A prior post on this blog referenced the use of formal assessments as a vehicle to support first time CEOs. I have admittedly received pushback in the past on this point from experienced CEO-pals who question the value of such instruments. Fair enough; to each their own. But I stand by that position and offer this post in an effort to support it. This piece will double-click into three questions relating Lock 8 Partners’ use of diagnostic tools for execs:
I. What is the general thinking behind using formal appraisals with execs?
II. Which specific tests do we use and why?
III. How do we administer and use the assessments for optimal impact?
The goal here is to share some lessons learned in order to help others optimally position CEOs / execs for success in their leadership roles.
I. General Thinking:
Leadership is critical to organizational performance, and CEOs / execs are key drivers of company success. Likewise, CEO roles — even in small businesses — are enormously complex, with many potential variables ultimately influencing outcomes. At Lock 8, we naturally want to leverage any available resource to help CEOs succeed, particularly the first-time CEOs whom we prioritize hiring.
To be clear, our objective with these assessments is not to weed out the “smart” from the “astonishingly smart” — that’s not what we believe matters most to small-scale SaaS businesses. Rather, we are trying to understand how execs align to a specific role in two main areas: (1) personality factors and (2) problem solving. To do this, it is first necessary to have an in-depth understanding of the particular business and nuances of that particular executive role. Only with that context are we then able to use these two types of information to understand how someone aligns to a given role, builds relationships, performs under pressure, processes information, and makes sound decisions. If an assessment can offer an advantage to our CEOs in this fascinating and high-stakes puzzle, then sign us up for these tests…
II. Which Test(s):
…but, not just any test, and certainly never only one test. The CEO role and the individuals who successfully navigate those roles are simply too complex to rely on any one measure to predict success. It would be the equivalent of saying “choose one thing that makes all CEOs successful” — it just doesn’t exist. Rather, such a multi-faceted endeavor warrants using several different tools, measures, and techniques. Following expert guidance, we have oriented around four tests, with two focused on each of (1) personality factors and (2) problem solving.
Personality Factors: Personality factors speak to the types of preferences and inclinations that determine how a person is likely to behave under normal circumstances, as well as when under pressure. We use two instruments to measure these different aspects of personality; they are the Hogan Personality Inventory (HPI) and the Hogan Development Survey (HDS).
The HPI is a measure of “normal personality” that provides the following:
A description of various aspects of personality related to such things as sociability, ambition, open mindedness, desire for learning. These speak to behaviors that drive CEO success.
Insights regarding likely performance in the workplace including such issues as managing stress, interacting with others, approaching tasks, and proactively addressing problems.
The HDS identifies the following:
Interpersonal behaviors that could potentially undermine or “derail” effective relationships and careers, especially when a person is stressed, bored, or fatigued.
Insights regarding blind spots that may trigger unproductive behavior.
The HPI and HDS provide a more in-depth understanding of the preferences and thinking that drives what many refer to as “Emotional Intelligence” (EI) or “Emotional Quotient” (EQ). They also facilitate a very quick / early understanding of an exec’s communication style, in order to better inform how that person could interact with a team. Research consistently shows that leaders who have higher self-awareness regarding their strengths, opportunities for growth, and biases to behave in certain ways are more likely to be successful. They often build stronger, more mutually respectful relationships with a broader range of people; and this increases the probability of being able to address highly complex issues effectively. For these reasons, we pay close attention to HPI and HDS.
The ability to recognize assumptions and determine those that are likely to be true or not.
The ability to evaluate arguments objectively without allowing a confirmation bias (the tendency to look for and agree with information that confirms prior beliefs) that leads to poor decision-making.
The ability to draw sound conclusions that are logical and consistent with the evidence at hand.
The insights gained from the W-G involve whether an individual can process highly complex information efficiently and make strategic decisions that take into account both short- and long-term consequences. However, the situation and the data regarding it are often ambiguous or incomplete; and this is where the RAPM is useful.
The RAPM helps us accomplish the following:
Measure the ability to use abstract information to recognize patterns, formulate new concepts, extract meaning out of confusion / ambiguity, and make the inferential leaps required of under-the-gun executives
Gain insights regarding whether an individual realizes the relationship among different aspects of a problem and can “make the connections” that others don’t realize.
Combined, these two measures shed light on an individual’s ability to do the “systems thinking” or to “see the bigger strategic picture” that successful CEOs must have. In addition, they allow a CEO to prioritize issues and direct time and resources to those most critical concerns in a timely manner.
