Site icon Kellblog

The CEO Job Description: In Reductionist Form

Dave Kellogg

Long-time readers will know I like making reductionist mission statements for roles in the organization. For example:

Some people take issue with these:

So, all that said, what’s the reductionist mission statement for the CEO?

The CEO’s job is to get what matters right.

Let me explain this with a story. Before joining Business Objects, I spent 10 years across two startups: Ingres, which got destroyed by Oracle (while nevertheless growing from $30M to $240M during my tenure) and exited for less than 1x revenue and Versant, which we turned around despite existing within a doomed category (object database) and went on to a lackluster IPO.

Let’s just say I saw plenty of problems along the way. At Ingres, I think I had 9 bosses in 7 years. We were so desperate for marketing talent that at one point we hired the former brand manager for Chuck Wagon dog food. We got acquired in an SGI/MIPS-like OEM-buys-technology-provider deal by ASK, the leader in what was then called MRP (the predecessor of ERP). The company that could have been Oracle got acquired by the company that should have been SAP. And then we pulled them down with us in a kind of corporate double-drowning, a Vietnam-esque escalation of commitment on ASK’s part. I was on the seven-member merger integration team, hand-picked by Sandy Kurtzig. I saw all kinds of shit go down.

At Versant, my boss, a high-flying ex-Lotus executive, told me one day, “if this can’t be a $1B company, I don’t want to be a part of it.” Well, I guess he figured it out because one day he — and the rest of the executive team — all vanished and I got a battlefield promotion to marketing VP. While we did turn the company around with a chasm-crossing strategy under the capable Dave Banks, we skimmed the treetops, a few times putting shares in employee compensation envelopes because we didn’t have the cash. (I’m sure this would be illegal today — who knows, maybe it was back then.)

I subsequently joined Business Objects, not long after its IPO. So I had access to a fresh S-1 for diligence. This thing was perfect. Twenty-something quarters of profitable growth. A total of $4M in VC burned from inception to IPO. A growth curve to die for: 1, 5, 15, 30 on revenues. The entire S-1 was as pristine as the Arctic National Wildlife Refuge.

After 10 years of struggles, I was finally going to work at the perfect company. I was so excited. And so naive.

I expected Business Objects to get everything right. It didn’t. I quickly learned lots of things were wrong. But several things weren’t. We had an aggressive, sales-driven culture. We understood how to manage Wall Street. We anticipated trends in the market (e.g., BI consolidation) and got ahead of them. We had strong operational discipline. And dare I say, good marketing.

But wow, did we get things wrong, too. The version 4 product launch darn near killed us. We were slow to the web (but had a great strategy once we went there). Germany was a repeated mess. The US operation continuously struggled. Our inability to build enterprise reporting (via a project ironically code-named after a tragic opera) nearly cost us the market. “This place is as screwed up as Ingres or Versant,” I’d often think.

But it wasn’t. That’s when I first realized that success in business is not about getting everything right. It’s about getting what matters right. And Business Objects did.

This, of course, begs the critically important question: what matters?

For Business Objects, in the end, what mattered was three things:

You’ll notice that I just took nine years of my life in a complex, evolving market and boiled success down to three things. That’s easy to do in hindsight. It’s nearly impossible when you’re in the thick of it.

I’ll share a trick. Before starting any strategy meeting, ask a few people during the coffee: “hey, you were at BigCo, and you folks really succeeded, why was that?” or “hey, you were at LittleCo and that didn’t work out so well, why was that?” Anyone with a strategic bone in their body can provide a pretty good, short answer. They’ve effectively just told you, “what mattered.”

Now do it in the present. “So what matters here at OurCo, today?” You’ll almost always get a laundry list of both strategic and tactical concerns. For example, only slightly dramatized:

I don’t entirely know why, but people are very good at distiling the essence of the past and just plain rotten at distillation of the present. Thus, that’s the CEO’s job. The very difficult task of figuring out what matters. And then getting that right. And doing their best to ignore or delegate almost everything else.

Remember my favorite passage on strategy, from Good Strategy, Bad Strategy by Richard Rumelt.

After my colleague John Mamer stepped down as dean of the UCLA Anderson School of Management, he wanted to take a stab at teaching strategy. To acquaint himself with the subject, he sat in on ten of my class sessions. Somewhere around class number seven we were chatting about pedagogy and I noted that many of the lessons learned in a strategy course come in the form of the questions asked as study assignments and asked in class. These questions distill decades of experience about useful things to think about in exploring complex situations. John gave me a sidelong look and said, “It looks to me as if there is really only one question you are asking in each case. That question is what’s going on here?”  John’s comment was something I had never heard said explicitly, but it was instantly and obviously correct. A great deal of strategy work is trying to figure out what is going on. Not just deciding what to do, but the more fundamental problem of comprehending the situation. (Bolding mine.)

For advice on how to figure out what matters at your company, read Rumelt’s sequel, The Crux, which will help you identify and make plans for overcoming your biggest strategic challenge.

I was a CEO of two startups for about 12 years in total. I’ve worked as a CEO direct report for 12 years. I’ve sat on 10 boards. The CEO’s desire to run a tight ship is real, particularly for proud perfectionists. The forces pulling CEOs towards everything on the above list are also real. But I view that list as the occupational hazard of the CEO job, not the job description.

The job is to get what matters right. The difficult first step is to figure out what matters. The second step is to focus most of your energy on that. The third step, perhaps the most difficult of all, is to ignore or delegate almost everything else.

Exit mobile version