Building technology companies, Forum

From Inner to Outer Leadership – A roadmap for Founder CEO’s

Anik Bose, General Partner at BGV shares his perspective on leadership skill development challenges for Founder CEO’s. The difference between effective leadership and poor leadership can be one of the primary causes of value destruction in technology startups – even those with a compelling vision and differentiated market opportunity. Unless the founder CEO has had previous leadership experiences, leadership skill development often becomes an “on the job learning” exercise with little or no assistance.   This situation is further exacerbated because being a CEO –the ultimate decision-maker — is often a lonely job for several reasons: a) The Founder CEO has to make tough decisions in an ambiguous environment where very few people have more information to make those decisions; b) Teams at startups are often viewed as comrades and friends, this makes hiring and firing a delicate decision especially when friends are not performing and only the CEO is aware of the facts; c) When the work day is over CEOs may return to family and friends who do not understand their desire to be an entrepreneur; d) Finally CEO’s rarely tend to ask for outside help as it may be perceived as a sign of weakness – they often feel they have to solve every problem on their own. Rare is the “self-aware” founder CEO who proactively seeks assistance to develop his/her leadership skills explicitly. I am a firm believer that the journey to becoming an effective leader must begin on the inner level before it can be successfully manifested at the outer level.   Remember the age old maxim – “Walk the Talk ” ? The difference between what a leader says and does is the “performance gap”. I have been surprised by how often people in leadership roles say one thing and then either do not act on it or even take an action that is utterly inconsistent with their own statements. I have frequently heard CEO’s verbally indicate their strong belief in a low tolerance for poor performance but then fail to let go or restructure the roles of non-performing fellow co-founders or executives due to close personal relationships.   If this “performance gap” is wide then it results in confusion in the early days, mistrust later and if the gap persists over a longer period it leads to the Founder CEO losing credibility with employees, co-workers and the Board/Investors – ultimately getting tuned out and replaced for poor performance. The “performance gap” can exist because of one or more reasons: a) Lack of self awareness – he/she is simply unaware that they are only following through on a few commitments while making dozens; b) Inability to prioritize – he/she is disorganized, overwhelmed and cannot separate from what must be done now versus what can be delegated and or done later; c) Lack of skills – he/she simply lacks the cross-functional functional integration or people management skills required to be an effective Founder CEO. Founder CEO’s can apply the above root cause analysis to diagnose their own specific situation on the road to becoming more effective leaders as follows:

  1. Developing inner leadership skills – Practice self-reflection frequently. Are you a person who follows through on what you say ? If not then ask yourself why ? If the answer is lack of self-awareness or inability to prioritize – then work on discipline and focus. Make fewer commitments and deliver on them prior to making any new commitments. Keep a list of the commitments you make verbally and at the end of 15 days compare which ones you acted upon and which ones you did not and why ? This simple close loop exercise will help you to improve your self awareness and prioritization skills.
  2. Developing outer leadership skills – Being the ultimate decision-maker is a lonely job, finding a coach or a confidant is extremely valuable for founder CEO’s. These coaches can be other successful startup CEO’s as well as specific individuals on the company’s Board. Ideally someone who will give you honest and direct feedback on the Founder CEO’s performance as well as input on key decisions – someone a bit removed from the daily fray who can bring a fresh perspective.
  3. Engage the Board with a performance scorecard – At the beginning of the fiscal year put together a simple, balanced scorecard of 10-15 measurable objectives for your startup, these should be closely linked to tangible value creation along several dimensions including: i) Market/Customer metrics such as industry analyst accolades, marquee customer wins etc; ii) Financial metrics such as sales pipeline, bookings, revenues etc; iii) Product/R&D metrics such as key product launch/release dates and milestones etc and iv) Organizational metrics such as filling talent gaps, implementing key processes such as product development and release, integrated lead generation, sales pipeline management etc. At the beginning of the fiscal year the scorecard metrics are analogous to “talk” – making verbal commitments; the results against these metrics throughout the year are an indicator of how good you and your team are at “Walking the Talk” – alignment of the Founder CEO’s actions around delivering on these commitments. This scorecard can serve as a simple close loop tool for the Founder CEO to measure and improve their leadership skills over time in dialogue with the board. Other benefits include providing a foundation for management incentives, establishing transparency and a fact-based dialogue between the Board and the Founder CEO about performance expectations. This ultimately leads to fewer surprises down the road for both parties in the event that personnel changes are warranted for the startup’s success.
Remember that leadership and learning are indispensable and go hand in hand. To be an effective leader one must develop the self awareness to identify one’s development needs and have the courage to ask for help…