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PERSONAL CHARACTERISTICS OF CEOs

There are a number of characteristics that define good CEOs, whether in
$5 million or $5 billion companies:
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F I V E DE F I N I NG C H A R AC T E R I ST IC S
O F GR E AT C EOS

1. Personal insight. Great CEOs are great leaders. They know
themselves and what they stand for. They have been called on
all their lives as problem solvers because others know them to
be fair and impartial. People respect their opinions and look
to them for guidance.
Great CEOs are mature as people. They can suffer disap-
pointment more gracefully than others and give others credit
for their achievements. They don™t come in the office door
yelling for something they need. They aren™t as concerned
about titles or power structures as they are about the welfare
of those who work at the company. They are trustworthy be-
cause they™ve always been honest with people and have
earned that trust. They care about families, and they know
that people are more important than dollars and express it in
their actions every day.
Finally, great CEOs seek out feedback. They want to know
how others see them so that they can understand themselves
better and continue to grow as people. They also want feed-
back about the company from an employee perspective, and
they use surveys as a starting point for creating a dialogue to
make things better.

2. Resourcefulness. Great CEOs seem to have boundless energy.
They come to work with the greatest enthusiasm. Even when
they don™t feel like it, they find ways to reenergize themselves
and come in ready to go. They take good care of themselves
physically and emotionally so that they can be there for the
employees and the needs of the company. They give much
more than they take every day.
They don™t give up. If the wall is too high, they back down
and find another way around. They don™t blame, but they do
look for solutions to problems so that those problems are less
likely to happen again.

3. Courage. The CEO has one of the world™s toughest jobs. No
matter how tough it was to start the company, it™s even harder
to keep it going and growing. A CEO must decide what he or
she stands for and do what is right, all the time.
(continued)
234 Lead with Courage




It takes courage to fire the salesperson responsible for the
company™s biggest, most lucrative account when that same
salesperson drives a company car drunk and causes an acci-
dent. There will be many times when CEOs will want to
smooth over something that requires decisive action because
of the potential consequences or because they just can™t take
on one more challenge at the moment. However, CEOs who
exercise poor moral judgment will lose their personal in-
tegrity with all of their employees watching.

4. Willing to look at risk. A great CEO isn™t afraid to look at the
downside and answer the hard questions he or she hopes will
never become a reality. The CEO needs a backup plan”one
that is designed by looking at the company™s worst-case sce-
narios. This plan addresses questions such as: What if your
industry experiences a slump? What if new governmental
regulations affect your business? What if you lose the client
that accounts for 50 percent of your sales?
Preparing yourself and your company for these eventuali-
ties may be the difference between a tough year or two and
bankruptcy. If you are in business for 20 years, some of your
worst-case scenarios will probably happen. The key is to be
ready and able to take immediate action to reduce the loss.

5. Foresight. It seems some CEOs have an uncanny ability to pre-
dict the future. They may have unusual insights into their
particular markets, and luck may play a part as well. In addi-
tion, they are prepared to create their own luck by cultivating
an ability to see opportunities for their company and to make
the deals that convert those opportunities into realities. Some
things that may seem like amazing foresight are actually the
result of the hard work and discipline it takes to constantly
look forward to build a successful company.
Great CEOs must also constantly develop new products to
build and retain a customer base. Foresight is also the ability
to hire and retain the right people, looking ahead toward the
growth of the company. Finally, over time, each company
must develop a steady source of business during both good
economic times and bad, because there are sure to be bad
economic times during the life of a business.
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FACING THE TOUGHEST QUESTIONS

One CEO who demonstrates many of the traits I mentioned is Toby Lenk,
who took his company, eToys, from a start-up to a public company in just
two years. On the day the company went public in May 1999, Lenk™s 10.5
million shares of stock were worth more than $850 million. However,
when eToys filed for bankruptcy in March 2001, Lenk still held 10 mil-
lion shares of eToys stock. He ended up with the money he took in salary
for those four years and little else”even though his idea made a lot of
other people very wealthy.

Lenk™s story is a great study about CEOs and raises some provocative
questions: How much do you give; how much do you take? What do you
owe the company you build, and what does it owe you? Where do you go
to find the answers?

Great CEOs like Lenk confront difficult questions like these and follow
their moral and ethical compasses. They create both a compelling and
heartfelt business plan and game plan. Ultimately, their behavior and
their belief in their vision for the company will determine whether the
endeavor thrives or perishes.



