“Hello, valued customer, your call is very important to us. Now please wait 15 minutes because we don’t want to spend the money to staff our phone lines.”
There was an actual human being who decided to record that message. That actual human being may really have believed that they valued customers. I fervently hope I’m not that person.
Your are your values
Values are an interesting thing. We all have them. They drive our behavior. They determine who we hang out with. They determine our decisions. And when we’re giving our TED talk, we even talk about our values. We list them. We point to their worldly goodness. “Family is what matters most.” Everyone nods. We think we live our values.
The values we proclaim—the ones in our TED talk—may have no relationship to the values we live by. Most of us assume that our lived values correspond to our proclaimed values. Most of us are wrong.
This matters because our lived values are the ones people will judge us by. They’re the values that will determine our reputation and “personal brand.” Those, in turn, will determine who wants to do business with us, who wants to hang out with us, and much of the quality of our emotional lives. The continual neglect of our teenagers’ science fair competitions are what they remember, not the world “family matters most.”
This also matters because presumably we actually want to be living our espoused values! What if we talk about integrity, and really want to be surrounded by people with integrity? What if we talk about respect, and really want to respect people and be respected by them? How can we make this happen?
Know What You Value (and thus, Who You Really Are)
First, list your proclaimed values. This will be easy, because they’re the ones you proclaim. Simply answer the question “what do you value?” off the top of your head. You’ll get the list. Watch your TED talk. You did a great job of listing them there. “I value truth, constructive disagreement, and following through on promises.”
Next, identify where those values drive your behavior. For each of your values, think about the kinds of decisions and tradeoffs where those values would show up. If you value truth, where would that manifest? Perhaps in giving feedback when someone asks if they’ve done a good job. Or when they ask if their current outfit is flattering.
If you value constructive disagreement, that would manifest in conversations with your spouse where you have differing opinions about something important. When it comes to following through on promises, you would look at things you’ve promised, and when (or if) you delivered on those promises.
Lastly, take a hard look at your lived values. Go through the scenarios you identified and notice what you actually did in those situations. Did you give honest feedback, or did you say the easy thing that wouldn’t rock the boat? Did you cave in to your spouse, because it was easier than asserting your own opinion. Do you have excuses at the ready, to show why it was actually reasonable to break all those promises?
This is very hard, because you will find that your lived values don’t match up perfectly to your proclaimed values. Indeed, some people may find that their lived values are the opposite of their proclaimed values. It is far more comforting to live in ignorance, than face the reality that the person who most betrays your values is you.
Now Change: Start Living Your Values
Once you know where the gaps are, you know where to change your behavior. Next time you’re in the situations you identified, consciously behave according to your proclaimed values, instead of your lived values.
This will feel wrong and unnatural! You’ve spent your lifetime deciding to reduce staffing in a call center so you boost profits. Now, you’re making a decision to spend more money to provide better customer service. If that decision felt natural, you would already behave that way. Expect yourself to resist, push back, and generally try to maintain the status quo.
It’s helpful to enlist trusted friends and colleagues in helping me change. You can ask your teenagers, “I want to do a better job of putting family Please tell me when I’m falling down.” They’re teenagers. They’ll tell you. You can ask your work colleagues, “I want to do a better job of living our values of customers-first. Please help me make decisions that reflect that.” You’ll be surprised. If you are sincere in your request, and you act on their feedback, people will be happy to help.
Values are the core of our identity. Our proclaimed values represent the ideal we wish to be. Our lived values represent the person we are. By bringing the two together, you’ll be taking control of both who you genuinely develop to be, and others will come to see you as that same (hopefully awesome) person.
The Chief Executive Officer is one of the most coveted titles, and least understood jobs in a company. Everyone believes that CEOs can do whatever they want, are all powerful, and are magically competent. Nothing could be further from the truth. By its very nature, the job description of a CEO means meeting the needs of employees, customers, investors, communities, and the law. Some of a CEO’s job can be delegated. But several elements of the job must be done by the CEO. Read on for the details of what makes a CEO.
What is intrinsic to the CEO’s job?
This isn’t a traditional job description; it’s an examination of the actual roles that a CEO plays (legally or de facto) within a company. A CEO’s job description includes a few important areas. Any individual CEO may take on any tasks that they wish, but these are the things that can’t be delegated:
While a CEO may get input for some of those duties, it is the CEO’s—and only the CEO’s—responsibility to perform those well. Being the CEO, they can spend the rest of their time doing whatever they decide they want to spend their time on. But ultimately, everything else about a given CEO’s job is optional.
