Being a CEO can be a lonely position sandwiched between the board of directors and the employees. Even though you are at the top of the corporate hierarchy and surrounded by your executive team and staff, it is an isolated role. You can build lasting and meaningful friendships with your team, but there is always a power dynamic where you, as the CEO, are the ultimate decider-in-chief, and you hold their careers in your hands. Business will always trump friendship, and the CEO is the one that may have to make the hard decisions about corporate direction, or whether or not to remove a teammate/friend from their position. To quote the great Stan Lee, creator of Spider Man, “With great power comes great responsibility.” This power dynamic creates a natural constraint on the flow of information.
A similar power dynamic exists between the board of directors and the CEO. The CEO and board must form a positive working relationship, but a fundamental role of the board is to hire and fire the CEO. Similar to the dynamic between the CEO and employees, the relationship between board members and the CEO has an underlying constraint on information flow that causes the CEO to be guarded about sharing uncertainty or showing vulnerability with board members.
Being sandwiched between employees and the board while carrying responsibility for all aspects of the business is what results in the CEO position being a lonely role. Regardless of experience level or business acumen, every CEO can benefit from a true business ‘friend.’ There are several ways to fill the role, but the requirements are pretty basic:
The ‘friend’ has to be solely devoted to the success of the CEO. No ulterior motives or conflicts of interest.
The friend has to be intellectually engaged in the CEO’s business and able to grasp the challenges the CEO is facing.
The friend has to be able to subordinate their own ego and exclusively focus on the CEO’s needs.
The friend has to be honest and able to hold up a mirror to the CEO, even if it is to show a painful truth.
In my past CEO positions, I have solved this need in different ways. One of my favorite approaches is to join a small, devoted peer group of fellow CEOs. I tried different types of groups, and found that the most helpful for me had the following specific characteristics:
There was a facilitator who ran the group and imposed a structure on the meetings.
Participants were required to prepare in advance and commit to be present for all meetings.
Participants were all in similar, but non-competitive businesses. In my case, they had to be technology CEOs.
Participants all had similar funding models. Mixing public company CEOs with private company CEOs does not work well. Blending self-funded CEOs with venture or PE backed CEOs also does not work well.
Participants needed to be from similar sized companies at similar stages of maturity with similar growth objectives and similar experience levels. We had to be able to help each other, and feel like we all had something to contribute.
Participants needed to have similar governance structures with a board of directors populated by institutional investors
I have tried CEO groups that did not follow these requirements, and it never went well. My craziest example was a group comprised of a sole-proprietor sod farmer, a friend-funded gravel pit owner, a PE backed healthcare company, and me - CEO of a VC backed software startup. Despite our best efforts, none of us could be very helpful to each other, and it turned into a waste of time. However, when I found a group that aligned with the requirements, it was life-changing.
An alternative to joining a CEO group is to find a CEO coach or mentor. A lot of people who make it to the CEO role have pretty big egos, and the idea of needing a coach may seem like admitting a flaw or deficiency. Our ego gets in the way of accepting help. The truth is even great sports champions all have coaches, so why not CEOs? A coach does not have to be able to do your job better than you, they only have to see how you can do your job better, and guide you to evolve to a better version of yourself. The most important rule for engaging a coach is that the CEO has to be the one who wants it, and they have to be the one to pick the coach. The coach can only serve the CEO. Too often, when the board thinks the CEO needs some help, they push for a coach, but problems arise if the coach is unclear about whether they work for the board or the CEO. It only works if the coach/CEO relationship is totally confidential, as if it is an attorney/client privileged relationship. No reporting to the board. The CEO has to be comfortable being vulnerable with the coach to acknowledge challenges and shortcomings without fear that the coach will rat them out to the board. In my experiences being a coach, it is vital for the CEO to understand that my sole objective is to help them become more successful.
Whether the answer is a coach or a peer group, the CEO has to take it seriously and commit the time and effort to do the work. Time is precious, and getting together with your coach or peer group has to be productive. It is not just a friendly shoulder to lean upon, although sometimes just venting an issue can be helpful. I am an advocate of making the sessions with a coach or a peer group structured. The CEO should prepare a brief and each meeting should review progress on past issues and address current challenges. Accountability is important, and that is where the coach or the peer group facilitator comes in.
In the situation where the board is uncertain about the CEO, they have a fairly blunt instrument to address the issue. Either they invest in the CEO to help them improve, or they fire the CEO and hope to find a better one. If the choice is not obvious, then the first step should be to help the CEO improve because replacing the CEO is a risky and painful decision. Investing in the CEO will either make the choice more apparent, or it will result in a better CEO. Coaches and peer groups cost money, and it is easy to question the expense or postpone the investment ‘until things are more stable.’ A common half-measure is to ask a board member to step in and ‘help’ the CEO, but that power dynamic thing will always get in the way. If the CEO is worthy of saving, then choosing to avoid the cost of an external independent coach or peer group misses the point. Investing to grow a better CEO is basically a self-funding investment that will deliver a high rate of return on investment.
The bottom line is every CEO can benefit from a trusted advisor or peer group, and every board ought to encourage the CEO to make the investment.