growth young firms.”

This is a terrible sign for the economy and may reflect a general uneasiness with the current economic climate. As the study points out, a relatively few number of startups are responsible for a significant amount of the new job creation. Using Census data, the researchers discovered that “In 1999, for example, the top 10% of startups grew almost one-third faster than median for all startups. By 2007, that ability to pull away had almost disappeared.”

As to the causes, the authors don’t reach definitive conclusions. One thing is for certain: The worse people feel about the economy, the less likely they are to start new businesses. Quitting a job to start a business is one of the biggest decisions any person can make, with many factors going into the decision. Most people who strike out on their own have special expertise that is particularly valuable in the market. When the economy is strong and the risk is low, the most talented are more likely to go for it.

As I wrote earlier this year, one issue is the current focus on chasing unicorns rather than other investments that may yield solid – though less potentially exciting – exits. With a glut of money going to unicorns, investors will realize that they cannot make as much ROI as they thought. This will make it increasingly more difficult to raise money, perpetuating the downward cycle of startup creation.

For whatever reason there aren’t as many “high-growth firms” being formed. You rarely hear this talked about in the national political conversation, but it should be.

Here are two articles that provide more details about this new research:





|16 Dec 2015

How to Be President of the U.S. (POTUS)

Commentators often claim that being President of the U.S. is totally different from being a CEO, because “you can’t just order everyone around.” This comment is usually made by someone who has never worked anywhere near a CEO, or they would realize that CEOs can’t order people around and be successful. While there are certainly differences between being POTUS and CEO of a major company, it is much more similar than not. Fortune 500 CEOs deal with many of the same issues as the President, because they both are in charge of large organizations and must balance many competing interests.

One of the first things I teach CEOs is what I call the Decision Nexus. To move the organization forward, CEOs must try to balance the often-competing interests of the following three very different stakeholders: employees, shareholders and customers. A good decision takes into account the needs of all three groups. A similar nexus can be used to explain how a President should think about his or her job.

Decision Nexus How to Be President

The Decision Nexus


Just like any large organization, the federal government has hundreds of thousands of employees. Most Presidents spend little time thinking about the average government worker or trying to make changes to improve performance at an individual level (not to mention at a departmental or organizational level). While they often spend much time on making various appointments, the criteria Presidents use have more to do with political payback than how well each appointee can do the job. An experienced CEO in the role of President would know how important it is to get the right people in the right seats to accomplish his or her key objectives.


The shareholders for the President are obviously the American people. Some Presidents seem to forget that they are the President of everyone, not just the people who voted for them. Communicating clearly and authentically with shareholders is key to having a productive relationship, whether in business or in the White House. Addressing legitimate concerns of shareholders instead of ignoring them is a vital role for any leader.


Finally, who are the customers of the President? Think about what customers provide a business: By buying products and services they provide the resources for the business to pay employees and invest in projects. In the case of the President, Congress is the entity that provides the resources by constitution.

I would suggest the President should treat Congress as the “customers” they are. It doesn’t mean he would do anything against his principles; merely that he would try to market and sell his ideas to Congress. He would discover where there was agreement and produce product to meet the need, forming whatever coalition necessary to sell the deal.

What can the President provide Congress in return? Significantly, he provides the ability to get anything done. As we have seen, it is very hard to accomplish anything if the President is truly against it.

This is a far different approach than most recent Presidents have taken. An experienced executive would understand that to accomplish anything, he must balance the interests of employees, shareholders, and customers. Nothing I have written is partisan in any way, but simply the best way to be an effective executive.

For more on how to balance these three constituencies, see the “Employees vs. Customers vs. Shareholders” chapter of my book “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO.”

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|02 Dec 2015

Managing the Giant Flywheel of Business

John Allison, former CEO of BB&T, once told me that he thought CEOs should be evaluated not only on the performance of the company while they are CEO but also for several years after they leave. There is a momentum effect in every business. Things going well tend to keep going well. If everything falls apart as soon as the old CEO steps out the door, it is a clear sign that things were not as good as they may have appeared. New CEOs need to understand what phase of the business they are walking into and that changes they make may not yield results for months or even years.

I have often equated revenue in a business to a giant heavy flywheel. When you start a business you want to give the wheel a big shove and get it going really fast. Unfortunately for most companies, no matter how hard you try it is very difficult to get the flywheel moving. You feel like every day you lean on it as hard as you can and it barely moves. With persistent and competence the flywheel starts moving and getting business becomes easier and easier. This can take years, but every new sale confirms the momentum and things start going in your direction. Customers start seeking you out. Employees want to work for you. Investors will want to invest, just as you may be proving you don’t need any more money. If you are really fortunate to have the right product in the right market, crazy things can happen.

I remember as CEO of NetQoS we got into this tornado phase in 2005. We were selling a physical server that did network management and had to be installed in the customer’s network. Every customer always wanted to do a proof of concept before they would buy to be sure it would work in their “unique” environment. Network engineers are famous for thinking their network is special and wanted us to prove our device would work. So one day my Sales VP walks into my office with a purchase order and a big grin on his face. At the time we were growing from about $10 million in revenue the previous year to over $20 million that year, so seeing a P.O. was not a rare occurrence. I glanced at it and saw it was for about $25,000 dollars, the cheapest product we sold. I looked at him and asked what was so special about it. He said this customer – North Dakota Telecom – called yesterday and wanted us to do a proof of concept. He told them he wasn’t sending a sales guy to North Dakota to talk to one customer about a $25K deal. And today they sent us a P.O. It was a significant moment for us.

When you get in that phase of the business it is easy to think that you are brilliant. The truth is this was the result of all the work we had done previously pushing on the flywheel. As CEO I could have gone on vacation for a year and orders would have kept rolling in to the business.

It is important to recognize this flywheel concept as a CEO. Significantly changing the revenue path of a business is very hard work. If things are growing this works in your favor, as the trend will likely continue, but if revenue is falling then reversing that is just as hard. Too many CEOs take over and think they will be able to reverse a company’s fortunes in a quarter or two. My experience tells me that even the best CEOs need six to eight quarters to make a significant difference in the speed and direction of the flywheel.

Almost all of the things a CEO does, such as setting the strategy or bringing in the right people, take time to show results. Don’t fall into the trap of promising quick changes. Fighting the flywheel is hard!

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|10 Nov 2015

Is Donald Trump a Leader?

I am constantly observing leaders to better understand how my three Cs model of credibility, competence and caring applies. Many people I know are shocked by the ability of Donald Trump to gather a large number of followers. They are offended by some of his comments and don’t understand how he could be leading the polls. An important point of leadership is understanding that you must look at it from the follower’s perspective. My model says that to gain followers you must appear to them as credible, competent, and caring. Let’s apply each of one of these to The Donald and see if we can learn something about leadership.

Credibility: Do people believe Trump is honest?

Credibility is the idea that people believe that you believe what you are saying to be true. You may have to read that last sentence twice. I did not say that you have to say things that are true. Clearly Trump has said things that most people would say are not true, but that is not the standard. With his willingness to say whatever comes to mind without a filter, he meets this standard for his followers. Am I saying that a leader can go around stating a bunch of crazy things as long as he appears to believe them? Well normally no, because that would violate the second standard in the model: competence.

Competence: Do people believe Trump can get something done?

People want their leaders to be competent at what they are doing. Getting all your facts wrong will cause people to doubt your competency. In this case, however, his followers are not looking for someone who is competent across every situation a president might encounter. What they are specifically looking for is a president who can get things done. No one can deny that Trump has successfully pulled off many land developments. It doesn’t hurt that he is flying around in a plane with his name on it. Compared to many of the politicians in the field – who can point to little more than having been elected to office to show their competency – he has a huge advantage.

Caring: Do people believe Trump cares about their issues?

Finally, we come to the caring question. How can a billionaire be perceived as caring? By talking about the issue that his followers care the most about, that’s how. Trump’s campaign was launched around the idea of discussing illegal immigration. For most of the politicians in the race, immigration is a difficult topic with many nuances. For Trump it is a hammer he uses to cudgel them on their own credibility and competence shortcomings. One of his favorite retorts is: “Why haven’t you done something to solve the problem?” I bet if you surveyed his followers, the majority would list illegal immigration as their number one issue.

To get elected and govern effectively, a president must capture a majority of the country as followers. The same is true of CEOs. While not everyone in a company must follow, to be effective you need a strong majority of followers across the entire employee base. The problem for Trump of course is how he can expand his followers and capture a majority of the people. This is the area where his previous comments will likely come back to haunt him. It is hard to see how he establishes the three Cs with voters who are less interested in the immigration issue and more focused on other issues. Making crazy statements may get you quick publicity, but over time it will erode your credibility and competence whether you are trying to lead a country or an organization.

Photo Credit: Gage Skidmore via Compfight cc

|06 Oct 2015

Lessons from GOP Presidential Race Disruptors

Presidential RacePhoto credits: Carly Fiorina and Donald Trump images by Michael Vadon. Ben Carson image by Gage Skidmore. All licensed under CC BY-SA 4.0 via Wikimedia Commons

I find the presidential race very interesting for what it can teach business leaders. The election is after all a market, with every candidate trying to sell himself or herself to the American people. Like every market, the presidential race has experienced significant changes over time. For example, the advent of television and the Internet forever changed the ways candidates sell their product to the country.

I think the current Republican primary is highlighting another potential transformation: The phenomenon of several non-politicians – the GOP outsiders – mounting significant runs for president is a classic disruptive change.

Reminiscent of large companies suddenly attacked by startups, the politicians in the Republican field have been “disrupted” by the likes of Donald Trump, Ben Carson, and Carly Fiorina. Similar to what happens in business, the established politicians are reacting by emphasizing their deeply formed policy positions and how the disruptors in the presidential race aren’t “serious.” In these comments, I can hear the echoes of CEOs such as Blackberry’s who claimed the iPhone was a toy compared to their professional products.

What the disrupted companies always miss is that they are no longer competing against the current incumbents. Customers are choosing a new product based on a previously unimportant dimension. Until the iPhone appeared, most customers bought mobile phones based on the ability to make calls and do email. Blackberry dominated with their phone, because it offered the best platform for doing email. Suddenly, with the introduction of the iPhone, email – though still important – was not the deciding factor.

In this presidential race the deciding factor is not a candidate’s legislative resume or even his or her judgment (see Donald Trump et al.). Disruptive products are often not nearly as “good” along many dimensions as existing products. But they often have one feature that people cling to as most critical. Currently, people in the polls are clinging to the idea that the non-politicians are more likely to go do something when in office.

The existing politicians in the presidential race are still trying to compete against the incumbents using the tactics that have always worked against other politicians. They need to forget about how their policies are more deeply considered than the new entrants and release a new “product” that convinces people they can get something done.

The lesson for CEOs is to constantly be on the look out for changes in your market. Are customers starting to make decisions along a different dimension? It’s critical to watch for startups that are getting traction. I am often surprised by how many bigger company CEOs know nothing about the startups in their space. Just because a company is small today doesn’t mean they aren’t going to be a major competitor tomorrow. Remember, every company started as just an idea. Don’t confuse current revenue with future results.

|22 Sep 2015

Just Do It: What Great Athletes & CEOs Have in Common

Rafael Nadal lessons for CEO

Photo of Rafael Nadal courtesy of Flickr user Ian Gampon

I watched an incredible U.S. Open tennis match this past weekend, which I think provided a demonstrable lesson for CEOs. Even if you aren’t a tennis fan, you can appreciate the uniqueness of the match. Rafael Nadal, the heavy favorite, was ahead two sets to none and a service break in the third set of the match. Nadal’s record after winning the first two sets in a Grand Slam tournament was 151-0! Never had anyone come back against him from two sets down.

That was true until Saturday when an incredibly talented but inconsistent Italian named Fabio Fognini turned in a performance for the ages. As Nadal admitted after the match, he played fine. Nadal didn’t lose the match as much as Fognini won it with an amazing array of shots under intense pressure. He didn’t allow the situation to overwhelm him, going for and making four consecutive winners in the key game. It would have been easier to just try and play it safe by hitting the ball in the court and hoping Nadal missed. Of course the odds of Nadal just missing and giving away the match were small (151-0).

Fabio Fognini lessons for CEOs

Fabio Fognini; Photo Credit: Bummel 1968 via Compfight cc

If you haven’t heard of Fognini, it is no surprise. A 28-year-old who is currently ranked 32 in the world, he has been generally considered an under-achiever during his career. Having played over 40 years of competitive tennis, I can tell you that learning how to perform consistently under pressure is the key to competitive tennis. Tennis shots have to be timed with incredible precision, and any slight variation due to nerves can make a good player look really bad.

You are probably wondering what this has to do with being a CEO. Well I’m glad you asked. In my experience CEOs struggle the most not with figuring out what to do but actually being able to do it under the intense responsibility of the CEO position. I often ask CEOs who have taken my class what they think I would do if I were CEO of their company. I used to be surprised by how often they quickly cite three or four things they believe I would do immediately if I took over. Of course then I follow up with: If you know what to do then why the heck haven’t you already done it? The ability to force yourself to do what should be done no matter the emotional pressures is a trait of both great athletes and great CEOs.

|08 Sep 2015

A Zirtual Outsourcing of Financial Responsibility

Zirtual burn rate

Photo Credit: purpleslog via Compfight cc

By now you have probably heard about Zirtual, the on-demand virtual assistant startup that closed up shop in the wee hours of August 10 and left 400 employees jobless overnight. A few days later, Zirtual founder and CEO Maren Kate revealed to Fortune that the company simply ran out of money. She said “the numbers were just completely f***ed.” In a blog post for Medium, she wrote, “‘burn’ is what happened to Zirtual.” What is even more telling is that she did not have a full-time CFO on staff and outsourced finances to a “Silicon Valley CFO firm.”

I often talk to first-time CEOs who have a very cavalier attitude about certain parts of their business. For instance, technologists think everything outside of product related stuff is easy. Or, those with a sales background will focus on sales and ignore everything else. The idea that you should outsource functions of your business that aren’t “core” is a thought you will hear from time to time.

I have never been a fan of this idea, but of course it depends upon how you define “core.” Before totally outsourcing a function, I would make sure that poor performance in that area couldn’t sink the ship. The number one reason startups fail is because they run out of money. Therefore, I would want someone on the team focused on predicting cash. That is a critical role, and outsourcing the entire finance function is a quick way for a CEO to lose touch with this key part of the business.

In the early stages, I would encourage the CEO to personally build the financial models so that they understand every lever related to cash. Almost every business should be predicting cash flow out as far as possible as part of their normal operations. It is not easy, but it is a lot better than sending a message on Monday morning that everyone is fired.

For those CEOs who think they can get away with focusing on just a few parts of the business, I’ll reiterate what I wrote in my book “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO.” As CEO you are responsible for the whole enterprise: The buck stops with you. The challenge all CEOs face is to build and grow a world-class company. You must be strong in every area of the business – not experts, but well informed – and fulfill the responsibilities that only you can perform. The CEO is responsible for making sure that every group is delivering at the highest possible level. Each company is only as strong as its weakest link. Understanding how to balance performance across all departments requires a CEO with broad experience, big-picture vision, and an understanding of what the job requires.

|18 Aug 2015

Why Google Can’t Run Its Business Like Google

Alphabet Google

Logo of Google’s new holding company Alphabet

Late last month I posted an article on this blog titled “Why You Can’t Run Your Company Like Google.” In it I discussed how most companies cannot afford to move beyond their core businesses and go after so many unconventional projects as Google does. Lo and behold, it seems that even Google cannot continue to act as Google. This week the company announced a new corporate structure where it is separating its core businesses from its “moonshot” projects, such as driverless cars and smart contact lenses.

The reason? According to Larry Page in his letter announcing the restructuring, “Our company is operating well today, but we think we can make it cleaner and more accountable.” They are separating the financials of Google from the collection of companies it is calling “Alphabet.” Said Page: “This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead.”

This move will make it much easier for employees to understand and align to the very different mission of the core business compared to the other moonshot projects. Defining success is critical for every CEO, and with the mishmash of businesses it was unclear what success was for the old Google. Now the existing advertising and search engine business can focus on what it does best, while the moonshots can be run as they should be: as high-risk, high-reward startups. As a CEO, it is important to review your mission annually and make sure success is clear for every employee.


|14 Aug 2015

Greed Is Good? For-Profits vs. Nonprofits

What is the difference between nonprofits and for-profit enterprises? If you listen to the popular media, for-profits are greedy, nasty organizations that succeed by taking advantage of poorly informed customers. Nonprofits on the other hand do noble work that provides value to society instead of making profits for greedy capitalists. While I am sure you could find examples to illustrate both ends of the spectrum, my experience serving on the boards of both for-profits and nonprofits is that there are more similarities than differences. However, the impact of competition and efficiency does a lot more good for consumers than people realize.

Amazon for-profits

Logo Credit: Amazon

For example, let’s say Amazon wanted to become a nonprofit. Would consumers benefit more? A simple question should illustrate the point. Taking the past three years (2012–2014) into account, if Amazon were to lower its prices so it made zero profit, how much could it reduce consumer prices? If you suspect a trick question, you are right. Amazon would actually have to raise its prices to break even. The fact that Amazon can raise money from the capital markets allows it to operate at a loss. This would be impossible if the company were a nonprofit. This statement about Amazon from Matthew Yglesias, writing in Slate, captures the concept:

“That’s because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way. And the competitive pressure of needing to square off against Amazon cuts profit margins at other companies, thus benefiting people who don’t even buy anything from Amazon.”

Walmart for-profits

Photo Credit: JeepersMedia via Compfight cc

Of course, maybe Amazon is just different from most companies. What if we looked at that most hated of American companies, Walmart? Over the same period, how much could Walmart lower its prices if it wanted to operate as a nonprofit? The answer is roughly three percent. In other words, an item that sells for one dollar would drop all the way to 97 cents. This would be hardly noticeable to most consumers. It is interesting to note that for every dollar Walmart collects on a transaction, three cents goes to Walmart as profits, and I estimate that between 20 and 30 cents goes to the government in the form of sales taxes, employment taxes, property taxes, etc. You could say that Walmart is a barely profitable organization being run for the benefit of the government!

Because Walmart and Amazon can fund themselves in the public markets, they have been able to scale to a size that provides tremendous efficiencies. It is commonly accepted that new businesses will lose money in their first few years in order to gain the scale necessary to break even. Because nonprofits by definition can’t produce a financial return for investors, most can’t raise enough capital to scale and are constantly trying to raise money to just keep the lights on.