Admit it. We all feel a touch of awe when someone has it: the CEO title. The power, the salary, and the chance to Be The Boss. It’s worthy of awe!
Too bad so few CEOs are good at what they do. In fact, only 1 in 20 are in the top 5%. Many don’t know what their job should be, and few of those can pull it off well. The job is simple—very simple. But it’s not easy at all. What is a CEO’s job?
More than with any other job, the responsibilities of a CEO diverge from the duties and the measurement.
A CEO’s responsibilities: everything, especially in a startup. The CEO is responsible for the success or failure of the company. Operations, marketing, strategy, financing, creation of company culture, human resources, hiring, firing, compliance with safety regulations, sales, PR, etc.—it all falls on the CEO’s shoulders. Being responsible means that the CEO is the one held accountable for the success of the company’s efforts, across the board. But of course, the CEO doesn’t actually do all that work.
The CEO’s duties are what she actually does, the responsibilities she doesn’t delegate. Some things can’t be delegated. Creating culture, modeling values, building the senior management team, financing road shows, ultimate approval of how money gets spent, and, indeed, the delegation itself can be done only by the CEO.
What is the CEO’s main duty? Setting strategy and vision.The senior management team can help develop strategy. Investors can approve a business plan. The Board can approve, advise, or ask the CEO to revise a business strategy. But at the end of the day, it’s the CEO who ultimately sets the direction:
Which markets will the company enter? Against which competitors?
What will the company’s product lines be?
How will the company differentiate itself? Will it be low cost? High service? Convenient Locations? Flexible financing? High-touch? Mass produced?
The CEO decides, sets budgets, forms partnerships, sells off incompatible product lines, makes acquisitions, and hires a team to steer the company accordingly.
Modeling and setting the company’s culture, values, and behavior
The CEO’s second duty is building culture. Work gets done through people, and people are profoundly affected by culture. A lousy place to work can drive away high performers. After all, they have their pick of places to work. And a great place to work can attract and retain the very best.
Culture is built in dozens of ways, and the CEO sets the tone. Her every action—or inaction—sends cultural messages (see “Life Under a Magnifying Glass”). Clothes send signals about how formal the workplace is. Who she talks to signals who is and isn’t important. How she treats mistakes (feedback or failure?) sends signals about risk-taking. Who she fires, what she puts up with, and what she rewards shape the culture powerfully.
This can not be emphasized enough! People imitate a CEO’s behavior when deciding how to act. The book Pre-suasion by Robert Cialdini, documents at length the ways in which, for example, a dishonest CEO makes employees feel as if they can cut corners, steal from the company, and generally behave according to those same standards.
A project team worked weekends launching a multimedia web site on a tight deadline. Their CEO was on holiday when the site launched. She didn’t call to congratulate the team. To her, it was a matter of keeping her personal life sacred. To the team, it was a message that her personal life was more important than the weekends and evenings they had put in to meet the deadline. Next time, they may not work quite so hard. The emotion and effect on the culture was real, even if it wasn’t what the CEO intended. Congratulations from the CEO on a job well done can motivate a team like nothing else. Silence can demotivate just as quickly.
If vision is where the company is going, values tell how the company gets there.Values outline acceptable behavior. The CEO conveys values through actions and reactions to others. Slipping a ship schedule to meet quality levels sends a message of valuing quality. Not over-celebrating a team’s heroic recovery when they could have avoided a problem altogether sends a message about prevention versus damage control. People take their cues about interpersonal values—trust, honesty, openness—from CEO’s actions as well.
Building and leading the senior executive team
Team-building is the CEO’s #3 duty. The CEO hires, fires, and leads the senior management team. They, in turn, hire, fire, and lead the rest of the organization.
The CEO must be able to hire and fire non-performers. She must resolve differences between senior team members, and keep them working together in a common direction. She sets direction by communicating the strategy and vision of where the company is going. Strategy sets the direction for the senior team, who in turn set it for the rest of the company. With clear direction that everyone understands, the team can rally together and make it happen.
Don’t underestimate the power of setting direction. In 1991, at Intuit’s new employee orientation, CEO Scott Cook presented his vision of Intuit as the center of computerized personal finance. Intuit had just 120 employees and one product. Ten years later, it’s a billion-dollar company with thousands of employees and dozens of products. Worldwide, it is the winner in personal finance, bar none. The success is due in no small part to every Intuit employee knowing and sharing the company’s vision and strategy.
