“Why” this CEO?
Tales from the trenches
What makes one CEO a tremendous success versus others? When I read blog posts from leading investors like Ben Horowitz from Andreessen-Horowitz, about their perspective on “Founding CEOs“, I keep coming back to the question of what makes the successful CEOs different from the rest?
I’ve been lucky enough to be in the CEO role a number of times. It’s what I do, and it’s who I am. I’m subservient to the purpose….and sometimes feel that my professional goals are so profound in importance that my life becomes measured by how much I can contribute to furthering my goals. Yeah, I know…it sounds a bit obsessive. But now you can appreciate why I’m interested in knowing what makes a CEO successful….and why I wrote this blog entry.
Like every CEO, I think you’re job is to:
- Lead the formation of the vision and direction of the company
- Make sure you have the right people, and that those people have the right resources
- Remove all obstacles along the way
- Ultimately, make sure that all are executing well
And you can find some CEOs performing better than others on a continuum from bad to great on all the above items. However, from what I’m seeing with my generation of CEO peers, what I find that makes one CEO stand out from their peers includes the following characteristics.
Innovation with Navigation
It all starts with the ability to understand the complexities of the ecosystem you live within. Being able to “put the pieces together” and then innovate. Having a vision of how to address a large market opportunity, be the first in your category, be #1 is only the beginning. And in fact, many will tell you that your first “idea” or “innovation” was based on the wrong assumptions, and that the company will need to “pivot”.
Ben Horowitz refers to this as the “stupid idea” that many naysayers will poo-poo (“if it was a good idea, somebody would have already done it. So, the innovator is guaranteed to have more natural initial detractors than followers.”)
Note: Many think that a CEO must have a wealth of domain knowledge which is a result of having spent years, sometimes decades, in a particular industry to be able to “innovate”. It is my belief that innovation comes from new-generation CEOs who are NOT married to the “old ways of doing things” simply because they do NOT have the programming associated with being immersed in a particular industry. So, in fact, an “outsider” can have an unbiased view which significantly contributes to “thinking out of the box” and innovating.
I also believe that coming up with a better way of doing things, the “innovation”, is only a part of the picture. The other side of the coin is navigating your way along a path which is efficient. Horowitz refers to this as maximizing (not finding) product cycles. This is where the CEO is honest with him or herself, their teams, their customers, their shareholders.
As most CEOs, you are probably used to “pushing” past things. Just getting shit done. Sometimes this results in not addressing the problem, but rather working around it. A good CEO; in my humble opinion, understands when things are unnecessarily difficult, and he/she resolves the problem…and, doesn’t just push past it or around it….ultimately, navigating the most efficient path. Let me give you some examples of innovation and navigation.
Example #1: The HPC Space
I was asked to help a fledgling startup which was selling linux cluster configuration and deployment software into the HPC (High Performance Computing) space. I had NO experience with linux clusters and absolutely no experience with HPC applications (academia, bio-sciences, etc). Matter of fact, I remember discussing the following graphic with analysts at IDC. Thinking, “What have I got myself into?”
After spending some time with the team to better understand the technology and its potential, I came to the realization that servicing the HPC space (although addressing a very real pain or need) was truly a distraction from a much greater market opportunity. Moving from HPC into Cloud/datacenter automation and later into BIG DATA Hadoop cluster deployment and management would expand the market opportunity by as much as 50x with a much higher growth rate. In fact, this company could claim a #1 position in a new category!
We had the vision and we established the strategy. I’d like to think that by not being an “HPC” guy, I provided the courage needed for the team to see this. However, where we failed was in our ability to navigate. I didn’t underestimate the market window/timing, the ecosystem, our customer’s needs. I did underestimated what it would take to move a team from academia into a startup. We didn’t fail, but it took 18 months before the company navigated the issues associated with this, and it ultimately lost its opportunity to address private cloud deployment and management. We had an 18mth window to execute, but instead spent that navigating inefficiently. This was vision without navigation.
Example #2: Chicken and Egg
I was heading up a new startup with the backing of a large foreign strategic. I had the vision of building the industry’s first private cloud platform as a service (PaaS) offering which would be sold to Fortune 1000 CIOs to help them address the needs of a demanding application developers community. The need was validated with Fortune 100 CIOs, datacenter architects, and application developers. Again, an opportunity to be #1 in a new and large category.
Unfortunately, the Board and its shareholders (the strategic investor) did not understand our vision and its associated opportunity. No matter how many customers we presented with clear interest, we fell into the trap where our thinking was perceived as a “stupid idea”. They wanted a proof of concept customer committed to working with us before they committed to additional capital.
We all know that getting POC customers is typically accomplished with the demonstration of product (alpha or beta) or with at least the promise of doing so in a relatively short period of time. We were clearly presented with a chicken and egg situation. Budget will come when we present customers, and customers will come when we can commit enough budget to build a working prototype.
