August 3, 2011
After 30 years of doing the entrepreneurial thing, a person – even one as dense as me – starts to notice certain repetitive patterns.
There are times I’m talking with a CEO and their story starts unfolding into what I call a “Oh NO! Here we go again” moment. It’s difficult to hold back and not just jump in and interrupt with a prescription, but that’s not the way to handle these moments.
No, the recipe to successfully get past those roll-your-eyes moments is to 1) absolutely not roll your eyes, 2) let the soon-to-be victim of scorn finish their story, 3) ask a few questions, and 4) help them see the error of their ways with a minimum of ridicule.
And now without further ado, I bring my top 3 Roll Your-Eyes CEO Moments:
1. “We’re equal 50/50 partners”
We’re equal partners means that someday soon we are going to reach a stalemate that destroys this company. Corporate ownership embodies 4 basic rights and responsibilities: 1) control, 2) share of the profits/losses, 3) share in the value of the enterprise, 4) share in the liabilities. You can share items 2 – 4 equally, but someone needs to have final control. You can alternate control, 6 months one owner, 6 months the other, shift control annually, put a “flip the coin after 30 second stalemate” provision in your operating agreement, but 50/50 control is no control at all.
2. “We agreed to figure out X some time in the future (where X equals, ownership, compensation, roles, etc.)”
Putting off stuff because it’s too complex and difficult to figure out now is a recipe for disaster, because 1) after you built something meaningful it would suck to see it fall apart because you can’t agree how to divvy it up and, 2) it isn’t going to get easier later…it’s only going to get harder.
You see, expectations are never going to be more aligned than before you start. But after a year of working on stuff, you’re going to compute a higher valuation to your contribution than your partner will. Your partner is going to figure that they are worth more than you believe they are. The gap in expectations then tends to get further apart and more difficult to close. Stalemate!
3. “We don’t have any one person responsible for revenue”
CEOs may have the gravitas, the personality, and the ability to run sales, and yet sharing responsibly between sales and other functions is a recipe for mediocrity. Having no one in the organization who fails when revenue does not meet expectations allows for revenue to be something other than the top priority. Someone needs to have a revenue target hung squarely on their back. There are too many places for people to hide when the crappy part of the sales job come a calling.
As CEO, there are too many fires that can divert your eyes from the revenue ball. You don’t want your person responsible for revenue to be able to say, “Sure I missed my number, but I did turn Mary into a happy customer.” Make sure your chief revenue officer has no place to hide, no excuses, and has a fire lit under their butt to deliver revenue, because without revenue you’re an unintentional non-profit.
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