#1: Provide the team with the necessary resources.
#2: Build shareholder value

#2 is the one I’ve known the most. Really a CEO works for the Board of Directors (who directly represent the shareholders). A CEO’s job is typically summed up in the 40,000 foot overview definition of “build shareholder value.” Meaning, always focus on increasing the valuation of a company.

This is obviously all encompassing, since everything from your team hires, technology development to revenue generation directly impact the valuation of a company.

So, there you go - that’s the best way to describe a CEO…

CEO = The head of an organization responsible for building shareholder value and facilitating all the resources necessary for the company to act on it’s business plan.

Over the last month or so, I’ve had another epiphany where I figure out more about what a CEO’s job really is - big company or small.

Here’s how this started…

My mentor just recently accepted the CEO position at a company that is 100% out of his industry understanding - pretty amazing company though. As we were teasing him about his new position in a brand new industry (for him) he made a comment that really hit home with me, he said:

“It really doesn’t matter since the main role of a CEO is to just gather the resources so his team can do what they do best - he’s just there to make sure they have what they need.”

That one sentence probably taught me more about business than an entire semester in college and the funny thing is that he said it in passing in the lobby of our building while we were joking around…

I have thought about what he said for a while now and it makes total sense. That one statement alone also describes the major difference between a CEO and an entrepreneur. An “entrepreneur” has subject expertise so he/she works IN the industry. But a CEO is really a manager - someone who makes sure that the wheels are turning.

So go on and be the CEO, make sure everyone on your team has what they need!

Let’s say you’re on a sales call and it seems to be going well, the other side says “they’re excited and ready, just a few steps left and let’s get this deal sealed.”

Your reaction?  WOO HOO!!! BIG one, I gotta go and tell EVERYONE, this is huge. Ok, let me start planning around this, I can hire 10 people, I can do this and that and this and that and I can go around bragging about this to everyone.

Guess what? If I had a nickle for every sales call that went well and I thought I was going to close but ultimately led to ZILCH revenue, well, I wouldn’t need to be in business right now

Bottom line is a CEO needs to be stable (something I admit I’m still working on). The best example is a cooooool poker face. Take good news at strides. The rule that I made 2 years ago and am getting better at day by day is to NOT get excited or even think about a sale until the check arrives, cashes and clears - NOW, I have a sale and can start spending the money!

No worries, when anyone is new at this it’s only human nature - but eventually after years of getting slapped around, it grows out of you.

Again, I start to understand why CEOs always look so serious, resolved, calm and well they look like good poker players!

Oh, by the way, a good poker face really helps in sales too.

Well, it just so turns out that what he’s complaining about, our company has an expertise in! Perhaps not *specifically* in the “banking” industry, but the general technology and know-how of how to resolve his big pain-point, we have it!

That immediately got me thinking…why not?

Could this be another way to use our existing technology and team talent to access a completely different market with a completely different service?

- In short, that was Sunday night, it’s now Tuesday morning, 11:30 AM - I’ve had 5 phone calls between advisers and team members.

- I’ve met with that friend TWICE since then to iron out bringing his company has a possible beta test client.

- I’ve spent countless hours researching the market - even found some competition (which is a good thing).

- I’ve done an expense chart to see what we would have to charge to be profitable.

- I’ve got a full t0-do list that I need to approach to finalize my market research.

Yes, THAT is a true entrepreneur right there. I got an idea and I MOVED on it, at least for research.

Now, the only part I have to be careful for is that my enthusiasm does not hurt us. I have to make sure I do ALL my research and strategize appropriately. Right now may not be the best time to get my team involved in something completely different. Also, one of my advisers was not excited about the idea at all, his exact comment was:

“These kinds of companies suck…”

He’s a very smart and well rounded businessman who has been on many boards and has helped raise money for many companies, so I do listen to his opinion. But of course, the entrepreneur in me still says “I’ll do my own research to see if I can’t change that …”

Either way, market research and taking your TIME to understand the idea is critical - don’t just jump off and start something.

In our case, we have our hands full with what we already do and a distraction could be a bad “CEO decision” - remember, my post about “The Conflict of an Entrepreneur and CEO.” However, at the same time, I’m excited that I got my head to think outside the box.

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THIS is how and why companies have “spin-offs” or “sister companies.” Your knowledge, technology and team could very well fit like a charm in a completely different field than yours - have you thought about that? 

Just remember, don’t spread yourself too thin - stick to a dedicated plan and work on that. But, if there is room/money/resources to expand, why not try it? 

Fast forward to today and it’s now 2 men and 3 women. Every time I joke that I’m going to make sure the next hire is male (joking of course), I end up finding the perfect fit who just happens to be a woman.

If you look at our entire company, 60% are women. Now, you may be thinking, “what’s the big deal?”

The big deal is that in our industry this is incredibly STRANGE. Women are very hard to find and it’s very “male run.” But, I’ve personally never thought about it that way, hence, my team does not fit the convention.

