Start-up CEO vs. Expansion CEO

Most company founders embark on a start-up journey with aspirations to see the company through to greatness while maintaining the role of the CEO.  However, the role of startup CEO and expansion-stage CEO differ greatly.  They require completely different skill sets, and it’s extremely rare for a founder to have both start-up and growth-stage skills.  A majority of founders end up recruiting replacements to take over the companies they created.  There is absolutely nothing wrong with that. It is a common reality that accompanies the shift from searching for a business model to executing and scaling it effectively.

A founding CEO must be tactical, hands-on, gets stuff done, where a professional manager CEO focuses on the vision/strategy, building a senior team, and guiding the senior team to execution.

Navigating a company through the expansion stage takes operational expertise. You have to know how to recruit senior managers who have specific functional expertise, and you must be able to establish an operating rhythm that gets your growing team working toward the right goals. As your company transitions to the next stage, you must transition with it, and as you do you are faced with three paths.

1) Adapt to the New Reality

If you are dead set on remaining CEO, then you need to pick up the new skills needed to address the blind spots and manage your company’s expansion. That means you have to augment those skills that got you where you are now: your audacity to do something new, your passion to inspire others to take risks, and the tenacity to create and disrupt markets. In addition, you need to focus on managing through others (this one can be the biggest challenge) and developing a rhythm for your team.

It’s extremely rare for a founder to have both start-up and growth-stage skills, and it’s even less likely that you can pick them up as you go. So, consider whether you’d hire yourself to run your company now that you are expanding — chances are, the honest answer is no.

2) Assemble a Skilled Team

Another option is to surround yourself with an executive team that brings the growth-stage experience and expertise your company needs.  For most companies entering the expansion stage, a sales and marketing-focused COO is the right choice.  However, if you need more cover on overall operations, financial forecasting, and legal matters, then a CFO makes sense.

When it comes down to it, companies aren’t run by highly effective individuals; they’re run by highly effective teams. Most successful CEO’s will tell you to surround yourself with the best people possible who are experts in the areas you are weak in.  This will allow you to focus on your strengths.

3) Transition into a New Role

The majority of start-up CEOs recruit their replacements as the company grows beyond $15 million in revenue. It’s that simple, and it’s usually the right choice. Work with your board to bring on a new CEO and transition into a new role. Don’t let your ego drive an emotional reaction. Put the company first, just as you always have, and you will come to the conclusion that it’s the right decision.

What’s your leadership impact?

Leaders set the tone for their followers and organizations.  Every leader from team lead to CEO makes an impact on others. Whether or not leaders know it, their followers monitor, magnify, and often mimic their behaviors. I worked with a company where the CEO did almost all of the talking in meetings, interrupted everyone, and silenced dissenting subordinates. His COO and other senior vice presidents complained about him behind his back, but as time went on, the COO started acting the very same way.  All the skills, experience and training that made him an effective COO began to change.

The ripple effects of this CEO’s style are consistent with findings from peer-reviewed studies showing that senior executives’ actions can reverberate throughout organizations, ultimately undermining or bolstering their cultures and performance levels.

Linda Hudson, CEO of BAE Systems, got this message after becoming the first female president of General Dynamics. After her first day on the job, a dozen women in her office imitated how she tied her scarf. Hudson realized, “It really was now about me and the context of setting the tone for the organization. That was a lesson I have never forgotten—that as a leader, people are looking at you in a way that you could not have imagined in other roles.” Hudson added that such scrutiny and the consequent responsibility is “something that I think about virtually every day.”

In your leadership role you too should think about the impact you make on future leaders.  The best leaders work tenaciously to stay in tune with this relentless attention and use it to their advantage. They know that the success of their people and organizations depends on maintaining an accurate view of how others construe their moods and moves—and responding with rapid, effective adjustments.

That view is invaluable for leaders as they try to carry out their first and most important task: convincing others that they are in charge. Leaders who fail to do this will find their jobs impossible, their lives hell, and their tenures short. Of course, taking charge effectively isn’t enough. The best leaders also boost performance by watching their people’s backs: making it safe for them to learn, act, and take intelligent risks; shielding them from unnecessary distractions and external idiocy of every stripe; and doing hundreds more little things that help them achieve one small win after another—and feel pride, respect and dignity along the way.