The real risk of being a CEO
9 years ago


As a first-time CEO, as your company grows and the work becomes more complex, and while you have a team to help you with this goal, you’ll notice that fundamentally there becomes two different kinds of jobs to do.

The first job is to imagine new ways of growing the company, to forge new strategies, and to implement new systems which are either new innovations for the industry or just new innovations for you.

The second job is the management or maintenance of the existing systems or workflows that you already have in place. You might start out selling through a particular channel online and then decide that you want to open up different channels.

You then have two jobs – to maintain the online channel that is already working and then incrementally grow it over time and to go into a completely new territory.

Your first instinct to delegate may be hurting your growth

Since you can’t do everything and you are growing a team that forces you to choose what to delegate, it is the natural impulse for you to give yourself the job of growth and to delegate the management and maintenance.

To navigate this problem well, it is useful to think of every new idea in your business in three stages:

1. Ideation and proof of concept
2. Growth or scale or proliferation
3. Maintenance or incremental improvement or repetition

As a first-time CEO, it’s best for you to lead the effort in the first stage and the last stage, but to delegate the middle stage.

Let’s take a specific example.

You have a company with one product that is selling decently well in retail stores and a small team of five people. You decide that you want to have three new growth initiatives:

1. Open up a direct-to-consumer online marketing campaign
2. Open up five new retail stores which have slightly different ways of doing business than the stores you’ve been successful in
3. Work closely with the main retail store and expand into new stores

These three initiatives fit nicely into the three stages: the first is the ideation and proof of concept, the second is an issue of scale, and the third is an issue of incremental improvement.

A quick note: In the second initiative, there are a ton of important decisions that are going to come up, like what to do about packaging and pricing, what margins do you negotiate with the new retailers, how much stock do you have to have , which stores and regions should you focus on, which brands should you focus on, what placement should you negotiate for in each store, etc.

These are the kinds of decisions that you need to delegate.

It’s going to be tempting to want to make those decisions yourself because you probably made them for your first set of retailers, but it is vital that you remove yourself from those kinds of decisions and hire people you trust to make them.

The true test of the first-time CEO comes the first time you notice one of your team members in a growth role making decisions that are different from ones you would make because it would feel to you like they are making a mistake.

But if you hired well, they’re going to be aware of different methods and different approaches that you don’t fully understand, which means that you have to trust them, which suggests that you should trust them to make decisions that you don’t agree with and let them follow through on them.

This is a very real risk because obviously bad decisions can cause sometimes catastrophic setbacks to companies.

CEOs and entrepreneurs are compensated for the risks they are willing to take, so hire extremely well and then trust, even if, and especially at the outset, it doesn’t look right to you.

The most effective way to use your team is to hire and delegate the second initiative (growth) almost completely to the team, asking what they need to be successful.

Here you ask, “I want you to go into five new stores over the next quarter, what do you need in order to do that?” and make sure you hire people that know how to create and maintain retail relationships.

They know they can be successful because they have a model of the stores you are in already, and though they are going to have to innovate because the new stores you are going into do business in a slightly different way, they are likely to have the creativity and commitment needed to make the project successful.

If you have a team of five you might delegate the third task of deepening the relationship with your key retailer, or you might do that one yourself just to support your team of growers, but certainly you’re going to be the one to innovate and manage the online channel just until the point that you’ve proven the concept and start making a few sales, then when it is time to grow that channel, it’s time to delegate.

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