My point with these two examples is to show the incredible effects of competition and efficiency in the marketplace as a force for good. While most entrepreneurs start their businesses hoping to make a profit for themselves, the market forces them to do that in the most efficient way possible. The unseen force of competition does more than anything else to benefit consumers.

|04 Aug 2015

Why You Can’t Run Your Company Like Google

Google's Eric, Larry and Sergey in a self-driving car; January 20, 2011

Google’s Eric, Larry and Sergey
in a self-driving car; January 20, 2011

I think we all know that Google is an outlier in business, but we can’t help comparing ourselves to them. They’re like the popular kid in high school who has looks and money and seemingly everything going for them. But the same lessons we learned then apply now: Stick to your own unique strengths and learn the value of delayed gratification. If you try to be too much like the cool kid, you’ll probably end up looking silly and ultimately fail. And, as is often the case, they aren’t the best role model.

The problem is not that Google built a successful search and advertising business. It’s not that the company basically has this printing press that throws off billions and billions of dollars in cash. It’s not that the company is trying to keep growing, as every business does. No, it’s their approach to growth that is the problem in my opinion. As Chairman Erick Schmidt told Business Insider:

“Most companies ultimately fail because they do one thing very well but they don’t think of the next thing, they don’t broaden their mission, they don’t challenge themselves, they don’t continually build on that platform in one way or another. They become incrementalists. And Google is very committed to not doing that. We understand the technological change is essentially revolutionary, not evolutionary.”

What this means is that Google is trying to catch lightning in a bottle again: They are desperate to create the next billion-dollar business. However, history is not in their favor. Few companies have ever come up with a billion-dollar idea twice in a field unrelated to their initial success. Just look at the turnover on the Fortune 500 list: More than half the companies that were listed in the Fortune 500 in 1995 were not on the list in 2007.

Their quest is causing Google to act in unusual ways. The company is certainly making good on Schmidt’s promise not to be incrementalists with its “moonshot projects” such as self-driving cars and smart contact lenses. Yet it remains to be seen if any of their futuristic projects will really be a driving force for growth or simply an entertaining distraction from the company’s core business.

Their use of “objectives and key results” (OKRs) is laudable, but having too many goals that are just pipe dreams is no way to run most businesses. In other companies, employees would not last long if they did not achieve more than 30 percent of their goals. In addition, many employees at Google do not have real job descriptions but are simply trying to come up with a brilliant idea.

I’m all for job flexibility and a healthy R&D practice, but most companies cannot afford to behave like Google. Many of us are just trying to make payroll. We need to have predictable cash flow. Excess revenue is put towards growing the business in a responsible way. We cannot go around chasing unicorns.

So no, you cannot and should not run your business like Google. Sure, their excess cash is a problem we’d all like to have, and I hope Google does come up with the next billion-dollar idea. In the meantime, the rest of us must continue to live in the real world.

|21 Jul 2015

Chasing Unicorns: The Beginning of the End

There is a constant theme in the business world: Some enterprising individual uncovers a new way to make money and makes a fortune. Other people look at what they are doing and say, “That doesn’t look so hard, I can do that too!” If they are early enough maybe they make some money as well, but over time we end up with too many copycats and too much money chasing too few returns. Greed is a powerful motivator, but as more money pours into an idea, it becomes harder and harder to make money. There is an inevitable collapse in prices that causes the later entrants to suffer a major loss.

I think we are seeing this phenomena occur in the venture funding industry as everyone has become enamored with the idea of chasing unicorns (companies who have a valuation over $1 billion). Everyone wants to invest in the company that will be the next unicorn.

Photo Credit: Jim Linwood via Compfight cc

Photo Credit: Jim Linwood via Compfight cc

Before Cowboy Ventures founder Aileen Lee coined the term “unicorn” in a November 2013 TechCrunch blog post, venture capitalist Mike Maples, Jr. was talking about “thunder lizards.” Mike is a smart guy who analyzed the returns from VC investments over many years. He found that in each year there was often one company that achieved exceptional returns compared to all the other companies that raised their initial funding in the same year. Often the results were so skewed that the one high performer was worth more than all the other companies combined! Also, the second best performer produced huge returns compared to everyone below them.

Being a smart investor, Mike recognized that finding the one thunder lizard each year should be the obsession of a VC. All of this makes perfect sense…at least until it doesn’t. There are a couple of underlying assumptions under this analysis that are beginning to be proven false. The biggest is that building a huge company means investors get tremendous returns. This was true in the past when the total venture funding raised by a company before going public was relatively small. If you build a company worth $2 billion, whether you raised $30 or $50 million doesn’t really matter much. The investor is going to be happy with the returns.

As the amount of money available to startups has increased, both because of larger VC funds as well as the entry of more late stage sources (private equity, sovereign wealth, pension funds, etc.), a billion dollar exit does not necessarily guarantee investor happiness. In the extreme case of Uber, which has already raised almost $6 billion, any exit short of probably $20 to $30 billion could leave early investors without a good return. No longer does being the top gross performer in your year guarantee a great return.

I think many in the startup community are losing sight of the goal. Venture investors want a great return for the large risk they take. They understand that many of their investments are going to be total failures, but some will be huge winners. Historically, a great return was defined as a 10X exit. Having a 10X exit should be the goal of the exercise, not hitting some random number of a billion dollars just because it sounds cool.

As entrepreneurs and investors are focusing on unicorns, they are failing to consider this changing landscape. My suspicion is that sometime within the next couple of years, limited partners may begin to realize that they don’t have as many winners as they thought they did. When that happens it will be really hard for many firms to raise another fund. My advice for entrepreneurs is to raise money now if you can, because it may not be available at nearly the same levels in just a few years.

Related article: Something is rotting under Silicon Valley (Fortune)

Featured Photo Credit: ell brown via Compfight cc

|07 Jul 2015

How to Engineer Employee Alignment

What’s the top challenge of CEOs? Employee alignment, according to many I speak with all over the country. Making sure each employee understands the company’s strategic objectives and is continually working towards them is critical. However, many CEOs believe they can run their organizations via verbal communications, with an e-mail thrown in every once in awhile for good measure. The truth is that even companies with as few as 50 people struggle to get on the same page, making it imperative that CEOs take a systems approach to employee alignment.

Consider the inefficiency of trying to verbally communicate the corporate objectives in a 50-person company. It’s possible for CEOs to personally meet with each employee, but it would be time-consuming. Even a companywide meeting once a quarter or once a year, while more efficient and certainly worthwhile, is not enough. To make it stick, CEOs also have to ensure that each employee understands how his or her daily work supports those objectives.

This takes extensive work on the part of the executive team and managers to help employees create goals that match up to the department and company goals. Many times this is also done verbally. Any written goals often end up on static documents that everyone revisits maybe once a quarter or even once a year. If employees and managers discuss progress towards their goals, it’s often infrequently during meetings. It’s common for no one to think about the goals again until the next weekly, monthly or quarterly meeting or even the yearly performance review.

Next, think about employees and departments who need to work together to help the company achieve its goals. The numbers escalate dramatically if most of those 50 employees need to communicate their key objectives and projects directly to each other. If every person had to meet with every other employee in a 50-person company, it would require 1,225 meetings!

Then think about how often things change and need to be communicated to the relevant parties. While everyone may not need to directly interact, the idea that an organization of any significant size can be run by simple verbal direction and communication is a fiction. This type of problem calls for a system of record that reflects the objectives of each team member and can be updated frequently.

I have found that a system using quarterly cascading goals as a foundation can align employees and formalize each person’s contribution to the whole. Simply breaking down the intent of the CEO to each employee – and putting that information in a formal system of record that everyone can see – is a valuable exercise that ensures employee alignment from the top to the bottom of the organization.

But the system needs to go further (and this is what I have done with Khorus) by continually reemphasizing the goals with employees and providing a way to communicate updates. Each week, employees should be asked to disclose how likely they are to meet each goal during the quarter and what their perceptions are of the quality towards that work so far. This is important, because employees may feel that a goal can be completed during the quarter – such as a software build – but they may also believe the quality will not be up to par. One Khorus CEO customer calls this the “canary in a coal mine” effect.

Instead of eliciting backwards-looking progress reports, these questions ensure that the CEO and managers receive predictive data about where goals stand and which ones may be in danger of not being completed on time and/or at a high quality. With this companywide forecasting, the CEO and his team can take action in time to make a difference – not at the end of the quarter or year when it’s too late.

In addition, keeping weekly tabs on likelihood and quality helps reinforce the goals with employees. Because they are regularly asked for their feedback and opinions, employees stay engaged with their work and feel empowered to take creative initiative. This lends purpose and motivation to each working day. Also, when all company, department, and individual goals are aligned and visible in the platform, it becomes easy to spot dependencies and redundancies between groups. This visibility boosts trust and collaboration.

Aligning every employee and his or her role with the corporate direction is a critical role for the CEO and the only way to deliver consistent performance. CEOs cannot simply rule by decree. Those who take a more systematic approach will be in a better position to more actively manage the company and achieve their objectives.

This article is based on one I published on The CEO Magazine web site last year.

|16 Jun 2015

Under Armour CEO on Decision-Making

CEO Decision-making

Kevin Plank, Under Armour CEO, interviewed by WP Engine CEO Heather Brunner during the event; Photo credit: Austin Technology Council

I attended the Austin Technology Council CEO Summit last week and heard Kevin Plank, the founder and CEO of Under Armour, give the best quote of the entire event: 

“As a leader, I don’t believe in right decisions or wrong decisions. It’s about being decisive.” 

He captured a thought about CEO decision-making I’ve had before but couldn’t express succinctly. People often ask me about my worst decisions as CEO, but I’ve never felt like I had a good answer. I can’t really pinpoint what my best decisions have been either. The point is that I don’t view events as discrete decisions but a continuous process of decisions. While certainly in hindsight some things didn’t turn out well, that doesn’t necessarily mean those were bad decisions.

Also, a good outcome doesn’t necessarily mean it was the best decision possible. As a CEO you must be decisive but also constantly reflective and willing to change course when presented with new facts. No decision is final. This is one of the odd balancing acts that CEOs must perform. It can make you crazy. You have to make quick decisions, but you also have to be open to the fact that any of those decisions could be wrong and should be changed. The people who course correct the fastest in their decision-making process are the ones who have most success in the CEO role.

Overall, the event was a success with more than 165 local executives in attendance. One regret I had, which was shared by many of my fellow CEOs in attendance, was that there were not more young CEOs there. I personally invited several from the Austin region to attend, but too many think they don’t have time for events like this. They missed out on all the incredible experience and connections gathered in that room.

As I mentioned in my last post – 12 Ways CEOs Build Learning into Their Daily Routines – those who make time for events like this are often the most successful, because they have learned what their responsibilities are and how to balance them. In addition, they have an attitude of being open to learning and growing. Those who believe they don’t have the time for personal development are not doing their jobs properly. This brings all this back to CEO decision-making: It’s a process that can be learned and honed, but only if CEOs take the time to do it.


|03 Jun 2015

The Top 15 Essential CEO Skills

What are the CEO skills needed for success on the job? Once CEOs understand the five responsibilities of the role and the six ways they should spend their time, I think there are 15 key skills they should cultivate. Why these 15? They help CEOs set their organizations up for success with systems, processes and resources; manage and lead well; and continuously learn/keep up with trends to help predict where the organization is going and what it will need in the future. Some CEOs will naturally be better at these than others, but all can be learned and perfected with the right attitude and zest for knowledge.

Here are the 15 CEO skills in no particular order. The links go to full articles and videos about each one on the Khorus blog, where I published a whole series about this topic.

  1. Attracting Employees: One of the most important uses of a CEO’s time is focusing on recruiting and hiring top talent. Too often, organizations treat hiring as a tactical fire drill rather than a critical part of the strategic plan. CEOs need to own this process.
  2. Retaining Employees: Too many organizations neglect employees once they are hired. CEOs should focus on the “A” (or top) players and ensure that they feel empowered to do their best work in support of a compelling purpose.
  3. Employee Development: This is an important part of retaining employees. The best workers want to be part of something special. CEOs need to set a clear vision and show employees how their contributions can support it. In addition, they should implement systems and processes to develop employee talent.
  4. Communication: Communication is essential for any CEO, but many think they can get away with addressing the employees just a few times a year. CEOs need to regularly communicate information that is timely, relevant, and tailored to each audience. This includes being transparent about both positive and negative developments.
  5. Leadership: CEOs must act through people, and leadership is effectively influencing people to achieve desired outcomes. There are three tools CEOs must use in concert to achieve influence: credibility, competence and caring.
  6. Sales Knowledge: The best CEOs are great sales people. They use the art of persuasion to build a company and obtain the best resources, create and establish a brand, and also acquire and manage customers.
  7. Operational Knowledge: It’s critical that CEOs understand internal operations and build systems that allow them to scale the company as it grows. As Jim Schleckser of the Inc. CEO Project says, failure to have more mature systems and processes will inhibit the company’s growth.
  8. Financial Knowledge: Don’t abdicate this skill set to the finance person. CEOs must understand the financials to dynamically make adjustments and prepare for the future.
  9. Regulation and Governance Knowledge: CEOs need to be aware of how laws and regulations may impact their businesses. They should seek outside sources of information rather than just relying on their legal counsel.
  10. Market and Customer Knowledge: CEOs cannot effectively lead if they don’t understand their product, customers, and competition. Failure to do this adequately can negatively impact credibility and competence.
  11. Tying Strategy to Execution: Coming up with a master plan is not enough. To succeed, CEOs must show employees how their day-to-day work contributes to that long-term plan, help them set smart goals, and measure their progress consistently.
  12. Attention to Detail: CEOs must balance between big picture strategy and the urge to micromanage every detail. Savvy CEOs focus on the details that matter.
  13. Anticipate Organizational Needs: One of the CEO’s key responsibilities is to provide the proper resources. The best CEOs look out six months to one year ahead to fulfill those needs before they became major weaknesses.
  14. Emotional Intelligence: Former Campbell Soup CEO Douglas Conant said what derails most CEOs is the “soft stuff.” This includes the ability to empathize with others and understand their needs.
  15. Build the Culture: Culture is how things get done in an organization. CEOs can and should actively manage for the culture they want.

Did I miss any critical CEO skills?

|21 Apr 2015

Why Are VCs Biased Against Me?

In my 20-year career as a CEO, I have had more than 100 venture capital meetings but have only been successful raising money once.

I started my first business in 1990, before venture capital was a common way to fund new companies. For the next ten years, I ran businesses that I funded out of my own back pocket. Since the money was my own, every loss was personal. Nothing teaches you the hard knocks of business quite like finding out a customer’s $13,000 check is bad—after you have shipped them the product. Nevertheless, I enjoyed the control that came from using my own money.

My first exposure to the venture community occurred at the end of the Internet bubble, in the late 1990s. I was living in Austin and would wake up each Monday to read the tech section in the local paper. At the time, it was filled with news of companies that had raised millions of dollars, often with business plans that seemed almost ridiculous. To someone who had been funding his own companies for nearly a decade, the spending habits of many of these startups were crazy. They often appeared to have no real plan to make money, but they could spend it like drunken sailors.

While I still liked the control that came with self-funding, the opportunity to raise enough money to do a business “right” began to appeal to me. If VCs were pouring money into the operations I read about in the paper, surely I had a chance at getting some. Soon, I was putting together a business plan around a technical idea developed by my wife. The very first venture capital firm we approached loved the idea and wanted to fund. We then approached the biggest VC firm in Austin to try and get a competitive process going, but we never got an offer. No problem: My first VC pitch had been a success, and we had $11 million in the bank. This VC thing was easy.

Since then, I have had literally over 100 VC meetings and have never raised another dollar.

Why has it been so difficult? Are VCs biased against me? Were they all right to turn me away? Should I have taken the hint from repeated refusals and given up? My own experience suggests otherwise.

The exceptional team we put together following that first VC investment delivered a great run, taking the company from zero to $50 million in revenue in eight years (the same amount of time it took Microsoft to get to $50 million). We had thirty-one consecutive quarters of double-digit year-over-year growth. Things were going great, and we were beginning to think of an IPO when the mortgage crisis hit.

The week Lehman Brothers collapsed, we could tell from our data that the world had changed. Continuing to deliver double-digit growth was going to be impossible without some significant changes. I immediately went to the board with an idea. While we would survive the downturn with only minor cutbacks, other companies wouldn’t be so lucky. In particular, there was a public company in France that I thought would make a perfect complement to ours. Because of the downturn, their stock was at a very low value, and we could acquire the company for roughly one time annual revenue. This was a great opportunity to double the size of our company and be ready for an IPO when the market returned. All we needed to do was raise the cash necessary to do the transaction. With our track record of growth and profitability, raising money should be easy, right?

Unfortunately not. I reached out to and participated in conversations with forty-six different growth-equity firms. Many of these had already expressed interest in our company. At the end of all these conversations, we couldn’t find a single one to fund the combination deal. Thirty-one consecutive quarters of growth didn’t matter; when we needed the money, we couldn’t raise it.

Nine months later, in late 2009, we sold the company for nearly four times revenue and a tenfold return for our single investor. I had been handing these firms at minimum a triple, and likely a home run, if we had reached the public markets, but I couldn’t find a taker.

Okay, so maybe the explanation is simply that in 2008, it felt like the world was ending. Surely in more normal times raising money would be easy.

After the acquisition was completed, I got a call from a local VC about stepping into the CEO role at a struggling company. While I didn’t take the job — because I felt that the company was beyond saving — I thought that the technology might have some value.

A few months later, when the company went into bankruptcy, one of the founders approached me about buying the intellectual property and starting over. The previous investors had put $20 million into developing the technology, so the opportunity to buy the assets for $50,000 was quite interesting. We needed to move fast to keep the core team of developers from finding other jobs, so I quickly wrote a check for the assets and personally funded the first million to get going. I then started talking to VCs about providing additional funding.

While it was easy to start conversations, no one was willing to step up and write a check. It seemed easy to me: $20 million in prior investment combined with my winning record in a similar space seemed like a very fundable deal. But after six months of banging my head against the VC wall, I realized I had to try a new tack.

I reached out to my network of business associates and high-net-worth individuals and was able to put together a $6 million round that allowed us to finish product development and reach the market. Soon after we got to market, NetApp approached us with an offer we couldn’t refuse. Investors received seven times their money after having been in the deal for a mere eighteen months.

So, two swings at the plate and two home runs . . . surely the VCs would now beat a path to my door, right? Several VCs who had passed on the previous opportunity even reached out to ask if I might do another deal. It seemed that this time I wouldn’t have to worry about raising money. So I started my current venture, Khorus.

Rather than immediately trying to raise money, I made sure my idea would work first. I personally invested the first $2 million to develop the product and acquire the initial customers. Once I was confident we were on the right path, I again tried to reach out to the VC community for funding. To my surprise, I once again found that whatever the VCs I talked to were looking for, I didn’t have. I heard various reasons through the grapevine: It was different from what I had done in the past. It would be hard to sell. They didn’t see the value. And so on.

Were these VCs biased against me for some reason? I could have concluded that VCs didn’t bet on me because they don’t like balding middle-aged white guys with Southern accents. But I knew the more likely explanation: the VCs chose not to invest because they simply didn’t believe they would make a sufficient return.