Just as we were discussing this internally a month ago, I came across this article:

Entrepreneur.com - Why Aren’t Companies Cashing In On Women In Executive Positions…

“Women are real assets on the management teams of publicly traded companies, according to a 2007 report by Group and Organization Management, which found that women have a positive effect on a firm’s short-term performance, three-year stock price growth and growth in earnings per share.“

I was happy to see that I’m on the right track If just one woman can have positive impact on a firm, I guess I’ll just overload (kidding of course).

Reasons To Put Women In Executive Positions:

These are my own personal observations:

1. More logical - Women add the perfect amount of logic amongst a ton of “let’s take over the world” testosterone. They tend to think very methodically and can ask the right questions.

2. Promote balance - A company is not just about making money, it’s a culture and much more. Women are much better at promoting a “family” experience and making sure that everything is being considered with decisions - not just money.

3. Calm - During tough times, I find that women keep their calm much better - not sure why. They almost seem more confident or more optimistic (in cases). Men (including myself) can get my spastic and that’s when you make stupid decisions.

4. Better Team Players - This is my favorite because women have far lesser egos (for the most part) than men. They seem to be much more concerned about the company’s growth then they are about their personal growth.

Not to say they don’t compete to grow, but they’re the first ones to consider “what’s best for the company” - men tend to have bigger egos that get in their own way sometimes.

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I want to emphasize that I’m being “general” and there are always exceptions. I just want to push the fact that if you don’t have “the other side” in your team, you need to.

Whether that means you’re a women run company, well, then you need to bring on some male teammates.

In the end it’s all about BALANCE - men and women are different, they think differently and they react differently. Having both on the team allows you to have a good balance and “cross-check.”

How about YOUR team? Do you promote this diversity and make best use of it?

I’ve definitely had times in the past where “I” did…I remember the questions:

• Where is the money going to come from?
• Should I lay someone off? But, that’s horrible…
• Should I try to raise money? But that’ll take so long…
• Should I go borrow money? But, I already have so much debt…
• Maybe that big account will close this week?

I always used to tell myself, “this must just be a problem that ‘I’ have because I’m a small business, once I get bigger it’ll go away…” Little did I know, it gets worse!

I was recently talking to the CFO and VP of Business Development of a company that does over $20 Million in revenue a year and has 120 employees. I was cracking jokes about the days that I’ve scrambled to launch a product just to get enough money to make payroll…honestly, I was looking for a glazed look on their face.

What did I get?

I got a loud, “Oh man, we know how THAT feels…hahahahahahaha” as they smiled and winked at each other.

I thought to myself, “what the heck? are you serious, how in the WORLD can you guys have payroll problems doing $20 Million a year?”

The more thinking I’ve done, I realized that actually the faster you grow, the more you hire, the more your expenses go up. It seems that BIG corporations really do run quite tight most of the time.

It’s not even bad financial management, it’s just the results of aggressive growth.

So, tell me, have you ever stayed up at night thinking about payroll?

A big part of the reason you are the CEO is because of YOUR ideas and YOUR vision.

What happens is that as your team grows, you bring in other bright minds who may be very out-spoken and you probably have great respect for. To make matters more difficult, once they’ve been with you for some time, you even develop a sort of “friendship.”

2-3 years ago I was much more likely to simply say “yes” to every idea my team or key players had. I was very unlikely to disagree with them (even if internally I did), all for the fear that I may upset or disrespect them.

However, a few “slap in the face” later, I realized that I have to learn to trust my gut more. I have to be willing to say, “I think it’s a great idea, but perhaps bad timing for now…” or “I see your point, you made a great case, but for now, let’s focus on this such and such…”

There are better ways of saying no than straight out saying “no.”

The bottom line is that you need to be willing to disagree and fight for your own ideas. If you think something is not a good idea, well speak up! Either genuinely be convinced later that your initial gut feeling was wrong or simply say no to the project.

No need to feel bad, it’s YOUR decision to make - just do it the right away and no one on your team will hate you for it, heck, they’ll probably just respect you more for it.

“It’s lonely at the top…”

It very much applies here - here’s how:

Let’s say something good happens or you THINK something good is about to happen, you’re inclined to want to RUN to the team and tell them. But, really, is that the best thing to do?

Some would argue that, “Yes, your team deserves to know right away and it will only help motivate them…”

I would tend to agree, however, here is where the “overreaction” comes into play - are you telling them BEFORE you signed the deal officially? Think about it…a huge portion of deals just fall apart anyways, do you really want to get THEIR hopes up too?

So, for good news, bottom line, deliver it once paperwork is signed, cash is in hand. Of course, some members of the team will have to know because they’re directly working on the deal - I just mean, don’t issue a company-wide memo on “heresay.”

The REAL Important time NOT to overreact - “BAD” news…

It’s amazing how quick your SLIGHT negativity can have a rolling effect on your entire company. If something “not so great” is happening, you need to do two things:

1. Don’t tell anyone about it until it’s 100% sure that it happened. The only ones that should know about it are those who can help you AVOID it from happening. Again, “need to know” basis - not everyone in the company needs to know.

2. After it does happen, sometimes it’s critical to let others in the company know. At that point, you NEED to find a positive spin on it and deliver it with SOME good news.