Allocating capital to the company’s priorities
Capital allocation is the CEO’s #4 duty. The CEO sets budgets within the firm. She funds projects which support the strategy, and ramps down projects which lose money or don’t support the strategy. She considers carefully the company’s major expenditures, and manages the firm’s capital. If the company can’t use each dollar raised from investors to produce at least $1 of shareholder value, she decides when to return money to the investors. Some CEOs don’t consider themselves financial people, but at the end of the day, it is their decisions that determine the company’s financial fate.
Footnotes for Part 1
 Pay no attention to the math background peeking from behind the curtain… back
Measuring Success as a CEO.
Knowing the job description is a good first step for a CEO, but to know how she’s doing, she needs to design her own measurement system.
Unlike inconvenient lower-level jobs, no one tells the Chief Executive how she’s doing. Do managers let her know she’s undermining their authority, making poor decisions, or communicating poorly? Not likely. Even when a CEO asks for honest feedback, the fear is there: non-flattering feedback may stall a promising career. Even when a company uses 360-degree feedback, no one penalizes the CEO if she doesn’t act on the feedback.
The Board of Directors supposedly oversees the CEO, but they are far removed from day-to-day actions. Over time, they can evaluate performance, but they look mainly at share price and company strategy. They are rarely interested in—(or qualified to comment on!)—the CEO’s daily behavior.
But the CEO’s daily behavior will make or break the company! The CEO’s duties don’t change because they are unmeasured. Indeed, lax measurement makes it easy for the CEO to feel confident, even when she shouldn’t. Good feedback is the only way to know what’s working, but share price simply doesn’t do it. External measures measure the company, not the link between the CEO’s actions. A low share price tells her something’s wrong, but it doesn’t help her figure out what.
By measuring her performance based on her duties, a CEO can learn to do her job better. As explained in part 1, the CEO’s job is setting strategy and vision, building culture, leading the senior team, and allocating capital. The last of these is easy to measure. The first three are more of a challenge.
How does a CEO know she’s doing the vision thing? It’s hard. Having vision isn’t enough—that just takes a handful of mushrooms and a vision quest. Communicating the vision is the key. When people “get it,” they know how their daily job supports the vision. If they can’t link their job to the vision, that tells a CEO that her communication is faulty, or she hasn’t helped her managers turn the vision into actual tasks. Either way, a CEO can monitor her success as a visionary by questioning and listening for employees to link their jobs with the company vision.
Culture building is subtle, the culture a CEO sees may be very different from the culture of the rank-and-file. One company had a facilities policy that all equipment within 450 feet of the senior management offices was kept in top working order. Senior managers saw a smoothly running company, while everyone else saw neglect and carelessness.
Surveys about openness, values, and morale can be used to develop a measure of culture. The questions to ask aren’t rocket science. The book First, Break all the Rules gives a great questionnaire for measuring overall culture. Also, check turnover. When 95% of your workforce says they can’t wait to get to work, something is going right. If people rarely leave, and if it’s easy to attract top talent at below-market prices, you can be sure the culture plays a large role. If people leave (especially your top performers), again—look to culture. And don’t underestimate the power of walking around and counting smiles. If people are having fun, it will show.
The CEO’s success at team-building can often be measured through the team. Teams usually know when they’re effective. They can also rate their team using assessments that measure specific behaviors. For example, “I can trust my teammates.” “My teammates deliver their part of the project on time.” “Every member knows what is expected of them.” Regular team self-assessments can help the CEO track the team’s progress and hone her abilities to keep the team running smoothly.
Easiest to measure is a CEO’s capital allocation skill. In fact, financial measures are the ones made public: earnings and share price. But how can a CEO link those to her actual decisions? Working with her CFO, a CEO can devise financial measures appropriate to her business. Sometimes traditional measures are most appropriate, such as economic value added or return on assets (for a capital-intensive company). Other times, the CEO may want to invent business-specific measures, such as return on training dollars, for a company which values state-of-the-art training for employees. By monitoring several such measures, a CEO learns to link her budget decisions with company outcomes. Ultimately, the CEO’s should be creating more than a dollar of value for every dollar invested in the company. Otherwise, her best bet is to return cash to the shareholders for them to invest in more productive vehicles.
In startups, earnings begin low to nonexistent, and share price is more about salesmanship and vision than earnings. So the CEO gets almost no useful feedback about her capital allocation wisdom. She doesn’t know whether a dollar spent on a slightly nicer-than-necessary copy machine is wasted or is a wise investment in a long-term. Careful attention to the design and tracking of financial measures can help her prepare for the transition to an earnings-driven company.