I often see entrepreneurs complaining about various biases in the VC community, and pointing to them as the reason they can’t get funding. Of course VCs have biases. We all have biases that come to bear in our decision-making. VCs are trying to make as much money as they can for their investors, and they do this by trying to identify patterns that worked in the past and that might work in the future. Many VCs are not particularly good at doing this, as evidenced by the average returns of funds over the last ten years. But their decision not to fund your company probably isn’t for any other reason than that they don’t think it will make them money.

Don’t let that stop you. It certainly hasn’t stopped me. I have found some individuals who believe I will make them money with Khorus, and I am convinced there is another nine- or ten-figure opportunity here. In time, we will see whether that turns out to be true—or whether the VCs got this one right.

|25 Mar 2015

Austin CEOs Have Class! (starting in April)

Calling all CEOs in the Austin area: I am ramping up for my annual CEO class sponsored by the Rice Alliance Austin Chapter, Austin Technology Incubator, and the Austin Technology Council. This invitation-only event starts April 3 and lasts for eight weeks. The series, now in its fifth year, is designed for CEOs of successful, growing businesses with more than 25 employees who are looking for the tools to maximize value and increase company performance. This is not a startup class but a chance to learn from and network with other accomplished CEOs. This year, we are focusing on building a world-class company.

CEOs: The CEO TightropeEach session will be held over lunch (provided) and last an hour and a half with lecture and discussion mixed together. CEOs will have the opportunity to try out the first class before registering for the entire series. During the first session, everyone will receive a signed copy of my book The CEO Tightrope (the agenda of the class closely follows the book).

The class size will be limited. Here are the details plus some insights from a few CEOs who have taken the course and benefitted from it. Contact me if you are interested in more information or want to sign up!

Building a World Class Company: A CEO’s Guide to Improving Performance 

Date: April 3, 2015

Time: 11:30 AM – 1:00 PM

Registration Fee: $995 (Participants may attend the first class for free!)

Session 1. Intro session, The Job of a CEO (April 3)

Session 2. Own the Vision (April 10)

Session 3. Right People on the Bus (April 17)

Session 4. Providing the Right Resources (April 24)

Session 5. Build the Culture (May 1)

Session 6. Make Good Decisions (May 8)

Session 7. Deliver Performance (May 15)

Session 8. Stories from the Journey and How to Improve as CEO (May 22)

Here is what some of the CEOs who have attended this seminar had to say about it:

Denver Fredenberg, CEO of Hyperware: “Joel Trammell’s CEO Seminar is a must, especially for any first-time CEO’s. You will learn what to expect as a CEO and the ins and outs of building a powerful team through Joel’s real life experience and candid feedback. You will also hear from and network with some of the more successful executive leaders in Austin. I pull from this experience with every challenge I face….especially the ones I never expected. Go do this!”

Chuck Gordon, CEO of SpareFoot: “CEO Summer Camp was a great experience because it gives you a chance to step back from your day-to-day and think strategically with the help of Joel Trammell. I learned tactics that I now put into action every day.”

Melanie Kalemba, former CEO of Movero Technology: “The Rice CEO seminar was not only insightful and thought provoking on leadership styles and successful business constructs it afforded a unique opportunity to interact with my peers across a variety of companies. I learned lessons I still refer to today in managing people and the culture of an organization.”

Chad Neely, CEO of Wenzel Spine: “The CEO summer camp is an excellent opportunity to learn from other CEO’s experiences and meet and share experiences with other CEO’s in Austin.”


|10 Mar 2015

The Dangers of Shunning Bureaucracy at All Costs

About a year ago Zappos decided to become a “holacracy,” getting rid of job titles and managers in favor of self-organizing around the work to be done. The jury is still out on whether this reorganization will be effective, but one thing is certain: The movement away from command and control management is growing. The danger is going too far in one direction, where any sort of bureaucracy is avoided.

I frequently see young entrepreneurs start new companies to escape the bureaucracy of corporate America. While this can be strong motivation, it can also lead to a management approach that says all process and structure is bad. For example, many extremely talented and smart engineers I talk to view their companies as overly bureaucratic. They feel hampered by too many meetings and processes. They believe the management structure is too rigid for them to accomplish anything of significance. As a result, some decide to take an idea they’ve had and start their own companies, convinced that they will manage them much better than their former employer.

The problem is that many entrepreneurs do not know how to run a company. They believe that knowing what NOT to do is the same as knowing WHAT to do. They avoid the processes and systems that plagued them at their old jobs. They eschew hierarchies for flat organizations.

This lack of bureaucracy is not an issue at first. Initially, employees will feel empowered, because they are given wide autonomy to perform their jobs. Jim Schleckser, CEO and managing partner of the Inc. CEO Project, says that early-stage companies often make up for the lack of processes and systems with talent.

However, when all process is eliminated or avoided, it becomes very difficult for the business to scale and grow. Employees eventually become discouraged, because the chaos of the workplace overwhelms their ability to get things done. Every task takes longer than it should, and employees never feel certain about their work or performance. Also, it is impossible to establish meaningful metrics, because everyone does things differently. Employees may try to invent their own processes, but find it difficult without management support.

Founders in these types of companies may become micro-managers, believing they have to fully understand every issue to make a decision. Unfortunately, most of these decisions are in areas where they have absolutely no experience or expertise. This inhibits the company’s progress and decreases employee morale even more. This is partly why so many young entrepreneurs are replaced as CEO.

What is the right approach then? Flatter hierarchies can work if the founder/CEO understands his or her role. The CEO job is a unique one that takes just as much knowledge, skill, and preparation as other disciplines. Entrepreneurs who know the responsibilities of the role will understand where to spend their time and how to be most effective. In addition, entrepreneurs should look for a partner who can make up for their lack of skills and knowledge – typically a business partner if they are technical or vice versa.

Another factor is the necessity of procedures and systems for growth. Schleckser advices companies to make investments in key systems early on to gain efficiencies and deliver on the company’s value proposition. This gives organizations true competitive advantages, while failure to have more mature systems and processes inhibits growth.

No matter what the organizational structure is, employees will not be motivated unless they understand their individual roles and how they contribute to the organization’s higher purpose. It is essential for entrepreneurs to establish a vision and then communicate it clearly and compellingly to all constituents. This includes how the organization is going to achieve this vision.

In addition, establishing a system of record is critical to helping employees understand how they can support the company in their day-to-day work. Each company should have a set of four to six corporate objectives every quarter. Leaders should then work with employees to create individual goals that map to these corporate objectives. A formal, written system where goals can be tracked and measured regularly – and that is shared by everyone from the CEO on down – is a good way to ensure that everyone is on the same page and working in harmony.

I am rooting for Zappos to thrive under its holacracy, but more importantly, it’s critical for every leader to understand the fundamentals of how to manage a company and motivate employees. This requires some “bureaucracy,” which CEOs need to embrace.

Related Article:

Do We Need Hierarchy? Forbes

|28 Jan 2015

How to transition from founder to CEO

Evolving from founder to CEO

I firmly believe that a company founder can become a great CEO with the right knowledge and skills. This is the topic of my upcoming presentation at SXSW on Friday, March 13: http://schedule.sxsw.com/2015/events/event_IAP37234

The transition from founder to CEO typically starts at 20 to 30 people and by 50 employees there is a distinct full-time CEO role. Prior to 20 employees, the founder’s job is more like a product manager who is developing an initial product and trying to generate some revenue. A full-time CEO role starts when there is a complete organization with all the major functions in place.

Here are the details for both my session in March and my proposed session for SXSW Las Vegas (The last day to vote is tomorrow: http://panelpicker.sxsw.com/vote/44283).

Evolving From Founder to Great CEO

Must founding CEOs eventually be replaced by a professional CEO for companies to reach their full potential? This is the conventional wisdom in the startup community. The idea is that the qualities that lead someone to be an entrepreneur are not conducive to the corner office. But if this is true, how do we explain Bill Gates, Steve Jobs and Mark Zuckerberg – all founders who became CEOs and led their companies to greatness? I believe that the CEO role can be learned, and that in most cases the founding entrepreneur is the best person to lead the company to greatness. While many startups fail, the CEO should not be the cause if they learn the key responsibilities of this critical role. This two hour long workshop will provide a methodology for the CEO job that any entrepreneur can adopt.

Questions I will answer:

– When does a full-time CEO role begin vs. a founder trying to get a start-up off the ground?

– How can you make the transition into an effective CEO?

– What are the responsibilities of a CEO?

– What qualities does a CEO need to possess to succeed?

– What systems and processes does a full-time CEO need to run a company?

Of course, I give a lot of advice on how to become an effective CEO in my book “The CEO Tightrope.”




|22 Jan 2015

Screw the Valley?! A Tour of America’s New Tech Startup Culture

Screw the Valley: A Coast-to-Coast Tour of America’s New Tech Startup CultureHow’s this for a provocative book title? “Screw the Valley: A Coast-to-Coast Tour of America’s New Tech Startup Culture.” Author Tim Sprinkle will be in Austin this month to explain why Silicon Valley is not the only place to start a tech company anymore. I’ll be hosting the discussion with him, which will focus on how and why Austin’s local culture is conducive to tech industry innovation. Sponsored by Texas CEO Magazine, the event will take place on Thursday, January 29 from 7:30 – 9:30 a.m. at The Austin Club. To register, visit http://texasceomagazine.com/events/screw-valley/

Here’s a bit more about Tim’s book from Amazon:

“The most exciting high-tech startups are escaping the expensive and inbred environment of Silicon Valley. Welcome to the future.

Entrepreneurs know they must embrace innovation to excel—starting with where they locate their new venture. Fortunately, budding companies seeking fertile ground have more options today than ever before. Screw the Valley calls on today’s entrepreneurs and aspiring business owners to forget California and explore other options across the country—cities that offer more room to breathe, easier access to funding and talented workers, fewer heads to butt, and less money down the drain.

Timothy Sprinkle visits seven areas that offer a superior landscape for tech startups:

New York City
Las Vegas
Kansas City

Sprinkle gives readers a window into the startup potential in each city, detailing which industries are thriving where, and highlighting the unique appeal and character of each location.”




|13 Jan 2015

Org Charts Essential to Good Decision Making

When I was CEO of NetQoS, some of my executive team members would kid me about carrying around an org chart with me wherever I went. I had managed to fit more than 250 employees on a double-sided piece of 11×17 paper that I personally updated with each new hire. Maybe it seems eccentric, but I had learned that a clear, continuously updated org chart is a surprisingly effective tool for fostering great decision making—the fuel on which every organization runs.

One of the core responsibilities of the CEO is to make good decisions. It is critical that he not only makes good decisions personally, but also that he teaches the rest of the company how to make them. When I look back at the bad decisions made in my organizations, most of the time I can trace the problem to one thing: The wrong person drove the decision.

Wrong Role = Wrong Decisions

In an organizational context, the person who should make a given decision is the one who has positional responsibility for the full scope of the question. A clear org chart (with written job responsibilities) provides an easy way for employees to know exactly which role should be responsible for the decision.

For example, imagine a company considering what standard price to charge for its software offering. While pricing is certainly a component of marketing, I would expect sales and finance to also have a strong interest in the price. Because this issue crosses multiple departments, we must move up the org chart to find the person all these various groups report to: This is the appropriate decision maker. This person should referee any disagreement and make the ultimate call.

Ramifications of Bad Decisions

Problems arise when issues don’t reach the appropriate level, which often happens because the organizational structure isn’t clear. A person who doesn’t have the positional responsibility might make the decision, and employees, not wanting to escalate the issue, may go along even though they disagree.

This causes several problems. First, the decision is a poor one, because the person making the determination doesn’t understand the broader issue. Second, the employees who disagree with the decision feel slighted, and if it happens consistently, they will often disengage. Third, it often takes months for the leader to understand that someone made a bad decision and to see the damage it caused.

However, just providing the org chart doesn’t always lead to the right behavior. You also have to empower people to rapidly escalate decisions to the appropriate spot on the org chart. This is one of the hardest things to teach managers and even executives.

Teach Staff to Escalate Decisions Appropriately

Too many people have heard that they should never bring a problem to their boss without a solution. While this makes some sense for issues within their span of responsibility, it doesn’t apply to broader issues that affect multiple groups. For this reason, teaching every employee to quickly escalate issues outside their span of control is critical, especially in fast-growing organizations. It also helps to have feedback systems in place where employees can communicate issues, anonymously if they wish.

Finally, good decision making depends on the level of credibility and competence you build among employees. Lack of trust can result in decisions either not being made at all or made by the wrong person. This is why major changes (reorgs, acquisitions, layoffs, etc.) cause organizations to almost stop: proper decision making becomes impossible until the appropriate level of trust in leadership is built up.

Keep It Current

Have you trained your organization on how to make quality decisions and who should make them? If not, get started on creating a clear and accessible org chart and explaining when and why it’s okay to escalate decisions to the right person. And keep it current. Don’t let the org chart become just another outdated document that no one bothers to view.

|06 Jan 2015

Top 10 Most Popular CEO Posts of 2014

Out of all the blog articles I published in 2014, here are the top 10 most viewed, grouped by subject. In the first one on “Been There Done That” hiring, I discussed how important it is to approach hiring as a two-way street: Don’t just look for candidates who have done the job before. Always take into consideration the candidate’s goals as well as your own. Someone who doesn’t have the experience but is super talented and eager to learn may be a better prospect than a mediocre candidate who has “been there done that.”

The next four are part of a series I did on company boards (especially private ones), which is a topic people have differing opinions about: What is their role? Who should be on the board? How do you go about choosing board members? Finally, what information should CEOs present to boards?

There is one article from my long-running “CEO Fail” series (How many ways can CEOs fail? I have yet to find a limit…). This one cautions the CEO against having a “best friend” among the executive team, because it can alienate the others. It can also give this special friend influence beyond his or her role.

khorus-2In “CEOs need a system,” I announced the launch of my company Khorus earlier this year and why I think CEOs need their own management software, just as sales, HR, software development, marketing, and every other function has.

The article on “Monolithic insanity” is a review of recent literature supporting the drawbacks of cubicles – a topic I write about often.

"Jack Ma 2008" by World Economic Forum - Copyright World Economic Forum (www.weforum.org)/Photo by Natalie BehringUploaded to Wikipedia (cc-by-sa-3.0,2.5,2.0,1.0; GFDL)from Flickr Jack Ma (cc-by-sa-2.0). Licensed under CC BY-SA 3.0 via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:Jack_Ma_2008.jpg#mediaviewer/File:Jack_Ma_2008.jpg

“Jack Ma 2008” Copyright World Economic Forum. Photo by Natalie Behring. Licensed under CC BY-SA 3.0 via Wikimedia Commons

Published around the time of Alibaba’s historic IPO, the article about Jack Ma discusses his management approach and if CEOs should prioritize different constituencies at each stage of a company.

Finally, the merger of Austin-based companies Mass Relevant and Spredfast represented a good example of CEOs setting aside their egos to do what was right for both organizations.

Here’s the full list. Enjoy and let me know your feedback!

– Are you guilty of “Been There Done That” hiring?

– The three roles of private company boards

– What is the right composition for a board of directors?

– Proceed with caution when choosing private company board members

– Want help from your board? Present the right information

– CEO Fail: The “My Favorite Child” CEO

– CEOs need a system

– “Monolithic insanity” & other notes on office spaces

– Is Jack Ma’s priority of customers, employees then shareholders correct?

– Setting aside CEO egos can make 1 + 1 = 3

|18 Dec 2014

Essential CEO Best Practices: Top Skills & Knowledge

I’ve been revealing my top 15 “CEO Best Practices” on the Khorus blog. These are the critical skills and knowledge that I believe, based on my experience as a CEO for the past 25+ years, that CEOs need to effectively lead organizations. Chief executives need to be generalists, not specialists, with a working knowledge of every issue and function. This is especially true for those areas where they need to take the lead, such as recruiting (note my first three are about people). Here are the 10 I’ve discussed so far:

1. Attract People

2. Retain People

3. Grow People

4. Communication Skills

5. Leadership Skills

6. Sales Skills

7. Financial Knowledge

8. Operational Knowledge

9. Regulation/Governance

10. Market and Customer Knowledge

I’ll disclose the last five CEO best practices over the next few weeks (any guesses?). In the meantime, here is the video of me discussing #10: Market and Customer Knowledge. It is crucial for CEOs – and really everyone in the organization – to take the time to understand the company’s products, customers, and competition (CEOs who don’t quickly lose credibility with their employees and the market). This requires getting out of the office and meeting with customers and others who can add to your knowledge of the market. Learning about and even engaging with competitors is important for every CEO, not necessarily for taking business away from other companies but for making the pie bigger for all and representing your industry’s interests.

|10 Dec 2014

Metrics Can Improve Performance – Even in Government!

Mitch Daniels used metrics to improve services in Indiana; Photo By Ray Taylor (Own work) [CC0], via Wikimedia Commons

Mitch Daniels, By Ray Taylor (Own work) [CC0], via Wikimedia Commons

Many people have heard of Mitch Daniels, former two-term governor of Indiana and now president of Purdue University. Republicans were pushing him to run for president for a while, primarily because of the “miracle” he wrought in his state. He turned a $600 million budget deficit into a multibillion-dollar budget surplus, cut property taxes, and improved services across the state. You may not agree with all of his tactics, and Indiana is still a struggling state in many ways, but the improvement in performance cannot be denied.

His leadership helped transform agencies such as the Department of Corrections, the Department of Child Services, and the Department of Motor Vehicles from the worst performers in the country (compared with other states) to national award winners. In interviews and a book, “Keeping the Republic,” Governor Daniels describes how he and his team instituted a management by measurement approach. This included creating performance metrics for every agency aligned with the most important goals, such as reducing the number of child deaths or vehicular deaths, or increasing the number of jobs in the state. He linked budgets to improvement on metrics: If agencies dramatically improved their metrics, they were asked to reduce their costs by a smaller percentage; pay and promotions were linked to job performance metrics; and so on.

In fact, Governor Daniels had on his desk a dashboard of twenty-five key metrics updated weekly, and that dashboard was posted on the government’s website for all citizens to see.

Here’s an example of the difference the metrics and dashboard made in terms of real-time oversight. In his book “Leadocracy,” Earl Goode – Governor Daniels’ chief of staff and former president of GTE Information Services, which merged into the new company Verizon in 2000 – told this story: “One of our cabinet members was recruited to a much larger state than ours…He was back for a visit a couple of months later, and I asked him how it was going. ‘One thing is really different,’ he said. ‘When I did something in my agency you guys knew about it within twenty-four hours. Now, it might be three years before they know what I’ve done.’”

CEOs need to create a culture in which goals and metrics are linked to business success and progress is consistently measured. The entire organization must know that the CEO will constantly hold everyone to a high standard. Like Daniels’ dashboard, the metrics should be visible to everyone who can impact those metrics. This lets employees in every department understand how they as a group are being measured and to understand the key drivers of success for other departments. It also puts even more pressure on leaders to respond when performance falls off and the metrics start to slip.



|02 Dec 2014

What books do CEOs read?

