Lessons From the Top, Part 2

What does it take to stay on top? One Silicon Valley CEO gave me the famous, “Only the paranoid survive.” Conversations with leaders led me to a different conclusion. Trust and character, not control and paranoia, are the keys to staying on top of your organization.

Here are seven more lessons the CEOs of Silicon Valley learned about the job of being large and in charge (check out the first seven here).

7. Build a broad base of knowledge, but know what you don’t know.

“A CEO has to be like a Swiss Army knife — you have to know enough about everything and know when to bring in the Marines.” –Kent Mar, president and CEO of VirtualGiveaway

Every CEO should develop a working knowledge of every function with her company. Although no one expects you to be able to step in for your functional managers on a day-to-day basis, you have to know enough about everything to recognize an overlooked problem, an opportunity, or even a snow job when you see it. If a manager can’t explain an issue to your satisfaction, you need to either further educate yourself or get a new manager.

6. Delegate and let people learn by making their own mistakes — while your business can still afford them.

“I used to feel like I had to be in control of everything and have all the answers. One, it stressed me out; and two, it stressed out the people I was with. I’ve learned to back off, let go, and trust my people more. Things have worked out even better than I could have imagined. Being a CEO is like being a parent — you can warn your son about touching that hot stove, but if he touches it, he’ll learn pretty quickly.” –Andy Chan, CEO of eProNet

Every business guru and his kid brother will tell you to delegate responsibility. The problem is that delegating too much too quickly can sink your business as surely as a lack of delegation. The key is investing time up front to delegate and monitor results carefully. Managers who learn from their mistakes will be able to shoulder a larger load with less supervision; managers that do not should not be managers.

5. Identify and explain the real problems and issues that face your business.

“What I aspire to do is to listen to a story and, in about five minutes, distill it to its essence, to a very simple straightforward response or action. You’ve really got to cut to the chase and say, “The real issues is…” or “The real problem is…” and help the people in your company make the decision.” –Kevin Lynch, president and CEO of Presedia

As CEO, you have a unique perspective on the business. Unlike your line managers and team members, you need to look at the big picture. Use that perspective to filter out the burning issues and opportunities that matter — both in the present and a year from now — from the vast sea of “wannas” and “gottas” that every organization produces. Your job is to focus the distributed resources of your company on the few questions and actions that are truly important.

4. Be ready to make the tough calls.

“There’s no other job like being a CEO. In the end, there are a lot of tough calls to make. Others have opinions, but you have to make the call. The board [of directors] is looking to you. If you’re looking to the board, then you’ve got a problem.” –Lorraine Hariton, president and CEO of Beatnik

Truman was right — the buck stops with the CEO. Every company faces decisions that simply can’t be made at a lower level. Perhaps it’s a resource dispute between departments. Maybe you need to bet the company on a particular business model or technology. Either way, it’s unfair to ask anyone else to make the call. The CEO, like the captain of a ship, has to take responsibility for her decisions. Right or wrong, she’s got to stand by her choices rather than attributing them to forces beyond her control.

3. Follow through on your initiatives to make sure your decisions translate into business results.

“The analysis of what should be done isn’t difficult. The difficult part is getting past the cholesterol that clogs the decision-making veins of most corporations.” –Denis Lang, president and cofounder of Sharinga Networks

As Isaac Newton observed, in the absence of an outside force, a body at rest tends to stay at rest. Simply making the tough calls isn’t enough; you have to apply enough force to overcome organization inertia (which is even stronger with difficult decisions, when some parties within the organization are sure to lose power, influence, their jobs, or all three). Once you’ve set the organization in motion, you must continue to apply force to overcome the friction of business and keep it in motion.

2. Character counts.

“The two most important types of intelligence for leadership are knowledge of self and knowledge of others. Knowledge of others lets you understand what makes people tick. But if you don’t know yourself, there will be a gap between how others perceive you and your true self. This comes through as a lack of authenticity, and people will not follow a leader who isn’t authentic.

“In the short run, all sorts of people are successful. In the long run, there is a correlation between ethics and success. If you ask who the leader in a community is, not just the person who has the largest house, people will point to the person with the highest ethical standards.” –Ken Wilcox, president and CEO of Silicon Valley Bank

The great Harvard Business School professor Bill Sahlman has a saying about venture investing that applies almost anywhere: A lack of integrity trumps all other factors. Sahlman lost a $75,000 investment learning that lesson but maintains it would have been cheap at twice the price. The CEO’s character goes far in determining the company’s character. As the Enron scandal shows, unethical behavior on top can bring down the largest businesses in the world. Cutting corners may deliver short-term results and long-term disaster.

1. Be hopeful.

“As much as we complain about the direction of the world, from a big-picture point of view, it’s appreciably better than 100 years ago, and it will be appreciably better in 50 to 100 years.” –Ken Wilcox

If you’re not hopeful, you have no business being CEO. You and your team must believe you can make things better in the coming day, week, month, year, and decade. This is not a license to be unrealistic — after all, a tenuous connection to reality is what resulted in the dot-com bubble. Rather, you must find a realistic path that allows both you and your company to progress and grow. Even in a shrinking industry, you can strive for greater share and greater efficiency. Know where you want to be, and get your ass in gear.

That’s good advice for any situation.