III. How To: Handle with Care
Given these robust, valid measures of both critical thinking and key personality factors, the question becomes how these assessments should be administered, used, and shared. The honest answer is: with flexibility, care, and compassion. That said, below are the core takeaways from our experience:
Awareness versus Selection: Perhaps surprisingly, we do NOT use these assessments to evaluate or select CEO candidates. Rather, we use them purely to support execs’ professional / personal development. Leaders complete these diagnostics only once they have been selected / accepted the job, and are in-seat at a business. We find that this completely changes the exec’s perception of the diagnostic. As opposed to being a test to be endured or “passed,” it becomes an investment in a set of tools that can help execs succeed in their new roles.
Is there a Doctor in the House? These are highly nuanced diagnostics; and it is critical to engage a qualified professional to interpret them. We always work with a psychologist who is a certified testing expert to provide a detailed analysis and briefing of the results. And, even before that, a critical step in the process is for the CEO to do an extensive 90 minute “get-to know” session with the psychologist. Again, this is in service to making the whole experience valuable for the exec; and this approach goes a long way toward opening minds toward this as a worthwhile endeavor for them.
Give Good Feedback: If a primary objective of this initiative is to raise CEO self-awareness and self-management, then the feedback loop back to the exec must be exemplary. This feedback comes from both Lock 8 and the aforementioned experts. In either case, key aspects that need to be present include:
a. Feedback must be in the context of the role at hand, i.e., not generic leadership advice
b. Recommendations needs to be actionable, i.e., changes in behavior that can be readily observed and measured
c. Observations should be accompanied by a means to recognize the “triggers” that cause unproductive behavior
d. Comments are most useful when they both raise self-awareness and drive a tangible action plan
Not Sharing is Caring: For this to help CEOs, a safe space needs to be fostered in connection to what should be confidential assessment results. No CEO wants a broad population of people accessing highly sensitive information that might reveal deeply personal vulnerabilities. So don’t share it broadly. We have committed to a policy where only three people having access — the executive, the psychologist, and Lock 8’s managing partner (me). That’s it.
Many Happy Returns: This is not shelf-ware. Rather, the results of these assessments should be used repeatedly; and it is critical to revisit them on a regular basis. When CEOs are looking to build out their leadership team, it should be with an eye toward addressing gaps that may have been revealed via the diagnostic. When doing semi-annual exec performance reviews, it ought to be informed by these assessments. Assessments cost both time and money, so these should be viewed as resources that assist in optimizing some of the company’s most important “assets” — key executives.
In closing: I’d like to thank Dr. Gary Lambert of Q4 Psychological Associates, not only for his significant contributions to this post, but also for his generosity of spirit in the sharing of his expertise and experience. Gary has been a great collaborator in Lock 8’s efforts to consistently improve our ability to set executives up for success. Beyond all of that, Gary is a pleasure and a lot of fun to work with.
A prior post made the case in favor of hiring first time CEOs to lead small-scale SaaS businesses; and this piece picks up where that one left off. Specifically, it expands on characteristics to prioritize when screening CEO candidates, some questions to help assess them, and — most importantly — ways to support executives in deepening those attributes once they are in-seat as CEOs.
Per that earlier post, “We prioritize candidates with high levels of humility / coachability, EQ (emotional quotient), systems-thinking, and prioritization skills; and the odds of their success are greatly improved by supporting them in an intentional, structured, and consistent way.
These supporting activities are critical: it is perfectly reasonable to ask rookie CEOs to lead effectively; but it would be naïve to ask them to do so without a support network or a shared commitment to their ongoing development. This post shares what that support can look like in practice by diving into “what / why / how” behind these particular characteristics and how fostering them can help position CEOs for success.
I. Humility / Coachability
The What / Why: First time SaaS CEOs confront countless unknowns every single day. They make most decisions with imperfect information; and they are understandably wrong an awful lot. This can be unnerving for even the most self-confident and growth-minded among us. For perfectionists with fixed mindsets, this can be downright debilitating. To thrive in such an environment, successful CEOs will consistently adopt a “beginner’s mind” of openness, eagerness, and a lack of preconceptions. They approach their responsibilities with a learning lens: what can I learn from this experience; and how can I apply those lessons learned in a scalable way on a go-forward basis?
The How (to Assess): When evaluating CEOs, it helps to frequently revisit a simple question: what did you learn from that experience (aka: what would you do differently next time)? This is a common question, but usually asked in the context of evaluating a prior failure. We think it applies equally to all experiences: from great successes, to flaming failures, to mundane everyday circumstances…and strong CEO candidates will have no shortage of substantive responses when repeatedly asked this question.
