It is a truism of the movie industry that every model wants to act, actors inevitably want to direct, and directors aspire to be producers. The restlessness that propels the players in Hollywood to abandon what they do well in favor of doing something different seems at times also to affect entrepreneurs who imagine they will automatically make great CEOs.
The cold hard truth is that many entrepreneurs simply do not have the skills nor the mindset to become CEO of the organization they created.
Unfortunately, it is this one error of judgement that brings about the demise of more businesses than any other. And the demise doesn’t always happen quickly, it can drag on over years as the organization burns through millions of investment dollars.
What defines an entrepreneur? An entrepreneur is the person who bootstraps the business. This is the person who puts it all on the line to make their vision a reality. A good number of entrepreneurs have the charisma and passion to attract external investment. They are the rainmakers who sign up the first customers and give great interviews to the journalists, who in turn profile them and their achievements in the myriad business and trade publications. They are the rockstars of the startup community.
What entrepreneurs don’t understand is their new role and responsibilities as the CEO. The CEO defines and lives the corporate culture. A good CEO builds a team around themselves of successful players, people who are outstanding in their own field.
In companies where the entrepreneur/founder has failed to successfully transition to the role of CEO you might expect that the board of directors would see this and force the necessary changes. This however is not always the case. Where the CEO was also the company founder and/or majority stockholder and owner, the Board of Directors act largely an advisory role and even when they are also investors in the organization they can still find themselves in a position where they are unable to bring about the change that is needed.
What exactly does a Chief Executive do that eludes many entrepreneurs? Here are six key areas and this is by no means an exhaustive list.
- Create, articulate and implement the organization’s vision, mission and values.
- Lead the management team particularly when the going gets tough. Only being visible to share good news is not even half the job.
- Using the skills and experience of the board to maximum advantage.
- Defining with the senior management team the critical success factors. What do you absolutely have to get right in order for the organization to succeed?
- Maintaining an awareness of the competitive landscape, spotting opportunities for expansion, anticipating new industry developments that might disrupt the existing business model under which you are operating.
- Taking a leadership role in CSR activities where you are visible to employees together with their family and friends. Making employees proud of the company they work for and appreciated in the community is incredibly powerful.
This list hopefully illustrates the point but it isn’t the full story. Perhaps a better way to express that is to say, it’s about being the CEO not just doing the tasks of a CEO.
There are of course some exceptions who prove the rule. Entrepreneurs who make the successful transition to CEO quite often built up their skills and in-depth experience in the corporate world before ever becoming an entrepreneur and creating their own business.
What to do?
If you are an entrepreneur aspiring to becoming CEO find yourself a professional coach who can help you make the transition to the role of CEO or help you transition to a new role and bring in a proven CEO to lead the organization you created. If you are looking to become part of a startup, lookout for the warning signs, it can be a long hard road working with a CEO who is out of his/her depth.