I have been speaking to many CEOs and company leaders recently and wanted to share a few things I have learnt from those conversations. Each company these CEOs/company leaders run, are unique in their own ways, so each company may work well with its own version of how best to organize itself to be able to create the most shareholder value. That said, there is a theme that emerges for me.
There are 2 main kinds of company leaders — I will set out what at best represent caricatures of real situations, but nonetheless I hope these caricatures help us see certain patterns more clearly.
The ‘singular-focus’ company leader
At one end of the spectrum, certain company leaders are focused only on a certain business metric or financial outcome (to the exclusion of everything else). They only care about how their company will meet that metric and will implement a linear process to get there. A singular focus on the metric(s) is all that matters and nothing else is important. There is a lot to be said for this focus, e.g., you can end up with a well-oiled sales machine. In that type of organization, everyone will be driven by one type of thinking, how do we achieve that metric: user growth, users?
The ‘designer-in-chief’ company leader
At the other end of the spectrum, there are leaders who see their roles as the designer of an organization (whose main purpose is to increase shareholder value). As part of that design process, they will build a well-oiled machine. But they usually take a less transactional approach to understanding people. They understand that people are not ‘econs’ but are ‘humans’ to borrow the terms used by the latest Nobel prize winner in Economics, Richard Thaler, who is regarded as the founding father of behavioral economics and finance (I was a lucky student of his at Chicago Booth). With that understanding, they will create a workplace and culture that help people thrive at work. They will genuinely care about how the employees feel being at work, how excited they are about the work they are doing, how they relate to coworkers, how they communicate with each other at work, how happy the team is. A good designer-in-chief, will create that kind of organization and at the same time, will have a maniacal focus on the right metric(s).
The good and the bad of the ‘singular-focus’ leader
With the ‘singular focus’ company leader, the organization becomes a machine where people are running after one metric and nothing else matters. If this sounds good, it is because it can be in certain cases. The problem is that in most cases, the singular focus does not lead to better results on the metric(s) in question (at least over a sustained period of time). What a few CEOs have gotten wrong (think of some high profile cases of some ‘currently/previously’ highly valued startups) is that their singular focus on a metric may have helped drive the metric(s) over a period of time, but failed to create the conditions to create a great organization. In certain cases, the metric(s) are fudged (outright fraud at times — some of you will recall (i) employees being told to go to stores to buy their own product to boost numbers, (ii) video engagement metrics being ‘boosted’ to attract customers) to show the desired metric growth. When nothing else matters, getting there ‘at all costs’ can be costly.
The good and the bad of the ‘designer-in-chief’ leader
The ‘designer-in-chief’ has the opportunity to create a truly great organization that could span decades. To the uninitiated, the CEO’s actions may at times seem random or unfocused (e.g. Brian Chesky looking at why the walls were white in the @Airbnb San Francisco office — see his Medium post here), but these random activities are part of the design process. Likewise, Stewart Butterfield seems to be intentional about the organization he wants to build: ‘I think everyone likes working in an environment like that’ when describing how in certain restaurants waiters are looking out on each other’s tables and looks to have a value of looking out for each other at Slack- see NYT article. I recently came across Ryan Holmes’s Medium post on 5 cheap, old-school hacks for building company culture in 2017. Indra Nooyi’s PepsiCo’s CEO is able to bring her massive organization together with the value of ‘Performance with Purpose’. In this company, people hit the metrics that matter and at the same time are inspired to new heights and feel more alive in doing so. Thinking tends to be less linear, which can create the conditions for the right ideas to emerge, the right collaboration to happen, the right focus to happen. What these leaders understand is that to get from point A to point B, focus on metric(s) of course matters and yet other things matter a lot and it is their job to bring those into existence.
The type of leader shapes the type of Company You Are
The type of leader has an impact on the type of company you end up having: How people think, how they relate to one another, the level of experimentation, how happy and engaged people are in the company. These things get reflected in what products you build, what metrics you reach over what timeframe. Jarie Bolander, author of The Entrepreneur Ethos, has a simple way he thinks about how a leader needs to build their culture “As a leader, you need to earn your position each and every day. Leaders that do this know what their team needs and build the systems required to succeed.”
What kind of Leader are You?
What kind of leader are you? What kind of leader do you work with? Share your observations! 😻🥑
Originally published at medium.com on October 17, 2017.