The How (to Support): We look to help CEOs strengthen these “inspect-and-adapt” muscles a couple different ways. First, we believe in executive coaching, as outlined here. All Lock 8 portfolio company CEOs are strongly encouraged (but not forced) to work regularly with outside executive coaches. We know of no better way to cultivate a safe space where CEOs can regularly ask / answer uncomfortable questions to support their own ongoing development. The second is confidential peer-to-peer support among executives. Let’s face it, being CEO can be quite lonely, particularly for first timers. Surrounding oneself with execs in similar circumstances can foster an amazingly strong network. Among Lock 8’s portfolio companies, we’ve established a structured CEO Forum that is modeled after YPO Forums, which for decades have been providing CEOs with insight and perspective only trusted peers can provide.
II. Emotional Quotient
The What / Why: EQ is “the ability to understand, use, and manage your own emotions in positive ways to relieve stress, communicate effectively, empathize with others, overcome challenges and defuse conflict.” The importance of this for CEOs cannot be overstated; the very essence of their role is to balance the (often conflicting) needs of a diverse set of stakeholders. High EQ depends on many strengths, most especially a leaders’ self-awareness. To deftly manage complex, goal-oriented, conflict-laden situations, CEOs must first understand their own perspective / biases and appreciate how their actions, words, and tone can impact others. This skill also enables leaders to recognize their own weaknesses, which helps them know when / where / whom to ask for help.
The How (to Assess): There are many ways to test for EQ, the most useful one being time — spend enough time with someone, and a clear picture will emerge of how that person will respond to most situations. But time is the scarcest resource we have, so we resort to interviews as a shortcut. One go-to interview question to suss out self-awareness is: “what is a common misperception that people have about you?” It’s a deceptively hard question, and you can learn a ton about a person from how they respond — most notably, their level of EQ and willingness to share their awareness of self. Also useful is to ask how someone else (a manager) would describe their areas of improvement. Responses give an indication of confidence, self-awareness and active participation in learning to work differently.
The How (to Support): Although they can be controversial, we like formal assessments. To be clear, we do NOT use these to evaluate CEO candidates, nor do we make hiring decisions based on them. Rather, execs complete a set of diagnostics once they are in-seat; and then they are provided with a detailed briefing and analysis of their results from a trained testing professional. We’ve been using the following four assessments over the past few years; and we think they offer a well-rounded assessment of the executive: Hogan Personality Inventory (HPI), Hogan Development Survey (HDS), Watson-Glaser Critical Thinking Appraisal (W-G), and Raven’s Advanced Progressive Matrices (RAPM). Again, the goal is not to determine whether someone is smart versus very smart…rather, it is to establish a shared baseline for understanding that exec. Most importantly, this practice elevates that person’s self-awareness to better understand themselves, raise their own EQ, and self-identify where they will need help.
III. Systems Thinking
The What / Why: This is about interconnectivity. CEOs are the ultimate general manager, responsible for optimizing the performance of complex, multifaceted organizations. This requires a keen understanding of how all of the parts / departments / functions fit together and how an action in one impacts all of the others — and to make the best decision for the whole
The How (to Assess): Case studies are a great way to investigate how someone thinks; but we’ve found these can be challenging to implement with more senior roles. As far as interview questions go, we like to focus on the concept of alignment. Getting CEO candidates to unpack circumstances where organizational alignment led to successful outcomes (and misalignment undermined otherwise promising enterprises) is a rich vein to mine.
The How (to Support): This may be the area to which we dedicate the most time and resources to support first time CEOs on an ongoing basis. The foundation is a year-long process of periodically revisiting and revising the roles / responsibilities of all parts of the organization, and how they support one another. A number of exercises and artifacts support this effort, including: the Cascade of Pain (described here), the Give-Get Grid (described here), and this graphic that we think is a bit like the old board-game Othello (“A minute to learn, a lifetime to master”). To decode it just a bit, it helps CEOs take a structured approach to assessing the totality of a SaaS business and how the core disciplines interrelate to one another and to the all-important product / solution.
The What / Why: One of my go-to parenting aphorisms is: “life is a series of choices; choose wisely.” Nowhere is this truer than for first time CEO’s in small-scale SaaS businesses. Their very existence is defined by a series of tradeoffs, where there are never enough resources / capital / hours in a week. Hence, world-class prioritization skills are paramount.
The How (to Assess): It will come as no surprise that we like to put a twist on some pretty standard interview questions to test for this skill. One favorite is: “please describe a time when you prioritized the wrong thing, and it worked out anyway.” This is often followed by: “please share a time when you prioritized the right thing, and it failed anyway.” These tend to elicit provocative discussions about prioritization, which offer a valuable indication of a person’s interest level in the process behind making smart tradeoffs.
The How (to Support): Our approach to this topic is a bit contrarian. Common wisdom suggests that goalsetting is a foundational task, which then informs a set of activities in pursuit of those goals. Unfortunately, this can be pretty arbitrary in small-scale SaaS businesses, leading to overly ambitious or under-informed goals. We prefer to delay goalsetting a bit, at least until that exercise can be better informed. This generally entails soliciting input from multiple stakeholders, through things like a Listening Tour (described here) and triangulating budgets from different perspectives (described here).