LOOK TO THE LONG TERM”THE VERY LONG TERM

A crucial aspect of leading your business is to determine how to keep
the business running in your absence. You won™t be around forever, so
plan ahead. This fact is sometimes difficult to appreciate, especially if
you founded the company, but it™s important. Making sure that your
company survives helps you and your employees focus on matters of
importance.

Many companies run, and even thrive, on personality alone”on the
charismatic leader whose employees rally round for direction and in-
spiration. However, businesses like these can appear more like cults
than companies, and cult companies often don™t outlive their leaders.
Companies thrive when they operate according to principles their em-
ployees can believe in. Your employees will do better if they believe that
your company exists to do something more than make you wealthy.
They want to know that their efforts will pay off whether you™re
around or not.
236 Lead with Courage



This doesn™t take away from you”the person running the company”so
much as it gives to your employees. You improve your own prospects for
a payoff from your employees if you improve their prospects for a payoff
from your company. If you show them that you expect your company to
run whether you™re there or not, you demonstrate that you really do look
to the long term.



FIND THE IMPORTANT DETAILS AND FOCUS ON THEM

Another aspect of leadership is knowing what drives your business.
Study your operations; then extract those details that are key to your
success. It™s not enough to house volumes of reports on a bookshelf. You
must know what those reports mean. If, for example, you send out
50,000 pieces of direct mail and two weeks later sales jump, you may
conclude that you dropped an effective mailing. However, perhaps your
advertising kicked in at the same time, or perhaps a distributor
launched an incentive program. You must find out so you know what
works and what doesn™t.


In addition, remember that data is often about quantity, not quality.
Only people”not mere data”can qualitatively measure performance by
answering questions such as the following:


• How well do our results match up against our expectations?
What™s different?

• Is the trend up or down?

• Will these trends last a short time, or do they look long term?

• What might have contributed to what we see in the data?

• What™s missing from this data that would lead us to ask more
questions?


As a rule, the finance department is the sole corporate unit devoted to
quantitative analysis. It doesn™t develop, produce, market, or deliver the
product. It measures the results of your efforts to do those things. It pro-
vides you with data from which to draw the benchmarks for measuring
your company™s performance. This doesn™t make the financial depart-
ment more important than the others, but simply more useful in this
context”if you decide to use it this way.
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Leading Your Business for Maximum Results




FAC E R E A L I T Y W H E N YOU LOOK
AT YOU R C OM PA N Y DATA

The problems you encounter in running your company are tough
enough to solve. Don™t let confusion muddy the waters. This means
keeping your analyses as objective as possible and admitting what
you see to those around you. Don™t try to persuade yourself or oth-
ers to see what isn™t there. You may be the only person, for example,
who can tell whether a two-month downturn in revenues reflects
your ordinary business cycle or the beginning of a more drastic
trend. Therefore, you must gauge the truth and act accordingly.
Later in this chapter, I discuss how to know if you can help to fix
this trend by bringing in an outside consultant.




LEADING DURING TIMES OF GROWTH

Your business may outperform your projections, or it may fall short.
Either way, you need to know. A game plan allows you to monitor per-
formance in detail, so learn how performance varies from the vision of
your business plan. There are no shortcuts in preparing the information,
in studying it, and in acting on it. You must plan, act, measure, and plan
again. Don™t expect to do this quickly. Analyzing the data takes time”at
least twice as long as it takes to compile the data, according to one rule of
thumb.

You may be jubilant when you outperform expectations, but just as many
problems can stem from too much business as too little. Are you pre-
pared with staff and resources to handle faster growth than you initially
projected?

Take each variance as an opportunity to rethink how it will impact each
aspect of your business. Although growth can be a wonderful thing for a
company, it can be challenging. This is a great time to get some outside
consulting help from someone who has been there and can guide you in
the next step for your company.

To be sure you stay on track, you will need to keep data and make choices
in each of two areas: where to invest your time and resources over time.
Running a small business is a balancing act because resources are always
scarce. I always set out to upgrade and change each area over time”
238 Lead with Courage



finance, sales and marketing, operations, human resources”so that no
area would be left without improvements for a long period.

Managing high growth means you have done many important things
well”product development, marketing, and sales”that™s the good news.
The bad news is that, at least for the short run, it feels as though the com-
pany is running you. Sometimes the best you can do is to enjoy the ride.
Understand that it™s probably temporary and leverage the opportunities
as best you can.

What you do during this period will have an impact on the life of your
company. Watch for the following:

• Don™t reduce your quality standards or treat people as if they are
dispensable.

• Avoid burnout (yours and your employees™). Keep this time in
perspective and help your employees do the same by taking time
off when you can.