 The CEOs don’t help the problem. Many of my CEO clients highlight the value of honest feedback from their coach. Yet they complain about employees who disagree with them, just don’t “get it” or don’t have enough information “to understand the real issues.” In a coaching call, they can hear feedback and consider it. At work, they treat disagreement as dissension, and then wonder why everyone’s a “Yes man.” back
 There are dozens of team effectiveness surveys. You can start by checking out http://www.cambriaconsulting.com,http://www.ccl.org, and http://www.pfeiffer.com.back
Pitfalls and Solutions for the CEO
A CEO can tank a company by not understanding their duties, or failing to set up good measurement systems. But it’s also true that the job itself can screw up the person, as well. It’s said that power corrupts, and few positions are more powerful than CEO. While the USA may be a democracy, our companies are legal dictatorships with the CEO calling the shots(1). While she may be having a great time playing Boss, the position may be taking a very human toll.
It’s all too easy for the CEO to become a …; jerk(2) …; without realizing it. They can forget—if they ever knew—what it was like to have a boss. They are free to ignore feedback that they don’t want to hear, and no one will call them to task for it. They can bypass the chain of command when they want to meddle. They can give themselves raises and genuinely believe they deserve it. And most dreadfully, they can forget what it is like to be “one of the little people”:
I have to leave early today.
To pick up my kids from daycare.
Oh… (looks genuinely perplexed) Why don’t you have your nanny do that?
I don’t have a nanny.
Oh…; wanders away with a mildly confused expression
The worker was an incredibly productive person. She worked harder than the CEO, got more done, yet couldn’t have afforded a nanny if her life depended on it. The CEO didn’t intend to be a jerk, but his lack of empathy didn’t win many supporters.
A CEO can become arrogant by externalizing blame
Having no day-to-day accountability for her actions can also turn a CEO sour. When things go wrong, she can blame everyone around her without facing her own shortcomings. “My employees just don’t get it,” proclaims the CEO, never thinking for a moment that she is the one who hired them. Did she hire incompetents? Or has she failed to communicate goals consistently and clearly? “Market conditions have changed.” she declares. A nice excuse, but isn’t it the CEO’s job to anticipate the market and position the company for success under a variety of scenarios? Without someone to keep her honest, she can gradually absolve herself of all responsibility.
Believing in a title can lead to overconfidence
Arrogance also threatens a CEO. “Because I am CEO, I must know the business better than anyone else.” It has been said, but it just isn’t true. No CEO can be an expert in all functional areas. A CEO who is doing her job is spending time with the big picture. If she knows the details better than her employees, she’s either hiring the wrong people or spending her time at the wrong levels of the organization. It’s appropriate for a CEO to manage operations if absolutely necessary, but she should quickly hire good operational managers and return to leading the whole business.
If she also comes to believe that the CEO title grants infallibility, watch out. Even the Pope is only infallible a couple of times each century. But CEOs can reinforce their delusions of grandeur by giving themselves higher salaries (surely she deserves it! After all, salary benchmarks show how underpaid she is) and more perks. Then when layoffs come, the CEO wants applause for having the moral strength to make “hard choices,” quietly overlooking how her own poor decision making led to the need for layoffs.
CEOs can stop learning well
Of course, once infallible, there’s no more to learn, and a CEO may quietly stop learning. Without daily oversight and high quality feedback on how she does her job, she can mistakenly believe her actions lead to success. In reality, she may be doing the wrong thing, but her staff may be working around the clock to cover for her.
Furthermore, sins of omission aren’t penalized. A CEO who does an adequate job, but far less than she could/should have done—goes unnoticed. In hindsight, XYZ Software(3) could have had a $1 billion market niche, and gone public with a valuation of tens of billions. Instead, it stuck to one product, had little understanding of its markets, and ignored competition. Yet it still went public in a $300-million IPO. Was management penalized for a lack of vision and market responsiveness? Hardly! The top managers walked off with $60 million apiece, reinforcing the notion that they had done a great job. Yet with a slightly grander vision, the company might have been 10 or 100 times its size.
Setting vision is the CEO’s job, but nothing tells her if her sights are too low. She isn’t penalized for missing the grander vision. Such sins of omissions are a CEO’s worst enemy. She can be lulled into mediocrity by not knowing what would have been possible. The four-minute mile was considered impossible…until Roger Bannister ran it. Now, it’s commonplace. Likewise, a CEO may limit herself by not realizing she can do her job better.
