I’ve been in board meeting blitz since the summer ended. Many of the companies I work with are well past the startup phase and are well into or even past the growth/scaling phase. And the thought that keeps occurring to me as I go from board meeting to board meeting is the key to success when you are past the startup/product market fit stage comes down to two things, team and strategy.
You have to get the strategy right and you have to have a team that can execute it without your day to day involvement. The CEOs that I work with that are struggling are usually running into issues with their team and/or their strategy. And the CEOs that I work with that are doing great generally have gotten the strategy set and have built a strong executive team underneath them.
This sounds so simple. But it is not.
Most of the companies I work with didn’t really start out with a strategy. They started out with an idea that turned into a great product that found a fit with a market. And they jumped on that and used it to build a company. Most of them wake up at some point and realize that a single product in a single market is not a strategy and they need to come up with a plan to get a lot bigger and build a sustainable and defensible business. I like to think that this is one place where a good investor group can help. If we are doing our job, we push our portfolio companies to work on their long term strategy and refine it to the point where it makes sense and is executable. But an investor group cannot give a company a strategy. It has to come from the founder/CEO and a small group of senior leaders. The smaller the group that is working on strategy, the better. Strategy is not something that can be done by committee.
The second thing, building an executive team that can execute the plan without day to day involvement of the CEO, is even harder. Most of the companies I work with go through a lot of hiring mistakes on the way to building this team. Some hire too junior. Some hire too senior. Some hire bad cultural fits. Some hire people that are nothing but cultural fit. And an investor or investor group can help with this but I believe that founders/CEOs need to learn how to do this themselves and make these mistakes. The best thing an investor group can do is to help a founder/CEO to understand when they have the wrong person in the job. Or help them understand that more quickly.
These are both areas where experience is huge. The CEOs I work with who have done the job multiple times get these two things right much more quickly. But even they can take a year or two to get these right. First time CEOs often take three or four years to get these things right. But sticking with founders who are first time CEOs through this process is usually worth it because they have a connection to the initial vision and mission that a hired CEO has a hard time replicating. There is not a good rule of thumb on this issue (who should run the company). Facts and circumstances on the ground will generally determine how that should go.
My final point on this is that once you have the strategy and team locked down, you should step back and let the machine do its thing. I like to say that CEOs should do only three things; recruit and retain the team, build and evolve the long term strategy and communicate it effectively and broadly in the organization and externally, and make sure the company doesn’t run out of money. When those are the only things you are doing, you are doing the job right. Very few CEOs get to focus on only these three things all of the time. Things break and you have to fix them. But when the machine is working and you can step back and watch it hum, it is a thing of beauty.