So we we bargained for a skeleton team in Silicon Valley to build an alpha prototype to win the business. And in order to be efficient, instead of hiring a local team in the Valley and building a concept, we took our budget and hired 4x as many engineers abroad and began pursuing a working beta product. Now, I don’t recommend you “pulling the wool” over the eyes of your Board or your shareholders, but I do encourage you to be creative, constantly thinking about how you can optimize the business. In this case, we didn’t want to lose our time-to-market advantage. It would be more difficult to manage an off-shore team, but it was worth the benefit of keeping on track and within the market window.
The Proactive Rock
I’d like to say that if you’re organized, you should be able to reduce the amount of chaos within your company. This is true. However, chaos will always exist. It’s the nature of the fast-changing technology environment. It’s the result of building a star company which is by definition exploring new ground. So you need to be the steady rudder for the ship, providing stability. You are the ROCK. Good CEOs will find taking on multidimensional problems invigorating. And they will attack problems without being impulsive. I’ll give you an example, but this time more personal to get the point across.
I believe every CEO needs to balance their decisions between the data and their gut feeling (two different part of the brains). In fact, I believe more in the gut due to biological facts…but that’s a whole other story.
I’m at my doctor’s office getting my regular physical. My doctor who I’ve known for more than 10 years the room and says,
“We have a problem. You failed your stress test.”
I have a family history of heart disease and I take a ultrasound test while running on a treadmill. My doctor elaborates,
“This test is 85% accurate. Given your complaints of chest pain and your family history, I increase this to a 95% probability that you have a major blockage in the left anterior descending coronary artery.”
I ask him how long it will take to confirm this with the obvious angiogram procedure needed. He says, approximately two weeks. We’ll schedule it for as soon as we can. Now I don’t have to tell you the types of things that would run through most people’s minds. The words, “Oh Shit” comes to mind.
I was the calmest of the family members. I continued my high-paced CEO job at the time without a hickup. I slept well. I continued to exercise (although I didn’t sign up for any Triathlons). Why? Because I approached this problem logically. Thinking only about the choices and realizing that I couldn’t make any educated decisions until AFTER the procedure.
To this day, I encourage my staff to remain calm, think through the options, and don’t fret over things until they have enough data to make an educated decision.
By the way, after they shot die into my heart while I lay awake on the operating table watching the blood flow through my heart on an overhead monitor….my doctor says,
“You have a heart of 21 year old. False positive. Sorry for the false alarm.”
I was in the 5%. Just the way I like it 😉
Rolling Up Your Sleeves
A CEO can’t always be the “big picture” person. I believe that they need to be able to “roll up their sleeves” and get into the details when they need to. This somewhat gets to Ben Horowitz’s point regarding “comprehensive knowledge“. I don’t mean that you are in the top 5% of industry veterans, that you know the competitive landscape backwards and forwards, or your customer market segmentation and needs, etc. Yes, that’s important.
But what I mean is that you know what is going on INTERNALLY. Knowledge of every employee who gets hired and why, every product and technology decision that gets made, all customer requirements chosen to drive product development, exactly what’s strong and weak about the code base, exactly what’s strong and weak about the organization. How else are you going to be able to keep your organization healthy, and help them uncover and remove obstacles? Here’s a technology example.
I was honored to be apart of a very high profile project. We were asked to build the next-generation data warehouse. This was a joint development between Teradata and NCR, and I was responsible for the networking technology.
We were a couple of years into the project, behind schedule, and over budget. We had a new shipment of machines being assembled for a very important number of early adopter customers. It was our debut. Unfortunately, in the 11th hour we find out that there is a race condition in our compute backbone. It would take weeks maybe months to turn new silicon with the necessary fix.
The air in the office was thick. We all went home Friday with our heads held low, not knowing what we could possibly do. I decided to roll up my sleeves. I was no longer a chip designer, but I took a look at the problem anyway. I came into the office and met some of the processor team in the lab. They showed me the race condition.
Over dinner that evening, I came up with an idea. It would take making modifications to the networking hardware, creating an “interposer” board that had additional logic that would essentially interact with the processor/memory bus. This interposer card couldn’t interfere with spacing, and the logic on the card would have to meet electrical timing constraints. I called a couple of my best consultants and a local circuit board fab and assembly house over the weekend. By monday morning I presented an approach to management, which was implemented within days.
Having been an engineer, I enjoy walking around the office and working with the team on design challenges from time to time. It’s still in my blood. Having been a VP of Marketing & Sales, I enjoy digging into positioning and messaging or refining sales process. I’m even a spreadsheet junky and enjoy the dialog around the details of our financial models with the CFO.
I think rolling up your sleeves can play an important part in knowing your organization and staying connected.