This Is The Most Difficult Skill For CEOs To Learn

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This is an abridged version of the full article.

By far the most difficult skill for me to learn as CEO was the ability to manage my own psychology.

Organizational design, process design, metrics, hiring and firing were all relatively straightforward skills to master compared to keeping my mind in check. Over the years, I’ve spoken to hundreds of CEOs all with the same experience. Nonetheless, very few people talk about it and I have never read anything on the topic. It’s like the fight club of management: The first rule of the CEO psychological meltdown is don’t talk about the psychological meltdown.

At risk of violating the sacred rule, I will attempt to describe the condition and prescribe some techniques that helped me. In the end, this is the most personal and important battle that any CEO will face.

If I’m Doing a Good Job, Why Do I Feel So Bad?

Generally, someone doesn’t become CEOs unless she has a high sense of purpose and cares deeply about the work she does. In addition, a CEO must be accomplished enough or smart enough that people will want to work for her. Nobody sets out to be a bad CEO, run a dysfunctional organization, or create a massive bureaucracy that grinds her company to a screeching halt. Yet no CEO ever has a smooth path to a great company. Along the way, many things go wrong and all of them could have and should have been avoided.

The first problem is that everybody learns to be a CEO by being a CEO. No training as a manager, general manager or any other job actually prepares you to run a company. The only thing that prepares you to run a company is running a company. This means that you will face a broad set of things that you don’t know how to do that require skills that you don’t have. Nevertheless, everybody will expect you to know how to do them, because, well, you are the CEO. I remember when I first became CEO, an investor asked me to send him the “cap table.” I had a vague idea of what he meant, but I didn’t actually know what the format was supposed to look like or what should be included or excluded. It was a silly little thing and I had much bigger things to worry about, but everything is hard when you don’t actually know what you are doing and I wasted quite a bit of time sweating over that stupid spreadsheet.

Even if you know what you are doing, things go wrong. Things go wrong, because building a multi-faceted human organization to compete and win in a dynamic, highly competitive market turns out to be really hard. If CEOs were graded on a curve, the mean on the test would be 22 out of a 100. This kind of mean can be psychologically challenging for a straight A student. It is particularly challenging, because nobody tells you that the mean is 22.

And to rub salt into the wound and make matters worse, it’s your fault.

Too Much Broken Stuff

Given this stress, CEOs often make the one of the following two mistakes:

  1. They take things too personally
  2. They do not take things personally enough

In the first scenario, the CEO takes every issue incredibly seriously and personally and urgently moves to fix it. Given the volume of the issues, this motion usually results in one of two scenarios. If the CEO is outwardly focused, she ends up terrorizing the team to the point where nobody wants to work at the company any more. If the CEO is inwardly focused, she ends up feeling so sick from all of the problems that she can barely make it to work in the morning.

In the second scenario, in order to dampen the pain of the rolling disaster that is the company, the CEO takes a Pollyannaish attitude: it’s not so bad. In this view, none of the problems are actually that bad and they needn’t be dealt with urgently. By rationalizing away the issues, the CEO feels better about herself. The problem is that she doesn’t actually fix any of the problems and the employees eventually become quite frustrated that the Chief Executive keeps ignoring the most basic problems and conflicts. Ultimately, the company turns to crap.

Ideally, the CEO will be urgent yet not insane. She will move aggressively and decisively without feeling emotionally culpable. If she can separate the importance of the issues from how she feels about them, she will avoid demonizing her employees or herself.

My friend Jason Rosenthal took over as CEO of Ning about a year ago. As soon as he became CEO, he faced a cash crisis and had to choose amongst three difficult choices: 1. Radically reduce the size of the company or 2. Sell the company or 3. Raise money in a highly dilutive way.

Think about those choices:

  1. Lay off a large set of talented employees whom he worked very hard to recruit and, as a result, likely severely damage the morale of the remaining people.
  2. Sell out all of the employees who he had been working side-by-side with for the past several years (Jason was promoted into the position), by selling the company without giving them a chance to perform or fulfill their mission.
  3. Drastically reduce the ownership position of the employees and make their hard work economically meaningless.

Choices like these separate the women from the girls. Tip to aspiring entrepreneurs: if you don’t like choosing between horrible and cataclysmic, don’t become CEO. Jason sought advice from some of the best minds in the industry, but ultimately he was completely alone in the final decision. Nobody had the answer and whatever the answer, Jason was the one who had to live with the consequences. So far his decision to reduce staff by letting go of primarily the most recent hires has paid off. Revenue at Ning is soaring and team morale is high. If it had gone worse (or ultimately goes bad), it will be all Jason’s fault and it will be up to Jason to find a new answer. Whenever I see Jason, I like to say: “welcome to the show.”

Techniques to Calm Your Nerves

The problem with psychology is that everybody’s is slightly different. With that as a caveat, over the years I developed a few techniques for dealing with myself. Hopefully, you find them useful too.

Make some friends—Although it’s nearly impossible to get high quality advice on the tough decisions that you make, it is extremely useful from a psychological perspective to talk to people who have been through similarly challenging decisions. My friend Bill Campbell was a huge help to me as CEO, but interestingly it wasn’t his great success running Intuit that I found most useful; it was his disastrous experience running Go. Through that experience and his most traumatic days at Intuit (like laying off 1/3 of the company), Bill learned a tremendous amount about how to think about excruciatingly difficult decisions from a psychological perspective.

Get it out of your head and onto paper—When I had to explain to Bill and the rest of my board that, as a public company, I thought that it would be best if we sold all of our customers and all of our revenue and changed business, it was messing with my mind. In order to finalize that decision, I wrote down a detailed explanation of my logic. The process of writing that document separated me from my own psychology and enabled me to make the decision swiftly.

Focus on the road not the wall—When they train racecar drivers, one of the first lessons is when you are going around a curve at 200 MPH, do not focus on the wall; focus on the road. If you focus on the wall, you will drive right into it. If you focus on the road, you will follow the road. Running a company is like that. There are always a thousand things that can go wrong and sink the ship. If you focus too much on them, you will drive yourself nuts and likely capsize your company. Focus on where you are going rather than on what you hope to avoid.

A Final Word of Advice—Don’t Punk Out and Don’t Quit

As CEO, there will be many times when you feel like quitting. I have seen CEOs try to cope with the stress by drinking heavily, checking out, and even quitting. In each case, the CEO has a marvelous rationalization why it was OK for him to punk out or quit, but none them will ever be great CEOs. Great CEOs face the pain. They deal with the sleepless nights, the cold sweat, and what my friend the great Alfred Chuang (legendary founder and CEO of BEA Systems) calls “the torture.” Whenever I meet a successful CEO, I ask them how they did it. Mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. The great CEOs tend to be remarkably consistent in their answers. They all say: “I didn’t quit.”

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