When You're the Problem

This article is written for all of the visionary entrepreneurs, founders and CEOs who have an amazing penchant for new ideas and the big picture. You solve big problems. You close big deals. You inspire others. But you also tend to lose focus. You become impatient or bored, so you change direction. You get lost in the weeds of details and operations. Sound familiar? Then this article is written with you in mind. It is also written for the co-founders, board members, team members, and family members who love you.

You see, I’m one of you. I’m a Founder and CEO who has had my share of successes, as well as my share of challenges. I’ve seen this scenario play out with countless clients and friends throughout my career. And talk about learning lessons the hard way? I’ve learned more than my share! As CEO of HireBetter, I’ve had a front row seat, earning my own real-life MBA!

Let’s be honest, there are certain skills visionaries have that get businesses off the ground and grow them to a certain point. But when it’s time to actually scale the business and take it to the next level, you need, we need, to add a different skill-set to the team.

I’ve often heard high-growth companies compared to a military operation. Most founders have the tenacity, charisma, and passion to rally the troops and storm the beach. But they often lack the organizational skills (or experience) required to execute on the next stage of growth. I’m talking about things like creating and implementing systems, processes, and procedures, developing cascading goals, outlining responsibilities, and consistently holding the team accountable.

When #2 Can Be a Game-Changer

The position for which we at HireBetter recruit the most is what we call the number two: the co-pilot needed to help the Founder/CEO navigate the no man’s land between early stage and next-level. There’s an art to understanding and then recruiting for the specific technical skills, soft skills, experiences, and personalities required to help our visionary clients scale their businesses.

But, as the dating sites know all too well, matchmaking is one thing; long-term marital bliss is quite another. Sometimes candidates don’t work out. Sometimes the personality fit is not quite there. Sometimes one, or both, of the parties is not completely candid during the dating/recruiting process (ever tell a white lie to someone you were dating?). And sometimes things change. Someone who was a great fit for the initial need is no longer a match now that the company has doubled in size or changed a significant portion of its business.

And sometimes – to put it bluntly – you’re the problem.

CEOs (especially founder CEOs) of high-growth, middle-market companies wear a lot of hats. They may be hiring and managing employees, growing revenue, raising capital, negotiating M&A transactions, setting the vision, or developing new products. Hell, some of you are still doing the accounting, managing your own schedule, or emptying the trash. Chances are good that you’ve got too much on your plate. This entrepreneurial, can-do spirit is a must in the early days but at some point it becomes unsustainable or, at a minimum, unscalable.

This is often true of your employees as well. When you’re a startup, it’s all hands on deck. I’ve seen accountants attend trade shows or operations managers pick up the CEO’s dry cleaning. But as the organization grows and attempts to scale, job descriptions need to be tighter and generalists need to become, or be replaced by, specialists. The accounting department needs to be manned by strong accountants, the sales team needs to sell, and the operations team needs to deliver.

Another consistent theme we see with high-growth, middle market companies is the CEO with a million ideas and a penchant for change. This often works for early stage companies – it allows them to shift with market conditions, be more nimble than their larger competitors, and flex with the needs of their customers. But this penchant for change can turn into organizational ping pong. Shifting priorities are hard to scale and can lead to burnout of key employees.

A big part of the solution is often hiring an operator, someone to execute the vision of the Founder – the yin to her yang. A good operator will bring structure, develop processes and procedures, and manage with metrics, not emotions. The right leader will outline clear goals and objectives for the company, for each department, and for each employee. They will develop annual, quarterly, and monthly priorities and will not shift them on a whim. Sure, even middle market companies need to be somewhat nimble to be able to seize market opportunities, but structure is critical to getting to the next level.

Real-life Example

I had a prospective client tell me that he had a seasoned consultant come in a few months ago to “fix my operations”. The company had been tremendously successful but now orders were outpacing their ability to deliver. The duct tape and binding twine method was no longer good enough.

The situation went from bad to worse when one of his major customers conducted a facility audit – and they failed. Thus, the reason for the seasoned consultant. Among the findings of the consultant was this gem: “…in order for the company to be successful, the CEO will need to step down and bring in new leadership.” Ouch.

While I don’t necessarily agree that the CEO needs to step down, I do believe that the CEO played a role in the company’s current challenges. And thankfully, he was not so arrogant as to think that he didn’t have some culpability.

The reality was that the company had outgrown him in a number of ways. While he still had a knack for product development, customer relationships, company vision and strategy, the time had come for him to bring in an operator to run the delivery side of the business: an execution partner. He needed an experienced operator who had successfully navigated similar stages of growth, a leader with skins on the wall.

Preparing for the Next Level

There are many businesses that are content with where they are today, generating a nice return for shareholders and management. Then there are those of us who want to grow, who feel there is more work to do to fulfill our mission. If you fall into the second category, it may be time to invest in building your next-level team and bring on your #2.

Acknowledging the need to bring in a strong operator is a big step and should not be minimized. This operator will ultimately be the CEO’s partner, the person who will be responsible for executing on the CEO’s vision.

Obviously identifying the right execution partner is paramount. You will need to find someone with the experience necessary to scale the company. They will need the strategic skills required to design and build the infrastructure as well as the ability to build a winning team and execute on the plan.

But they also need the soft skills, They need to be strong communicators, both with the team they’re managing and the CEO with whom they are working. They will need to win the hearts and minds of key stakeholders in order to transition the culture from “do-whatever-it-takes” to one of accountability, built for scale. By definition, the new operator is going to do things differently than the visionary.

