Category Archives: Leadership

What is Your 3-Year Plan? Six Suggestions

Situation: A founding CEO wants to cut back to 1-2 days per week with someone else overseeing day-to-day operations. Her timeline to accomplish this is 3 years. Currently she splits her time between engineering and sales support, managing operations, overseeing the CFO and managing the company. How do you accomplish this transition? What is your 3-year plan?

Advice from the CEOs:

  • Advertise for and hire a General Manager/engineer who can understand the company’s applications and develop unique solutions.
  • Advertise for and hire an understudy for the sales person. This could be someone in their 40s who is experienced, and who can act both as the sales person’s back-up and develop additional accounts to diversify the business.
  • As the company continues to grow it will take more time and effort to manage all the activities. Plan the company’s organization chart and infrastructure to account for this.
    • Be careful not create an infrastructure during good times that is unsustainable during down times.
  • As the new GM gains familiarity with the company, this individual will and should start to take control. This automatically means that the founding CEO will have to agree to release some of her control. Prepare for this.
  • Consider several alternatives for the GM:
    • Super President – $400K.
    • GM with engineering talent – perhaps a consulting or engineering sales background. Hire at $150-200K and develop into the President.
    • Given the 3-year lead time this individual could be a Technical Lead or Project Engineer. The objective will be to develop a very talented person into the GM or President. This alternative opens a larger pool of talent, at lower initial cost.
  • Where are these people found?
    • Trade association contacts.
    • A high-quality engineer that another CEO won’t be hiring over the coming months. Talk to friends and industry contacts.

What Are Your Five- and Ten-Year Plans? Five Points

Situation: A CEO is considering her exit strategy between five and ten years out. She wants to do what is best both for her, the company and her employees, assuring that both personal and company needs are met and the company is ready for transition. What are your five- and ten-year plans?

Advice from the CEOs:

  • The personal side and the company’s future are closely linked. The solutions and strategy must fit both the CEO’s priorities as well as those of the company. By looking at the CEO’s role, the current and future needs of the company, and any changes that need to be made, the CEO is preparing for an eventual exit.
  • The CEO must decide what lifestyle she wants – both as she prepares for eventual exit and as she prepares the company to continue under new leadership.
    • She must decide what she wants to do with her time in an ideal world. What will make her happy as she prepares for the future?
    • This must be considered both for herself and her business partners. Have conversations to align both business and personal expectations.
    • Conduct a strategic planning retreat on the future of the company as well as the transition of leadership.
    • Have a talk with significant others to align personal expectations.
  • What changes in leadership are necessary to implement the plan? What are the key roles and who will fill them? What is the succession plan for each key role? Are current personnel in place to fill these roles, or is additional hiring and training necessary?
  • Consider an ESOP or a virtual stock program to enhance employee incentives and sense of ownership in the company’s future.
  • Decide what exit means on a personal level.
    • Transitioning from founder to leader gets the CEO more involved in the company.
    • Meditate on priorities and engage in ongoing discussions with key personnel to jointly plan the future.

What is the CEO’s Job? Is It for Me? Four Recommendations

Situation: A CEO wants to significantly grow his company, either to prepare for an IPO or to become an interesting takeover target. However, he struggles with delegation. When responsibilities are delegated, the job isn’t done to the CEO’s satisfaction and he ends up doing the work himself. He asks: what is the CEO’s job? Is it for me?

Advice from the CEOs:

  • In order to grow the company to the desired level, it is necessary to hire competent people and delegate. The most important position will be a COO with deep experience organizing people and functions.
    • The CEO’s role is to provide the vision and strategic objectives for the company. The COO’s role is to assure that the right people are in place or hired to do the work necessary to realize the vision and operational objectives.
    • The CEO-COO relationship will be pivotal. If there are specific ways that the CEO wants to see things done, these must be clearly delineated in discussions with the COO.
    • The role of the COO will be to organize the company to reach the growth objective.
  • Hire a competent, talented HR person to plan the organizational development road map, and the positions that must be filled in stages to reach the goal.
    • The growth plans of the company are ambitious. Absent significant change, growth will be limited to a fraction of the current objective.
    • Working with the COO and HR person, build the organizational chart for the size company that the vision imagines. Fill the chart with current personnel where the fit is appropriate. Determine where the gaps exist and build a plan to hire these people in stages.
    • The E-Myth Revisited by Michael Gerber provides an exercise to accomplish this.
  • Hire a high-level assistant to help in areas where the CEO finds it difficult to let go. This will be another key relationship and will be important to learning how to let go.
  • Hire a CEO coach.
    • This will likely be an individual with significant experience who has achieved the growth envisioned by the strategic plan.
    • The CEO Coach will help to draw lines between delegating and micromanaging and will help the CEO to learn to effectively delegate to qualified people.