Though salary benchmarks are common, performance benchmarks are surprisingly rare. Quality learning demands a CEO benchmark herself against other superb CEO’s. Her central learning question is not “are you doing a good job?” but “are other CEOs doing a better job and if so, how can you learn to measure up?(4)“
Footnotes for part 3
(1) Ok, ok. Technically the Board of Directors has hire/fire authority over the CEO, but the Board can’t control day-to-day operations. And while there are certainly boards that replace inept CEOs, it takes sustained incompetence over a long time to move a board to action. So for practical purposes, the buck stops with the CEO. back
(2) Her employees may use less diplomatic terms. back
(3) Names are changed to protect the innocent. back
Coaching tips to stay sane and skillful at the top of the heap.
These coaching assignments will help an executive avoid some of the pitfalls of the CEO job. They are simple, easy, and won’t take much time. They’ll help a CEO stay connected with workers, keep herself humble, and increase her learning while becoming more successful. The suggestions strive to be quick and easy to do, while still producing real results.
Make Space to Practice These Assignments
Set aside 5 to 10 minutes, daily, to developing as a leader and human being. This will be the time you think about the below topics and set your mind for the day. Schedule the time if necessary. Just make sure that you do what’s right for your growth.
Pace yourself. Life is long. Adopt these suggestions one or two at a time, and practice until you make them your own. Then move on. Forcing won’t help; this is about developing at your own natural rhythm. Do one assignment for a few weeks, then move on to another. Keep the ones that work for you and drop those that don’t.
Staying connected with “the little people”
Cultivate an attitude of respect—your respect for them. The “little people” are the ones turning your vision into reality. Meditate on this for a few minutes and ask yourself whether you can their jobs as well as they can. If you can, then you’re not hiring the right people—go change that! Otherwise, once a day, go talk to one of your low-level employees—someone more capable than you in their area of expertise—and learn from them. Choose a different person each day. Get as close to the front line workers as possible.
Listen with an open mind and learn. Learn about their job. Ask what works for them and what doesn’t. Above all, listen to their comments without judgment. Your goal is to connect with their experience of the world, not impose your own. Learn about their life. Find out what motivates them. Why did they come work for you instead of somewhere else? Simply by spending a few minutes understanding their life, you can greatly increase your appreciation of how they’re different (and similar!).
Share your vision and job with them, from a position of service. Pretend that your job is to make this person a success. Ask them how their job fits into the work the company does. If they don’t know, take on the responsibility of helping them understand how their job links to the vision. Clarify any confusion they may have about where the company is going. And ask them what you can do to help them succeed at doing their best. Then do it.
Acknowledge, often! Without your employees, your dreams and plans wouldn’t amount to much. Take every available opportunity to acknowledge the contribution of those around you and give them credit, especially in public. Feedback is rare in most companies, and positive feedback is rarest of all(1).
“Get” that it’s all your responsibility. When things don’t go the way you want, take responsibility—whether or not it’s your fault. The mindset of responsibility will put you in a much more powerful place than the mindset of blame. Regularly review circumstances asking, “What could I do differently (or stop doing) to make a positive difference?” Identify the action and then take it. You’ll be surprised how much more power you have over externalities, operating from responsibility rather than blame.
Gather honest advisors to hold you accountable for your behavior. Sometimes a Board of Directors will give honest feedback, but they are removed from your day-to-day behavior. Actively solicit feedback from third parties: friends, peers, associates. Share your issues and how you’re handling them, and ask for an honest assessment. Everyone in a company is accountable to someone for their behavior, except the CEO. Make yourself accountable as best you can.
Identify your limits. Ask, “can someone else in the world do my job better than I am currently doing it?” If the answer is Yes, seek out that person and ask for their guidance in getting better. If the answer is No, validate that answer by asking your advisors, competitors, suppliers, customers, and employees. Many companies have crashed and burn because they believe they were the best, for no good reason but pride and ego.
Create measurable performance criteria for your executive team, including yourself. Make sure people within the organization know your goals, and know what you can be counted on to do. Hold yourselves accountable. If you don’t meet your goals, withhold your bonus, take no raise, and treat yourself exactly as you would treat an employee who missed their targets. It sends a powerful message to the company that you’re serious about performance.
Ask your direct reports, your Board of Directors, and anyone else you work with for feedback a couple of times a year. You can use a 360-degree feedback process or simply ask in an e-mail. It’s a lot easier to hear feedback on your performance if you’ve explicitly asked for it.
