Tuesday, August 14, 2007

Startup to IPO: Building great talent

No question from my point of view – the single most defining characteristic of a great company is the strength of the leadership team. Are they all world class? No matter what the size of your company – you assess each executive and whether they are at a world class level for the job you have them doing. If you can answer yes to this question then you have a strong team; if not I think it’s high time to replace the ones that you cannot defend to any challenger and if your company is growing fast you also need to get comfortable with parting ways with executives who don’t scale.

The recent business week article The Five Faces of the 21st Century Chief names the style of CEO style I strive for as “The Casting Agent”. This makes sense to me (although I probably display some “Conductor” characteristics as well). Think of great movies; the best shine because of great actors and a great director – working well together. It’s like that in a company too. Sometimes the CEO is the producer (raising funds, managing the team), sometimes the director (calling the plays in detail), sometimes both.

So the challenge as a CEO is to hire people who are better than you in their field. Sometimes it is hard for new CEOs to have the confidence to do that – and it takes confidence to lead a room full of people who are better than you in their field. It also takes trust – as covered in my June post on trust – because they can make your life tough if they want to and then you have a whole different problem to solve.

The job is particularly hard for public company CEOs today. I sit on the board of Rambus and watch first hand the tremendous challenges placed on the CEO, Harold Hughes. Today, public company CEOs have to not only manage the company itself, but also manage much more attentive boards, auditors (who are a whole class of issue themselves) and appropriately demanding investors. Given the breadth of challenge I think the only answer is to be a great casting agent and build bench strength in your team.

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