What are the favorite books of CEOs such as Bill Gates, Mark Zuckerberg, Tony Hsieh, Elon Musk, Meg Whitman, and more? CEO.com recently compiled a list, shown in this infographic. As you can see, these CEOs read not just business books, but everything from fiction to history to biography.

CEOs must constantly evolve. One of my favorite parts of the job is adapting to new challenges and situations every day. CEOs who do this well are great learners. They have a voracious appetite for knowledge. While it can be challenging to keep learning on the job, CEOs must make time for it. They need to keep one step ahead and be innovative in their approaches to new products, services, hiring practices, sales, marketing, and every other facet of business.

This may explain why these CEOs read more than business books, beyond personal preference. As Albert Einstein said: “Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.”

Favorite books of CEOs - CEO.com

Books That Big-Name CEOs Can’t Stop Reading – CEO.com

|19 Nov 2014

How CEOs can keep up with regulation (VIDEO)

I’ve developed a set of 15 CEO skills that I believe are crucial to success, which I’ve been revealing on the Khorus blog. I’m up to #9: Regulation and Governance. CEOs must stay up to date on how regulation is changing in their industries. In this short video, I describe how I’ve kept up with it in my companies. We’ll be featuring the rest of the series in the coming weeks on Khorus.com, with snippets on this blog as well. Also visit and subscribe to my new YouTube channel here: https://www.youtube.com/user/TheAmericanCEO


|12 Nov 2014

CEO Fail: The Cult Leader and Mr. Mayhem

Last week Entrepreneur published my latest article, about “How CEOs Can Maintain Their Edge.” In it I discussed how easy it is for CEOs to lose their effectiveness if they are not open to new ideas and information, and do not have a clear strategic direction. I mentioned two specific CEO failure modes that have lessons for all executives: The Cult Leader CEO and the Mr. Mayhem CEO. Here is more detail about each one.

Cult Leader CEO

CEO fail: Cult leader

Photo Credit: SantaRosa OLD SKOOL via Compfight cc

Cult leaders have a great advantage when it comes to instilling a vision in their followers. Unlike CEOs, they have no need to consider adjusting their vision or strategy, because they’ve surrounded themselves with people who believe in the absolute righteousness of it. Cult leaders have developed such an intense level of belief in their vision among their followers that no cult member questions any of their decisions, regardless of how bizarre, dangerous, or even fatal they may be (See Jim Jones, Davis Koresh, etc.).

Similarly, the Cult Leader CEO communicates a vision so compelling that his employees follow it fervently. This can be a positive thing, but this type of CEO convinces them that questioning the vision is like questioning the king – not permissible. Anyone who expresses doubt is branded as traitor.

Cult Leader CEOs can and have lead companies to success. The problem arises when their basic beliefs must be challenged due to market conditions, competitors, etc. Then they often fail in dramatic fashion, because no one in the organization has ever considered any other possibilities. Employees are frozen, because they have been trained to never question the vision or strategy, even when the company desperately needs to adapt.

As a CEO you can’t be so dogmatic. One of my favorite statistics is that more than half the companies that were listed in the Fortune 500 in 1995 were not on the list in 2007. After a mere twelve years, half the list had turned over. No CEO can ever be confident that his strategic vision today is permanent.

CEO fail: BlackBerryIn the article, I mention Research in Motion (RIM) as an example of this Cult Leader CEO failure mode. RIM, better known as the maker of the BlackBerry smartphone (and now called BlackBerry), had an unfailing and unhealthy belief in its own prowess. The company certainly had much to be proud of, growing from $300 million in 2003 to almost $20 billion in revenue by 2011. But the faith placed in the two CEOs, Mike Lazaridis and Jim Balsillie, proved to be unhealthy. A quick Internet search will reveal many “great” quotes from each that illustrate how completely they missed the threat posed by the iPhone and other smartphone platforms.

For example, in February 2007 Balsillie said this about the iPhone: “It’s kind of one more entrant into an already very busy space with lots of choice for consumers . . . But in terms of a sort of a sea-change for BlackBerry, I would think that’s overstating it.” Unfortunately, for Balsillie and RIM, it was not an overstatement.

Mr. Mayhem CEO

CEO fail: Mr. MayhemUnlike the Cult Leader CEO, fickleness is the norm with Mr. Mayhem. I based this failure mode on the character Dean Winters plays in that series of funny Allstate Insurance commercials you may have seen, which show how “Mayhem” can turn any situation into a disaster. The purpose is to convince people of the need for insurance. Unfortunately, if you work for a Mr. Mayhem CEO, you can’t buy insurance that will solve the problem.

Mr. Mayhem CEOs create chaos in their organizations by continuously starting new projects and redirecting resources, to the detriment of all. Unable to settle on a focus or direction for any length of time, they cannot effectively lead an organization. Their dynamism and adaptability can be a positive, but the constant change and stress means that employees cannot produce meaningful results. Mr. Mayhem CEOs usually fail before achieving any sort of notoriety.

Some CEOs cause this chaos without realizing it by merely thinking out loud and having their thoughts translated into action by eager-to-please employees. CEOs must be careful to distinguish between directions and musings, as Scott Abel, CEO of Spiceworks, advised in my Forbes.com CEO series article about “What Surprised You Most About The CEO Role?

How can CEOs avoid these extremes and maintain their edge? Seek out competitors, customers, and new executives to provide the information, ideas, and perspective needed to stay fresh: http://www.entrepreneur.com/article/238842

This article was excerpted in part from “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO

|06 Nov 2014

What mindset do the best leaders share?

Leadership styles vary, but the best leaders share a specific mental approach. This is what Gap International discovered when they interviewed 500 executives, according to an article in Entrepreneur. The results reveal that high performance leaders focus on the big picture and their employees to ensure everyone is engaged, motivated, and prepared. They have a “get it done” attitude, are positive, and have a zest for learning.

This is partly why I believe anyone can prepare to be a good CEO. The right attitude goes a long way. This infographic showing the results of the Gap International survey is a great snapshot of what CEOs and other leaders should strive for:

Best leaders share similar attitudes

|31 Oct 2014

An Air Force general’s guide to leadership

Here are some excellent insights for CEOs and other leaders from Brig. Gen. John E. Michel, the Commanding General, NATO Air Training Command-Afghanistan and Commander, 438th Air Expeditionary Wing, Kabul, Afghanistan. His four principles apply to leadership in general, not just complex undertakings:

Principle 1: Craft your vision in pencil, not ink.

Principle 2: Believe no job is too small or insignificant for anyone, especially you.

Principle 3: Remember that leaders should be generalists, not specialists.

Principle 4: Recognize that every interaction is an opportunity to equip, engage, empower, and inspire those around you.

Here’s an excerpt of his article. Read the entire piece at Harvard Business Review: http://blogs.hbr.org/2014/10/a-military-leaders-approach-to-dealing-with-complexity/

A Military Leader’s Approach to Dealing with Complexity

“The most effective leaders I’ve known or studied all share a common trait: they were unwilling to settle for the existing state of affairs. They believed with all their heart that what we focus on can become reality.

In my quarter-century of military service, I’ve been afforded the rare privilege of leading in a broad array of environments: commanding a 500-person special operations expeditionary air refueling group in the Middle East after 9/11; guiding a 7,000-person military community through a dramatic mission transformation in North Dakota; and leading men and women from 14 NATO nations in building a sustainable, independent Afghan Air Force in an active war zone—something that had never previously been attempted.

I know how daunting it can be to lead dedicated professionals to undertake complex endeavors, and I’ve lived the reality of trying to bring positive change to large, bureaucratic organizations. Here are four principles I’ve learned that can help you enhance your leadership while concurrently bringing out the best in those around you.”

|23 Oct 2014

Is Jack Ma’s Priority of Customers, Employees Then Shareholders Correct?

"Jack Ma 2008" by World Economic Forum - Copyright World Economic Forum (www.weforum.org)/Photo by Natalie BehringUploaded to Wikipedia (cc-by-sa-3.0,2.5,2.0,1.0; GFDL)from Flickr Jack Ma (cc-by-sa-2.0). Licensed under Creative Commons Attribution-Share Alike 3.0-2.5-2.0-1.0 via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:Jack_Ma_2008.jpg#mediaviewer/File:Jack_Ma_2008.jpg

“Jack Ma 2008” Copyright World Economic Forum (www.weforum.org). Licensed under Creative Commons Attribution-Share Alike 3.0-2.5-2.0-1.0 via Wikimedia Commons

“Customers first, employees second, and shareholders third,” wrote CEO Jack Ma in a letter to investors in advance of Alibaba’s record-breaking $25 billion IPO.

He explained his reasoning behind this during an interview at the AllThingsD (now Re/code) conference in 2012: “If the customer is happy, the business is happy, and the shareholders are happy.”

Is this the right prioritization? I think it depends on the stage of the company. Having a balance is key, but companies naturally focus on different groups at different stages.

Early Stage: Employees First

When a company is first formed, there are often no customers to worry about. Employee concerns tend to take precedence in the CEO’s mind, because he knows everyone well, and they can all fit in a small room. He’s trying to build a team and has no operational redundancy, so it seems critical to keep every employee happy and productive. The only thought CEOs give to shareholders is whether they have provided enough money to make payroll.

If the CEO is smart, he or she has created a product based on an analysis of what potential customers want, so the initial offering is designed to fill unmet needs. Belief in the product is the extent of consideration for the customer.

Growth Stage: Customers First

Over time, if the company is successful it will reach a growth phase during where it adds customers rapidly. With this new attention from customers, many companies will begin to focus strongly on them. Variations of the slogans “the customer is always right” or “the answer is always yes” will become common, and stories about employees going out of their way to meet the needs of customers are celebrated.

However, if the balance goes too far in this direction, CEOs end up with issues of employee burnout and low profitability (poor shareholder return), as no expense is spared to treat customers well. In addition, some companies allow their largest customers to have undue influence on their product development process at the expense of including features and services that may serve a larger market need.

Showing Results: Shareholders First

Finally, as the company achieves more economic success, the shareholders will begin to press for plans and actions that deliver a return on their investment. Even in companies that are bootstrapped, the founders will eventually need to recognize returns from their efforts.

For companies that make it to the public markets, the pressure for shareholder return often becomes all consuming and very short-term focused. If you spend time within most public companies, you’ll get the sense that decisions are made based almost solely on their impact on earnings in the current quarter and year. Customers and employees are sacrificed at the altar of making the quarterly number.

Although this shareholder-focused approach will initially show financial results as the emphasis moves away from customers and employees, the business will begin to erode. A few quarters of good performance turns into a death spiral of dissatisfied customers and unmotivated employees.

Achieving Balance

I consider the balance of these three constituencies so important that I devoted an entire chapter to it in my book “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO.” It’s critical for the CEO to understand the natural pressures that exist in organizations as they mature and to balance these pressures in the company’s decision-making process. Everyone in the company should consider the interests of all three constituencies when making decisions. It will be interesting to see if Ma’s prioritization of the customer and employees over shareholders shifts as Alibaba deals with the pressures of the market.

How are you balancing customers, employees and shareholders?

  1. Have you made a decision in the past six months designed to keep either employees or customers happy, even though you doubted the long-term wisdom of it?
  2. What stories or proof of success do you share at meetings? Is there a particular focus on either customer service stories or on financials?
  3. Do you neglect training for employees because you can’t calculate the return on the expense? Do you try to keep your salary expense as low as possible?
|02 Oct 2014

Strategy is not dead but only the beginning

Writing in Forbes, Rick Smith asks, “Is Strategy Dead? 7 Reasons The Answer May Be Yes.” He makes some excellent points, but in my opinion strategy is not dead but only the starting point for a company – not the final product. In other words, planning is great, but the plan does not win the battle. What does win is executing the plan well and being able to adapt it in near real-time as conditions change.

I have seen many leaders who think their job is finished once they have developed a plan. On the contrary, I believe leaders earn their keep by how well they deliver results as the plan is implemented. Carrying out the plan requires just as much rigor as developing the strategy in the first place. Having a system to assist in the execution can make a huge difference between success and failure.

That’s why I think this quote from Smith’s piece is so insightful:

“In the end, your company’s strategy is nothing more than the collective actions of all of your employees, and these actions are being guided less by strategies thoughtfully crafted within wood paneled conference rooms, and more by speed, unpredictability and sweeping change occurring on a dynamically evolving battlefield.”

Being able to regularly capture those actions and employees’ perceptions of how well they are tracking toward their individual goals – which should support a clear set of corporate goals – is indispensable to trying to adapt to quickly changing conditions.

Photo Credit: Amanda M Hatfield via Compfight cc

|24 Sep 2014

Should there be a CEO school?

“We had never thought of it as a profession.” This is how faculty members at INSEAD (a graduate business school with campuses in Europe, Asia, and Abu Dhabi) reacted when they encountered the question: “Is it time for a CEO school to train leaders for the top job?” This mindset illustrates what is wrong with current thinking about the CEO role. Not taking it seriously as a profession like any other in business negatively impacts professionals and organizations across the globe.

As I’ve written about extensively, most people are not prepared for the chief executive job no matter how successful they’ve been in other roles. This lack of preparation results in dysfunctional organizations that ultimately experience low performance and high CEO turnover.

To answer the question, the INSEAD faculty members interviewed CEOs worldwide about the job and the need to codify a set of standards for it. They found agreement that the job is very situational, so having a standard qualifying exam is not ideal. However, as I have been saying, there are “essential traits and competencies fundamental to CEO success” no matter what the geography, industry or type of organization. The professors rightly conclude that business schools do not do enough to identify these traits and develop these competencies in future CEOs.

So it should come as no surprise that my answer to the question of whether a CEO school is needed is an unqualified “yes.” CEOs CAN learn the job, and it’s absolutely essential to success. One of my long-term goals is to open a school where CEOs can learn the basics of the job – which are unique in business – and prepare to hit the ground running from day one.

I agree with the INSEAD authors that “Development of future CEOs requires a competency-focused cross functional approach.” This includes instruction in skills essential to every CEO, such as developing vision, selecting talent, enabling performance, making decisions, managing in crisis, communicating well with all constituencies, and cultivating a discipline of life-long learning.

The authors conclude by urging business schools to do more to ensure they are addressing the needs of future CEOs. That is all well and good, but I also say we need schools that focus solely on the CEO position. I’ve outlined the foundation for my future CEO school in my new book “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO.”

Read the entire article here: http://knowledge.insead.edu/leadership-management/can-you-learn-to-be-a-ceo-3570

Photo Credit: avrene via Compfight cc

|18 Sep 2014

Where There’s No Margin for Toxic Leadership

Good reminder from Robert Sher that CEOs need to do what is best for the organization and not let weak executives continue to serve.

|27 May 2014

Addressing a new CEO assignment with why, what and where

This article originally appeared on CommPRO.biz

Every new leader faces the immediate challenge of how best to communicate his or her vision to the organization. Employees are anxious when there is a change at the top, so it is important to begin the communication process as quickly as possible. Unfortunately, new CEOs will likely not have had time to develop a fully formed strategy, so they must be careful to only communicate what they know to be true. Too many leaders let their enthusiasm overwhelm them and come out of the gate promising huge changes and major victories. Experienced CEOs know that change is hard and avoid promising results at this early stage. Initial communications should focus on three fundamental areas:

  • Why the CEO believes in the opportunity
  • What the CEO perceives to be the organization’s strengths
  • Where the CEO will focus on improvements

Why the leader believes in the opportunity 

The new CEO took the position because he sees an opportunity. It is essential to explain to the employees why the leader is excited about the company and why this is personally important to him. At this stage the new CEO may not have a complete vision for the organizations, but he can communicate why he took on the challenge. This personal connection to the mission is important for everyone to understand, as it will shape the vision and values of the company moving forward.

What the leader perceives to be the organization’s strengths

The second item the CEO should communicate is what is right about the organization. Every company has certain advantages in the market and areas of superiority versus the competition. The new CEO will do well to identify these key advantages. This performs two functions. First, it lets employees know that their company is not a total failure. Usually a CEO is replaced after a long string of losses. It is easy for morale to go downhill quickly. The new CEO has to stop the downward slide and remind people that they are not losers just because the entity has struggled. Finding a positive point to rally around is critical in these situations to buy time until people can see the results of the new management efforts. 

Where the leader will focus on improvements

Finally, employees want to know what is going to change. People realize that if the team has been losing in the market, that it would be foolish to keep doing the same thing and hoping for different results. Letting the employees know that the new CEO has a plan to improve the organization is important, along with a timeframe for action. Details will help. For example, the CEO could say: “I believe the biggest challenge we face as a company is that we have lost touch with our customers. I intend to spend much of my time over the next 90 days meeting with customers. At that point we will align the organization to provide a superior customer experience.” Being specific as to area and timeframe will give employees as much certainty as possible without committing to anything that the new CEO can’t deliver. 

Following the simple path of why, what and where should help any new CEO with the challenges of a new assignment.

|22 May 2014

What is the right composition for a board of directors?

The relationship between the CEO and the board of directors is unique in the business world. The idea of reporting to a committee of people instead of to a single individual makes managing this relationship much more challenging, particularly for new CEOs with little experience working with boards. The composition of the board will have a big impact on the relationship as well. 

The trend over the last twenty years has been to diversify the composition of boards and to include more functional expertise. I have always thought that the job of the board should be to select and monitor the CEO in his or her efforts to represent shareholders’ interests, not to become involved in running various areas of the company. It is impossible for a group that meets once a quarter to have the same understanding of the business as the people who are working in it every day. For this reason, I like to see boards that are primarily composed of people with CEO experience. As this blog is all about, the CEO job has many unique aspects that people without that experience will not appreciate.

If you have a board with mostly subject matter experts – for example CFOs or CIOs or CSOs – the board can quickly morph into a “super executive” team. People will naturally gravitate to their area of expertise and the board can become an operating entity. This is dangerous and undermines the credibility of the CEO.

The problem can be exacerbated if you have weak executives in any key positions. If you need a board member to help cover for one of your executives, it is a clear sign that you have the wrong executive in place. 

If you are running a private company, spending time to get the right board members in place is a valuable use of your time. Even in public companies, the CEO will likely have some influence. Aim high. Most people are flattered that you would consider them for a board position, and while they may not always accept the position, they will often have recommendations for others who would be a good fit.

In addition, I think it is a good idea to have board terms expire every year or two and require unanimous approval to renew then. Sometimes, board members remain long past their useful time just because there is no easy mechanism to replace them.

The right board can be a powerful multiplier of your efforts as CEO. Take the time to select people who have the knowledge, connections and experience that will make you a much better CEO.

Photo Credit: Incase. via Compfight cc

|20 May 2014

What are the responsibilities of a CEO?

