Being Effective as CEO

One of the great privileges of being in venture capital is the ability to observe many CEOs in action – not just at a distance, but close up.  One of the lessons I have learned from that is that there are different ways to be effective as a CEO and that very different personalities can make for effective CEOs.  I have observed effective CEOs who are technologists and others who are top sales people; CEOs who are methodical and others who are inspirational.  You get the idea.  But all the effective CEOs have one thing in common: they do what they do best and surround themselves with great people for everything else.

That of course sounds a lot easier than it is.  For starters, it requires knowing what you are good at (which does not have to be a function like engineering or marketing but could be cross-functional such as strategy or be a people skill).  Even that is not easy because too often CEOs seem to think that they have to be good at something other than what they are actually good at because they have mistakenly convinced themselves that something is critical to being a CEO (or worse yet because they believe that their board or investors expect it of them).  So to be effective as a CEO you have to be honest at least with yourself and ideally with your board about your strengths and weaknesses.

Then there is surrounding oneself with great people.  There are many reasons why this is hard.  But it is virtually impossible if the CEO does not see this as essential.  As long as there are one or more major positions or functions in a company that are not filled with or run by great people, it will be a drag on the effectiveness of everybody else.  Back to the first point though, seeing building the team as essential is different from doing it oneself!  I have seen effective CEOs who personally recruited every key member of their team and I have seen others who worked successfully with internal or even external recruiters to do so.

The great variety of styles and personalities that can make for effective CEOs is one of the reasons why I believe it is a mistake to early on look at a company founder (especially a first time founder) and conclude that they need to be replaced as CEO.  That should only be necessary if they either don’t know what they are good at (and by extension what not) or how to surround themselves with great people (even with the help of the board and/or recruiters).