One of the key roles that every CEO performs, especially in a company's early stages, is engaging in what I call Player mode. That means the CEO spends his or her time performing a key function within the company--say working on sales, marketing, or engineering--that adds value. In fact, the CEO is probably the most valuable person inside the company at that function because of what they're able to bring to the table in terms of effort and results. In order to get the business off the ground, you might spend 75% of your time in player mode--because it is needed and there isn't anyone else.
But as the company grows, you begin to add talent and layers to the organization and its management team. And when that transition happens, the CEO needs to change roles and spend far less time in Player mode. If a CEO continues to operate excessively in Player mode--which I would define as anything more than 25% of his or her time--then the CEO actually begins to harm the business in dangerous ways.
It boils down to three key areas where a CEO who does too much of the wrong thing hurts their company:
- They don't allow their people to develop.
- They diminish the value of the company.
- And they limit their ability to ever sell or leave the business.
Let me explain.
The more a CEO operates in Player mode, say swooping in to close big sales deals or to resolve the latest software bug, the more they limit the ability of their team to grow and develop their own talents, skills, and proficiencies. In fact, you train the people in the organization to count on the CEO as a Player and become dependent on their talents.
Because the company's talent base doesn't improve, it then limits the company's ability to scale, because the CEO only has so many hours in a day--which then diminishes how an investor might value the company.
And the more a CEO makes themselves integral to day-to-day tasks that drive the success of the business, the harder it becomes for them to ever actually leave or sell their business. The business essentially no longer exists without them. It's like a puzzle without a key piece--incomplete.
That's something a potential buyer would see right away, which means even in a best case scenario, they would ask the CEO to stick around for two to three years after any sale--which means the CEO will be stuck in that functional role while someone else actually runs the business. It's like you've become a living example of that old commercial for Roach Motel: you can check in, but you can never check out!
What a nightmare.
That's why if you are a CEO who wants to grow your business, sell it someday, and get the maximum value for all of your hard work, you need to get yourself out of Player mode today--before it's too late.
And to make that transition, you need to evolve from Chief Executive to Chief Delegator. Now, as a CEO myself, I know how difficult that can be to do. Most highly-driven entrepreneurs understand how difficult it can be to find people that are as good at them at performing certain tasks.
That's why you need to embrace the 70% Rule, which states that if you can find someone on your team that can handle one of your tasks 70% as well as you can, you delegate it. Of course, there are exceptions when it comes to some mission critical items. But trust me: most of what you do in Player mode can and should be delegated.
And by doing so, you'll see a tremendous payoff in a couple of ways. One, you'll begin to develop your talent base. Your team members will improve their competency over time at doing those tasks you've delegated, becoming 80% or 90% proficient, or perhaps even better than you after a while.
Just as importantly, you'll find that the more you delegate, the more time you create for yourself to devote to even more valuable activities. Think about the math for a moment. Which would you choose: Getting a 70% result for spending 0% of your time, or getting a 100% result from spending 100% of your time? It's a no-brainer.
But it should be noted that delegating is as much as art as it is a science. When you delegate a task to a member of your team, you need to give them enough information and the boundaries about how to do it, but then you need to step aside and let them do it in their own way. You can't keep opening up the oven to check on the cake, so to speak, or you've never really delegated the task.
We'll dig deeper into the topic of effective delegation in our next piece. Until then--stop playing around. You're only hurting your company as a result.