Being a CEO

Notes

• Everybody learns to be a CEO by being a CEO. No training as a manager, general manager or any other job actually prepares you to run a company. The only thing that prepares you to run a company is running a company.
• It’s a lonely job
• If you are the CEO, you do not have anybody to blame. Buck stops with you. You are responsible for everything that is wrong in your company, directly or indirectly.
• CEOs often make the one of the following two mistakes:
  • They take things too personally. Every CEO makes thousands of mistakes. Evaluating yourself and giving yourself an “F” doesn’t help.
  • They do not take things personally enough. In this view, none of the problems are actually that bad and they needn’t be dealt with urgently. By rationalizing away the issues, the CEO feels better about herself. Ultimately, the company turns to crap.

• Ones and twos:
  • Two core skills for running an organization: 
    • (Ones) Knowing what to do
    • (Twos) Getting the company to do what you know. 
  • Being a great CEO requires both skills.
• Little things: You should set high-level goals, but those goals will or will not be achieved by the organization that you assigned them to. If you want to help them reach their goals, do so by focusing on the little things. The big things will take care of themselves.
• Questions to ask yourself:
  • Does the CEO know what to do?
    • The Strategy and the Story
    • Decision making: At the detailed level, the output of knowing what to do is the speed and quality of the CEO’s decisions.
  • Can the CEO get the company to do what she knows? The company should:
    • Have the capacity to do so: In other words, the company must contain the necessary talent in the right positions to execute the strategy. Is the CEO building a world-class team?
    • Be a place where every employee can get things accomplished – the employees must be motivated, communication must be strong, the amount of common knowledge must be vast, and the context must be clear. Is it is easy for employees to contribute to the mission?
  • Did the CEO achieve the desired results against an appropriate set of objectives?
• Peacetime CEO/Wartime CEO
  • Peacetime in business means those times when a company has a large advantage vs. the competition in its core market, and its market is growing.
  • In wartime, a company is fending off an imminent existential threat. Such a threat can come from a wide range of sources including competition, dramatic macro economic change, market change, supply chain change, and so forth.
• Best use of a leader’s time
  • Recruiting + Hiring
  • Long-term strategy, vision, and culture
  • Communicating the direction to everybody all the time
    • Over-communicate vision at all-team meetings.
    • Leverage your one-on-one meetings.
    • Don’t just talk about vision — codify it. Document it.
• As a CEO, be careful what you say and when you say it. Most of the time your word carries more weight than you wish. Reserve that weight for when it’s really necessary.
• The Product CEO Paradox: CEOs who manage product have to walk a fine line:
  • Keep and drive the product vision
  • Maintain the quality standard
  • Be the integrator
  • Make people consider the data they don’t have

Handling Challenges

• Nobody cares. When things go wrong in your company, nobody cares. All the mental energy that you use to elaborate your misery would be far better used trying to find the one, seemingly impossible way out of your current mess. It’s best to spend zero time on what you could have done and all of your time on what you might do. Because in the end, nobody cares, just run your company.
• Don’t Quit. As CEO, there will be many times when you feel like quitting. In the technology game, tomorrow looks nothing like today. If you survive long enough to see tomorrow, it may bring you the answer that seems so impossible today.
• This is not checkers; this is chess. No matter the situation, there is always a move. You just have to find it.
• Don’t put it all on your shoulders. Get the maximum number of brains on the problems even if the problems represent existential threats. 
• When stuck:
  • Ask yourself: “What’s the most I can do with what I have right now?”
  • Remind yourself: The present is real. The future isn’t real yet. It hasn’t happened.
• Techniques to calm your nerves
  • Focus on the road not the wall: If you focus on the wall, you will drive right into it. If you focus on the road, you will follow the road.
  • Make some friends.

Decision Making

• Leader’s job
  • Take difficult decisions. If decisions were easy, we won’t need leaders, they will be automatically decided. 
  • Absorb complexity and pass onto the organization a simpler problem. Broken into chunks.
• Decision making: Courage is particularly important, because every decision that a CEO makes is based on incomplete information. In fact, at the time of the decision, the CEO will generally have less than 10% of the information typically present.
  • The most difficult decisions (and often the most important) are difficult precisely because they will be deeply unpopular with the CEO’s most important constituencies (employees, investors, and customers).
  • As CEO, there is never enough time to gather all information needed to make a decision. 
  • In life, everybody faces choices between doing what’s popular, easy, and wrong vs. doing what’s lonely, difficult, and right. These decisions intensify when you run a company, because the consequences get magnified 1,000 fold.

Effective Leaders

1. Ask “What needs to be done?”
   • Find the priority task at any given time and stick to it.
   • Once done with the first task, ask “What must be done now?” This generally results in new and different priorities.
2. Ask “What is right for the enterprise?”
   • They do not ask if it’s right for the owners, the stock price, the employees, or the executives. Of course they know that these are important constituencies who have to support a decision, or at least acquiesce in it, if the choice is to be effective. But they also know that a decision that isn’t right for the enterprise will ultimately not be right for any of the stakeholders.
3. Develop action plans
   • The action plan is a statement of intentions rather than a commitment. It must not become a straitjacket. It should be revised often, because every success creates new opportunities. So does every failure.
   • Without an action plan, the executive becomes a prisoner of events. And without check-ins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.
   • When they translate plans into action, executives need to pay particular attention to decision-making, communication, opportunities (as opposed to problems), and meetings.
4. Take responsibility for decisions
   • It’s just as important to review decisions periodically—at a time that’s been agreed on in advance—as it is to make them carefully in the first place.
   • Such a review is especially important for the most crucial and most difficult of all decisions, the ones about hiring or promoting people. Studies of decisions about people show that only one third of such choices turn out to be truly successful. One third are likely to be draws—neither successes nor outright failures. And one third are failures, pure and simple. Effective executives know this and check up (six to nine months later) on the results of their people decisions. 
   • If they find that a decision has not had the desired results, they don’t conclude that the person has not performed. They conclude, instead, that they themselves made a mistake. In a well-managed enterprise, it is understood that people who fail in a new job, especially after a promotion, may not be the ones to blame.
   • Decisions are made at every level of the organization, beginning with individual professional contributors and frontline supervisors. These apparently low-level decisions are extremely important in a knowledge-based organization.
5. Take responsibility for communicating
   • Specifically, this means that they share their plans with and ask for comments from all their colleagues—superiors, subordinates, and peers. At the same time, they let each person know what information they’ll need to get the job done. The information flow from subordinate to boss is usually what gets the most attention. But executives need to pay equal attention to peers’ and superiors’ information needs.
6. Focus on opportunities 
   • Good executives focus on opportunities rather than problems. Problems have to be taken care of, of course; they must not be swept under the rug. But problem solving, however necessary, does not produce results. It prevents damage. Exploiting opportunities produces results. 
   • Above all, effective executives treat change as an opportunity rather than a threat. They systematically look at changes, inside and outside the corporation, and ask, “How can we exploit this change as an opportunity for our enterprise?”
   • Unless there is a true catastrophe, problems are not discussed in management meetings until opportunities have been analyzed and properly dealt with.
   • Effective executives put their best people on opportunities rather than on problems.
7. Make meetings productive
   • Making a meeting productive takes a good deal of self-discipline. It requires that executives determine what kind of meeting is appropriate and then stick to that format.
8. Think and Say “We”
   • They think of the needs and the opportunities of the organization before they think of their own needs and opportunities.

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