• Consider getting a line of credit or other borrowing vehicle while
your sales and profits can justify it.

• Consider the risks of stocking more inventory than you can
quickly sell in case demand decreases faster than expected.

• Get all the public relations you can while your story is newsworthy.

• Pay down debt and set up the ability to borrow in the future.



MANAGING SLUMPS

If you plan to stay in business long, you™ll see up economies and down
economies in your career. The secret of success is to learn how to make
money during both. This means trying brand new, bold strategies. Deter-
mine who™s still buying what you™re selling; maybe they are in a new in-
dustry, or the product they™re buying is just a little different from what
you™re offering.

The good news about lean times is that they might offer you a breather
from the otherwise breakneck speed at which you usually operate. For
example, you™ll have time to plan that marketing campaign you™ve been
thinking about for the past two years.
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Leading Your Business for Maximum Results



It™s essential to stay positive in tough times and to celebrate the progress
you™ve already made in your business and the lean times you™ve already
made it through. Instead of looking at today and next week, look at a year
or more ago. What have you done that you™re particularly proud of in the
past few years? Resist the impulse to conclude that your success is now
ending”a slump is just a lull in the action.

Ask really successful people and you™ll find that most have gone to the
edge of personal crisis. It™s what they learned about themselves during
those critical times that made it all worthwhile. Have you been tested in
the past? Do you know you will be able to make it because you™ve risen to
the challenge before?

If not, maybe this is the time to find out about yourself. If you usually
shrink from a challenge, this time rise to meet it. Find the big customers
you™ve always wanted but assumed you were too small to lure”ask them
for their business, or do something really bold to get yourself noticed.

You™ll never find the energy for that next bold move unless you feel good
about yourself right now. Indeed, you™re too important to the business
you™ve created not to take great care of yourself. Learn what works for
you and do it religiously. Get physical activity, even if it™s just a walk dur-
ing lunch. Develop eating habits that will sustain you. Find the things
you enjoy and engage in them regularly. Get outside perspectives so that
you don™t take everything so seriously.



YOU CAN™T DO IT ALONE

The job of a CEO is overwhelming”so overwhelming, that many CEOs
don™t realize that they™ve lost touch with their families, lost friends, and
haven™t done anything but work for years.

Don™t try to run a company without support. If your family thinks the
business is a bad idea altogether, try to get some counseling and talk it
through. It™s perfectly understandable that a spouse might be concerned
that a business will cost money initially, be risky, and, more importantly,
take you away from the family. This isn™t an insignificant concern. Con-
tinually work on compromises.

Well-established companies face family concerns as well. Who should
work in the family business? Who in the next generation should run the
240 Lead with Courage



business after the founder retires? How can the family wealth be divided
after the death of the founder if all of the wealth is in the business? Many
other CEOs have dealt with these issues successfully, and you can, too,
with their help. Find a group of other CEOs, preferably from a variety of
industries, to share the burden with you and to give you the benefit of
their experiences and help you cultivate new ideas.



GETTING OUTSIDE HELP

In addition to finding other CEOs for guidance, you might find yourself
needing the services of a consultant at certain points during the life of
your business. Many owners and managers are suspicious of consul-
tants; they distrust freelance experts who charge big hourly rates but
make little long-term commitment. Sometimes, they resent any outsider
criticizing their companies”no matter how much they know, intellectu-
ally, that they need help. However, one crucial trait of great leaders is
that they know when to ask for help.




R E A SONS YOU M I G H T N E E D
SOM E OU T S I DE H E L P

• You need a high or specific level of expertise that goes beyond
what your company could afford to pay an employee.

• Your needs, generated by growth or external market forces, are
only temporary.

• Problems have become so acute that they require immediate
response.

• Problems are of such a broad institutional nature that they
defy internal response.




How do you know you™re in this kind of position? You™re calling the bank
every day”nervous to hear your account balance because you can™t get
straight information from your accounting department. Traditional mar-
keting campaigns that have worked for years take a sudden dive in perfor-
mance. Production bottlenecks you never saw before flare up and won™t
go away.
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Leading Your Business for Maximum Results



Unfortunately, identifying a problem isn™t the same as fixing it. That™s
where outside consultants”used well”come in. To use a consultant well,
you have to look past short-term tensions to long-term goals. You have to
be willing to share relevant information freely and cooperate openly. This
doesn™t mean handing over the keys to your kingdom, but it does mean
you have to do some preliminary work and expand your concepts of trust
and comfort to include some outsiders.

Done well, these efforts will return many times their original invest-
ment. They™ll get you past sticky problems and lead you into productive

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