In sum, these characteristics are critical to help first time CEOs survive. And, while we certainly test for them in the interview process, we spend a lot more time and energy in helping to support the ongoing development of those attributes in CEOs over time.
A quick closing aside: these characteristics are crucial as CEO differentiators; separating the good from very good. They are “spices” that makes the meal compelling and something of unique value. The “main dish,” though, is comprised of a core set of must-haves that were summarized in a prior post as an exec’s ability to (1) Get it, (2) Want it, and (3) Capacity to do it. This latest post does not intend to suggest ignoring or in any way under-valuing such must-haves. Admittedly, without these staples, those spices would be wasted and without substance.
Last week I had the opportunity to speak with three different SaaS execs about their careers. Each had valuable experience within high-growth software businesses. Each brought deep management and functional experience, having led critical departments within their respective companies. Each presented themselves as personable, passionate, and articulate about their work. And yet, they were all grappling with how to take the desired next step of their career journeys — to land the CEO gig at a growing SaaS business.
These folks are not alone; countless aspiring leaders struggle to make this leap. This is unsurprising: although many executives harbor the lifelong dream of leading a company, the chief executive role is uniquely challenging; and the sheer numbers are stacked against elevating to this level. Likewise, seemingly everyone wants to get in on SaaS these days, making the odds even longer for would-be tech leaders. And yet, making the jump to SaaS CEO is far harder than it should be. In fact, like many things in life (such as college admissions, securing student internships, earning a roster spot on competitive teams), the “right to enter” can be even more prohibitive than the required qualifications to succeed. Why is that?! This post aims to identify, and hopefully poke a few holes in, some of the less obvious reasons for why it is so hard to navigate the path to becoming a SaaS CEO.
The Founders Path: The surest path to becoming CEO of a SaaS business is to start one. Again, this is unsurprising: founders are the natural choice to lead the entrepreneurial endeavors they initiate. After all, who better to rear the brainchild than the person who hatched the idea in the first place? This founder-as-CEO model has been reinforced for decades in our minds by the many well-known and truly remarkable individuals who have not only started successful businesses, but also subsequently led them through extended periods of growth. Thomas Edison, Steve Jobs, Jeff Bezos, Jack Ma, Payal Kadakia, and countless others have made this extraordinary achievement seem almost commonplace — it’s not. It is rare and amazing, and it should be celebrated as such. And yet, founders often remain CEO of their business until either (a) the business goes belly-up (bad outcome, but statistically the likeliest), or (b) the business succeeds and grows to the point of needing a hired-gun executive (good outcome, but often an emotionally fraught one).
This whole dynamic can be cruelly ironic in a couple ways. First, a fair portion of founders end-up learning that have little appetite for many of the CEO’s duties (such as: leading people, managing a board, exec selling, or sweating the financials). Rather, founders often prefer to start things…not finish them. Conversely, many executives yearn for the top-spot in a company and have invested heavily in developing related skills…but simply don’t possess the founder-gene. Consequently, one of the most viable paths to becoming a SaaS chief executive is blocked to countless qualified leaders simply because they “don’t have a great idea for starting a business.” As a short aside, many would-be CEO’s do end up choosing to start businesses, at least in part as an entrée into the corner office. Although this absolutely can work out well, it is generally a “tail-wagging-the-dog-ish” bad idea. Anyway…where exactly does this leave the non-founder SaaS exec who has the itch to prove herself in the CEO role?
Which Came First? For non-founders, the obvious route to “CEO-dom” is to work one’s way up the ranks. Unfortunately, this is also a narrow path with many pitfalls, including the fact that climbing the corporate ladder can take years or decades (with plenty of brain-damage and no guarantees along the way). To further complicate matters, not many employers actively recruit non-founder, first-time CEO’s. Traditional VC / PE investors, who often are responsible for hiring SaaS CEO’s, rarely (if ever) actively seek out rookie CEO’s. Again, hardly surprising: these financial stakeholders have a fiduciary responsibility to maximize returns while minimizing risk. Accordingly, very few are keen to take a chance on an unproven executive in the one role that will arguably have the greatest impact on the outcome of a given investment. Likewise, self-aware founders seeking to replace themselves generally tend to prioritize a proven track-record when considering their successors — and certainly not less-experienced first time CEO candidates! All of which begs the question: if one needs to have already been a CEO to become a CEO…how does one initially break-in? That is precisely the vexing chicken-and-egg problem that the executives described above are striving to crack.