I’ve covered this topic in depth on this blog, but if you want to read a quick summary check out my latest article for Entrepreneur: The 5 Core Responsibilities of a CEO

As I mention in the article, it’s difficult to do the job well if you aren’t clear on what you are supposed to be doing in the first place. Knowing these five responsibilities helps focus your time and prevents you from being distracted by tactical issues. It’s also important for anyone who works in business to understand what the responsibilities of a chief executive are. This not only helps them better support their CEO but also judge whether or not he or she is doing a good job. In addition, they can better evaluate future opportunities depending on how well the CEO is performing.

For more information, check out my series on the five responsibilities of a CEO:

5 Responsibilities of a CEO: Own the Vision

5 Responsibilities of a CEO: Provide the Proper Resources

5 Responsibilities of a CEO: Build the Culture

5 Responsibilities of a CEO: Make Good Decisions

5 Responsibilities of a CEO: Deliver Performance

|15 May 2014

Are You Guilty of “Been There Done That” Hiring?

I am often consulted to help companies fill key positions. Whenever someone wants to fill a position, the natural reaction is to write up a list of things you want that person to do and then try to find someone who has done all of that. While I understand the appeal of finding a proven commodity, this “been there done that” approach to hiring often leads to less than optimal results.

The problem with this approach is that it fails to consider that hiring someone requires a dual sales process. Not only do you have to be convinced that a particular candidate is the right choice, but the candidate also has to believe that the job you are offering makes good career sense for them. This is where the “been there done that” approach runs into a big issue. The top performers – the ones you really need to give your business a competitive advantage – typically won’t want to do the same job they have already done. These “A” players are looking for their next step up the career ladder. They are looking for new challenges and bigger opportunities. If you focus your screening criteria around a been there done that approach, you will weed out many potential superstars while interviewing mostly mediocre candidates.

To attract the top performers, you need to set the experience bar one level below what you expect them to do in the job but set the talent bar one level higher. For example, when hiring for a VP position, I would always rather hire a super talented individual with director-level experience than a less talented individual with VP experience. You may not always have a VP position available for superstars, however. In general, the people you want aren’t willing to make a lateral move without some sort of disruptive event. Examples of disruptive events are bankruptcies, acquisitions or CEO departures. This is often a time when you can convince a good performer to make a move. Otherwise, you should reach down to find a rising star that can blossom with a new opportunity. 

|13 May 2014

“I love Khorus, yes I do.”

Thanks to Dan Graham, CEO of Austin’s BuildASign.com, for writing this article on his blog about his deployment of Khorus and the potential he sees in it to align his employees around their quarterly goals. They were using Google docs for goals management but, as he says in the post: “…as far as instant and company-wide visibility into any employee’s cascading goals and tracking progress goes – Khorus wins.” BuildASign is our biggest customer so far, and we can’t wait to hear how Dan and his team progress with the software!

|09 May 2014

Why CEOs suck and how to suck less

It’s part of my mission every day to address this topic via this blog, my upcoming book, my company Khorus, and in many other ways. It is also the title of my proposed session at SXSW Las Vegas, which is summarized below. Voting for which sessions will be held during the conference ends tomorrow, May 9, so please consider voting for mine here: 

http://panelpicker.sxsw.com/vote/28398 (quick registration required)

And if you have questions for me, specific topics you’d like me to address, or advice about why CEOs suck and how they can suck less, please let me know!

Why CEOs Suck and How to Suck Less

The CEO job is the most important but least prepared for role in business. People get there in different ways: They may have been a superstar in marketing, sales, engineering or whatever business function they came from. Or they may have just had a great idea and started a company. Regardless, few are ready for the unique responsibilities, challenges, and stresses of the role. As a result, most chief executives simply do not know what to do and react in ways that are negative for the organization and themselves: They end up paralyzed by fear and indecision, or wallowing in tactical issues, or taking a hands-off approach after they’ve pronounced some grand strategy.  This is alarming in a country where the majority of CEOs are new to the role. The bottom line: Most CEOs suck. But there are ways to suck less.

This presentation will address:

  • What are the top three challenges facing CEOs?
  • What are the top five responsibilities of a CEO?
  • What is the one question every CEO needs to answer?
  • How can I ensure that employees are aligned on our strategy and executing against it?
  • How can I better prepare for the CEO position? 
|08 May 2014

Are you better at relating to employees or setting performance targets?

Most leaders tend to be better at either building relationships with employees or setting strong performance requirements for them, but the best CEOs and managers do both equally well. This is the focus of my latest article for Forbes – The Critical Balance CEOs and Managers Must Strike To Get Results – where I provide several ways to evaluate and improve your skills in both areas.

For some CEOs building relationships comes naturally. They have no problem engaging personally with employees at all levels of the organization. Employees like the attention they receive from these personable CEOs and return the affection. Their desire for relatedness is fulfilled, and they get a status bump every time the CEO delivers kind words of praise. There’s nothing wrong with this, but there is a problem when the relationship impacts running the business.

At the other extreme is the hard-charging CEO who sets stringent performance requirements but doesn’t show any interest in employees. As I described inCEO Fail: The Attila the Hun CEO,” this type of CEO doesn’t engender any sort of loyalty. While he may think he’s driving top performance, employees will not put forth their best effort for him. Many will soon leave for better work environments.

Read the full post for how to achieve balance between relating and requiring and let me know what you think: http://www.forbes.com/sites/joeltrammell/2014/05/06/the-critical-balance-ceos-and-managers-must-strike-to-get-results/


|06 May 2014

CEO business strategy advice falls short on the “how”

Business literature is full of advice for CEOs and leaders on what to do, but sometimes falls short on the how. Case in point is this article published by SmartBlog on Leadership titled “What’s the plan?” The author, S. Chris Edmonds, tackles the important topic of how to create a corporate strategy as well as ensure all employees understand it and can link it to their individual goals. He presents a five-step process for developing, communicating, and reinforcing a strategic plan. The first few steps give advice for crafting the strategy, which is fine, but where I believe his article – and strategic plans for that matter – falls short is in what he calls the “Work” and “Assess” phases.

In the “Work” step, Edmonds says you’ll spend the majority of your time “working the plan.” What does this entail? He states that you should “…craft relevant performance dashboards that help communicate progress on strategies and goals with a quick glance. You’ll communicate, educate, and promote your strategies and goals. You’ll then align plans, decisions, and actions, daily.”

This is all well and good but not a trivial undertaking. Create dashboards? Align everything daily? How is a busy CEO supposed to do this, especially in larger organizations?

The last step is “Assess,” where you’ll “assess the progress on and effectiveness of your strategies and goals.” At least quarterly, he says, “gather data with key players and refine targets as needed.”

Again, this is an important step, but how can a CEO gather data from hundreds or thousands of employees and make sense of it?

This challenge is why CEOs need a system. I created Khorus software specifically to help CEOs better instill their strategies across the organization and align employees to those strategies. Instead of waiting to find out where the company stands at the end of the quarter or getting anecdotal input, CEOs can see on demand, cascading goal performance for the entire organization, departments and individual employees, and how they each link to the corporate goals.

It’s about time someone gave CEOs and other organizational leaders the “how” amidst all the punditry about the “what.” My aim with Khorus is to provide that.


|01 May 2014

Toyota’s move to Texas a good decision

A core role of the CEO is to ensure that the company has the proper resources to be successful. Most commonly people think of capital and people as the two primary resources needed. Related to the people side but sometimes missed by CEOs is their role in providing the best possible work environment to drive performance. I was reminded of this when reading the recent announcement by Toyota that they are consolidating multiple North American offices into a single headquarters in Plano (Dallas area), Texas.

While technology has made distributed organizations easier to operate, I am still a big believer in the value of having a single location where people come to interact with their fellow employees. Business is all about people and the complex relations between them. The best functioning organizations have leadership teams who are closely aligned and function effortlessly. That positive behavior takes significant face time to develop. I bet that Toyota’s move will pay off down the road with a better functioning North American operation. 

Related article:

It’s Not About Incentives: Toyota’s Texas Move Is A Corporate-Culture Gambit (Forbes)

|30 Apr 2014

CEO Fail: The Attila the Hun CEO

By Peter d'Aprix (http://www.galleryhistoricalfigures.com) [CC-BY-SA-3.0], via Wikimedia Commons

By Peter d’Aprix (http://www.galleryhistoricalfigures.com) [CC-BY-SA-3.0], via Wikimedia Commons

Attila the Hun as CEO is the character often portrayed in movies and the press as the prototypical chief executive. While I won’t argue that this type of CEO doesn’t exist, I will say he is probably less common than the public perception. One reason is that after his behavior becomes known, it becomes hard for him to attract competent employees. 

For Attila nothing is ever good enough. He requires exceptional performance at all times while treating employees like minions. This focus on outcomes without building up any personal relationships convinces employees that he really doesn’t care. They perceive threats at every turn—to their status, certainty, relatedness, and fairness.

Attila never earns the trust required to have real influence in the organization. While he may feel that he’s driving the ship, he is not building employee buy in and is often getting far less than their best effort. The top performers will often flee, knowing they will be treated better in another environment. 

Are you an Attila the Hun CEO?

  1. How do you let your employees know that you care about their success as much as your own?
  2. Do employees discuss personal problems with you?
  3. How many employees would follow you if you were to leave to become CEO of a different company? 
|29 Apr 2014

“The CEO Tightrope” Is Real

The-CEO-Tightrope-Is-RealHere’s a sneak peek of the book jacket proof for my book coming out in September. The CEO Tightrope has been years in the making, so it’s gratifying to see it finally becoming a reality! The back cover gives you a summary of what the book is all about, but in a nutshell it is a practical guide for current and aspiring CEOs based on my years of trial and error. My goal was always to become a CEO, so I started my own companies to become one at a young age. I’ve been disappointed at the lack of CEO resources ever since, so this book is my way of contributing to the literature and sharing what I’ve learned. More to come.

|24 Apr 2014

The Coach’s Dilemma

Photo Credit: Thomas Leuthard via Compfight cc

Photo Credit: Thomas Leuthard via Compfight cc

I can still remember the first time I volunteered to help coach a little league baseball team, which was 30 years ago while I was in college. The kids were around 13 years old and were learning the finer points of the game. Not surprisingly, I became attached to some of the players, not because they were necessarily good players but because they were good kids. It is only natural when you are a leader to like the people who follow your lead. That is fine when you are coaching a little league baseball team but can cause issues when you are CEO.

If you believe like I do that people are by far the most important asset in a business, you probably spend a lot of time coaching your employees. A good CEO must be able to separate his or her positive personal feelings for an employee from their evaluation of how well the person plays their position. I often visit with CEOs who know they need to make a major change in their business but think they can do it with their existing team. Making key additions to an executive team is often a very effective way of initiating change. In my businesses I have made it a habit of adding a new executive every one to two years, sometimes replacing a weaker player and sometimes augmenting the team.

One role of the CEO is to provide the best possible human resources to the company, giving everyone the best chance for victory. Don’t allow your personal affection for your team limit their chance to win.

|22 Apr 2014

Predicting the future is useless without the courage to act

One of my favorite sayings about the technology business is that it is very easy to predict the future….the problem is getting the timing right! For example, everyone knew electric cars were an inevitable innovation that would attract customers, but many companies went broke trying to sell an electric car before Tesla got it right. Now if you know something is inevitable, you should prepare for the event. The challenge of course is that you can never be quite sure of the timing. 

Because of this uncertainty about timing, I have seen many CEOs not take action until it is too late. I often see a similar problem when dealing with people issues. I remember a board meeting I once attended where the discussion turned to executive talent. One board member made the point that it was clear the CEO needed to upgrade his team in a couple of key areas. He knew the growth the company was expecting in these areas would overwhelm the abilities of the current executives. The problem was it was unclear whether the issues would arise in the next year or a couple of years out. The CEO defended not doing anything immediately by saying the organization is going through a lot of change and making a change now would be risky. 

Of course changes at the executive level are always risky. On the other hand, the CEO agreed that it was inevitable the executives would fail at some point. It hit me at that moment that a key skill for any CEO is not just the ability to see the future but more importantly, the courage to act on the future they see. Once you are convinced of the future, the faster you act to prepare for it the better for everyone.

|15 Apr 2014

Bad hire? Blame the CEO

How much does a bad hire cost companies? It’s more than just money according to this infographic by Mindflash. Hiring the wrong person also causes lost time, productivity, and morale. The infographic also provides some suggestions for improving the hiring process. While these are important, one of the keys to hiring great people is to have a great recruiting process. This starts with the CEO, who in my mind should serve as the Chief Recruiting Officer.

CEOs should own recruiting and treat it as a core piece of the company’s strategic plan, not a tactical fire drill. Hiring right doesn’t mean taking your time, however. If your process is set up correctly, you should be able to hire someone within two weeks – that’s resume in hand to offer letter. Superstars won’t wait around for a company that drags its feet.

Also see a slide show version of this infographic at FastCompany.com.


|10 Apr 2014

What’s missing from the Mozilla CEO debacle commentary

I have read numerous posts and comments related to the “resignation” of the Mozilla CEO Brendan Eich. I feel compelled to comment on the situation as it raises an interesting issue that most of the commentators have not addressed: The relationship of a CEO to his employees. Since caring is one of the three Cs necessary for leadership, it is important for your employees to feel that you would put the interests of the company and the employees ahead of your own personal interests. I suspect based upon the stories I have read that a significant number of employees felt that the CEO’s views, defended in a recent interview, made it impossible for them to believe in him. While I would have hoped that people would value tolerance of opposing views more highly, I don’t doubt their reaction was genuine.

No one has a right to the CEO position, and if a CEO loses the confidence of a significant portion of their team it is right for them to move on. Often the reason the team loses confidence is more emotional than rationale, but whatever the reason it doesn’t have to be fair. To quote from the final scene between the great Vulcan philosopher Spock and Captain Kirk in Star Trek II: The Wrath of Khan, “…the needs of the many outweigh…the needs of the few…or the one.” 

I believe the reason the team lost faith doesn’t really matter. I hope the people supporting the employees in this case would be as understanding if the shoe were on the other foot politically. It would not be hard to imagine a CEO who wrote a check to and actively supported a pro-abortion group losing the confidence of a significant group of his or her employees. My guess is that in this case the press and others might rush to defend the CEO.

But in my view the reason employees lose confidence is irrelevant to the decision. CEOs lose the confidence of their people all the time for far less controversial things than gay rights or abortion issues. Imagine a CEO who travels by private plane on the company dollar while employees are scrutinized over every dollar on an expense report. It is impossible to lead if people don’t believe you care.

Just so people don’t feel that I am taking sides on the issue of gay marriage, my own position is probably more out of the mainstream that what either side in this dispute represents. My extensive study of the Constitution can’t find anything in the document that mentions who consenting adults CAN or CAN’T marry. I disagree with both sides. I hope this radical view doesn’t get me booted from my next CEO gig.


|08 Apr 2014

Setting aside CEO egos can make 1 + 1 = 3

I have spent much of my career running businesses in the startup phase of their lives. In my mind, the startup phase continues until you are confident that the business can survive any normal risk scenario. The definition of normal risk could be debated, but most CEOs know the feeling when they make the transition to a sustainable business that can continue without outside resources. What this means to me is that investors will get at least some return on their investment.

I have always felt that the best startup CEOs are able to de-risk the chance of striking out (bankruptcy) while maintaining the potential upside. It is easy to swing for the fences if you don’t care if you strike out. Often, I have seen opportunities for companies to de-risk their situation by combining with another company that has complementary offerings. Getting to scale where you can leverage your investments as quickly as possible is critical for small companies.

Unfortunately, most CEOs are so proud of their baby that they cannot imagine another one being as pretty as theirs. For this reason, it is well known in the investment community that similar size private-to-private transactions are very difficult to do even though they are often the most valuable deals for the investors. For it to happen, it takes two CEOs who are both willing to put the success of their company ahead of their own, since inevitably one will have to move aside.

Yesterday I read a perfect example of this when two Austin companies, Mass Relevance and Spredfast, announced their merger. I know both of these firms and their CEOs. Both companies were having great success in the market. They didn’t need to make a move. They made a move because two great CEOs saw that one plus one could equal three and didn’t let their egos get in the way. Look out, I predict that the combination will be a huge win for everyone involved. Disclaimer: I have no position in either company, unfortunately.

|03 Apr 2014

Command’s Place Among Leadership and Management

Leadership and management are covered so often in the popular business press – frequently positioned as opposing forces – that you would assume no other element is involved in running organizations. However, one essential concept receives little attention, especially in the context of the CEO role: Command. Now in my view both leadership (influencing people to take action) and management (organizing the resources necessary to take action) are very important for managers to understand. Managers who exhibit really good leadership and management skills will likely have tremendous success in their careers. But if they don’t understand and master the concept of command, they may not last in a CEO role.

The military uses the word command to describe the position of having responsibility for a given unit or asset. While civilians may equate command with the ability to give orders, most experienced officers understand that the first word related to command is responsibility. The person in command has the ultimate responsibility for the all the people and resources of the unit. In a CEO role, you have total responsibility for the performance of the organization, though limited control.

Photo Credit: petersandbach via Compfight cc

Photo Credit: petersandbach via Compfight cc

This dichotomy inherent in the CEO role is one reason that it is often hard to judge how someone will respond when they are put into a command position. I have seen people who exhibited great leadership and management skills in other positions struggle with the responsibility of command. Sometimes the weight of the position makes it hard for them to make a decision, or they are unable to handle the stress of having final accountability for the organization. There are many people who are great as part of a staff but just don’t have the right makeup to be successful as the top executive. 

When a previously highly successful executive fails in their first chance at the CEO role, it is often because the charge of command was something they just couldn’t handle. Being the CEO of any company is a great responsibility. The CEOs who can embrace the responsibility without letting it over power them are the ones who can achieve great success.

|01 Apr 2014

The tenuousness of CEO tenure

Recent research on U.S. CEO tenure varies anywhere from 5 to 8 years, but one thing is certain: CEOs have less time than ever to prove their merit. Part of the reason is market dynamism and the rapid changes taking place in businesses today. A CEO who was a perfect fit when he was hired may not be the right person to steer the company just a few years later.

CEO Strategic FitTwo recent blog posts in Harvard Business Review discuss the need to examine the CEO’s fit over time. In When It’s Time for the CEO to Go, Manfred F. R. Kets de Vries says CEOs tell him that about seven years is the right tenure for optimal effectiveness. He outlines three phases that CEOs go through during their tenure – entry, consolidation and decline. To maximize performance, CEOs need to understand what phase they are in at any given time. This also lets them know when it is time to step down.

In Assess Your CEO’s Strategic Fit Over Time, Marc Effron and Miriam Ort cite research about executives showing that “poor fit leads to poor performance.” They recommend assessing the CEO’s fit on strategy and change, two dimensions upon which the chief executive has distinct influence.

Both articles make a great case for why the board of directors must constantly examine how well the current CEO is addressing the strategic challenges of the organization and make changes as needed. As I’ve outlined before, the most important role of a board, especially in private companies, is to hire and fire the CEO. The board’s role is especially critical when CEOs refuse to acknowledge that their performance is subpar and that their unique set of skills and experiences no longer fit the company’s needs. Board members should study the research about strategic fit over time. 