How Do You Reprioritize Your Time? Seven Suggestions

Situation: A company delivers specialized consulting services. The founder CEO is also a lead consultant. As the company has grown, the CEO has struggled to prioritize her time as she shifts from consultant to leader. How do you reprioritize your time?

Advice from the CEOs:

  • Look at the skill sets required to run the company and compare this with the skills of current staff. While the company has excellent consultants, do some of these people also have experience in business development or management?
    • Prioritize the skill sets needed and focus hiring efforts on those that can’t be filled by current employees.
  • If the CEO is also the chief rainmaker, then a top priority is hiring a manager/leader. The next level of development within the company will require a level of management.
  • Accept that the company can’t get an A+ grade on every project or detail. Learn to accept a B when this is enough. It will do.
  • Recognize that as priorities shift, vacuums will develop. Identify what will be missing. For those vacancies:
    • Write job descriptions for the roles.
    • Replace the leader’s roles with flexible teams instead of individuals.
  • Reapply financial resources to fund the transition as incentives for individuals to take on new work and responsibilities.
    • Look at profit-sharing models. Use profit sharing to facilitate the shift in priorities by adjusting payout incentives.
  • Anticipate the risks within the plan. Think through these thoroughly and develop contingencies.
  • As CEO, you will not be able to do everything that you do now. In your new role you won’t want to do everything you do now. Your view and responsibilities will change.

How Do You Stay Focused When It’s Busy? Five Points

Situation: A CEO and his COO find it difficult to focus on core tasks when business is booming and everyone is busy. The company is small but has been very successful. However, the pressure of simultaneously attending to key customer relationships, training new people, and formulating plans is overwhelming. How do you stay focused when it’s busy?

Advice from the CEOs:

  • If the CEO and COO are doing a mix of corporate and project tasks, the first step is to delegate so that top staff focus on strategic areas rather than execution.
    • Over the next week, keep a record of what the CEO and COO are doing. At the end of the week sit down and determine which activities were corporate activities, and which should have been delegated to staff.
    • As an example, training of new personnel should be a key role of someone else. The CEO and COO will be involved, but only tangentially. The bulk of onboarding should be handled by staff.
    • Similarly,restrict sales activity of the CEO and COO to high level discussions and decisions.The rest should be handled by sales staff.
    • What must the CEO and COO be involved in?  Intellectual property development, high level decisions about new service offerings, high level decisions on business expansion opportunities, and occasional oversight of company operations.
  • It is important to focus. The first priority should be the company’s principle revenue stream.
  • The second priority should be new service offerings which are central to efficient delivery of the primary revenue stream.
  • Meet with top staff and develop a five-year vision. The order of priorities that are developed will determine where to focus.
  • In the process of developing priorities, ask the following questions:
    • What do you love and what do you need to love?
    • Analyze the comparative importance and urgency of each activity of the CEO and COO. Which require top level input, and how much? Which are better delegated to staff?

Can Outside Board Members Help a Struggling Company? Four Thoughts

Situation: The CEO of a family-owned company has struggled to align family members with the business plan. When difficult decisions must be made, established personality patterns and family history hinder consensus on what should be done. The CEO seeks advice on whether the addition of one or more outside Board Members can help to build consensus. Can outside Board members help a struggling company?

Advice from the CEOs:

  • The CEO of another closely-held company brought in an outside Board member two years ago. This has added considerable focus to the Board discussions. The addition of a fresh and respected perspective has helped to clarify decisions and reduce conflicts among the founders.
  • First, have a conversation with the team. Give them the opportunity to straighten out things themselves. Present the addition of an outside Board member as an option. Get their support. This will make the addition of an outside Board member a company decision, rather than the CEO’s.
  • The experience of other companies is that compensation can range from free – a retiree who wants to help – to expensive. Arrangements and expense will depend on what the company leadership wants to achieve.
  • Investigate SCORE – a well-established source for outside board members for small and family businesses.

How Do You Identify Key Managers? Three Suggestions

Situation: A software service company wants to expand operations. Their business model is to build clone offices that operate like the home office in new markets, much like a franchise operation. The founder CEO is struggling to identify key managers who can manage remote offices. How do you identify key managers?

Advice from the CEOs:

  • The key managers must be individuals who are business savvy, not talented engineers. The key managers must understand:
    • Management – with a proven management record;
    • Basic accounting;
    • Recruiting and hiring;
    • How to manage an office;
    • A bonus will be experience in a similar field, but this experience does not substitute for the above four critical requirements.
  • Looking at current employees, is there the bandwidth within the current team to help bootstrap new remote offices?
    • For example, is there a key senior manager who can become Director of Franchise Operations? In this role, the DFO will serve as a resource to the individuals opening new offices.
    • As this individual’s focus switches, an important question will be who replaces this individual in their current role?
  • It will be beneficial if the individuals who are chosen to lead new offices have at least some experience in sales. This will help to quickly build new customer bases for the remote sites. However, a new site manager must have balanced experience. While sales will be part of the responsibility these individuals must also be able to build and oversee the other critical functions necessary to build viable remote sites.