The hard truth is that — like so many things in life (e.g. skydiving, performing in a live production, asking someone out on a date) — no training can adequately prepare CEO’s for the real thing. Sure, aspiring CEO’s could / should strengthen their CV by amassing increasing levels of leadership experience and developing valuable functional expertise. Sales, marketing, finance, and product management are all proving grounds for future chief executives. General management roles, particularly ones with accompanying P&L responsibility, are also “as good as it gets” in terms of prepping future SaaS CEO’s for the stress and complexity of “sitting in the big chair.” But even with such undeniable preparation, the first-time CEO remains about as appealing as an understudy on Broadway — highly suspect unless and until he / she demonstrates the ability to handle the moment and shine when the lights come up. These and other forces combine to create a stacked deck against aspiring CEO’s. But this doesn’t have to be the case.
Contrarian Closing: Why we like first-time CEO’s
With respect to all of the points above, we beg to differ. When it comes to early-stage SaaS businesses, we dig first-time CEO’s. While there are many undeniable benefits of prior CEO experience, there is also a lot to like about first-time CEO’s in this environment. First, they tend to be quite energized by the opportunity to “make something their own.” This typically translates into a high “want-to” factor, the importance of which simply can’t be overstated (as outlined here). This is particularly true when a leader marries that enthusiasm with a high-level of capacity / competence, which is overwhelmingly characteristic of anyone who is a legitimate CEO candidate. As another short aside, this point reminds me of this gem from Simon Sinek…so, so true). First-timers also tend to have a healthy respect for the complexity of the role / situation into which they are stepping. This encourages them to be open-minded and coachable; and it discourages them from prescribing before diagnosing. This is a crucial point; some of the biggest mistakes leaders make can result from defaulting to the assumption that they’ve already “seen this movie” (aka: fully understand a situation, before having completed exhaustive discovery). Rookies, on the other hand, rarely fall into this trap. Finally, sub-scale SaaS businesses tend to be scrappy and under-resourced; and first-time CEO’s can easily jump-in with both feet. Specifically, they are in a great position to leverage up-to-date expertise that draws on their functional background…and, in the process, to help the business punch well above its weight.
In fairness, not all departmental / functional leaders can successfully make the leap to CEO. We prioritize candidates with high-levels of humility / coachability, EQ (emotional quotient), systems-thinking, and prioritization skills; and the odds of their success are greatly improved by supporting them in an intentional, structured, and consistent way (both of which seem like topics for future posts).
In sum, though, up-and-coming execs can offer a great option as CEO’s of sub-scale SaaS businesses…much more so than is suggested by the narrow paths available for them to get there.
The CEO role can be described in countless ways. One definition comes from the Corporate Finance Institute, which states: “The CEO is responsible for the overall success of a business entity or other organization and for making top-level managerial decisions.” Accompanying that description is a list of the CEO’s roles and responsibilities, which is peppered with dynamic verbs such as: leading (X), creating (Y), communicating (Z), ensuring, evaluating, and assessing. Such a high-powered portrait of the CEO is unsurprising, especially given the commonly held notion that “real” CEOs should courageously lead from the front. And although Jim Collins’ classic book Good to Great introduced us to Level 5 leaders who are characterized as humble and reserved, the image of CEOs as vibrant action-heroes-in-board-rooms is a persistent and alluring one.
It is with all of this as context, that I was surprised in a recent board meeting when a CEO characterized his role in an entirely different way: as Chief Conversation Officer. “If you can create good conversations,” he offered, “You can create good outcomes.” This initially struck me as being a far more passive role-assessment than I’d expect to hear from an actual CEO. But, with its unwavering focus on delivering results (which is undeniably the responsibility of CEOs), this description resonated with me as being worthy of serious consideration.
Upon further reflection, I view this as an accurate and valuable addition to the responsibilities of the CEO. It is undeniably important for CEOs to foster effective discussions among a broad range of stakeholders. They need to create open dialogue with prospective customers in order to gain an informed understanding of jobs to be done. It’s imperative to cultivate candid conversations with existing clients in order to consistently improve products, inform future investments, address service issues, and avoid churn. A balanced and candid exchange with team members is crucial to enable them to perform, and to identify what obstacles stand in their way personally and professionally. And, finally, open dialogue with owners / investors is needed to align expectations and leverage their helpful perspective from above the fray of day-to-day operations.
