While the nuances of a CEO position reflect some organizational specifics, the key goal is fundamentally the same everywhere: CEOs must increase the value of the enterprise, whether for shareholders or private ownership. And in order to build that value, CEOs must first build overwhelming confidence among the board in the CEO’s ability to lead the company and achieve that goal.
In our work with our advisory and portfolio companies, we’ve seen that creating that confidence comes first and foremost when CEOs keep their word to the board – what they say they will do is what happens. This means that as CEO, you cannot only give good news and lofty projections to the board – they need you to share all the news, good or bad, and to demonstrate a firm understanding of the reality on the ground. If things go awry, they want to know that you’ve learned those lessons and will make adjustments. Ultimately, the board should see your expectations and projections – positive and negative – happening within 5 or 10 percent of what you say, meaning they can focus less on questioning your assumptions, and more on what they can do to help you achieve company objectives.
So with a goal of building value and a job that’s focused on building trust, how should a CEO spend their time? We recommend the following breakdown among three essential areas:
- Managing cash: More than 50% of your time should be spent on driving revenue, managing expenses, investing resources, and raising capital.
- Building the value proposition: About 30% of your time should go toward moving your product from a nice-to-have to a must-have. It’s tempting to spend the bulk of your time here, but without healthy cash flow, you’ll never truly get here.
- Growing leadership capacity: The remaining 20% of your time should be focused on making sure those in your organization can make decisions, understand what’s going on, can articulate the goals and strategy of the company, and make modifications as needed. Just as with the CEO to the board, the organizational leaders must be accurate – with good and bad news – with the CEO. Building that capacity must be done intentionally, however, and is often overlooked.
One proven tactic for building leadership capacity is to have a monthly 30-minute meeting with each staff member along these lines:
- Here’s what I said I’d do last month, and here’s what I actually did last month.
- Based on that, here’s my plan for next month.
- Here’s what I learned, and here’s what I need to learn.
Done monthly, this simple format – because no company can wait 12 months for annual review to make adjustments! – will help staff grow and develop, which in turn allows a CEO to cultivate the deep understanding of the business needed to solidify board confidence and drive the increased value of the company.
Finally, if you’re looking for additional insight on how to make these and other tactics work for your company, drop us a line at firstname.lastname@example.org to learn more.