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Leadership Team

Wearing many hats may be a great skill when starting a business, but over time, a short period of time, other people need to be able to take on responsibility for getting things done. Selection of the leadership team as well as how it is organized is a critical responsibility of the CEO. If you are forming your own company, you make all the choices. If you are stepping into an existing business, the leadership team is often in place and operating according to existing plans. To be successful as a CEO, you need to be able to handle both situations equally.

This section explores how to structure a leadership team so that it complements your strengths and weaknesses. We also explore how to work with an existing team with a goal to avoid the desire to change things for the sake of change (although change is needed at times). Given the goal is to achieve success, the leadership team, driven by the CEO, is critical to get right.

The First Choices

When first forming a business, the founders often assume the various leadership positions. There is almost always a founder leading development/engineering (it might even be the CEO) and less often a founder to focus on sales and/or marketing. If the business is externally funded (e.g. VC's), the management team selection plays a key role in deciding if the business is fundable -- a team with experience is more valuable to an investor than one without experience.

If you plan to sustain your business over a few years (you should be), you may also want to consider whether or not the first leadership team choices will hold up over that period of time. Choosing a founder (a business or personal friend) who may be an excellent software developer as the VP Product Development may not be the right choice if that person has no experience building and scaling a quality product development team. You may be faced with effectively demoting them down the road or even letting them go altogether if they are unsuccessful (damaging the product reputation). Sometimes starting founders in mid-level management roles is best (e.g. Directors) where they can grow into a VP role if appropriate.

Some roles are not really needed until the Company is ready to go to market with its first product. The following defines some of the first leadership team roles to establish (in order):

  1. Product Development -- probably the first primary leadership role to establish. Without a product, the Company has nothing to sell (unless you are in the services business). A leader in this area should have a clear picture of the requirements for the first generation of product and have a deep handle on how to get it done. It is also common for the development leader to be fully hands-on, often the senior developer in the group.
  2. Financial Controller -- not always second to be hired and often outsource as a part-time role, you will need someone to manage the Company finances. Although you can buy simple-to-use accounting tools, getting the finances right can take time -- valuable time away from other aspects of the business. In the first few months and perhaps even the first year you primarily need to make sure payroll is managed properly, the bank statements are accurate, the bills are paid and the Board has its needed financial reports.
  3. Sales -- the second primary leadership role tends to be sales. A strong sales representative with credible experience ideally in or near the market you plan to sell into. As mentioned elsewhere in the CEO discipline, the CEO will work hand-in-hand with the sales leader to achieve the first strategic goals of the Company, typically the reference accounts needed to validate the value proposition of the business.
  4. Product Marketing -- not a full marketing team but a mid-level manager capable of getting the message out about the first product offering. This leader should be a competent communicator, experienced using on-line marketing tools like the Web, know how to draft press releases, create brochures, organize events, etc. Supporting marketing resources can be outsource or insured as budget allows.

All of the above roles should report directly to the CEO during the first year or two. You need to have the right pulse on things operationally and be able to step in and take charge if something goes astray. Even if your personal experience is slanted towards one role or another (e.g. development versus sales), you should take on management of all the roles at the start.

Managing Failure

Choosing wrong is never good for the business, choosing wrong at the leadership team level is often very damaging. Some key points of impact include:

If you reach a point where someone is not performing to expectations, there is often a few reasons you can explore and learn from so that the next choices serve the Company better:

Repeated leadership team failure starts to turn back on the role of CEO. Do what you can to make sure your leadership and coaching style is conducive to success for the people that work for you.

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