Being a good conversationalist takes work; and not every CEO is naturally gifted in this area. Rather, the art of conversation is the subject of countless studies and far exceeds the scope of this post. But, as this previous post highlights, a bit of structure and a few simple practices can help CEOs up their game in terms of fostering effective conversations with consistency and intentionality:
What / How Questions: Effective CEOs hone the ability to consume, analyze, and process large amount of information very quickly. And, although this skill improves their efficiency in decision-making, it can also make conversations with CEOs seem more like interrogations. A few simple word choices can alter this dynamic and lead to far more natural and interactive conversations. When engaging stakeholders in conversations, executives should steer clear of yes / no questions and avoid starting queries with “why,” “why not,” “who,” or “how many.” Far better are questions that start with “what” and “how;” almost inevitably, starting with these words results in a question that invites real input and opinions from the responder. In her excellent post on how to manage 1-on-1 meetings, Mathilde Collin (Co-founder and CEO of Front) offers a list of questions she frequently asks employees — nearly every one of them starts with “what” or “how.”
The Power of “What Else?”: Two simple words. Used effectively, they form a question that is astonishingly powerful. This question is wide-open for responders to interpret in many ways: “what else is on your mind, what else do you think I should know, what else do you feel is important to say?” This short phrase can be a key tool in engendering the kind of trust that allows someone to share their (invaluable) inner thoughts, which can be far more insightful to the business than still more stats and figures. To be clear, tone / inflection / intent are all critically important here. This CANNOT be communicated either explicitly or implicitly as “what else you got?” This was the go-to move of a former boss; no matter how substantive our discussions were, he would conclude with the inevitable question: “Is that all you got?” Suffice it to say, that didn’t establish a strong foundation for productive conversation.
Silence Can Be Golden: People want to hear what CEOs think; and chief executives get comfortable articulating their thoughts for audiences of all sizes. But CEOs get less forced-practice in listening. This is particularly true as CEOs interact with stakeholders with whom they have less frequent contact. The expectation is that CEOs do the talking, others do the listening. In this dynamic, breaks in conversation can present themselves as awkward silences — which we as humans prefer to avoid. Although it may be counter-intuitive, good CEO-conversationalists lean into those silences; and the benefits can be profound. Giving someone the white-space to slowly open-up and share an important-but-inconvenient fact or opinion, could just prove seminal in informing a thorny decision.
Kill the Conversation Killers: We CEO’s are an action-oriented bunch (see points above), so it’s possible someone might read this blog and be tempted to rush headlong into a bunch of CEO-conversations. Don’t do it. Conversations are powerful things; and they can go spectacularly wrong for countless reasons. Thankfully, humorist and relationship writer Jessica Wildfire recently posted an incredibly useful roster of 10 Fatal Mistakes that Kill Conversations. In all honesty, I found this list anything but funny. Rather, I’ll sheepishly admit that at some point in my life, I’ve probably broken every one of these guidelines. But I don’t intend to repeat those mistakes. Likewise, this is a great list for any Chief Conversation Officer to keep handy and review from time to time.
This whole topic of CEOs as Chief Conversation Officers reminds me of the well known African proverb: If you want to go fast, go alone. If you want to go far, go together.” In today’s business environment where speed is rewarded, CEOs are wise to also remember to focus on going far, together. And that if you are going to travel far, it is always better to have good conversations along the way.
As SaaS businesses scale-up, one of the most important responsibilities of an executive is to participate in and support sales efforts to prospective new clients. New client sales are critical to the health of any early SaaS business, and senior executives can play a major role in helping sales teams attract customers. For many leaders, this is an entirely natural act which they execute with ease; for others it can be an uncomfortable stretch. In either case, their involvement needs to balance two competing goals: (1) help win business today that results in successful, profitable, long-standing customers, and (2) build the team’s ability to win more and more of these types of deals in the future. This second goal sometimes gets lost in the shuffle; and it significantly complicates how thoughtful executives engage.
Nearly two decades in SaaS leadership roles have taught me many lessons around an executive’s role in sales meetings (and contributed significantly to my hair-loss early in that period). As I think about those lessons, a majority tend to fall into three general buckets: two “Do’s” and one “Don’t,” as follows:
Do…Make the Sales Rep CEO: When a sales professional is working an account, he / she alone is ultimately responsible for the success of that sales cycle. Period. Even in team-selling environments, the rep is on the hook. If she closes a deal, she’ll get the commission and the quota credit. If not, she’ll need to answer hard questions. Regardless of what the company org chart says, she is the team leader in charge of that sales cycle. That person needs to be empowered to get the job done. So, when requested by a sales rep to provide executive representation in a sales setting, I almost always respond that I am happy to, as long as she is willing to assume the role of CEO for that engagement. Said another way, she needs to run the show. I go on to explain that I need her to tell me exactly what is expected of me and specifically how I can support her in successfully closing that particular deal.