Videotape yourself receiving bad news. Watch the videotape and decide whether or not you would want to work for that person. If the answer is No, learn to chill when you hear bad news.
Study excellent CEOs. Call a CEO you admire and invite them to lunch. Exchange tips and adopt tactics that others have found useful. Read books like First, Break All the Rules, which are broad-based studies of habits of top-performers. Adopt at least one new habit a month.
Create systems for gathering feedback. Interview customers, competitors, analysts, and others in your industry to know how your company and products are perceived. Make sure you’re gathering feedback that will disconfirm your beliefs about the world, as much as confirms it. For example, if you think you’re #1 in your market, don’t just ask customers why they like your products. Ask what other products they use, and how your products fall short.
Spend time learning about the fundamentals of a CEO’s job:
Setting strategy. The strategy and vision for the company determine where everyone will focus their efforts. Find a vision and strategy and use it to align your entire company.
Creating the corporate culture. Your culture will determine what people do and don’t try, who will stay, who will leave, and how business will get done. Culture starts with you. Decide how you want people to act and start modeling the behavior publicly.
Capital allocation. Every dollar you raise and spend should produce more than $1 of return for the company, or it’s a waste of money. Learn how to make these judgements.
Hiring and Firing. The job of executives is primarily team and culture building. Hiring and firing are must-have skills. Read, take classes, and review past hiring successes and mistakes. Do whatever you can to hone your abilities.
Raise the Bar
Hold yourself to higher standards next year than you did this year. Challenge yourself to learn to get more done with fewer hours and fewer resources while creating a more balanced life for yourself.
These are just a few of the things you can do to increase your chances for success as a senior executive. I also believe in working with a coach to identify and overcome (or compensate for) blocks in your performance. Success can be had with many different skill sets. The more you learn about yourself and your capabilities, the better you will be able to shape a job that works for you. The more you learn about the capabilities of those around you, the better you will be able to build teams that produce spectacular results.
Do Great Things!
Footnotes for Part 4
(1) Social psychology has shown that rewarding desired behavior is far more effective than punishing bad behavior or non-performance. For reasons that aren’t entirely clear, our culture has evolved around using punishment as the main way of controlling behavior. Unfortunately, punishment doesn’t work very well. Interestingly, animal trainers have known this for years. For an excellent book on the subject, check out Don’t Shoot the Dog by Karen Pryor. back
I just returned from Black Rock City, NV, better known as Burning Man. Burning Man is an annual event where 70,000 artists, engineers, performers, and makers descend on the Black Rock Desert in Nevada. In one week, they build and inhabit a city made of interactive art. Then they dismantle it and “leave no trace.” They take every bit of refuse home with them, leaving the desert the way they found it.
You know what’s even more amazing? It’s all done by volunteers. Think about that: 70,000 people, paying to attend the event, cooperatively pitching in to build and run a city. (Yes, it’s the size of a city. I once thought it was just called that. Nope. It’s a city.)
Burning Man started as a party with a dozen people on Baker Beach in 1986. As someone who loves growing organizations, it fascinates me. So many organizations struggle with growth. How did Burning Man scale from a beach party to an actual city?
Scale requires different people.
The people you need to run a small organization are different from the people you need to scale. In a small organization, everyone knows everything that’s happening. People can pitch in as needed. They may still have different jobs, but if the situation warrants, you might ask the accounts receivable person to handle a customer service from someone they know. You need generalists.
As the organization grows, jobs shrink. The original crowd at Burning Man handled all aspects of what was, then, basically a camping trip. Each person would be part of choosing where tents would go and how things would run. Generalists make the small event run.
With a city-sized event, just laying out the street grid requires dozens of people. Each person will spend every day, all day planting flags at the corners of streets that will later guide the city construction. The best people for the job are those who enjoy focusing on this one task, and doing it superbly.
Scale requires uniform processes.
When you’re small, you can get away with everything being ad hoc. If Ozzie Obstacle (the most annoying of your 12-person party) is pitching their tent in the wrong place, you can yell over, “Hey, Oz! Move your tent ten feet to the right!”
When tens of thousands of people are pitching their tents, you can’t just do everything by the seat of your pants. If you yell “To the right!” while someone yells “To the left!”, poor Oz’s head will explode. And at Burning Man, that could mean literally.
Getting large requires that people be able to coordinate at a distance. Doing the same things, the same way lets people coordinate when the ad hoc approach no longer works.
Scale requires explicit process.
