“Thinking it’s often just the next step in their career, many CEO neophytes don’t realize that it’s a unique position with challenges they haven’t faced before.” Joel Trammell, Forbes
There are a million things I wish I knew before I became a CEO. Sometimes you have to jump in with both feet – but when you’re jumping into this particular pool, there are a lot of undercurrents with which to contend. There is a reason not everyone in business rises to this position. Luckily, others have faced these challenges and their “wish I knews” can be good preventative medicine for new and aspiring CEOs.
I wish I had known…
1. How important it is to manage cash.
CEOs – and their boards and shareholders – look at profit, but they tend to ignore cash. I have seen profitable companies become insolvent because they didn’t have the cash they needed to sustain themselves.
Many of those who rise to the level of CEO, particularly if they started their own company, are technical people who developed a product or service. All of a sudden, they’re CEOs. They don’t always realize that cash and profitability are two separate things – and that cash is more important.
2. How tough it is to be a CEO.
If being a CEO were easy, everybody would be one. CEOs account for such a small percentage of the population, and they have no peers within their own companies. Think about it like this: every other single person in the organization has a boss. Who does the boss go to for help?
They’re expected to know what to do – and to do it without falling down. John Challenger, CEO of Challenger, Gray & Christmas says, “CEOs these days are given one term in office. If they’re very successful, they might get four more years.” The pressure is on, and it’s on continually.
3. That most of my challenges would revolve around people.
Eighty percent of the problems a CEO is going to face are based on people and how they behave and perform. Yet, research conducted by Stanford’s Graduate School of Business and Rock Center for Corporate Governance found that CEOs were weakest in the following areas:
This is an incredible disconnect because most of a CEO’s headaches boil down to people-problems.
4. How difficult it is to establish and sustain the right kind of culture.
It’s great to start a business as a young CEO, for instance, and say, “We’re a fun company. We’re going to play games on the weekends, bring in meals every day, go bowling, etc.” But when the company starts to grow, it’s hard to maintain the culture. Many CEOs just don’t know how.
A CEO has to ask, “Who are we? Do we even have the right culture? Are we a culture of innovation? Of putting our heads down and working as hard as we can? Of fun? Of believing the customer is always right – or that we’re always right?” There is any number of cultures leaders can foster, but no one teaches them how to do it.
5. How important it is to hire people who fit the culture.
Say a CEO does establish a healthy, strong culture. What good is it if he or she does not hire people who fit in it? Companies tend to hire based on skills, expertise, experience, and education.
The problem is someone who looks great on paper may be a dismal failure on the job because he doesn’t mesh with the culture. I always suggest looking at fit first and asking scenario-based questions to see if interviewees will be able to integrate successfully into the company. Otherwise, CEOs are wasting their time and resources trying to jam a square peg into a round hole.
They don’t teach people this in graduate school, and they can’t learn it in VP roles or other executive positions. At the same time, CEOs don’t get the luxury of on-the-job training; they have to hit the ground running. Learning from other CEOs and developing the skills and competencies that the position requires, from managing cash to maintaining culture, will give them a good head start. And maybe that second term in office too.