Tag Archives: CEO

How Do You Change the Company Structure to Support Growth? Ten Points

Situation: A CEO is concerned that her current company structure may not be set up to support envisioned growth. She is not sure how to differentiate managers from developers. She also seeks guidance on how to evolve the CEO role. How do you change the company structure to support growth?

Advice from the CEOs:

  • How do you differentiate and select managers versus developers?
    • Use an organizational development process to facilitate this selection.
    • First, outline the organizational structure that will evolve as the company expands. Share this with key staff and listen to their input.
    • Next, with key staff, determine the metrics. For example, what revenue or net profit before tax milestones will trigger the addition of managerial staff.
    • For each managerial position create a position description and a list of talents and skills that a candidate for that position should possess. Review these with staff and adjust with their input.
    • Let the company know the plans for the organization, and the positions that will be created as the company hits the milestones that will trigger growth. This will prompt anticipation of the opportunity and professional growth for staff that will accompany expansion.
    • Schedule a 1 or 2-day planning meeting with staff to discuss how to develop and improve both the organizational structure and operations. Continue this discussion in staff meetings at least quarterly.
  • The CEO’s role within the company.
    • The first question to ask is “what do you enjoy?” Is it being CEO, or is it leading the development teams? These are different roles.
    • Look at immediate needs. If the CEO is doing the books, it may be time to either choose or hire a COO – someone who can handle accounting, HR, and all the back-office functions.
    • Up to this point, the company has had a flat organization. The difficulty with this is that the first real crisis will take up so much CEO time that the company will fall behind in key areas currently overseen by the CEO.
    • Maturing the organizational structure is the right way to go. It will remove CEO from a “doer” role and allow the CEO to take the “leader” role – moving from working IN the business to working ON the business.

[like]

How Do You Manage Succession Planning? Seven Considerations

Situation: The founder and CEO of company needs to find a successor. She is ready to reduce her role but wants to assure the ongoing operation and future growth of the company, as she will remain the principal shareholder. How do manage succession planning?

Advice from the CEOs:

  • Options for management succession and growth.
    • One option is to create an employee stock option plan (ESOP) to expand ownership of the company and to help recruit new managers to support growth.
    • A second option presented itself through a broker who has approached the company to help them find a buyer for the business. The broker suggests finding a customer who is a potential buyer and also the right fit.
    • A third option is to purchase a smaller company with a good CEO and then do an ESOP transaction to allow the CEO to reduce her role while providing new incentives for management.
  • Options for maintaining continuity of the business.
    • The CEO has identified an individual with the background to lead the company and identify the talent to fill key roles.
    • In addition to a leader, what other key roles must be filled? Look at the current and planned organizational charts. Determine which roles must be filled, the order of priority to fill them, and management succession plans for each.
  • When and how should the CEO’s plans and options be communicated to staff?
    • One approach is to say nothing until either a successor has been identified or an actual deal is in place. This will avoid unnecessary disruption that will accompany and news of the plans.
    • On the other hand, if an ESOP is the option, let current staff know early, along with anticipated specifics of the ESOP Plan.
    • It is best to be straight with staff once the timing has been determined. Complement disclosure of plans with assurances that the change will be good for staff and that there will be financial incentives for them to remain with the company.
    • Be sensitive to what drives and motivates staff – build this into plans to inform them of what is happening.

[like]

What Is a Favorable Exit Strategy? Three Points

Situation: A CEO is contemplating retiring in the next two years. The company is profitable but is primarily dependent upon a single large client for whom the CEO is the primary contact. Compared to national averages the company’s profitability is very favorable. The CEO questions whether his valuation of the company is reasonable. What is a favorable exit strategy?

Advice from the CEOs:

  • The principal question from the group is whether the anticipated valuation on exit will yield the financial rewards that the CEO requires.
    • The buyer will discount the value of the current business because the CEO is too important to the business, and because they will not assume that there is ongoing value to the current business beyond 2-3 years.
    • The best option is to sell to a buyer who wants entry into the key client. They will have reasons beyond the value of the company to pay a premium for this access.
    • For planning purposes put the value at 2-3 years of the cash that the CEO takes out of the company, discounted to present value plus some premium for the entry that the buyer seeks. Look at the dollars that this will yield and decide whether this sum is a satisfactory payment.
  • Concerning the company’s relationship with the key client:
    • The company’s reliance on the key client is two-fold – they are the key customer, and they drive the market which yields a premium price for the company’s products.
    • Purchasers do not like to be dependent on a single supplier. Their purchasing department will always be looking for alternative sources.
    • During the exit window it is critical to develop new customer relationships to sustain the company’s growth and reduce reliance on the single key customer.
  • If the key client is #1, who is developing technologies that will compete with the key client?
    • What are their markets?
    • Where are they going?
    • How are they trying to exploit the chinks in key client’s armor?
    • What can the company do to secure a vendor relationship with the companies who may replace the key client?

