April 6, 2017
A friend of mine just left his job as CEO of a growth stage company to become CFO of a Fortune 500 company. That’s a big deal…and also a big change. When I was talking to him about the move, he said the following to me:
Some executive teams are like baseball teams. You play shortstop, and you bat 8th. That’s just what you do. The team needs one of those because the sport is structured that way. The CEO of my new company likes to run his executive team as a basketball team. Everyone has a position, but everyone also has to be capable of doing everything on the court well – shooting, blocking, rebounding, passing – and is expected to go after the ball any time it’s nearby.
It’s one thing to say that of a Fortune 200 company, because you have the luxury of doing anything you want in terms of staffing at those levels. My friend, who is financially oriented for sure, can be CFO of a company of that size because they probably have a strong Chief Accounting Officer. But how does that dialog apply to startups? Should you run a baseball team? A basketball team? Does it matter? Can you switch between the two?
My take is that early stage startups need to be more like basketball teams. You just don’t have enough people to get everything done unless you all take things off each others’ plates. And you certainly don’t want to be siloed early on in a company’s life as you’re trying to find product-market fit and get those first customers on board. Your CTO needs to be in front of customers in sales pitches. Your CFO needs to run customer service and other staff functions. Everyone needs to pitch in on strategy.
As companies grow, I think they need to become more like baseball teams because larger organizations require levels of specialized knowledge that you don’t often find in startup leaders (though you certainly can, especially as the world becomes more startup-oriented) if they are to survive and scale. You need a CFO capable of putting in place more complex systems and controls. You need a head of Sales who knows how to manage a more disciplined pipeline and sales power-driven machine, not just someone who is a fantastic closer of big deals.
At the larger sizes (well below the Fortune 500 level), you can afford to have more of a basketball team again. You want people with areas of specialization, but you also just want great athletes, and you can have some of the more technical expertise working at the next couple levels down.
There are two challenges this metaphor raises for scaling businesses. The first one is making your baseball team AS MUCH LIKE A BASKETBALL TEAM AS POSSIBLE when you’re in that mode. Why? I love baseball more than most as a sport, but executive teams of companies at any size need strategic thinkers and interdisciplinary, cross-functional work as much as possible.
And that leads to my second challenge with the metaphor, which is that you don’t want to swap out your executive team multiple times in a rapidly scaling business if you don’t have to. So this begs the question – can you turn a great specialist into a great generalist and vice versa? We have gone through transitions this past few years at Return Path from a functional structure to a business unit structure and back (sort of). My take in the end is that it’s easier to turn a specialist into a generalist than to turn a generalist into a specialist. You can interview for this. There are great specialists in every discipline who are capable of being generalist thinkers. But it’s really tough to take someone without proper training and experience in some disciplines and make them a specialist. Not impossible (although in some disciplines it actually is impossible – think about General Counsel), but difficult.