Too many shots of bad news at one time can really drain on morale - even if you have to deliver it, do it in small doses and team it up with good news.

How To Stop Overreacting - Rule #1…

Don’t react at all. Step back and give things some time to SINK in. If you react the MINUTE you have a thought, you’re generally going to make the wrong decision.

Soak in what has happened, think about it and let it have some time. Once you’ve had time to wrap your head around it and possibly come up with your own solution or time to close the deal, THEN find a way to open it up to everyone.

See, that’s why it’s lonely at the top, you don’t really have that many people to talk to without risking adverse reactions that can snowball.

(( I wonder if a lot of CEOs see therapists ))

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My advice of the day - The next time something happens that makes you want to RUN and tell someone, ANYONE - don’t. Force yourself to sit on the news for a minimum of 24 hours (unless it’s urgent of course - use your judgment). Get in the habit of thinking twice and even thrice about everything you say to your team, to your executive team and all.

They are not there to make you feel better, it’s actually the other way around. Suck it up and deal with it!

The concept is “hire only A players in your company.”

By “A players” it’s referring to self-motivated, intelligent, efficient, influential and culture-fitting people who can excel your business without having to be micro-managed.

That general concept makes a lot of sense, however, the topgrading interview guide takes it to the next level by going into great details on how you should conduct the recruiting process (a.k.a interview process).

The Days of My 30 Minute “Gut” Based Interviews Are Gone…

Sure these kinds of short “I like this person” interviews may work in the beginning when you are small, but they won’t scale.

To scale, you need a system that every manager can “quantifiably” put in place - that system is the topgrading interview system.

What Does The Topgrading Interview Guide Teach?

Really the book is called just “Topgrading” - I am calling it the “Topgrading Interview Guide” because so much of being a topgrader revolves around how you interview.

The biggest change I am making moving forward is how I do my interviews:

1. Hold at least 3-4 separate interviews.
2. Don’t be afraid of having 3-4 hour interviews - REALLY dive into the person’s life and give them lots of time to talk about themselves.
3. Always have at least 2 people in the room listening.

The biggest “mind-shift” for me has been getting around the concept of hosting MULTIPLE 3-4 hour interviews. It seems like such over-kill, at the same time, I completely understand why it helps you learn more about a candidate.

After Evaluation, I Found Only ONE “Non-A-Player” In My Team…

I’m disappointed AND proud.

Disappointed to have to put this title on someone.

Proud because we have been able to grow so fast and by default have built an “A” team…

A part of me has always known that this person is not an A player, but Topgrading has forced me to face it. According to Brad Smart (author of Topgrading), I should take immediate action to either remove this person from the team or shift his/her role where they CAN be an A player.

I am right now thinking about whether I should try this person in a different role or whether their personality just does not lend them to being an “A player.”

By the way, how you judge someone as an A, B or C player has many elements in it (their role, their salary level and performance).

I’m not enjoying having to make this decision, but these are the exact types of tough decisions I need to make.

Topgrading is a pretty thick book to read (I’m only about 20% done), however, they do have a shorter “review” version that I started and finished in 2 days - it left me wanting more.

I highly recommend this book - pick up a copy, click here…

I’m going to immediately implement the advice of the topgrading interview guide, I suggest you do the same.

Year 1: I kept to that commitment, being goofy, fun and everyone’s best friend was working (considering I had zero employees and vendors).

Year 2: Still kept hard to that commitment, maybe even more committed - all our partners LOVED me and worked harder for me (maybe I had about 3 employees, all great people).

Year 3: “Hmm…this person is so used to being my friend, I can’t get them to take me seriously…” or “I just got taken advantage of and swindled by that vendor.”

Fast forward to today, I see myself slowly becoming more resolved, quiet and “businessy” - you must be thinking “No! Don’t do that! You have to be yourself, don’t become one of those people…”

Honestly, I probably never will - I just don’t see it in myself. HOWEVER, with that said, I’m also seeing that the need to reflect authority, decisiveness and control are incredibly important as the team grows, business grows and more parties get involved.

The vulchers are out there and you need to let them see that you have a few fangs too in case you need to defend yourself and your company.

Bottom line is that I have realized that it’s not that the CEOs are cold and rude by nature. A CEO (at least a genuine one) has many pressures on his mind, for example, payroll. The faster you grow, the more people you have (employees and their families) relying on you for their livelihood.

Add to that hungry investors, contractors, vendors, office politics and the 800 other things that can go wrong and I wonder why the heck anyone even WANTS this job? Well, some of us crazy people get “off” on the adrenaline it creates.

It brings the question to mind: “Would you rather be loved or feared as a leader?”

My answer: I’d rather be respected for which I have to inspire love and infect just the right amount of fear.

Not trying to sound cynical, but by “infect fear” I simply mean that everyone in your company and around it HAS to know that you mean business and won’t take “crap.” You have to show action and you have to prove that you easily make tough calls - that in and of itself puts just the right amount of “fear” in people.

But, again, perhaps fear is not the right word, I think respect covers it much better.