[like]

How Do You Evaluate Career Choices? Three Considerations

Situation: An SMB CEO has sold his business and seeks a new opportunity. Options range from a mid-level position in a large company to various options in existing or start-up smaller companies. How do you evaluate your career choices?

Advice from the CEOs:

  • The most important factors are to determine what you want to do and what will make you, and your family, happy. Start with a Pro/Con analysis of each type of opportunity compared with your short and long-term desires. Which among the following choices are more important?

o    Financial stability and some level of job security vs. higher risk and potential reward with lower security.

o    Desire to be a player or to be the person in charge vs. being happy with a staff position.

o    Ability to create your own path or willingness to adapt to the priorities of others.

  • Given these choices, here is what you may find:

o    In a large or established company the most likely opportunity will be a staff position. The trade-off is stability for authority, but be aware that large company organizational politics may be severe.

o    In a small existing company it is possible to be a player in a key position. The trade-off is lower stability and viability for more authority.

o    In a new company there is the chance to be the CEO, bringing business experience to a group with technology expertise. The trade-off is high risk, long hours and low stability for a high level of authority.

  • Other factors to consider are how critical your personal situation is and the depth of your resources. If you have time and flexibility, take the time to find a situation that best meets your needs.

[like]

How Do You Create a Family Charter? Four Guidelines

Situation: The spouse of a CEO works in the business but has conflicts with other employees. This creates personal tension for the CEO. The CEO wants to explore a different role for the spouse, and also wants to create more balance at home. The CEO believes that working with the spouse to create a simple family charter with common values, vision and mission will help the two of them to find common needs and goals both at work and at home. How do you create a family charter?

Advice from the CEOs:

  • As you build a family charter, consider both your individual and your common views. Once you have established common ground with your spouse, you can bring children into the process to reinforce values and share creation of the vision.
    • In preparation for this discussion, both you and your spouse should start by thinking about what you each want. Once you have done this, compare notes and look for commonalities where you agree on what is important. These commonalities will form the core of your shared values, vision and mission.
  • Have lunch with your spouse once a month, just the two of you. Why? Because you are telling your spouse that they take precedence over your second spouse – your job, and you are taking time and attention from work to spend time one-on-one with your spouse. Do this monthly, but not always on the same day – make it more spontaneous and special.
  • Reinforce your family charter with regular family or one-on-one meetings with your spouse and children.
  • When having a conversation, focus on listening and don’t try to “fix” things.

[like]

How Do You Adapt From Sales to CEO? Five Perspectives

Situation:  A company’s CEO came from sales where she excelled in building relationships with important customers. As CEO she must adapt to new responsibilities. This seems to be working, but she misses her sales role as the face of the company to customers. She wonders whether this is normal. How do you adapt from sales to CEO?

Advice from the CEOs:

  • First, congratulations on your new role and responsibilities. It is clear that your Board saw your potential and has rewarded you with a new opportunity. You have a lot to feel good about.
  • Second, adapting to new roles is a necessary pain of personal growth. The company needs a different you now. Everyone in the room has gone through the same emotional trauma – and survived! You will, too, in your own way.
  • In your sales role self validation came from your ability to convert customers, satisfy their needs and solve their problems. As CEO, self validation must now come from managing, coaching and motivating others, not from doing the job yourself. Your new customers are internal as well as external. Many of the techniques that worked in sales can work in your new role. Look for potential wins and take pride in these just as you did in sales.
  • You are still the face of the company, but now in a bigger role. Enjoy this and leverage it for the benefit of the company. Take pride in team wins just as you did previously in personal wins.
  • You will never find someone just like you or who does the job the way that you would! Accept this, accept that others will add value different from your own, and that this has benefits. The more you can help others win the more success you will experience.

