This blog has focused extensively in the past on the topic of first-time CEOs within small-scall SaaS business. This post made the case for hiring first time CEOs; this piece shared tips for screening / selecting those CEOs and how to support their transition to chief executive; and this one offered tactics around leveraging formal appraisals to optimize CEOs’ performance. The following 2-part post aims to pick up where those others left off. Specifically, it addresses CEO performance and how to thoughtfully assess and enhance it. We’ll tackle this topic in two parts.
1. Part I introduces a framework that summarizes for aspiring CEOs the seemingly infinite demands that chief executives face. The purpose of this bit is to help CEOs clearly understand “what good looks like” in terms of performing this critical role on behalf of their organizations.
2. Part II shares how Lock 8 Partners leverages this framework in conjunction with other artifacts to help our portfolio CEOs develop and perform. Part II is directed toward board members or anyone seeking to bring out the best in CEOs — by both holding CEOs accountable and prioritizing their professional development.
What follows is text pulled from an artifact we call the CEO Developmental Rubric (CDR). It is one of the frameworks we use to evaluate and provide feedback to CEOs. The CDR seeks to dispel whatever pre-conceptions incoming first-time CEOs may have about their new role…and to clearly outline precisely what is expected of them in that seat. Those expectations span eight core disciplines, each with supporting themes and explanations. Below are those disciplines / themes / summaries:
Leadership: Build Leadership Team / empower individual contributors / practice self-reliance / foster culture of learning, growth, & performance / plan for future-state
The CEO surrounds themselves with high-caliber LT members and actively works to foster cohesion / collaboration / independence / inter-reliability among this “First Team.” In turn, the CEO and LT recruit / develop / empower individual contributors that strengthen the team and advance attainment of company goals. The CEO lives and models the company values and establishes a culture and environment where others feel safe and motivated to do the same. The CEO proactively considers the org’s future-state and engages in succession planning to maximize org effectiveness and minimize the impact of transitions or organizational surprises. Finally, L8 CEOs strike a balance between developing the team and / but also being self-reliant — they are long-term builders, but also action-ready doers…and they are comfortable rolling-up their sleeves to get things done individually and alongside their teams.
Vision and Strategy: Articulate Vision / lay-out Strategy and Tactics / consider and mitigate complexities / inspect & adapt
The CEO articulates and codifies a clear, concise, compelling Vision for the company and where it is going…and shares that effectively with stakeholders, particularly the internal team. The CEO lays out specific Strategies and Tactics by which the company can successfully execute that Vision and achieve well-defined / broadly understood Objectives. The CEO considers the deep complexities of these tasks amid the dynamic / nuanced competitive environment in which the company operates. The CEO remains steadfast on the Vision but regularly reconsiders / re-calibrates / adjusts Strategy & Tactics in a timely manner to an ever-changing operating landscape.
Execution / Resource Management: Hit the Plan(!) / enforce operating cadence / optimize team time / focus on priorities & avoid distractions
Through discipline and rigor, the CEO ensures that the business just “gets things done.” Specifically, the company can be counted on to consistently attain its stated Company Objectives (Hit the Plan!). The CEO establishes organizational focus on these Objectives and implements an operating cadence of daily / weekly / monthly / quarterly / annual activities that optimizes the business’ most precious resource — people’s time. The CEO prioritizes the most impactful initiatives and ensures that others do the same. The CEO avoids distractions or endeavors that detract from the company’s resources and ability to get things done — both in the immediate and longer terms.
Communications: Communicate with intentionality / balance views / listen relentlessly / seek coaching & incorporate feedback
The CEO communicates with purpose and ensures that the organization does likewise. The CEO communicates intentionally and proactively with all stakeholders in form / tone / substance / frequency / altitude that is targeted and specific to each audience (those being: Market / Clients / Team / Shareholders / Options Holders). The CEO communicates credibly with the board of directors (BoD) in a way that fosters BoD engagement and impactful discussions. The CEO calibrates communications to ensure a realistic view and one that balances optimism / pessimism and that avoids “hope as a strategy” in favor of “confronting the brutal truth.” The CEO receives communications at least as well as they transmit. The CEO actively listens to all stakeholders, seeking always to learn new perspectives that can benefit the business and themselves. The CEO seeks / accepts / incorporates feedback from a broad range of stakeholders and proactively closes the loop on suggested points to explore.
Analysis: Leverage data / generate insights / build instrumentation / focus pragmatically
The CEO leverages available information to inform a thoughtful, fact-based, data-supported view of the situation and opportunity. The CEO synthesizes data to formulate second-order insights and hypotheses regarding where the business needs to go. The CEO takes a long-term view toward instrumentation, with a “patient-but-ambitious” understanding that small-scale SaaS businesses frequently need to build systems and processes from the ground-up and over time to support the desired-state of business analytics. The CEO is pragmatic in terms of ruthlessly focusing on metrics-that-matter and avoiding the “noise vs. signal” problem of looking at too many metrics that overwhelm business leaders and under-impact the business. This same principle applies to frequency of metrics review — the CEO regularly examines metrics but avoids “living in the numbers” at the expense of seeing the big picture for the business or engaging authentically with others.
Learner / Owner Mindset: Approach issues openly / commit to CEO craft / seek broad understanding / spend like an owner
The CEO consistently demonstrates two important, and somewhat contradictory, mindsets — that of the “Learner” and the “Owner.” The CEO assumes a Beginners Mind, approaching issues with genuine curiosity, openness, and commitment to learning. The CEO brings a strong appetite for advancing their craft of becoming the best leader / CEO they can be. The CEO also behaves like an owner of the business — seeking to understand all aspects of it, but with a healthy appreciation that they cannot possibly be / do all things. The CEO also acts as the owner in terms of financial stewardship. They treat / spend company resources with prudence / frugality, but also with a willingness to invest and take calculated risks to optimize long-term value of the enterprise.
Resilience: Confront the brutal facts / remain focused / ruthlessly compartmentalize / maintain your humanity
Being the CEO of a small-scale SaaS business is hard. Very hard. There is always more to do, and almost never enough resources to do it. The CEO is frequently confronted with new, often unpredictable crises, for which there is rarely infrastructure or a roadmap to assist the CEO in navigating. For these and so many more reasons, the CEO must remain resilient, unflappable, unsinkable. They must consistently demonstrate what is commonly referred to as “grit.” And they need to channel this type of resilience into the DNA of their organization. All of this must be accomplished while maintaining credibility among the team and demonstrating empathy, so as not to be perceived as overly rigid or unsympathetic to the challenges the team collectively faces.
Creativity / X-Factor: Innovative ideas / ideas into action / action into advantage / advantage into value
The CEO brings something extra to the business — innovative product ideas, contrarian vision for the industry, best-in-class domain expertise, innovative solutions to process challenges, ground-breaking ways to optimize resources, highly differentiated ways to position / sell the company versus competition — anything that creatively provides the business with a difficult-to-replicate advantage. This X-Factor can take countless forms, and it can be the difference between good versus great businesses and for strong versus exceptional leaders.
Although the responsibilities of CEOs truly are overwhelming, we’ve found that these eight disciplines encapsulate what we at Lock 8 hope CEOs will bring to the SaaS businesses in which we invest. I’ll go into more detail in Part II of this post on the mechanics of how these concepts get applied. But hopefully they stand on their own as a focus-producing resource for aspiring, first-time, or even veteran CEOs.