How can you keep things fresh as a CEO? Being open-minded, recognizing when market changes demand action, and seeking outside counsel are good ways. When I was CEO of NetQoS, another action I took was bringing in a new executive every 12 to 18 months. In a growing company, this is often a brand new role. I think by refreshing the executive team – and thereby bringing in new points of view and experience – CEOs can expand their productive window.

|27 Mar 2014

The Top 10 CEO Failure Modes

The 10 Most Common Ways That CEOs Fail In Epic Fashion

Regular readers of my blog know that I have an ongoing series about how CEOs fail. From the Cheerleader CEO (the worst, in my opinion) to the Master Strategist, I’ve taken my top 10 and summarized them in my latest article for Forbes. Check it out for a short synopsis of the 10: 

  • The Cheerleader CEO
  • The “My Favorite Child” CEO (aka the “BFF” CEO)
  • The Drop-In Carpet Bomber CEO
  • The Saint CEO
  • The Budget Tyrant CEO
  • The Budget Blower CEO
  • The CIA CEO
  • The Super VP CEO
  • The Total Control CEO
  • The Master Strategist CEO

If you want to read an in-depth explanation about these and several others, check out all the CEO failure modes on this blog. Since there seem to be innumerable ways CEOs can fail, I’ll continue posting new ones on the blog periodically.

Photo Credit: Nickogibson via Compfight cc

|25 Mar 2014

Software startup’s aim is to teach CEOs how to be CEOs

Austin American-Statesman article about Khorus

Thanks to Lori Hawkins of the Austin American-Statesman for writing this article about Khorus and our business management system for CEOs. Thanks also to our customer Scott Tynes, CEO of Consero Global, for interviewing with Lori for the piece and outlining his reasons for choosing Khorus. He sees it not just as a management system for himself as CEO, but also as a tool for fostering teamwork among his distributed employee base of 250. Check it out!

|24 Mar 2014

GM CEO Mary Barra Demonstrates Mastery of the Three Cs

GM CEO Mary Barra Photo Credit: © General Motors

GM CEO Mary Barra Photo Credit: © General Motors

Earlier this week I spoke to Entrepreneur writer Geoff Weiss for an article about how GM CEO Mary Barra is handling their vehicle recalls. I believe that so far she has shown mastery of the most powerful tools CEOs have to achieve top performance: credibility, competence, and caring (I call them the three Cs). As I say in the article, the video message she published on the GM web site showed that she cares about the vehicle issues, that she is accepting responsibility for them, and that she is taking steps to fix the problem as well as ensure that it never happens again. Time will tell if she truly has the competency to lead GM, but I think she’s off to a good start. Check out the article for my full comments.

In addition, here are a few more articles that share additional insight into how Barra is handling this issue:

GM’s Barra Saying Sorry Seeks to Limit Fallout From Recall (BloombergBusinessweek)

Honeymoon interrupted for GM’s Mary Barra (The Washington Post)

Barra Could Do More To Meet New GM Need For Transparency (Forbes)

Video: GM CEO Barra says ‘something went wrong’ (USA Today)

|20 Mar 2014

CEO Fail: The Grandparent CEO

Grandparents have the best job in the world: They get to enjoy the kids when they want but don’t usually have to deal with issues like discipline. If they spoil the grandkids a little and let them get away with something, well that is part of the fun. This works great for grandparents but not so well for CEOs.

One of the key roles of the CEO is to set the bar for the quality of work allowable in any organization. If the CEO lets people get away with not meeting their deliverables, it will reflect on his or her credibility. Setting up good metrics is a key step. The harder part is consistently holding everyone to the high standards required to be a successful company.

Are you a Grandparent CEO?

  1. Do you allow people in your organization to miss deliverables without any repercussions?
  2. Would people in your organization feel like you hold some groups to higher standards than other groups?
  3. Do you cheer every victory – no matter how small? See also: CEO Cheerleader Fail: Drawbacks of the Eternal Optimist
|18 Mar 2014

Why “I don’t know” is a viable – even desirable – answer for CEOs

‘I don’t know’: Why admitting you don’t have all the answers is perfectly okay

I was planning to write a post on the use of “I don’t know” by CEOs, but Jason Freedman (co-founder of 42Floors) beat me to the punch with this article published on TheNextWeb.com. I have found in general that CEOs who use the phrase often are typically much better performers than those who never use the phrase. Jason spells out the reasons in this excellent post.

Also see this piece on the drawbacks of know-it-all leaders written by Hugh Arnold, adjunct professor and former dean at the University of Toronto’s Rotman School of Management (published this week by Canada’s national newspaper, The Globe and Mail). In a nutshell, Hugh asserts that leaders who convey that they have all the answers are essentially saying to their employees:

  • “I’m smarter than all of you.”
  • “Even though you may have deep knowledge and expertise, I don’t need to waste my precious time seeking out your ideas.”
  • “I don’t need your help.”
  • “All I really need from you is to put your heads down and do what I tell you.”
  • “I don’t know” is looking like a pretty good alternative, especially if you are dealing with knowledge workers, wouldn’t you say?

Photo Credit: ryanmilani via Compfight cc

|13 Mar 2014

How to avoid being a weak executive

Striking a Balance Between Yes Man and Doubting Thomas

In my latest article for Entrepreneur Magazine, I discuss what good CEOs are looking for in their executives and how to avoid being a weak one. This includes not acting like a “Debbie Downer.”

|12 Mar 2014

CEO Class Starts April 4


Building a World Class Company: A CEO’s Guide to Improving Performance 

Starting April 4, I am teaching my CEO class again in conjunction with the Rice Alliance Austin Chapter and the Austin Technology Council. The class is designed for CEOs with more than 20 employees who are seeking ways to grow via the right tools, people and processes. Much of the agenda focuses on the 5 responsibilities of the CEO that I’ve outlined in this blog. The content is not geared towards startups, but successful CEOs who want to improve their skills and network with peers.

Here’s a look at the agenda: 

Session 1. Intro session: The Job of a CEO (April 4)

Session 2. Own the Vision (April 11)

Session 3. Right People on the Bus (April 18)

Session 4. Providing the Right Resources (April 25)

Session 5. Build the Culture (May 2)

Session 6. Make Good Decisions (May 9)

Session 7. Deliver Performance (May 16)

Session 8. Stories from the Journey (May 23)

Session 9. How to Improve as CEO (May 30) 

Class size is limited to 20 CEOs and is by invitation only. If you fit the criteria, contact me for more information.

|11 Mar 2014

Five management lessons from Ben Horowitz

Excellent article based on the new book by Ben Horowitz. Here are two related interviews with him:

A Q&A With Ben Horowitz On His New Book, “The Hard Thing About Hard Things” (TechCrunch)

The consigliere of Silicon Valley (Washington Post)

|05 Mar 2014

DILBERT tackles goals management

DILBERT © 2007 Scott Adams. Used By permission of UNIVERSAL UCLICK. All rights reserved.

DILBERT © 2007 Scott Adams. Used By permission of UNIVERSAL UCLICK. All rights reserved.

I thought this DILBERT cartoon was appropriate to share after the launch of my new company Khorus a few weeks ago. Maybe back in 2007 (when this cartoon was published) it would have been a monumental task to collect and make sense of weekly employee input on their goals. The Khorus business management system is doing exactly that. We’re not just collecting the data for data’s sake, but analyzing the information and creating real-time reports and alerts for the CEO and division/department heads about how the company is tracking towards its goals. The system helps align employees to the corporate goals by helping them better understand how their individual contributions are supporting each one. 

One of the ways Khorus is different is our focus on likelihood and quality of goals versus simple goal status or completion. Likelihood captures each employee’s confidence in goal attainment. It’s a much better metric than status or project completion percentage, which does not reflect the inherent risk in the portion of work that is not complete. The natural inclination of most managers will be to ask: “Where are you on the goal?” The typical reply – “Oh, I’m about 80% done” – doesn’t tell you much. The employee may not know how to get the last 20% done. Or, they could only be 20% done but know exactly how to achieve the last 80%. 

Requiring employees to report on likelihood of goal completion each week makes them much more focused and holds them accountable. It also helps expose any business performance issues quickly. Over time, employees become better predictors of their work schedule.

In addition to likelihood, Khorus captures quality of deliverable as a core business performance metric. The emphasis shifts from simply getting things done to getting the right things done at a high quality. This focus on quality drives a culture of continuous improvement for long-term success.

So yes, it’s possible to know what’s really happening in your organization! And you’ll have more to base recognition programs on than superficial measures!

|04 Mar 2014

Sales should not be the only focus of an ops meeting

It’s always bothered me that many people seem to think the only purpose of an operations meeting is to talk about the sales forecast (and I’ve spent a lot of time in them for various companies). As a CEO, I think it is critically important that all areas of the business be in balance and receive an appropriate amount of attention. While the sales function is clearly important, it should not receive 90% of the attention as it often does.

Why do most companies spend so much time talking about the sales forecast? I realized that it is often the only future-oriented data that is collected. Every other department wants to talk mostly about what they have done, not what they are going to do. If future plans are discussed, they are typically tactical in nature and don’t relate to how they will impact the business. This focus on the past and tactics provides little value to a CEO.

One of the key roles of the CEO is to look as far into the future as possible to steer around any potential icebergs. That can happen only if he or she is receiving predictive data. It is crucial that every department help the CEO by looking at their activities from a forward-looking perspective, just like a sales forecast, and constantly be comparing actual performance to forecast performance. This way they drive continuous improvement in their ability to predict the future and help the CEO steer successfully towards their destination. The CEO bears some responsibility for this as well and should clearly communicate what kind of information he expects to receive, ideally tied to how departments are achieving the corporate goals.

Photo Credit: lumaxart via Compfight cc

|27 Feb 2014

What’s the one question every CEO needs to answer?

How likely is my company to meet its corporate goals?” 

Ironically, it’s one question that vexes CEOs, because they cannot get the information they need to answer it. While no CEO has a crystal ball, success depends upon having some way to predict how the company is tracking towards its corporate goals. Most of the data a CEO receives is backwards-looking, tactical information that doesn’t help them look towards the future. The answer is to have a process that lets them systematically collect the right type of information from across the organization. For more on this, read the article I just published for Forbes: http://www.forbes.com/sites/joeltrammell/2014/02/25/the-one-question-every-ceo-needs-to-answer

Photo Credit: Marco Bellucci via Compfight cc

|25 Feb 2014

My First Job: A blast that taught me some customer fundamentals

Everyone remembers his or her first job. Mine was working at a fireworks stand in Ruston, Louisiana. The first time I met the owner of the stand was when he drove into my neighbor’s driveway in a brand new Porsche. To a teenage boy in a small town, this was quite impressive. When I asked him what he did for he living, he told me he was an elementary school physical education teacher. While I was young, I already understood that PE teachers didn’t often drive around in Porsches. I realized his side business of selling fireworks must be pretty lucrative. That was enough for me to ask for a job.

The fireworks “stand” was an old 40-foot trailer like you might see being pulled down the highway. Customers entered from the middle and all the fireworks and prices were listed on a big display board in the trailer. One evening a gentleman walked in and begin ordering numerous items. As he named an item, the owner of the stand wrote down the price on a brown paper bag, and I retrieved the fireworks from the shelves behind the counter.

DiscountAs the customer was about half way through his order, he commented that he should get a discount for ordering so much. I was a little surprised when the owner readily agreed to a discount. He had always told me not to discount the price since we were the only stand in the area and if people came in they rarely left over price.

We didn’t have any sort of calculator so I watched as the owner, in front of the customer, tallied up the prices on the bag and came to a total. He said the total is $44 but since you bought so much I will give you a 10% discount and call it $40. The customer seemed quite happy that he had negotiated a good deal and took the fireworks and walked out the door.

Once the customer was at his car I turned to the owner and said, “You didn’t do the math right on that one.”

He said, “What do you mean?”

I said, “You added one extra $4 dollar item more than the man purchased.”

A wry grin came across the owner’s face as he said, “I have been doing that for 20 years and you are the first person who ever caught me.”

Now some people might say he cheated the customer, but I don’t agree since the customer paid the same price as everyone else. Now the owner could have just told the man that he didn’t give discounts, but that might have caused the customer to buy less or even leave. In the end both sides were happy with the transaction, and that is what was important. I would never intentionally try to mislead a customer, but I would look for ways to make everyone happy in a transaction. How people feel about a transaction is often much more important than the objective facts.

This reminds me of a story my brother told me about going to a car salesman friend of his to buy a car. He asked his buddy to tell him what kind of car he needed. The salesman responded, “I would go broke selling people the car they need, what do you want?” In business it is most important to figure out what the customer wants!

Photo Credit: kyeniz via Compfight cc

Related article:

My First Job: What Unloading Beer Taught Me About Leadership (LinkedIn)

|20 Feb 2014

Answering the “Exit Strategy” Question

Excellent post by my friend and former colleague Gordon Daugherty

|19 Feb 2014

CEOs need a system

I’ve had some success in my career as a CEO, which led me to think about what I could do to help out fellow CEOs as well as aspiring ones. This blog is part of that effort, as is the CEO course I teach every year and the book I’m publishing this fall. As I often say, the CEO role is the most unique but least prepared for job in business. CEOs rarely get the training they need unless they’ve been specifically groomed for the post. Even then, I don’t know of a good methodology or system that exists for CEOs.

I mean, HR people have a system (e.g., Workday), sales people have a system (e.g., Salesforce.com), marketing people have a system (e.g., Eloqua, Marketo), etc. But CEOs have what? Calendaring, e-mail, spreadsheets? This lack of a formal system is one reason I think many CEOs are not doing as well as they hoped. They cannot align the day-to-day activities and priorities of their people to the corporate goals, especially as they grow. In fact, many CEOs feel powerless due to lack of influence, lack of timely information to address problems, and lack of employee engagement. Can a system fix all that?

I think so, which is why I started my new company Khorus that we are officially launching today. Khorus is a business management system we developed specifically for CEOs to run their companies. It’s a cloud-based software product based on a system I created and used in my previous companies. The product uses a cascading goals framework, but this is no ordinary goals system.

KhorusTPSMatrixIt’s a way to align every employee to the corporate goals and reinforce them on a weekly basis: Every week, employees provide their input on the quality and likelihood of achieving their goals in the quarter. Instead of backwards-looking, tactical information from different departments, CEOs for the first time get a normalized, relevant view into what’s driving – or inhibiting – the business. This way, they can see issues developing and act on them before it’s too late. In essence, the system helps answer the one question that I think CEOs agonize about most: “How likely is my company to meet its corporate goals?”

Check out the press release for more information.

Here’s a quick product tour:

I’m interested in your feedback about this, both in theory and execution. If you are a CEO – or even a VP or director of a large department – and want to know more about Khorus, feel free to reach out to me directly.

|18 Feb 2014

Will an aluminum Ford F-150 make Alan Mulally the CEO of the decade?

Commercialization: Aluminum Body on Ford’s F150

2015 Ford F-150 Reveal

2015 Ford F-150 Reveal; Photo Credit: Ford

I follow the new car and truck market quite closely. It is a very competitive worldwide market that must balance form and function. I have been a big fan of the work that Alan Mulally has done at Ford, but this latest move is a whole other level. Switching from steel to aluminum for a vehicle that is not only your best seller but also the best-selling vehicle in America is a huge gamble. It is the type of move that companies don’t usually make unless they feel they are on death’s door and have no other option. The “safe” play from one perspective would be to stay with steel, and if you wanted to try aluminum do it in a low-volume, higher-end model. The fact that Mulally could make this move shows a leader who has the confidence of his team and is providing real leadership. My guess is that it will be a homerun for Ford and in my mind cement Mulally as CEO of the decade.

|13 Feb 2014

Why CEOs have power but lack influence

Entrepreneur.com just published an article I wrote titled “How Leaders Can Find Their Mojo.” Whether they admit it or not, many chief executives feel powerless in their organizations. Oh sure, they have power: They can hire and fire, acquire companies, reorganize whole divisions, change the company strategy, etc. But once an organization gets beyond 20 or 30 people, CEOs start to lose the ability to influence the day-to-day activities and priorities of their people. Chief executives who don’t have a formal system to align employees to the corporate strategy and goals risk consequences such as employee disengagement, inefficiency, and poor performance, no matter how many organizational changes they make. In the article, I cover the top three challenges that cause CEOs to feel powerless and what they can do about it. Check it out here: http://www.entrepreneur.com/article/231430

|12 Feb 2014

How to set corporate goals in 2014

Effective goals management leads to execution that supports corporate strategy

Effective goals management leads to execution that supports corporate strategy

I’ve done a couple of Webinars recently to show CEOs and other executives how to set goals for their organizations. This is one of the keys to success in any company. The bigger your organization gets, the more disconnected your employees will become from the big picture strategy if you don’t do something formally to link them together. Cascading goals are a way to do that, but only if every employee understands how their day-to-day contributions tie to the corporate goals, and you have a way to continually and consistently monitor, measure, and hold everyone accountable.

In these Webinars, I share the goals management system I’ve used in the past. This has morphed into a software system for CEOs in my new company Khorus. Here’s a quick outline of what you’ll learn:

  • The top 3 CEO challenges
  • Why quarterly goals are necessary
  • The 5 steps needed for execution to happen
  • How to set corporate, department, and individual goals
  • How to choose the proper measures
  • How to review goals and give feedback
  • Goal setting and execution timeline
  • Do’s and don’ts

If you are an ExecSense subscriber, find my Webinar here: “Best Practices for Establishing 2014 Goals for Your Management Team

Another version is available on YouTube here: “Get to High Performance: The CEO’s Art of Setting Goals

To learn more about Khorus, sign up at http://khorus.com/get-started



|11 Feb 2014

Employee engagement counts

Officevibe has created this infographic about employee engagement based on a bunch of stats that support what I’ve been saying on this blog for a while: Employee engagement is low in general across U.S. companies, money is not a chief motivator if you pay market value, people leave bosses not companies, engaged employees perform better, etc. For CEOs, ensuring that your employees are engaged should be one of your top priorities. One way to do this is to own the vision and make sure that everyone in the company – from entry-level to executives – understands the corporate goals and how their day-to-day activities contribute to those goals.

