Good CEO VS Bad CEO. One mistake that could cost your business.

Ekaterina Osadchuk – CEO at Indigo Tech Recruiters, economist, professional psychologist, HRD and business development director with more than ten years of experience.

The growth of the business from a start-up to a more mature company is impossible without changing the roles of the management team, especially the transition from the entrepreneurial approach of doing business by the owner himself to the system management by a hired manager.

It’s almost impossible to entrust your child to the hands of another manager without worry and anxiety. The question is how not to let this alarm develop into micromanagement and freedom restrictions on the new Chief Executive Officer? After all, excessive control reveals your mistrust to the team, and if you do not trust the CЕО, then how will the team trust them? There is an exit. Hire an intelligent CEO.

I write below  about how to determine if your new CEO is  intelligent or vice versa. In the meantime, it is essential to understand – why, after all, does the owner need to retire sooner or later?

At the stage of company active growth, the owner with their belief in the product, irrepressible energy, charisma, the ability to negotiate and infect the team with enthusiasm (this is especially important in a startup – after all, there is not much to pay) is the main driving force of business.

All of the above leads to stable cash flow, team satisfaction and of course that of the owner themself. Inspired by the success, they begin to show their entrepreneurial nature, generating new business ideas, grabbing exciting opportunities, coming up with new directions for business development. Energy splashes in all directions and …. is sprayed.

There is so much creativity that the team does not know which way to go every day. Today we start one thing, tomorrow another and they do not finish anything, because something new always come up. It is difficult to keep focus, and there is a risk of spendingall the company’s money and all the team’s energy on such noncriticial ventures .” The team burns out, and the company gets close to collapse. Do you recognize yourself or your leaders here?

If the owner tries to suppress their  excellent ability to generate ideas and devotes too much time to building the processes, they quickly burn out and lose interest in the business.

So, to prevent the worst case scenario, the owner should apply his strong qualities and form new businesses without referring to the current one. The best solution here is to hire a CEO who will be able to systematize all processes according to a strategy developed and agreed with the owner . After all, at the stage of the company active growth, the precise organizational structure is not formed yet. It means some functions are duplicated, and some of them, on the contrary, are not delegated to anybody. Plus, there is  not always there a well-defined business model, financial plan and the correct conducting of cash flow analysis (Cash Flow), profit and loss reports (Profit and Loss, PL), an understandable and fair payment system, and so on.

With the slightest problem, and there are a lot of them at the stage of growing a business, where processes are not established, everyone starts blaming each other, and everybody rushes to put out fires.

How can asystematic CEO and creative owner get along?

The first recommendation to the owner is to find common values. With all the difference in approaches to doing business, the CEO and the owner must have shared values. Try to hire not just  an experienced and professional person. Your candidate should also have the similar beliefs to you. For example, if your team’s openness is crucial to you, and authoritarian management style is not appropriate, check it out how closely these values align with the future CEO’s.

The second recommendation is to hire a professional. This will allow you to trust the general manager.

Here I can speak to this from personal experience.

I used to work with owners, CEOs, and I used to hire CEOs and, in fact, I work on the business management process as CEO for Indigo Tech Recruiters’ owner. Our incomes and profits grew by 70% during the first year of management. During the second year, our dynamics remain the same.

Experience has provided a dozen recommendations. Let’s see them in a chart.

 

By the way, a Good CEO always fights for an excellent product and service. And during development stage he sees the value that a client could get from them. He also takes into account the appropriate time and required price to bring the product into the market, so to complete the sales plan.

 A Bad CEO describes their unique selling proposition and doesn’t know the value and how the price is formed. They don’t know the best way to bring the product into the market and complete the sales plan.

A Good CEO concentrates and makes the right choice. Even if it seems that there’s no choice and everything will be destroyed. Even when he wants to run away, to hide or to die. While a bad CEO will run away in fact and hide or die if there is a tough moment in business flow.

Everything is both simple and challenging at the same time. CEO is a unique position. A competent CEO sees the company with the owner’s eyes. They can see the business as a whole process, and every process and unit as part of this business. Moreover, he understands how a company is connected to the market environment. He works with stakeholders, with customers, with the state, suppliers, employees, media and so on. It is the only way he can create an effective strategy.

At the same time, the CEO must keep their hand on the driving pulse of the business. And, if during morning coffee time they sort the mail, resolve current tasks and conduct meetings with the team regarding current issues, then at lunchtime they think about the strategy, new markets and the ways to implement financial plans, and for dinner, they meet with partners, clients or give a speech at CEO club or some meetup.

Not every manager can think strategically, steer current affairs, take care of the team and not forget about publicity and networking. Perhaps that is why intelligent top managers are unique, and the owners are not ready to place  their child in the hands of amateurs.

Feedback