It’s not enough for processes to be uniform. People have to know them, which means they need to be documented and communicated. Sometimes this is done informally, through mentorships or apprenticeships. But often, it’s done via classes, checklists, and explicit instruction.
With 70,000 people constructing a city, the behind-the-scenes organizations (the Rangers, the Department of Public Works, camp Placement) not only have uniform processes, but they have extensive training and reference resources to teach those processes. They have classes, certifications of skill levels, Wikis, and gatherings to explore and deepen the shared understanding of what gets done and how.
When your organization is successful, you’ll reinvest for growth. But pay attention carefully to the changes that scale requires. You’ll need to change who you hire, how they do their jobs, and how they get trained. It changes the nature of the work, but if done right, you’ll be laying the foundation for great success.
My article on the duties, responsibilities, and job description of a CEO, lays out four inherent parts of a CEO’s job. These are the parts of the job that, by definition, make a CEO a CEO. The CEO can delegate some things, but others simply can’t be delegated. Capital allocation is the CEO’s fourth main duty.
Allocating capital is the ultimate expression of strategic priorities.
Trump manages money
So far Trump has shown that he takes money very seriously. His position on many international bodies and on America’s role in the world is that all countries should help foot the bill for international costs. His stance so far has, indeed, prompted some countries to step up and contribute more to the U.N.
Domestically, Trump has instituted a hiring freeze on the Government and is presumably going to look at spending within the government.
Like everything else, this is more complicated than it seems. Government spending is a huge driver of the economy, and the government is the largest employer in the country. A business certainly wants to lay off as many employees as it possible can and still keep functioning. That’s how we boost profits.
A government, however, is walking a trickier line. A business is generally not affected by the employees it lays off, or by any reduction in its own spending. But not so, a government. Stop spending too quickly and lay too many people off and it simply drives up unemployment and slows down the economy.
Will spending cuts be done wisely?
In companies, spending cuts can be done by declaration: “cut 30% costs across the board.” This is an attractive way to do things. It’s easy to understand and easy to calculate. But it’s a bad way.
This kind of cutting assumes that there’s 30% waste across the board, and it assumes that all cuts are equal. All cuts are not equal. If you consider a company like Microsoft, cutting 30% of their administrative expenses might be a reasonable goal. But cutting 30% of their programming staff would boost their quarterly earnings while probably destroying their ability to fix bugs and develop products to stay competitive.
Spending cuts + process improvement = win?
The fundamental way to reduce costs in an ongoing business is through process improvement, finding ways to do existing things better.
While the stereotype of the Government is that it is extremely wasteful, that is an oversimplification. Some Government programs (e.g. Medicare) are extremely efficient, much moreso than their private counterparts. Other Government programs (e.g. famously, the Defense Department) have huge amounts of waste.
What matters isn’t whether or not the Government runs a program. What matters is whether there are incentives and structures in place that encourage people to work smarter, work better, and improve continuously.
What gets measured gets … measured
George W. Bush was a Harvard MBA who famously was going to bring business principles to the Government. It’s not clear he did much of that. No Child Left Behind introduced measurement into the educational system, but did so in a way that many teachers view as hindering education, not helping it. The Total Quality movement of the 1970s and 1980s showed that simply setting numeric goals without adding process improvements to reach those goals isn’t, in practice, particularly effective.
The business practices that might help the government use its money more efficiently are those of aligning incentives, re-engineering processes, tying employee pay and promotions to customer feedback, and so on. If Trump implements this kind of thinking in the government, it could, indeed, signal a major shift in how efficiently we use our money.
Big allocations reveal priorities
The capital allocation I was referring to in the CEO job duties article weren’t just cost efficiency. The most important capital allocation decisions are the ones that decide which strategic initiatives stay, and which go.
Whether Trump’s spending will be thoughtful or abrupt remains to be seen. He has already declared his intent to increase military spending, while freezing other budgets. He has given directions for us to build a wall between the U.S. and Mexico. He has stated we will increase infrastructure spending, while possibly withdrawing from international bodies (such as the U.N.) to which we pay dues.
The President doesn’t control the budget
Though Trump can control how capital is allocated within the Executive branch, it’s Congress that sets the overall budget (or often doesn’t, in the cases where we’ve had a Democratic President and a Republican-controlled legislature). Trump can fund or defund the efforts to implement programs created by Congress, but there are limits to how much control he has over the national budget.
At this point, it’s too early to tell how Trump will allocate capital. If his skills match his claims as a successful businessman, he may well find ways to steamline the government and put it on a path to being more efficient. His larger capital allocation decisions remain to be seen, however.