10 Shocking Stats About Employee Engagement

Infographic crafted by Officevibe, the corporate team building and employee engagement platform.

|06 Feb 2014

The three roles of private company boards

In my last post, I wrote about some red flags when choosing board members for early stage companies. Understanding the function of private company boards will help CEOs select the right members as well as help those board members to offer the right value. Here are the three roles that I think board members serve in private companies:

  1. Hire and fire CEOs (and this includes succession planning just in case): Who should captain the ship is the most important decision in the whole company, and the board is responsible for acting collectively to make those decisions. Most CEOs are members of the board, which complicates matters. As a board member, I am a big believer that I support the CEO until they are not the CEO. In other words, even if I am not sure the existing CEO is the best choice, I do not in any way undermine their authority. If I reach a point where I believe they need to go, then I must discuss the issue with the board as well as directly with the CEO (however unpleasant that may be). Don’t hide behind the rest of the board. If a board member believes the CEO should go but the rest of the board does not, then it is probably time for that board member to resign. Either way, the CEO is the CEO until they are not, and he or she should be treated with the appropriate level of respect.
  2. Approve major decisions that impact the company: A typical list would include things like corporate strategy, fundraising, acquisitions, the annual budget, and the hiring and firing of executive positions. I view this as an approval process. The CEO brings these issues to the board with his recommendation, and the board ratifies the direction. If the board does not approve, then the CEO should take the feedback and come back with a new proposal. I do not believe the board should be creating strategy or forcing other direction on the company.
  3. Act as a strategic consultant to the CEO: A good board spends 95 percent of their time doing this. Just like any good consultant, they spend a lot more time trying to ask the right questions rather than showing how smart they are by dictating answers. The CEO should feel comfortable calling board members anytime he wants to discuss an issue, without being worried that they will suddenly jump in and decree an answer. The good board member understands that the more he or she can do to build up the CEO, the more value the company’s stock will have in the long run. It is always best if the board can make the current CEO successful rather than think they can bring in some rock star CEO who will run the company much better. For small companies, it is almost impossible to attract good CEOs. Typically the reason the CEO is being replaced is that things are not going well, and there is limited runway on the current funding. No proven CEO is going to step into a situation like that. Boards should focus on making their existing CEO as strong as possible, because replacing a CEO is a failure of the board.

Running private companies is tough enough without having to deal with a poorly functioning board. Because it is such a critical decision, make sure you spend time up front vetting any potential board members. Where possible, I believe that board positions should be one-year appointments and only be renewed with the unanimous approval of the entire board. This way board members who aren’t helpful can easily be removed without a big fight. Best of luck with your board relations!

|04 Feb 2014

Proceed with caution when choosing private company board members

I have had some interesting conversations over the last few weeks that made me realize many people view the role of private company boards far differently than I do. This may be because many of the board members in these companies don’t have significant board experience. Often they have brought money to the table but don’t have the right experience to provide value to the entrepreneur. Or in some cases, people take board seats because they still want to run a company but aren’t willing to commit the time and reputation risk of being the CEO. Both of these cases are terrible for the entrepreneur and can lead to the company’s failure.

Because of this, entrepreneurs must be very selective about who they allow on the board. You should put at least as much research into selecting a board member as you do when hiring an executive team member. The first step is to check with every CEO you can of companies where the individual has been a board member. Hopefully, you can find out how the board member behaved not only when things were going poorly, but also when things went well.

If the individual you are considering has never been on a board, then it will be necessary to spend some time discussing his or her view of the board role. It is easy for an investor who puts up a significant amount of money to feel like he or she should have a right to determine specifically how that money is spent and how the company is run. This never turns out well.

Any good CEO understands that running a company – even when focused on it 24 hours a day – is a very difficult task. When board members believe they can spend a few hours each week thinking about a company and then dictate what should be done, they are deluding themselves. I have more than 20 years of successful CEO experience, and I would never feel comfortable making key company decisions based upon my limited view of the company as a board member.

So how should a board member approach a board position at an early stage company? In my next post, I’ll share three main roles for the board.

Photo Credit: huskyte77 via Compfight cc

Related article:

To Board or Not to Board: That is the question for early stage companies

|29 Jan 2014

Donald Trump Leadership Redux

This article applies Donald Trump’s leadership to my model of CEO leadership. I think the post holds up pretty well five years after I published it. Hopefully today’s election results will be finalized sooner rather than later, finally determining if Donald Trump’s unique brand of leadership overcomes Joe Biden’s focus on character. If Trump wins reelection, this article may explain why.

Is Donald Trump a Leader?

Originally published on October 6, 2015

I am constantly observing leaders to better understand how my three Cs model of credibility, competence and caring applies. Many people I know are shocked by the ability of Donald Trump to gather a large number of followers. They are offended by some of his comments and don’t understand how he could be leading the polls.

An important point of leadership is understanding that you must look at it from the follower’s perspective. My model says that to gain followers you must appear to them as credible, competent, and caring. Let’s apply each of one of these to Trump and see if we can learn something about leadership.

Credibility: Do people believe Trump is honest?

Credibility is the idea that people believe that you believe what you are saying to be true. You may have to read that last sentence twice. I did not say that you have to say things that are true. Clearly Trump has said things that most people would say are not true, but that is not the standard. With his willingness to say whatever comes to mind without a filter, he meets this standard for his followers.

Am I saying that a leader can go around stating a bunch of crazy things as long as he appears to believe them? Well normally no, because that would violate the second standard in the model: competence.

Competence: Do people believe Trump can get something done?

People want their leaders to be competent at what they are doing. Getting all your facts wrong will cause people to doubt your competency. In this case, however, his followers are not looking for someone who is competent across every situation a president might encounter. What they are specifically looking for is a president who can get things done.

No one can deny that Trump has successfully pulled off many land developments. It doesn’t hurt that he is flying around in a plane with his name on it. Compared to many of the politicians in the field – who can point to little more than having been elected to office to show their competency – he has a huge advantage.

Caring: Do people believe Trump cares about their issues?

Finally, we come to the caring question. How can a billionaire be perceived as caring? By talking about the issue that his followers care the most about, that’s how. Trump’s campaign was launched around the idea of discussing illegal immigration.

For most of the politicians in the race, immigration is a difficult topic with many nuances. For Trump it is a hammer he uses to cudgel them on their own credibility and competence shortcomings. One of his favorite retorts is: “Why haven’t you done something to solve the problem?” I bet if you surveyed his followers, the majority would list illegal immigration as their number one issue.

To get elected and govern effectively, a president must capture a majority of the country as followers. The same is true of CEOs. To be effective you need a strong majority of followers across the entire employee base. The problem for Trump of course is how he can expand his followers and capture a majority of the people. This is the area where his previous comments will likely come back to haunt him.

It is hard to see how he establishes the three Cs with voters who are less interested in the immigration issue and more focused on other issues. Making crazy statements may get you quick publicity, but over time it will erode your credibility and competence whether you are trying to lead a country or an organization.


|03 Nov 2020

One Financial Platform to Rule Them All: OneStream Software CEO Tom Shea

OneStream Software CEO and co-founder Tom Shea has a unique blend of technical, financial, and leadership expertise. As his career began, he was really an engineer cloaked as an accountant. The engineering side finally won out and led to him becoming an entrepreneur and CEO as well.

As the leader of OneStream and an architect of its cloud-based financial management platform, Tom’s success is in the numbers: OneStream reached $130 million in revenue in 2019, reporting a 50% year-over-year revenue growth and a 99% customer retention rate. Their customers are the CFOs of the world’s largest companies.

It was interesting to hear Tom discuss his transition from being a founder/specialist CEO to a generalist focused on helping the company scale and grow. Of note also is his insight that taking a pause due to the pandemic can be of value to a growing company that must reinvent itself every few years.

Joel: What was your journey to the CEO role? 


Tom Shea

Tom: “It’s interesting because when I think about it, I’m almost an accidental CEO. I spent 10 years in corporate finance first and was just writing software on the side. I started to realize that I sort of picked the wrong major. I was an accountant with an MBA, really focused around systems analysis and design.

Over that 10-year period, I started to gravitate more and more towards software. I’m also sort of an accidental entrepreneur, because being an accountant, I was extremely risk averse. I just kept thinking, ‘How can I ever do this?’ And I kept rising higher and higher. I worked at Chrysler, United Technologies, ITT Automotive, huge companies. But I learned the problem I was trying to solve by doing that.

I thought I wanted to be the CFO of a large company. When I was about 28 years old, I’d made it to a director executive position and just realized, wait a minute, I don’t want to do this for another 30 years. I think I need to figure out how to take my passion, which is creating software, and turn it into a business.

So I set out to learn how to write contracts and do a bit of consulting for about a year or two. Then I started a company called UpStream when I was almost 30, and that’s how I became a CEO.”

Joel: Tell me about OneStream and how you came to co-found it.

Tom: “We’re a company that’s heavily focused on customer success. Our approach as a bootstrapped company has been to speak softly and carry a big stick. I don’t want to sound negative, but the trend in Silicon Valley with a lot of software companies was to talk about stuff you’re going to do before you’ve done it and really hype it up. And then a lot of times that fell short of the actual result.

So we had this different, I’ll call it Midwest sort of mentality, which is to focus on one customer at a time, get at it and be successful. This is my second company. I had a go at this the first time with the exact same philosophy. So in 2000, I started a company called UpStream. It’s confusing, but that company was focused on moving data from a lot of ERP systems into a market leading product called Hyperion, which eventually acquired us in 2006.

I learned a lot on that journey and made connections with some really important engineers. This led to the ability to create OneStream a few years later in 2010, when two of us started creating the product. We said, if we do this right, we’ll be able to attract the best people from our prior life to be a part of this business and help us grow it. So today it’s the same ecosystem, the same partners, a lot of the same sales team. We were able to put together sort of a dream team.

‘One’ is an important word in the title of our name OneStream. Over about a 15-year period we saw companies such as SAP, Oracle, and Hyperion (financial reporting and planning software) make a lot of acquisitions and roll them up into their stack. Then their salespeople would show up at a company and try to sell them 16 different products. 

We saw that customers (in our case the CFOs) were starting to get more and more frustrated. After every acquisition or strategic move, customers would hope that the larger company was going to rationalize how all these products should work together. That never really happened, and these companies just kept trying to sell them more and more products. This meant more cost or debt, if you will, technical debt for the customer to manage.

We saw that opportunity and were able to step back. We didn’t have any of the sacred cows. We thought, well, what is good about all these different products? What are the important things about each one? Why are they needed? How can we rationalize all that into one product or a platform? Can we sell to these customers with a more rational cost of ownership and a product that allows them to go forward from where they were? That was the rationale behind OneStream.”


OneStream co-founders (l-r): Bob Powers, CTO; Tom Shea, CEO; Craig Colby, President


Joel: Financial planning is obviously critical during this period. I assume you’re seeing a lot of interest in your product?

Tom: “Yeah, that’s a great question, and it’s very logical. We’re fortunate to have strong interest in our product. Financial planning is more important than ever. If you think of the typical financial reporting process, 30 days go by and then you produce your financial statements. Then you end up reporting on the quarters and then to an external authority.

We’re involved both in the management reporting and the external financial reporting. The customer data that comes out of our system is what’s provided to Wall Street. We’re the book of record, but we’re also the planning system. What we’re finding now is, and we’re seeing this even in our own company as we’re getting bigger, is we really need financial signals sooner. We can’t wait 30 days to figure out if something’s right or wrong. We have to be analyzing financials on a daily basis, getting better and faster.

This is not a new desire. It’s been around since I’ve been in this game. It’s just that with technology, the cloud and the way people are thinking about it, it’s more possible than ever with tools like ours. We’re seeing customers push us to this faster frequency.

The challenge is there’s lots of data that is collected by these companies on a daily basis, right? So when you think of all the data that’s flowing through all the ERP systems and all the operational systems, it’s not really financially intelligent data. So on a daily basis we help those customers take that data that’s being recorded about their business and turn it into a financial signal that they can use to steer their financial results, not wait for them to occur.”

Joel: What’s your typical customer? Is it mid-market, Fortune 500?  

Tom: “We target the largest businesses. OneStreams’ average customer is $3 billion in revenue. What defines the need for a product like ours is more the complexity of your business than the size of your business. We have a few customers that are under $500 million, but that’s not who we usually target.

We’re engaged with some of the biggest organizations you can imagine, such as UPS, Toyota, the Department of Homeland Security, the Federal Treasury, the largest shipping company in the world, and many more. We offer the most value to big, complicated businesses, because they have so much information. It’s a logistical battle for companies that large just to put together their financial statements.”

Joel: So now with hundreds of employees, a new employee probably doesn’t see you every day. What do you tell a new employee who asks, “What do you do as CEO?”

Tom: “It’s really interesting. OneStream had been bootstrapped up until March of last year, when we took our first funding round from KKR. Up until then, I spent a disproportionate amount of my time on engineering. I was the face of the company at all of our conferences and would hold all-hands meeting with employees. But I was seen as a driver of the product and steering it to fit the market.

Now, it’s dramatically changed for a lot of reasons. With the investment comes having a board and accountability. The company has transitioned from its initial survival point in its life cycle to one foot in prosperity. We’re trying to scale to the next level as a business. My role now is what I call engineering the company.

I’m involved in all kinds of organizational scaling, making sure that we have the right programs and communication in place, such as committees. It was very much one-to-one communication with all the top executives, where I would just have a series of calls every day. Now it’s trying to get that overlap in place to make sure that there’s sharing. I try to do 33% business development, 33% engineering and then 33% operations.

So my point to employees is I’m really just trying to conduct the orchestra or however you want to say it, to make sure that we’re optimizing in each of the core areas. I’m working with the leadership in each of those areas to ensure we stay in touch with the market, maximize our financial goals, and create and maintain our culture the best that we can as we start to grow.”

Joel: What have you done to focus on the culture, particularly bringing in outside investors? Having a board does changed things.

financialTom: “Well, our story is a bit unique from being bootstrapped. Our culture always centered around being somewhat conservative, and you have to be accountable. That way of thinking has stayed with us, even with KKR, one of the biggest investment firms on the planet.

The reason lies in our decision for why we would take capital in the first place. We were profitable and approaching a hundred million in revenue. We wanted to keep our growth pattern going plus 50% growth. How can we do that? We have to start looking two years ahead, not one quarter ahead in the way that we think about it.

So our senior leaders said now is the time. Because of the way we conducted ourselves, we had 10 companies make us offers for an excess of a billion dollar valuation. This allowed us to focus on a firm that would be a partner to us. We didn’t just pick the highest number. To protect the culture, we focused on making sure that we had a team that was going to help us and be a true advisory board. They needed to provide the depth of knowledge we require as we march towards IPO or whatever that next big step would be for us.

So that’s helped us. I shared that with the company, because I didn’t want them to think this was an act of desperation. This was a choice. This was a very stringent selection. We weren’t begging someone to invest in us. We were picking a partner, and I think that helped soothe and maintain our culture, which is really built around customer success as I said.

When we walk into a deal at these big companies, we hand out the list of every company that’s ever purchased our software and say, you can call anybody. And that’s what our entire company is built on. Now, when you think about that as a culture, if you lead with that, it gives people purpose, it gives them pride in maintaining that. And I think it wasn’t hard for KKR, Goldman Sachs is also one of our investors by the way, to get behind that belief because they saw the output or the benefit of it.”

Joel: Has your mission and vision changed a little bit, as you’ve matured as a company and brought in investment?

Tom: “No. As you can imagine people start to focus on metrics and sales. So two board meetings ago, I challenged the board on whether our mission is still to produce a happy customer or to get every possible sale we can. The board agreed unanimously that customer satisfaction should remain our philosophy.

And that may mean putting the brakes on if we tip this equation too far on the demand side. Otherwise you run the risk of not being able to deliver or implement, because consulting is a big part of what we do. Maybe the partner community around supporting our product isn’t there, or the customer is not ready or the knowledge transfer isn’t there to keep up with the demand. In any case, you’re not going to end up with a happy customer.

So we’re taking a long view of the business. We’re much more metric-driven than before, so changes are happening. But we’ve been able to get agreement that sales growth is not the metric, sales growth is only a part of the story.”

Joel: How have the current virus issues affected the way you’re running the business?

Tom: “The first thing you notice right away is that the employees need to hear from you, because the anxiety is growing. We stepped up our communication cadence to help them understand how we are viewing this challenging time and managing it.

I really tried to be transparent, because no one has all the answers. I think the number one lesson that I learned, because we’ve gotten a lot of positive feedback, is don’t act like you know everything when you don’t, and be honest.

I told employees, ‘Hey, you’re at a safe company, there aren’t going to be any layoffs. We care about you and your family.’ I’m proud after 20 years of being a CEO that I’ve never laid a person off. I assured them: I’ll focus on the business. We’ve got a great partner in KKR. They are more bullish on us than they’ve ever been.

From a capital perspective, I told our community and stakeholders that we’re just taking our foot off the accelerator, not really jamming on the brakes. We’re still growing this year and had already hired over a hundred people. But that’s going to be probably 200 short of what we would have hired in 2020.

I also assigned certain staff to help us understand the possible duration of this, what the slowdown might look like, and how we’re going to know when we’ll transition back to growth. I also advised employees to be proactive during this time. If we’re down, if you’re slower, if one of your clients isn’t there, make sure that you’re doing something proactive. So the next time you do that task, it’s better.”

Joel: How are you thinking about the next 12 months economically? Do you think everything will be back to normal in six to 12 months, or is this a longer problem? 

Tom: “We see it as a lot of software companies are seeing it: 65% of expectations in Q1, Q2 obviously the worst, maybe like a 50, 60%. Then 75% in Q3 and 100% in Q4. That’s sort of how we’re operating right now, meaning that we would be back to our normal level of business in 2021.

Now with that said, our demand has been driving new interest in our funnel. We’re really, really pleased with that micro view of our business. What remains to be seen is the close rates. So even though we’re putting all these companies in, are the close rates what we’re accustomed to? That’s really heavily dependent on the macroeconomic situation that everybody’s in.

We are seeing a gradual uptick right now. We sell to all industries. Clearly we have some customers that are really challenged, from airlines to some large hotel chains. We have other segments that are just killing it such as some segments of retail. So we’re hopeful.

To us, this was just a pause. And in some ways, a nice pause because we’ve been a 50% plus grower our entire lifecycle as a business and that’s hard. As a growing company you break every couple of years. You have systems and people and processes in place and in two years, it doesn’t make sense anymore and you’ve got to rethink it. So this has given us a chance to really look inward during this time.”

Joel: Any other trends you’re seeing that maybe other CEOs and other industries should be aware of?

Tom: “The big trend that I’m seeing is an increasing need to have an financial analytics foundation in your business. It’s not a luxury anymore to have the ability to examine it and see your business much closer to real time. This is an accelerated digital transformation, and it’s exposing those who are unable to adapt to it quickly. I think this trend is going to continue. And I think this is going to burn in and be something that people learn from.”

Something else I would advise: If you’re a CEO looking to take on a partner, you can have a great one if you run yourself responsibly. We have an unbelievable board of directors with people like General David Petraeus and John Kinzer, who was the former CFO of HubSpot. We have a great think tank that’s been there. If I have any kind of question or concern, having that knowledge base to draw on has just been unbelievable.”

|29 Jul 2020

Business Forecasts: Cloudy with a Chance of Futility


Credit LA Cicero, 11/4/1996.
Kenneth J. Arrow

Nobel Prize-winning economist Ken Arrow started his career as a weather officer in the U.S. Army Air Forces during World War II. He worked with a group responsible for preparing long-range weather forecasts for military leaders. As a trained statistician, he began to wonder if the forecasts were accurate.