This tends to do a number of things. Best case, it empowers the sales professional to dispassionately direct the guest-executive to do precisely what’s needed to win the deal (versus deferring to the executive, who is actually the least knowledgeable person about the account). I love it when a rep gives me painstakingly precise instructions for what value I can bring to a sales process that will help us earn business. At worst, this approach can lead to blank stares. Sometimes a rep hasn’t completely thought through why they want an exec on a call; and this can smoke-out that lack of clarity. I’ve actually had reps tell me, “I’m not sure what I need from you, I just want you to do your CEO thing.” I explain that without context, my schtick just isn’t all that great…and I politely decline the request. In most cases, though, this simple tactic puts the accountability for a successful outcome exactly where it belongs — on the sales professional. Typically, this leads to the salesperson rising to the occasion, using her account knowledge to make the most informed call on meeting strategy, and taking full responsibility for driving a successful outcome. Any action by an executive that leads to this end-result is a must-do.
Do…Conduct After-Action Analysis: It goes without saying that relentless pre-meeting preparation is a primary ingredient for successful sales calls, so we’ll skip right over that. What is less common, I’ve found, is prioritizing a ruthlessly candid post-meeting assessment. Immediately after the meeting. Too frequently, people rush off to catch planes or jump onto their next set of scheduled calls. The result is that massive amounts of tacit learning from meetings evaporates forever. Instead, it is well worth the effort to schedule extra time and strictly adhere to the discipline of consistently sharing post-meeting impressions and assessments. These don’t need to be terribly formal, but I like breaking them into two distinct sections. The first is: what happened in the meeting / what went well / what went poorly / what did we learn / what next steps should we consider taking to earn business from this account? This is all about this particular sales cycle, and what we need to consider in pursuit of this specific client. The second is more of a process assessment: how was our preparation / how did our staffing align to the prospect’s participants / how well did our overall messaging work / how was our intra-team interaction / what will we want to replicate with other comparable prospects / what about our approach should we reconsider in the future? This is all about using the data from this meeting as a pure learning opportunity for future application. Separately, I like to start by putting myself directly in the cross-hairs for feedback from the sales rep (aka the CEO for this sales call). “What could I have done differently — please tell me?” To the degree that there are reasonable steps that I can take to better help our salespeople, I really, really want to know what they are. Beyond that, though, I also want the salesperson to know that it is a two-way street, and we should each embrace the opportunity to share our perceptions. I almost always have post-meeting feedback for sales professionals, and / but I first want them to have an opportunity to give me feedback, for the good of the team. This practice can be really unsettling for everyone at first. But I’ve found that it quickly becomes a natural act and a staple among high-performing sales teams that incorporate executives into the selling process. Another “do.”
Don’t: Become a Verb: They called it getting “Gibby’d;” and it wasn’t a compliment. I was relatively new in senior leadership roles, having been battle-field promoted within a company experiencing hyper-growth. My unshakable belief in pre-meeting preparation led to a practice where our team of presenters regularly conducted rigorous rehearsals in advance of important sales meetings. Often those practice sessions were the first time I may have heard a particular salesperson present; and sometimes those presentations were pretty flawed. That’s when I’d jump in to “save the day.” I’d start making suggestions about sales strategy, meeting flow, presentation assignments, slide layouts, talk-tracks, competitive positioning, and any number of variables relating to the impending meeting. Generally, these sessions were the night before or the morning of big meetings; and the last thing anyone needed was to have a bunch of late-breaking changes foisted upon them. Although some of these last-minute changes definitely proved to be helpful for a specific meeting / sales cycle, they simply weren’t worth the downstream fallout. Specifically, they undermined the whole effort to empower the sales professional (“no…really, you are the CEO of this sales call…”) and lowered confidence and morale among these critically important team members. In sports, the rule of thumb is never to try something in competition that you haven’t successfully done a number of times in practice. In this scenario, the lesson was not to make any changes that could unsettle a sales professional before a meeting. Conversely, the big learning was to do everything possible to ensure that your sales professionals are feeling their absolute, super-human, bullet-proof best when they walk into sales calls. They’re doing so will allow them to overcome many other imperfections on that particular meeting and build a strong foundation for future sales. To the degree that changes to strategy or tactics are warranted — and they often are — the responsibility of the executive is to ensure that those changes are raised and practiced well in advance of game-day. Lesson learned: Don’t become a verb; just keep your eye on the prize and do the job the salesperson (aka CEO-for-the-day) assigns you.
In closing, executives have a huge role to play in supporting sales efforts as businesses scale; and it can be difficult to balance the desire to help win deals today while building the team’s ability to win consistently in the future. Hopefully these few rules of thumb help leaders land on the stepping stones and avoid some of the stumbling blocks.
