Sep 062010

What Does a CEO Do, Anyway?

What Does a CEO Do, Anyway?

Fred has a great post up last week in his MBA Mondays series caled “What a CEO Does.”  His three things (worth reading his whole post anyway) are set vision/strategy and communicate broadly, recruit/hire/retain top talent, and make sure there’s enough cash in the bank.

It’s great advice.  These three are core job responsibilities of any CEO, probably of any company, any size.  I’d like to build on that premise by adding two other dimensions to the list.  Fred was kind enough to offer me a “guest blogger” spot, so this post also appears today on his blog as well.

First, three corollaries – one for each of the three responsibilities Fred outlines.

  • Setting vision and strategy are key…but in order to do that, the CEO must remember the principle of NIHITO (Nothing Interesting Happens in the Office) and must spend time in-market.  Get to know competitors well.  Spend time with customers and channel partners.  Actively work industry associations.  Walk the floor at conferences.  Understand what the substitute products are (not just direct competition).
  • Recruiting and retaining top talent are pay-to-play…but you have to go well beyond the standards and basics here.  You have to be personally involved in as much of the process as you can – it’s not about delegating it to HR.  I find that fostering all-hands engagement is a CEO-led initiative.  Regularly conduct random roundtables of 6-10 employees.  Send your Board reports to ALL (redact what you must) and make your all-hands meetings Q&A instead of status updates.  Hold a CEO Council every time you have a tough decision to make and want a cross-section of opinions.
  • Making sure there’s enough cash in the bank keeps the lights on…but managing a handful of financial metrics on concert with each other is what really makes the engine hum.  A lot of cash with a lot of debt is a poor position to be in.  Looking at recognized revenue when you really need to focus on bookings is shortsighted.  Managing operating losses as your burn/runway proxy when you have huge looming CapEx needs is a problem.

Second, three behaviors a CEO has to embody in order to be successful – this goes beyond the job description into key competencies.

  • Don’t be a bottleneck.  You don’t have to be an Inbox-Zero nut, but you do need to make sure you don’t have people in the company chronically waiting on you before they can take their next actions on projects.  Otherwise, you lose all the leverage you have in hiring a team.
  • Run great meetings.  Meetings are a company’s most expensive endeavors.  10 people around a table for an hour is a lot of salary expense!  Make sure your meetings are as short as possible, as actionable as possible, and as interesting as possible.  Don’t hold a meeting when an email or 5-minute recorded message will suffice.  Don’t hold a weekly standing meeting when it can be biweekly.  Vary the tempo of your meetings to match their purpose – the same staff group can have a weekly with one agenda, a monthly with a different agenda, and a quarterly with a different agenda.
  • Keep yourself fresh…Join a CEO peer group.  Work with an executive coach.  Read business literature (blogs, books, magazines) like mad and apply your learnings.  Exercise regularly.  Don’t neglect your family or your hobbies.  Keep the bulk of your weekends, and at least one two-week vacation each year, sacrosanct and unplugged.

There are a million other things to do, or that you need to do well…but this is a good starting point for success.

  • http://fredwilson.vc/ fred wilson

    great post Matt

    i loved these parts:

    - get out of the office and into the market
    - don't delegate hiring and retention to HR
    - run great meetings
    - don't neglect your family and hobbies

    thanks so much for a great follow up

  • http://www.josephomansky.com Joe Omansky

    Excellent insights. Extremely valuable for creative entrepreneurs lacking innate CEO leadership skills looking to improve themselves or hire leaders. And, thanks @fredwilson for directing me here.

  • Matt Blumberg

    Thanks for the comment, Joe. Often with new CEOs, I think some of the skills are innate and just need to be drawn out and honed.

    Matt

  • http://www.arisey.com Linda Cao

    Thanks for your insights, Matt. Love to hear more:

    how did you allocate your time in 3 core CEO activities, during the startup and scaleup?

    Thanks in advance. Linda

    • Matt Blumberg

      Well, cash is, as they say, the bottom line, so that has to take precedence over everything else when it’s needed.  Those times, that one are might be 75% or more of your day…but then when it’s not a need, it drops down to almost zero.  The other two are probably 50/50 during the early stages. 

    • Matt Blumberg

      Well, cash is, as they say, the bottom line, so that has to take precedence over everything else when it’s needed.  Those times, that one are might be 75% or more of your day…but then when it’s not a need, it drops down to almost zero.  The other two are probably 50/50 during the early stages. 

  • Jos Burger

    Great insights, Matt. It is crucial to get out to the market, visit customers and partners and above all listen listen and listen. Steve Blank evangelizes this as Customer Development. http://bit.ly/cRmcuX

    • Matt Blumberg

      Absolutely, Jos. We are Blank students and practitioners here as well on the product side, but his theory doesn't only have to apply to product!

      Matt

  • http://thedreaminaction.com Ryan Graves

    Wow! Really good stuff Matt. As a new startup CEO, this was definitely a good post to refresh :)

    • Matt Blumberg

      Thanks, Ryan. What's the startup?

      Matt

  • http://www.arisey.com Linda Cao

    Thanks, Matt. I like to spend time in improving cash flow via revenue and profitability, not the raising fund part. Because it is such a distraction, however a necessary evil to scale up ahead of competition in a large market. Love the lean startup concept in a way of bootstrapping to gain initial market validation and traction. This is doable in a niche market, a bit difficult for a change-the-world idea with a large market potential.

    • Matt Blumberg

      Good point, Linda. At different points in time for different kinds of companies, making sure there's enough cash in the bank can take on different meanings!

      Matt

  • http://www.realtimecfos.com Mark J. Denning, CPA

    As a CPA and financial consultant, my obvious focus is cash in the bank. Unfortunately, not many small business CEOs have CFOs and access to real-time financial reporting, forecasting, and cashflow management systems to make "the engine hum". In fact, a real-time financial management system will help you Drive the Business financially. It will show you where you are and where you are going, helping you to sleep at night and take weekends off without worrying about your finances. Here is a good read to help CEOs understand the necessity and components of such a system, as well as how to implement it. http://www.realtimecashflow.com

    • Matt Blumberg

      Great, Mark – thanks for the tip!Matt

    • Matt Blumberg

      Great, Mark – thanks for the tip!Matt

  • http://openviewpartners.com/ George Roberts

    Matt,

    I had blogged about Fred's post earlier and just picked up on your add on and added it to my blog to share your insights.

    All good things for founders/CEO's to aspire to if they want to build a truly great company!

    Thanks for sharing.

    All the best!

    G

    • Matt Blumberg

      Thanks, George!

  • http://www.martincollege.edu.au Bob Arce

    "Don't be a bottleneck"..I couldn't agree more. CEOs must learn to choose the right people AND delegate tasks according to their skills and capabilities. Having people who have to wait on you all the time before moving on something is just impractical and stunts growth. Thanks for this post!

    • Matt Blumberg

      Thanks for the comment, Bob.Matt

  • http://www.switzersuperreport.com.au/business/superannuation-warehouse/ Superannuation

    The CEO has to be a leader in the context of leaders being folks who get organizations to places they would never get by themselves. He has to want to be a leader. He has to be comfortable being a leader — or able to deal with the attendant discomfort gracefully. He has to be able to say — "I am responsible for EVERYTHING that happens or fails to happen at this company." And then make it so and believable and live it.

    • Matt Blumberg

      Great comment – very true. It's all about ownership!Matt

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