Most visionary CEOs understand this, they want this, they crave this. But they often struggle because change makes them uncomfortable – and it makes their team uncomfortable. Building an organization for scale means bringing in structure, processes, and accountabilities that will scare some of your employees. It also means that they will likely no longer have a direct line to you. This direct line to the CEO is common with high-growth, middle market or early stage companies but it is simply impossible to scale. 

This situation is hard to navigate for many but solving it can be an amazing, unlocking move for you and the organization. This is why we love working with clients facing these types of opportunities. The solution is definitely more art than science.

Keys to Success

To me, success comes down to three things. Three deceptively simple words:

Trust. Respect. Communication.

Trust: Be careful. Existing employees, trusted employees, will complain to you, even going so far as to discredit the new leader. “This place is changing”, “the family atmosphere is gone”, and “this guy is a jerk”, are all phrases you might hear at this stage. And when the existing team is not used to a culture of accountability, they may resist your new operator – and they will likely complain to you about that person.

As CEO, you need to trust your new leader and they need to trust you. This is one reason I don’t want new operating partners making any changes for the first 30, 60 or sometimes even 90 days on the job. I want them to learn the business, learn the industry. Talk to team members, customers, suppliers, shareholders. Build trust, both within and outside of the organization – especially with the CEO.

As CEO, it is okay to listen to the complaints but take them with a grain of salt. Tell them to take it up with the new leader. Have his or her back – or you will be soon looking for a new operating partner. The hardest part for many first-time CEOs is recognizing that many of your existing employees simply aren’t going to make it, including a few whom you consider key. And that has got to be okay. I told my operating partner when he came on, “No one is untouchable. There are a few who I would like to have every chance to succeed, but I won’t hamstring you with any sacred cows”.

One particularly interesting example was a first-time entrepreneur we worked with a few years ago. She knew she needed help to scale. She needed an operator to build the infrastructure required to make her vision a reality.

When she hired her new operator, she had a pretty good idea of what she expected from him. She had mapped out his first 30, 60, and 90 days, and had developed a vision for success. His first 30 days were specifically set up for him to get to know the company, interview employees, meet customers, learn the product and the industry inside and out. We knew something was amiss on day five when she reached out to me and lamented that he had been there a week and still hadn’t chosen a new ERP system or revamped their payroll. The following week she informed me that she had the opportunity to spend two months revenue on a new marketing campaign and asked the new COO to develop a plan to execute it.

To make a long story short, the entrepreneur ultimately became frustrated that her COO was not moving fast enough and hadn’t accomplished the key project that she wanted done. While this relationship may have been doomed from the start, we believe there would have been a better chance of success had the principals in the story trusted each other.

Respect: It is a lot easier to accept change and roll with the punches if you respect the person bringing change. We believe that a relationship built on mutual respect is paramount to long-term success of your #2 and ultimately your business.

When we were growing The Controller Group, Brett Lawson was my operating partner, and also my business partner. Brett looked at things from a different perspective than me. We were opposite in a number of ways and he was a lot of things I wasn’t: direct, analytical, and sometimes an ass. We disagreed a LOT. But I respected the hell out of him and he respected me. He knew my hair-brained ideas had some semblance of credibility, and I knew that his strategies of execution were sound. We respected each other enough to listen to one another and to co-develop solutions. Sometimes the answer was mine, sometimes his, but most often, it was something in between.

Communication: Trust and respect are huge, but if you don’t communicate, then relationships quickly breakdown. When you onboard your operating partner, go out of your way to schedule regular meetings – even daily at first. Communicate, communicate, communicate.

What are your expectations? What do you expect of your operator in the first 30, 60, 90 days? When will change begin and how will it happen? What has she learned that will necessitate a change of plans? Priorities will naturally shift. When you are on the same page, you can lead your team effectively, together.

Interestingly, even seemingly trivial things can blow up without effective communication. For example, we recently worked with a CEO who had a thing for the “reserved” parking spaces at the office. He believed in parking as far away from the front door as possible because he didn’t want to give the impression that he was better than any of the company’s 180 employees. So when his new COO came in and parked in the reserved spots, it drove the CEO crazy. Of course, he didn’t tell the COO that it drove him crazy. His head trash told him that his COO thought he was better than their employees. This was not the only reason that the two ultimately parted ways within the first year, but it was one of the straws that broke the camel’s back.

Sometimes You Are The Problem

As entrepreneurs, we want things to move uber-fast. We have a hundred ideas a week and want to put them into action. Then we get frustrated when our list of unfinished projects gets longer. And we compound this frustration by giving our poor team new priorities next week. We crave the stability, systems, and structure that operators can provide but we lose patience with the very methodical pace that ensures their success. While this sounds crazy to an outsider, it’s hard to see within ourselves.

You see, we tend to overemphasize our strengths and undersell our weaknesses. And we don’t realize the impact our scattered approach has on our teams. What would others say about you if they were speaking candidly? Would they agree that you may be part of the problem?

I invite you to share this article with someone you trust. Someone who will be candid with you and give you honest feedback. Ask them to read it – with you in mind – and share their feedback with you. You may not want to hear it but awareness of the issue is the first step towards fixing it!

What about you? Do you relate to any of the leaders I highlighted? If any part of this article hit home with you, it may be time to consider adding your own #2. An operating partner to help grow, scale or simply run your business. I welcome the opportunity to help you start the conversation or begin mapping out a plan of action. I can be reached at Kurt@HireBetter.com.