After examining the old forecasts, he determined that the one-month predictions were no better than random chance. Based on this conclusion, Ken sent a message to the commanding general asking to discontinue the practice. Here’s the response he received:

“The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.”

Like the general, CEOs need forecasts, but many are under the delusion that their current methods are valid. Every CEO wants to be rational by using data to run the business and make decisions. The problem is that data is not always helpful in predicting what is likely to happen in the future.

The Data Challenge

By definition, data is historical. It is a backwards look at what has happened. I have seen many CEOs who obsess over the data but never develop a system to turn it into a forecast. Other CEOs who are flush with data may be overconfident in their ability to calculate the future of everything.

In addition, some CEOs are too rooted in the past. They only ask: “How well did we do?” not “How well did we perform against our predictions?” The best ones ask: “How good are our forecasts?”

Predictive Metrics Facilitate Good Forecasts

Setting up predictive metrics to measure against is a critical first step. Most metrics reflect past performance though. Revenue, for instance, shows how many deals the sales team closed or how well frontline staff pitched a new service – last quarter. It provides no information about what might happen next quarter.

The ability to predict future business performance is one characteristic of a good metric. For example, the best predictive metric for sales in my opinion is the accuracy of revenue forecasts. Most every sales team follows a certain methodology or process. Sales professionals who excel in understanding and using the process can maximize the revenue possible within the given market conditions.

Consequently, accurate revenue predictions measure how well the sales team understands the sales process. For instance, at one of my former companies our final sales numbers were almost always within five percent of forecast each quarter. This excellence in forecasting gave me a crystal ball of sorts to understand how to lead the company into the future – and led to 31 consecutive quarters of double-digit revenue growth.

Collect Predictive Metrics from All Employees

CEOs need to collect forward-looking, relevant information from every department – not just sales. Very few CEOs require this, but those who do can drive continuous improvement in their predictive capabilities and steer the company in the right direction. They continually compare actual performance to forecasted performance to ensure the organization is on track.

It is important to challenge and teach all employees to be good predictors in their areas of expertise. CEOs must implement systems where their employees can provide the useful input needed to help make forecasts. This should be an ongoing process instead of just once a quarter or year.

Training the organization to make good predictions can give CEOs a huge competitive advantage – literally one step ahead. So be like Ken Arrow and constantly test the validity of your forecasts. This will help make your business forecasts more accurate, with an above-average chance for growth.



|26 May 2020

CHRO Evolution: Jason Hanold on What CEOs Expect

This is part 1 of my interview with Jason about his journey to the CEO chair and the progression of the CHRO role. Look for part 2 next week.

Jason Hanold is the CEO and co-Managing Partner at Hanold Associates, a retained HR executive search firm focused on recruiting Human Resources officers and Diversity & Inclusion leaders. They have a stellar list of clients, including the NFL, Domino’s Pizza, Under Armour, Patagonia, Gucci, Kohler, REI, Kellogg, and many others.

I wanted to know: How did a recruiter with a background in HR became the CEO of a firm that recruits chief human resources officers (CHROs)? I also asked his perspective about how the CHRO role has evolved over the past 10 years and what CEOs today are expecting from them. His answers are enlightening.


Jason Hanold

Did you always want to be a CEO or did you fall into it as many do?

“No, I never really wanted to be a CEO. I always wanted to just recruit, because I loved it. But then over time you think about the ways you’d do things. For example, the way you’d model and build teams to be a better recruiter in search engines. Then all of a sudden you find yourself as a CEO.

Being a CEO has allowed me to still practice my craft and lead through example. I try to role model what I’d like to see in the younger recruiters who are coming up with their own experiences. So, it wasn’t a goal to be a CEO per se, but it was just kind of my love of the craft – that’s how I fell into it.”

What has surprised you most about the role? Did anything feel really different than you anticipated when you got in the chair?

“What surprised me most and what I’ve enjoyed the most is the freedom to make nuanced decisions that best suit a client or a business scenario that comes our way. I don’t answer to a private or public board, so it’s incredibly rewarding to remain agile, to flexibly live in time with the markets and with our client needs, and to be able to make those decisions as we go. That’s as opposed to being kind of hand tied with governance protocols set by other people who maybe weren’t close to the clients and the markets that I had to follow. It’s wonderful to be able to build a team that is not just about diversity in terms of representation, but a collective team of diverse people from different socioeconomic backgrounds, ethnic backgrounds, and different global regions of our country and planet. It’s great to see how that really comes together, working with people that you genuinely like, who are good people.

I worked in a couple of organizations where I took the long way from the elevator to my office just to avoid folks. So, I appreciate that freedom as CEO to set the tone and tenor for your culture, and realize that whoever you add to the organization equals your next iteration of your culture, and so on. When we’re considering hiring anyone into the firm, we always ask: Do we like that version of us that we become once this person is added to us? It’s much like a scientist views a culture growing in a petri dish. What grows from that culture in the petri dish is informed by what you add to it, and so that’s the way I think of cultural fit and how we continue to grow our firm. That’s a wonderful freedom to have as CEO.”

Is there anything you wish you’d experienced or studied before becoming a CEO?

“Yeah, I think there’s a depth of analytics that goes with the financial acumen. That wasn’t my background, and that’s certainly not my expertise. Now we’re healthy and doing incredibly well at Hanold Associates, but I always wonder. It’s always that fear of ‘I don’t know what I don’t know.’”

Yes, and that’s always true. Even after 30 years, I can tell you, you always wonder what you don’t know. My approach to the CEO role is paranoid optimism.

“Yes, that’s right, and I also use that as fuel to keep learning and growing. I feel like at 52 years old that I’m more curious and learning more than I did when I was 10. That’s a good thing, I suppose. I use equal doses of paranoia and insecurity to fuel that and ensure that I am learning what I should be learning. That’s more out of a responsibility I feel to my colleagues and their families. I know that I’m responsible for providing well for them, and that’s where that comes from.”

I noticed you’re working on an advanced degree, is that correct?

“Yes. I know it kind of sounds ridiculous. I have a student ID card at 52, but I still can’t bring myself to get the 10% student discount if you show your student ID card at the movies!”

What’s that program around and why do you think it will be helpful to you?

“It’s the University of Pennsylvania Chief Learning Officer program that leads to a doctorate in education. Fundamentally the content is about how organizations close their talent gaps as they’re changing, transforming, growing, or reconfiguring. The magic of this is you have people from all over the world who come together in a relatively small cohort. It involves not only chief learning officers and heads of HR but also non-profit leaders and others. The head of learning development and leadership growth at GE is an alum of the program. We also have a Rear Admiral in the Navy who’s responsible for all the Navy’s learning and training. The head of NATO’s training is also in the program.

The reason I am in the program is to bring some science into what I do. For example, recently I was at Major League Baseball headquarters with Rob Manfred, the Commissioner, and Dan Halem, the Deputy Commissioner. Before that we were with Roger Goodell and his crew at the NFL. We just wrapped up two searches with him. When you’re advising folks like that, who are successful in their own right, I feel it has to be more than my intuition and perhaps wisdom over the years. I want to ensure that I have the right frameworks today, which I get from an advanced degree program, and bring them into the art of what I do as an executive search consultant and recruiter in the eyes of the clients that we’re serving.”

I think that’s particularly interesting. As I understand it, you focus mostly on the CHRO/HR leadership area. Is that fair?

“Yeah. That’s correct.”

How do you see that CHRO role changing in organizations today? What are CEOs looking for now that’s different from 10 years ago?

“Well, the good news is the expectations for this role are much higher than they were 10 years ago, and that’s in the eyes of the CEO. I remember in my early days, sometimes I might be doing a CHRO search while the company concurrently had a CFO search going on. I could tell that the CEO had higher expectations for the CFO search in terms of the caliber of my candidates. He wanted a bigger, broader business leader for the CFO role, with an eye towards succession.

I’m truly pleased to report today that I have more and more conversations about our CHRO candidates being a potential successor to the CEO, with the right experiences and rotation. Board members and executives committees are also catching on to this.

It starts with the candidate’s business acumen, with their lens. The people I might put into a role today will have perspectives on the business beyond just people implications. In the past, an HR person who served on the executive committee would remain relatively quiet unless something HR-related came up, such as benefits or hiring. Today, they’re weighing in on all topics. I heard it from the NFL when we did their CHRO search. They wanted a CHRO who could be a potential successor to the commissioner’s office. That’s what they see in Dasha Smith who they hired. That just wasn’t a common conversation 10 years ago.”

I think more CEOs should come out of the CHRO spot than sales, which is the more common route today. How does a CHRO get business experience in companies that view them as compliance only and won’t offer those opportunities?

“We have a couple of influences that are helping to propel this. In years past, if an HR person had an advanced degree, it tended to be in industrial relations. Today, their advanced degree is more likely to be an MBA or other business-related degree, finance even. Another influence is that more HR people today actually started in other areas of the business. They’ve had rotations in operations and maybe had P&L responsibilities. Then they’ve gone into HR as a key rotation and really enjoyed it. So some of your best talents in the organization are saying, ‘You know what? This is where I want to focus and this is what I want to do.’

All of these themes have come together where fundamentally CEOs are becoming much more sophisticated in their expectations of the HR person. They want that strategic advisor, as opposed to the transactional, compliance, administratively focused leader who used to be in there.

Not to age myself, but in the 80s I started at State Farm in operations, and they moved me into what was then called personnel. I wondered what I did wrong! I was embarrassed to admit that I was in personnel, because HR didn’t typically attract the best people in business. Even when I got a promotion, I didn’t tell anyone because I went from personnel specialist 1 to personnel specialist 2. It didn’t seem that impressive.

Today you have a better caliber of executive in HR. They’re instilling confidence because of their thought leadership, their contributions, their intellect, their agility, and their curiosity. All these leadership traits and characteristics have boards and executive committees saying, “You know what? This person has the capability. Let’s rotate them. Let’s go have them take on this business unit or this geography or what have you and get them into our succession plan.” So we have a lot of intervening influences that are helping to shape that.”

In part 2 to be published next week, I ask Jason what CHRO and HR candidates are looking for in a job and how to prepare for their first 100 days.


|14 Apr 2020

CEO Responsibilities 2020: 5 Unique Duties

CEO responsibilities today are more complex and burdensome than ever. The novel coronavirus, talent shortages, the presidential election, digital transformation, competitive pressures: CEOs must confront a never-ending onslaught of issues and challenges, and 2020 will be no exception. While some of these disruptive forces aren’t new, they are increasing in “complexity and intensity,” according to an Accenture survey of C-Suite executives.

In this rapidly changing environment, CEOs cannot rely on experience alone. A German C-suite executive told Accenture that: “In a linear world CEOs could project their experience into the future. Today, experience does not have that same value because the world is developing exponentially.”

Today’s CEOs must be more adaptable, humble, and willing to learn. To survive and thrive, they should be comfortable making bold decisions and moves. CEOs should recognize they cannot be experts in everything, especially as environments shift and disruptions occur faster than ever. Instead, they need to bring together disparate teams to collaborate on initiatives that move their businesses forward through the uncertainty.

Along with these traits, the most critical aspect for CEOs is to realize their job is unlike any in business and fulfill those unique duties.

CEO Responsibilities 2020  

The good news in this world of turbulence is that CEOs have a stabilizing force: A framework of five CEO responsibilities that provide a consistent approach to the role – if they are willing to embrace it. Great CEOs know their distinctive responsibilities and stick to them. They understand where to spend their time and how to be most effective.

The following outlines my framework of these five CEO responsibilities, which are enduring and critical for 2020 and beyond. They provide an anchor for taking calculated risks while ensuring that the organization is reaching its strategic goals.

After each one, read examples of how the top 5% of companies from PwC’s 2020 Global Digital IQ report are succeeding by fulfilling each responsibility – to the tune of 17% higher profit margin growth. According to PwC’s survey of more than 2,380 senior executives in 76 countries, these are the companies that are gaining the most value from digital, such as Sony, Liberty Mutual, Porsche, Amazon, Nestlé, Microsoft, AliBaba, John Deere, and others.*

Every company is a technology company now or working towards that goal, so these examples apply to all organizations large and small.

CEO Responsibilities 2020

CEO responsibilities

CEO Responsibilities 2020 – #1: Own the Vision

Mission, vision, values, and overall strategy 

Without clear guidance on the vision, a company is simply a bunch of people pursuing individual or departmental goals, guided by their own values. In particular, lack of clarity on the strategic direction makes it difficult for the CEO to drive and measure performance. Too often, CEOs take a hands-off approach and think minimal communication with employees suffices.

CEOs must clearly and continuously communicate the organization’s strategy to employees, customers, and shareholders. They must keep it fresh and top of mind for everyone. For each stakeholder group, the CEO should delineate the WIIFM: What’s in it for me? Profit? Purpose? Career development? Business success?

Conveying timely stories and facts about the company’s progress is a valuable and compelling way to remind everyone of the vision. CEOs should not change the big picture vision much but adjust it in response to rapidly changing business conditions.

Own the Vision in Action : The top 5% of companies from PwC’s 2020 Global Digital IQ research are getting real value from digital by having a consistent strategy. Their corporate strategy IS digital as they integrate technology into every part of their businesses. Their employees have a clear direction for digital 96% of the time. As a result, these companies have 17% higher profit margin growth than their peers.

CEO Responsibilities 2020 – #2: Provide the Proper Resources 

Balance people and capital

Only the CEO can balance capital and staff across disparate groups and initiatives. Different departments will strive for the same limited budget dollars, for example. Skillfully making these decisions requires not only a clear vision but also a deep understanding of all aspects of the business.

The people side is especially important: Hiring and retaining the best talent, putting them in the right positions, and giving them the appropriate training is probably the single most important thing a CEO can do. With the right team, all things are possible. With the wrong team, nothing else matters.

Provide the Proper Resources in Action: The companies winning in digital provide the right resources for their digital transformations. These organizations spend 33% more than others on new technologies, processes, and other investments to drive business growth via digital, according to PwC.

For example, Porsche AG has dedicated half of its IT budget to digitization and expects all company employees to be involved in the initiative: “The Porsche customer experience must be as outstanding as the vehicle itself,” said Klaus Zellmer, President and CEO of Porsche Cars North America. “This quality claim is paramount as part of our transformation from a pure sports car manufacturer to a digitally focused company.”

These companies also invest more on training/upskilling and have unique recruitment efforts that make them 200% more likely to attract and keep top talent. Their employees are making a difference: The top 5% report having more innovative employees who are contributing to revenue growth.

CEO Responsibilities 2020 – #3: Build the Culture

The CEO is the culture

CEOs who respect culture are more likely to have engaged, high-performing employees. The most critical part of culture is values: Who you are and what you value as a CEO defines the organization’s culture. This is especially true in smaller companies where the culture grows organically based on the CEO’s personality. Any personal weaknesses will manifest in the culture, so it’s important to have the self-awareness as a CEO to mitigate this.

In larger organizations, the CEO must communicate a set of clear values and ensure that everyone applies them consistently, from top to bottom, across every department. Many CEOs become hypocrites when they discuss culture and values, because their actions don’t match their words. Constant vigilance is key here: CEOs should also regularly measure culture to ensure the organization is on track. Gallup has an instrument for this that I have found effective in my companies.

CEO ResponsibilitiesBuild the Culture in Action: Digital transformation is embedded in the cultures of the top 5% percent. This is driven from the CEO down. Change is the only constant for these organizations, and they embrace what’s needed to fail fast and innovate. In fact, the PwC survey revealed that 67% survived a major disruption over the last two years – M&A activity, changes in business models, new leadership, etc. – and came out stronger because of it.

Microsoft CEO Satya Nadella has masterfully lead a cultural shift by pivoting to cloud computing and encouraging his employees to have a “growth mindset.” During his tenure, Microsoft has become one of the most valuable companies in the world. According to Microsoft CMO Chris Capossela: “We went from a culture of know-it-alls to a culture of learn-it-alls.”

CEO Responsibilities 2020 – #4: Make Good Decisions 

Triage and act decisively

CEOs are often surprised by the breadth of decisions that confront them from day one. They must hone the skill of knowing which decisions to make as CEO and which to leave to others. The CEO is often the only person in the company able to make decisions that impact multiple departments.

Other decisions should be left to those with the authority and/or expertise to make them. Otherwise, the CEO risks wasting time and undermining employees. The most successful CEOs train their employees to make good decisions at every level, which is another reason that communicating a strong, clear vision is so important.

In addition, speed of decision-making is critical. Too many CEOs delay, putting their organizations in limbo. Highly decisive CEOs are 12 times more likely to succeed according to the CEO Genome Project. The faster you make a decision, the faster you can correct it if necessary.

CEO ResponsibilitiesMake Good Decisions in Action: Speed of decision-making is paramount for PwC’s top 5%. Their leadership mandates change and keeps these organizations on the cutting edge: 90% are leading their industries in digital. Only 6% of leaders at these companies present a roadblock to innovation. This type of speed and agility is only possible when the CEO is decisive—and allows employees to make strategic decisions at the appropriate level.

CEO Responsibilities 2020 – #5: Deliver Performance 

The buck stops with the CEO

Because the CEO is ultimately held accountable for the organization’s performance, he or she must take an active role in driving it. The CEO sets the standard, which means helping each department set the right metrics and goals and then consistently measure them. It is critical for an organization to know that the CEO will constantly hold everyone to a high standard. The best CEOs “trust but verify.”

This is not about micro-managing but instilling a culture of high performance where constant improvement is the norm. Two-way transparency is key here. The CEO needs visibility into performance at all times – not just once a quarter – to solve any issues and make course corrections.

Employees should have access to the performance metrics they impact and a way to update their progress frequently. With an understanding of how everyone is contributing to the company’s goals, employees are more likely to perform well.

CEO ResponsibilitiesDeliver Performance in Action: The top 5% of companies in PwC’s research are clearly delivering performance with 17% higher profit growth margin than their peers. Their leadership’s digital investments are engaging the staff to support the company’s goals: Employees are more likely to adopt new programs and technology (72%). This helps them be more active in driving business and innovating in ways that positively impact the bottom line.

Embrace the 5 CEO Responsibilities

It is very easy to fall into a tactical routine as CEO, confronting each problem as it comes your way. Prioritizing these five CEO responsibilities will sustain you in a world of uncertainty and rapid change. You can take a more professional approach to the most unique and challenging role in business.

CEO Responsibilities 2020:

#1: Own the Vision

#2: Provide the Proper Resources

#3: Build the Culture

#4: Make Good Decisions

#5: Deliver Performance

For greater detail on all five CEO responsibilities, read my book “The CEO Tightrope.”

*Disclaimer: I have made these connections between the five CEO responsibilities and the PwC research – not PwC.

|13 Mar 2020