Being a first-time CEO poses many new challenges, and one of the trickiest can be interfacing with a board of directors. Perceptive executives quickly realize that boards hold hiring-and-firing responsibility over them; and boards clearly have significant influence over the fate of any business. With that in mind, it’s no surprise that prudent CEOs focus on carefully fostering board relationships. Unfortunately, this very inclination toward care-taking can sometimes backfire and lead to costly mismanagement of the board. Beginning with my first CEO gig in 2007, I’ve made my share of mistakes on this front, a few of which are outlined below…along with a lesson learned that should guide all of a CEO’s board interactions:
Transparency vs. Overload: How much information should a CEO share with a board? In some organizations, boards are perceived as external entities “to be managed or handled.” That typically means censoring or tightly controlling the information boards receive, which can really hurt a business. As a first-time CEO, that’s not how I wanted to roll. Instead, I planned to share information freely and be perceived by the board as admirably transparent. So, I became an over-sharer. Specifically, I invested a lot of precious time and energy sending the board gobs of information, a relatively small portion of which was actually useful to them. That board didn’t view me as an open-book. Rather, I had become an incessant and overwhelming stream of data that required resources to be consumed and interpreted. Worse, I was signaling to the board my own inability to call-out the signal from the noise. In this instance, more was definitely not more — it was overload. BOARDS NEED THE RIGHT INFORMATION THAT ALLOWS THEM TO EFFICIENTLY FOCUS ON THE KEY DRIVERS OF THE BUSINESS.
Pitching vs. Sand-bagging: Smart CEOs recognize that board members (particularly investor-directors) have a lot riding on the success of the company. So, some CEOs fall into the trap of feeling the need to paint a rose-colored picture of company progress. In my experience, board members hate this. They understand that things are never perfect; so, they are inherently suspicious and immediately distrustful of the executive who tries to pitch, promote, or “sell to” the board. My problem was the opposite. I was so intent on being sober and credible (“under-promise and over-deliver,” as the mantra goes), that I consistently under-sold our progress and overemphasized our challenges. This mistake can breed its own forms of mistrust and concern among board-members. Although no one wants to be perceived as a promoter, it’s not much better to be considered a “sandbagger.” BOARDS NEED HEALTHY AND BALANCED EXPOSURE TO THE EXCITING OPPORTUNITIES AND THE INEVITABLE CHALLENGES THAT EVERY BUSINESS FACES.
Professionalism vs. Perfectionism: We all want to be considered competent and capable, particularly as new executives. So, we attempt to “stick the landing” when it comes to interactions with the board, particularly early-on in our tenures. But while professionalism is a required building block for dealing with boards, perfectionism is a stumbling block to be avoided. In my case, this perfectionist streak was particularly acute with written deliverables such as board packages. They were works of art — high production value slides and zero-defects, prepared weeks in advance of quarterly meetings. And they detracted from time I could have been spending building real value in the business — I was mired on the wrong end of the 80–20 rule when it came to preparing board materials. BOARDS NEED TO KNOW THAT THE CEO IS OVERWHELMINGLY FOCUSED ON DELIVERING TANGIBLE BUSINESS RESULTS; NOT PRETTY PRESENTATIONS.
Pestering vs. Surprises: CEOs are generally a self-reliant lot, a trait for which we’ve generally been rewarded throughout our lives. The result is that we tend to think we should have all the answers; and we hesitate to ask for help — certainly from our board (“they might think I don’t know what I’m doing!”). In short, we avoid bothering board members with the countless and constant personnel challenges, product-problems, and client-issues that arise in most businesses virtually every week. Instead, we want to show up at quarterly board meetings and reveal a ton of great progress and momentum — like a great chef presenting a masterpiece meal to hungry diners — voila! I’ll admit that I have been prone to this pitfall as a CEO. It’s a particularly insidious one, because this approach works great when everything is going perfectly. Unfortunately, things are never perfect; and negative surprises are about the worst thing a CEO can bring to a board. In other words, the risk simply does not justify the reward. BOARDS NEED TO BE ENGAGED BY CEOs IN A WAY THAT IS CONSISTENT, EFFICIENT, AND JUDICIOUS…NEITHER ONCE EVERY 90 DAYS, NOR IN AN ON-DEMAND MANNER DURING PEAKS AND VALLEYS.
Admittedly, getting these items just right is a learned skill that requires a lot of error-filled practice. But one realization has proven to be consistently helpful in keeping on track: The CEO’s primary job is to engage the board. Specifically, the CEO needs to enable board members to share their significant experience, learnings, and pattern-recognition to the benefit of the business. The CEO should give board members timely, accurate, relevant information…and then shut-up and listen. That’s it. If the CEO fosters robust, honest, unrestrained, challenging discussion among board members, everyone in the business benefits. So, forget about the pretty slides; and focus on getting the board to engage with unrelenting candor. It’ll be the best use of everyone’s time and worth every minute of investment.