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Entrepreneur, CEO or Both?

Entrepreneur, CEO or Both?Entrepreneur, CEO or Both? Which hat, or hats do you wear? CEO…that title sounds good doesn’t it? Okay, so you founded the company, but does that mean you should also be the chief executive? Did you bestow the title upon yourself simply because you had the authority to do so, or are you the right person for the job? Perhaps you were the right person for the job initially, but has the company outgrown your management ability? As the founder, can you, or should you, attempt to grow with the company? What does a CEO really do anyway? In today’s post I’ll assess what it takes to be an effective CEO and you can decide for yourself if you have what it takes to get the job done.

Sure, it’s your business, your idea, your net worth at risk and certainly nobody else will work as hard as you will, but is this really the right way to evaluate who should be the chief executive? In most cases the answer is no it’s not…however this is often times exactly how the decision is made. While entrepreneurs are clearly talented innovators and visionaries, most first time entrepreneurs don’t have prior experience as a CEO.

Over the years I have come across many self-appointed CEOs that struggle with leadership, team-building, creating a healthy culture, reading a balance sheet, understanding capital formation or financial engineering, have poor communication skills, have never built a sales force, authored a business plan, or lack any number of other requisite operational abilities. I’m not suggesting that all entrepreneurs are incapable of being chief executives, but I am suggesting that you stop and make an honest assessment of whether you are doing the job because you’re the most qualified, or just because you don’t know what you don’t know…

Before I start breaking this down, let me disclaim that a post of this nature works off generalizations and stereotypes, and that there are clearly exceptions to every rule. I have known many entrepreneurs that are exceptional CEO’s, but I have known many more that don’t measure-up and shouldn’t be fulfilling the role of CEO. I’m not making any judgments or pointing any fingers, but readers of this post will know which camp they fall into.

It is the nature of the beast that most entrepreneurs are a disruptive force within a company. A VC friend of mine refers to most entrepreneurs as practicing “seagull management” in that they fly in, flap their wings, crap all over everything and fly back out again…Many entrepreneurs desire to have input on everything, yet don’t want anything to do with the details.  They often don’t possess the skill sets to add value to the initiatives they want to control. This type of behavior is proof certain that the entrepreneur is not being effective at leading, team building, delegation, leveraging process and a variety of other highest and best use activities for CEOs.

Let’s begin by determining what it is that a CEO does…First and foremost it is the CEO’s job to provide consistent leadership by insuring that the corporate values are reflected in a clearly articulated vision which in turn translates into a well defined strategy. Priority number two is team building and talent management. One of the main keys to generating organizational leverage is for chief executives to know when, where and why to deploy (or redeploy) talent and resources. It has been my experience that it is much easier to recruit talent or acquire resources than it is to properly deploy talent and allocate resources.

Jack Welch the former head of GE built a reputation as one of the great chief executives of this era. When asked how he transformed a lack-luster, institutional, global corporate giant into a dynamic culture focused on innovation and growth, Welch responded by saying; “My job is to put the best people on the biggest opportunities and the best allocation of dollars in the right places. That’s about it. Transfer ideas and allocate resources and get out of the way.” Welch clearly not only understood the concept of organizational leverage through proper deployment of talent and resources He mastered it.

I’ve heard it said that the role of a leader is to create and manage good followers. While there is an element of truth in that statement if this is what you aspire to as a leader it constitutes a complete under-utilization of leadership responsibility. I believe great leaders will mentor and coach subordinates for the purpose of identifying and developing other great leaders.

To achieve maximum success I believe it is incumbent upon an entrepreneur to take an honest inventory of his/her skill sets and competencies, and contrast them with the needs of the enterprise as it relates to what is required to efficiently and effectively lead the company forward. If your skill sets are best suited for business development, product development, branding, finance or other areas you may want to consider playing to your strengths by taking a senior position in the area of your subject matter expertise and hiring the best chief executive you can find to lead the company.

Surrendering the chief executive role doesn’t mean that you must give-up financial control or lose the ability to have input on decisioning, but it does mean that you’ll have to trust in, collaborate with, and delegate to someone who has the necessary domain expertise to get the job done.

At the end of the day, the choice of who occupies the chief executive role is yours to make…choose wisely. As always, I’m  interested in your thoughts…please share your insights and experiences in the comments section below.

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    Anand

    January 21, 2011 at 12:08 am

    Mike, Thanks for the meaningful post. Indeed it is very important as a leader that first to know yourself and know what your capabilities are, which will help in growing your brain child (your company). Be wise and educated in making decision at the early stage, else, if not now, for sure in future one has to cut the sorry face due to failure.

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    Larry bruce

    January 21, 2011 at 12:10 am

    Wow nice post Mike! After starting and selling 3 companies now I can look back and see I was definitely the seagull in the fist one, arguably all 3.

    In defense of the seagull though, I have seen many institutions and investors remove the founder diminish their capacity and position both in the company and equity, politics rearing it’s ugly head.

    In the end that’s what we fear the most and why I thing most founders want to remain in that title and the seagull thing.

    I encourage u and other investors to work make the founder understand their role and way it’s important for them to play it.

    Thanks for the post,

    Larry Bruce (@pcmguy)

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    Dan Collins

    January 21, 2011 at 4:24 pm

    Not bad Mikey – nothing could add to that one.

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      Mike Myatt

      January 21, 2011 at 4:33 pm

      Thanks Dan…Have a great weekend Sir.

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    ATIG

    January 21, 2011 at 5:19 pm

    Dear Mike,

    Reasonably at the crucial moment, We can’t resist and reject that process.
    There are a number of things which need to be in place and depend on the current economic environment.
    So at this point in time, from a US perspective, there is effectively
    extremely strong profit margins and a very predictable future.

    We should be well-advised to proceed cautiously and add value.
    ==> https://hub.n2growth.com/stop-selling-and-add-value/

    Thanks,
    Sami

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    Isidoros Papamichalis

    January 21, 2011 at 8:18 pm

    Hi Mike,
    from an HR perspective, the role of the entrepreneur has different prerequisites than that of the CEO. So, although sometimes a person may play succesully both of these roles, most of the times this doesn’t happen. The issue here, I believe, is emotional, that is the parent (entrepreneur) feels that he gives his child (company) for adoption, and believes that the adopting parent (CEO) can never care for his child as much as the real parent. This belief, of course, is not always true but it is definitely a decision driver.

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      Mike Myatt

      January 21, 2011 at 9:41 pm

      Hi Isidoros:

      I enjoyed your analogy of the parent/child relationship. Thanks for sharing.

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    Pastor Tom

    January 22, 2011 at 3:54 am

    Very insightful and challenging Mike. The points were clear and beyond the thinking of most entrepreneurs. Thanks for the continued wisdom and over the top thinking. You certainly show why you are one of the premier coaches in the North.

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      Mike Myatt

      January 22, 2011 at 4:29 am

      Thanks Tom. I appreciate the kind words even though you just consider me a another Yankee:)

    Entrepreneur, CEO or Both? | WORDPRESS!

    January 22, 2011 at 1:56 am

    […] Original post by leadershipcoach […]

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    Hayliatipa

    January 24, 2012 at 6:48 pm

    ISI wrote a nice detailed article in American Business Magazine that decsribed this theory also.

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