I recently wrote a post talking about how some VCs meddle in operating company decisions or some executive teams are too reliant on VCs to jump in and make hard calls for them.
Fred Wilson also wrote on a similar topic in his usual more succinct manner, with a great quote being:
“One thing I know for sure is that those who advise and invest in startups cannot and should not meddle in the day to day decision making. It’s harmful and hurtful to the startup and those that lead it. So operating at a higher level, helping to set the framework for decision making and then sitting down and watching the game be played, is certainly the way to go.”
Of course I agree with this. In practice it can be a fine line between sparring partner / coach and stepping over the line to brute-force persuasion. And you can easily err the other way of not weighing in forcefully enough. I see this in cases where sometimes board members don’t want to take on the “Pottery Barn Rule” that if you break it, you fix it. And with most difficult decisions being subjective it is also a fine line to walk.
While everybody can easily point at VCs or board members and accuse them of being meddlers, the same is actually true of many CEOs. I speak from experience. This can be even more harmful than the board meddler because the CEO is full time and also has more authority.
CEO’s beware. Meddling in the wrong ways or too often can either produce a culture where people don’t like to take actions because they know you’ll eventually just step in anyways or equally badly the company gets unfocused from the constant interventions.
Here is where I see this really play out:
Most CEOs fancy their own product skills and like to weigh in on priorities. I did this. At times I wanted the engineering team to produce features to support our sales efforts to I occasionally leaned on them a bit. Eventually I had a head of Product Management – the best I ever worked with named Tim Barker – politely say to me that this wouldn’t fly any more.
Tim had a great solution. He said that product management would run like “asset allocation” in which we would allocate a certain % of dev to different purposes each quarter and once set they couldn’t be changed. So he would allocate say – 20% to sales, 15% to marketing, 20% to eng priorities, 10% to customer support, 10% to ops, 20% to ‘platinum customers’ and maybe 5% directly to me as the CEO. So I would get ANYTHING I wanted within the confines of my budget. Beyond that he (and thus engineering) could simply tell me, “No.” Those were the rules. Of course by the next quarter if I felt ripped off I could advocate for 7% or maybe ops requirements needed to be upped to 20% for one quarter. But we didn’t have to negotiate constantly.
Allocation planning in product management in ingenious and helps a lot with CEO meddling. CEOs often meddle in products and dev teams hate it.
Another area we CEOs often meddle is in sales. Of course we fancy ourselves as the best sales people in the company. But as your company grows and you bring in professional sales leadership you can no longer do this. Either your head of sales is the right person or fire him or her. But overriding sales leadership is as destructive as overriding product management.
The way we dealt with this issue is that we took each senior exec in the company (including the CFO and the CTO) and assigned them to important accounts. There was always a sales leader on the account and that person got to decide how to use you. And of course the VP of Sales had the ultimate call. But I was wheeled in to help and I was assigned senior execs to build relationships with.
But where you need to be careful is in either “cutting side deals” with the execs such as huge CEO pricing discounts (unless that’s the agreed sales plan) or committing to features to win a deal. We CEOs like to be heroes and with the power to push through pricing or product we have unfair advantages over the normal process. Your job as CEO is to be “chief adjudicator” not “chief dictator.”
And as I always tell management teams, great CEO’s “Dip but Don’t Skip.” My key quote from this post was:
“Skipping is insidious. The organization gets used to it and adjusts. It sets the wrong culture. Senior management feels undermined. Staff never knows whom to listen to. Decisions get overturned at the last minute by the big boss. People avoid making the tough decisions because they know the CEO is going to step in at the last minute and change everything anyways. And you build an organization of under-empowered people.
Let information flow up but direct your staff and execute through hierarchy.”
This is the key to being a great CEO as your team grows. When you move from a 10-person startup to a growth company – meddling restricts growth.
(Cross-posted @ Both Sides of the Table)