[like]

How Do You Facilitate a CEO Transition? Five Factors

Situation: An early stage company is preparing for an IPO. The founder and Board have selected a new CEO with experience taking companies public. How do you facilitate a CEO transition, and how can the founder best position himself to support the new CEO?

Advice from the CEOs:

  • Get clear on your own strengths and desired primary responsibilities, but prepare to be flexible in negotiating responsibilities with the new CEO. For example, if the founder’s strengths are marketing, IP and early stage fund raising, see how these compliment the strengths of the new CEO. Then select a title which will allow you to leverage your strengths without impinging on the focus of the new individual. Don’t pigeon-hole yourself with your new title; keep it as broad as possible, for example Executive Vice President.
  • If you, as the founder, have a good long-term relationship with your VCs and the Board this will be one of your strengths. Be prepared to counsel the new CEO on individual personalities and objectives of this group. The CEO will form him own relationship with the VCs and Board over time.
  • Chemistry between the founder and new CEO will be very important. The job of the new CEO is to captain the ship. Your new job is to be a superior first mate.
  • It appears that you have an excellent learning opportunity. Learn as much as possible from the new CEO as well as the experience of the IPO process.
    • To smooth the transition personally between the two of you, take the opportunity to tell the CEO that you believe that the Board made the best choice and that you look forward to the opportunity to learn from him. This might be best done outside of the office, for example taking the new CEO to dinner.
  • Maintain your relationship with the key VCs on the Board. Let them know about your future ambitions and that if the right opportunity opens up in one of their portfolio companies, you could be interested.

[like]

How Do You Manage a Company Outside of Your Expertise? Three Foci

Situation: The CEO came into a company as a engineering consultant. Three years later the Board asked him to take on the CEO role. This created a credibility issue with staff because the CEO is a duck out of water, though a duck with better business sense than most others within the company. How do you manage a company outside of your technical expertise?

Advice from the CEOs:

  • The staff credibility issue may just be one of self-confidence. You have already demonstrated competence in revising company processes and improving profitability. In fact, your non-industry perspective may have contributed to your success to date.
  • Near term, in what areas should you focus?
    • Focus on building bridges which will give you more leverage to address key barriers, particularly within the more entrenched groups in the company.
    • Look at how the company communicates and exchanges information with clients. One thing that customers want is more self-service options and access to data. You have the opportunity to develop Web 2.0 capabilities which will to set the company apart in what is historically a very conservative and paper-oriented client culture.
    • These actions will help you to increase your credibility as an effective leader and CEO.
  • Longer term, what should be the plan?
    • Keep the ship running smoothly. This by itself will help to build appreciation for your talents.
    • Use any free time to create business plans of your vision for the future. Share these interactively with key staff members and incorporate their input into the plan. Involve them in disseminating the plan within the company.
    • As you develop your vision and plan, look for opportunities to attribute success to others. This will be a breath of fresh air to staff and will strengthen the bridges that you have worked to build. They will start to see you as a key ally who shares credit instead of hoarding it.

[like]

What’s My Role as CEO? Five Perspectives

Situation: The CEO questions whether he is the right person to lead the Company. The Company has solid revenues and profitability, but growth is lower than expected. How can the CEO improve his situation and solidify his leadership?

Advice from the CEOs:

  • The primary functions of the CEO are to assure the maintenance of company values, to provide vision, and to monitor resource allocation within the company.
  • Identify your strengths, and the most important areas where you need help. Create an organizational chart not of positions but of strengths that are needed within the company. Compare these positions with your own strengths, and focus your own activities on your strengths. Promote or hire talent to support you in the latter areas.
    • As you hire or promote and delegate, make sure that you are allowing those with new responsibility the latitude to run their areas of responsibility.
  • Should I consider hiring a CEO or COO?
    • Maybe. If you do, first identify the key leadership traits that we most want to see in a candidate.
    • If you hire a CEO, this individual should have skin in the game. They must be perceived as a leader, and there must be a clean hand-off.
    • Consider hiring a COO. This can be someone willing to take this role with the understanding that your long-term objective is to replace yourself as CEO. A person unwilling to come on as COO and to develop into the CEO may not be the right candidate.

Key Words: Leadership, Role, Strengths, Delegation, Organizational Chart, Values, Vision, Resource Allocation, CEO, COO                                                             [like]