How Do You Give Back to the Community? Nine Suggestions

Situation: A company has done very well providing goods and services to the local community. In the process they have made good money for the owners and employees. Still, they are aware that they only serve a portion of the community in which they operate. How can they reach out and benefit members of the community who do not necessarily require their services? How do you give back to the community?

Advice from the CEOs:

  • When employees have children or children of friends who are selling fundraising items, like Girl Scout Cookies, make a large purchase. Give the cookies away as gifts to clients and key contacts.
  • Conduct educational sessions to help the community become more versed in and aware of the products or services in which you specialize. These won’t be sales or marketing presentations but rather information sessions with no sales pitch attached. Talks can be given at schools, community organizations, or other venues that seek speakers.
  • Create a gift-matching program for employees. Make a gift to your favorite charity and the company will match your gift.
    • Try a fun variation on gift-matching: “Make Joe Pay!” Make a gift to a charity, and Joe, the CEO, will match it 3 to 1!
  • One company has a policy that employees are not to pressure other employees into supporting their or their kids’ fundraising. Instead, the company steps in and does this.
  • Work with the Angel Tree Foundation. Set up a Christmas or Holiday Tree prior to the holidays. Employees or others pick cards, and then buy a gift for someone in need within in the community.
  • Support national charities, e.g., the Heart Foundation or Cancer Society.
  • Create a formula-based program whereby based on company profitability or some other metric the company creates a donation pool. Have customers vote on the charities to be supported from this fund.
  • Encourage management and employee involvement on Boards of community organizations. Create guidelines and allow them paid time off to participate.
  • Create a mentor program. Contact the local school system and ask about clubs or classes at local schools that the company can sponsor or mentor.

How Do You Plan for Succession? Four Points

Situation: The CEO of a family business seeks to create a succession plan. One family member has expressed an interest in taking the reins of the company but has failed to take the initiative to demonstrate that he is prepared to take on this role. Another family member is now demonstrating both interest and initiative. How do you plan for succession?

Advice from the CEOs:

  • How should this situation be approached?
    • Do not view this situation competitively, but rather from the standpoint of what is best for the whole family because many family members stand to benefit from the ongoing success of the business.
    • Whatever decision is made, the successor will need support and assistance understanding both the financial and business sides of the company. This individual must also be aware of conflicts and challenges that face the business.
  • What else should be done to prepare for succession?
    • Given that there are two individuals interested in becoming CEO sit down with each individual and negotiate a clear boundary statement on what you, as CEO, can and can’t do, as well as what can and cannot be expected of you, as CEO, as the succession decision is made. This understanding should be documented in writing and signed, signifying understanding by both the CEO and the candidate. Each candidate should have their own signed agreement with the CEO.
    • In a family business, the CEO, as guarantor of the company, may be faced with a different level of financial risk than other family members. Both candidates for the CEO position must understand that if they accept this position, they also accept this risk.

How Do You Transition from Doer to Leader? Four Suggestions

Situation: The Founding CEO of a professional services company has always been deeply involved as a service provider and rainmaker in addition to his role as CEO. As the company has grown he sees the need to spend more time as leader of the company instead of being a doer. What can be done to facilitate this transition, and what expectations need to be created? How do you transition from doer to leader?

Advice from the CEOs:

  • Another CEO removed himself from day to day business development activity by bringing in a new rainmaker. These were the adjustments made to facilitate the process.
    • During the first year he worked with the new individual in a team or partnership role.
    • Compensation was results-based. Discussion of equity consideration was deferred until the individual proved herself.
    • The CEO moved himself out of the individual contributor role except as needed to support the new rainmaker’s efforts.
    • All of this was accompanied with clear communication to clients: “this adjustment will provide better service to you; here’s my number if you need help.”
    • Rainmakers are a different personality type. To be most effective, they must be able to say “my team.” Allowing this will ease the transition and improve the relationship.
  • Create teams to deliver solutions that have traditionally been provided by the founder.
    • Identify skill sets behind the roles that are being delegated.
    • Build an organization that will fill these roles.
    • Participate in team meetings, but as an advisor rather than as principal decision-maker.
    • Adapt role and behavior in phases to ease the pressure of the change on both the CEO and the team.
  • How does the CEO manage his own expectations as well as those of the company as he makes this transition?
    • Delegation initially takes more time and effort than doing the work yourself. Be patient and let the investment pay off.
  • Larry E. Greiner of USC was an expert on the study of organizational crisis in growth. Per Greiner’s model, the company is currently at stage one – moving from principal and founder to initial delegator. It may be a useful to study this model.