Sooner or later, every growing company reaches a point at which the entrepreneur behind it should start wondering whether he or she is the right person to be CEO. The answer has a lot to do with the company’s stage of development. The person who’s right for the start-up phase may not be right when the business reaches the management stage. Veteran entrepreneur Norm Brodsky found out the hard way that he was a terrible manager.
Brodsky suggests there’s no tried-and-true formula for evaluating a prospective CEO. Ultimately, of course, the proof is in the pudding: How does the company perform? By the time you see the results, however it may be too late. That said, here are the five criteria Brodsky uses in evaluating a person’s ability to handle the responsibilities of a CEO.
First, a CEO has to be a leader, not simply a pied piper. Entrepreneurs are pied pipers. We play seductive melodies, conjure up wonderful images, and entice people into following us. Leadership is different. It calls for keeping a watchful eye on the business and making sure everyone understands what must get done. You need to create a sense of urgency about that.
Second, a CEO should have the ability to see around corners—that is, to recognize well in advance what has to be done for the good of the business—so that the company is always leading the industry rather than trying to catch up.
Third, a CEO needs a passion for problem solving. You have to be able to figure out quickly which problems require your attention and which don’t, and then focus relentlessly on getting the big ones solved. It helps to be sort of a person who feels acutely unhappy until a problem is fixed.
Fourth, a CEO has to be able to put the company ahead of his or her ego gratification. Entrepreneurs enjoy the spotlight. That’s fine when the company is establishing itself in the marketplace, but it can become a problem later on. You need to be willing to do what’s best for the company at any given moment, which may include staying out of the spotlight.
Finally, a CEO must be financially literate in a way that goes beyond accounting. As CEO, you need to be able to use the numbers, not just to understand what has happened but to help you spot trends, identify problems, and head off trouble before it hits you.
Now, there are obviously many other traits not mentioned here, such as having a good strategic sense, working well with people, knowing how to delegate, and on and on, Brodsky says. “I value all those qualities, but the CEO has a special role to play. He or she is responsible for the success of the company as a whole. For that reason, I believe the five criteria I’ve mentioned are the ones to focus on. Do you agree. Lew me know.”