My article on the duties, responsibilities, and job description of a CEO, lays out four inherent parts of a CEO’s job. These are the parts of the job that, by definition, make a CEO a CEO. The CEO can delegate some things, but others simply can’t be delegated. Setting culture is the CEO’s third main duty.
The CEO sets culture by modeling behavior and by the policies they set. The behavior of a CEO has a profound effect throughout an organization. Behavioral scientist Dan Ariely’s (Dis)Honesty Project shows that when a cultural norm of dishonesty sets in, everyone jumps on board.
Some people speculate that this will bite Trump, and ultimately discredit him. Others think we will simply normalize to the lies. If so, given Ariely’s research, that could pose a real danger for America as a culture to begin to see lying as a perfectly fine way to interact.
While I was writing this post, Trump forbid all government agencies from talking with the press. This level of government secrecy is unprecedented in a democratic government. Culturally, the message being sent is one of a change to a command-and-control style of governance, rather than a culture of government accountability to the people.
The command-and-control messages Trump is sending are very worrisome. They constitute not just a cultural shift from Obama, but a cultural shift for America as a country. A major goal of the Constitution was to create a government with checks and balances that could be accountable to the citizens. While the last several Presidents have moved increasingly in the direction of low transparency and accountability, Trump is taking this so far and so hard in the direction of non-democracy that it’s scary.
In terms of the cultural messages he’s sending on the social and immigration front, he is clearly not trying to send a message that all are welcome in America. With his cabinet picks, the executive orders he has chosen to sign in his first couple of days, and so on, he is sending a clear message that he will act in the interests of only specific groups in his policy-making. People who can’t afford healthcare or education, and women, are already getting the message that they can’t look to the government for help.
My article on the duties, responsibilities, and job description of a CEO, lays out four inherent parts of a CEO’s job. These are the parts of the job that, by definition, make a CEO a CEO. The CEO can delegate some things, but others simply can’t be delegated. Leading the top team is the CEO’s second main duty.
In the case of the President, the top team means the Cabinet. Most CEOs don’t immediately replace the top team of a company without seeking to understand something about who’s best for the job. Not so, the President. The President replaces the Cabinet immediately.
Most people talk about elections as if it’s a middle school popularity contest. “My candidate won! Neener, neener, neener.” “My candidate lost, I hate you forever!!!” Let me be tasteful and diplomatic in saying that this is idiotic beyond belief (trust me, you don’t want to hear the non-diplomatic version).
Elections are a job interview. We may not like the slate of candidates we’re given, but they’re the candidates we have, and we have to choose one to fill the job.
I’ve heard it said that Trump was elected on the “pass it down” theory of competence: he doesn’t have to have great solutions, he just has to put the right people in place who have solutions.
Has he done that?
From his Cabinet picks, I don’t believe so. When hiring for a job, you generally look for relevant past experience, or a highly transferable skill set (e.g. general management).
A Cabinet pick oversees a multibillion-dollar organization. Not necessarily a business, an organization. Governmental bottom lines aren’t measured in dollars, but in civic terms.
Several appointees don’t necessarily know the playing field of the post they’ve been appointed to. That means that if they can get up to speed in any meaningful way, they have the same learning curve as someone just entering the field. I’m not sure that hiring candidates with the equivalent experience of a new college grad is the way to go.
In short, viewed solely through the lens of hiring the right person for the right job, it appears to me that Trump is not doing a good job.
Leading the team
Once he’s hired the team, he has to lead them. It’s too early to tell how he’ll do in that regard. Stay tuned.
Trump has appointed a top team whose qualifications for their specific roles are seriously in doubts. Many of his picks have no background in the areas they’ve been chosen to lead, no established reputations and connections in those areas, and no evidence in their backgrounds that they’ve managed similar efforts.
If I were an investor in a company whose CEO had just made these picks for leaders of the company, I would sell my stock.
UPDATE Jan 27, 2017:The entire senior administrative staff of the State Department just resigned. Good CEOs put proper succession planning in place for themselves, and understand the need for orderly transitions to keep things from spiraling out of control. Most institutional memory resides in the employees, not in the policies and procedures manuals. I’m extremely puzzled as to why Trump would allow something like this to happen, and not work harder to keep his senior team. This is a troublesome development, to say the least.
I found Stever’s talk at the HBS Cyberposium full of insights specific to early stage companies. Also, I found his talk lively and entertaining quite a departure from other speakers who talk on similar subjects.