What kind of CEO produces the best long-term results for their business?
If you’re a CEO or business owner, you might feel that you have to be more charismatic; louder; or more motivational. As my company grew, I felt that I needed to become a larger inspirational “presence” to my team and my clients. But, as Jim Collins discovered in his six-year study of companies that last, this isn’t true.
Collins refers to inspirational and figurehead CEOs as “time-tellers”: when someone wants to know what time it is, they ask the CEO. The CEO determines the company’s vision; selects their marketing; gets involved in product development…and sometimes they even get onto the assembly lines.
Inspirational, larger-than-life CEOs can grow a company. The problem is that the company can’t grow without them. When the figurehead takes a vacation, retires or dies, the company is lost without them. In effect, they ARE the company.
And most inspirational CEOs don’t actually grow their company. Every leader is going to make a mistake sometime, and a leader with full autonomy can lead a company to ruin if they don’t change course quickly. Some CEOs can become married to a bad idea, and with absolutely authority, they can pull the company down as easily as up.
The alternative to being a “time-teller” CEO is being a clockmaker.
The clockmaker CEO builds a company that can grow without them.
Instead of focusing on their own control or presence, they focus on building systems that guide decisions, strategy, marketing and product development.
In effect, they build a clock that can run without them. Here’s how to do it:
- First, create a clear vision for success. Think about the mission of your company, and paint a picture of success for your team and your clients.
- Get the right people on the bus, and the wrong people off. The right people don’t need to be motivated, because they’re motivated by the mission.
- Systemize everything. Create a framework for the delivery of your service – standardize excellence.
- Determine measurable metrics for every system. When your marketing is working well, what numbers should it produce? When your product is being delivered well, what kind of client retention or repurchase rate should it produce?
- Set up an audit cycle for every metric: an evaluation for each staff person, a financial audit for your P&L, an After-Action Report for your launches and events, a client outcomes audit for your results. You need to know if you’re delivering on your promises to your staff, shareholders and customers.
- Determine who is responsible for improvement in each metric.
- Determine who holds that person accountable for improvement. That’s your reporting hierarchy.
The CEO’s job isn’t to wind the clock; it’s to build a clock that doesn’t need much winding. This is the skill of CEOs who build enduring companies.
It’s tempting, as the founder of your business, to want to be a bombastic, inspirational CEO.
It’s tempting to say “because I said so!” when a staff person questions your direction.
It’s tempting to talk about yourself instead of your company.
Trust me: when my company hit the $25M mark, I was given many opportunities to do ALL those things. I wanted to be in the spotlight; I wanted to do podcasts talking about how I’d built a huge business from a little daily blog. But that didn’t last: eventually, the mission of Two-Brain was strong enough to pull me back to focus. The purpose of Two-Brain isn’t to make the CEO famous; it’s to make gym owners successful. Here’s how we’ve built the systems into our company:
- A clear vision: we’re going to make 10,000 gyms profitable for their owners, staff and clients.
- Our team is highly motivated to help gym owners become profitable.
- We have playbooks so extensive that the company could hire and train staff, determine marketing direction and spend, audit our tax strategy, update our curriculum and even produce our content without me. My hands are in some of those jobs simply because I enjoy them.
- We produce monthly dashboards for our financials, client results, marketing, and team performance.
- We audit our curriculum annually and test the performance of our media monthly. We publish our client ROI on our service.
- We have clear reporting lines for each metric, and everyone knows for which metrics they’re accountable. At our annual planning meeting, we determine these metrics and then measure against them for the rest of the year.
- We’re upgrading our frameworks for responsibility (but that upgrade was also triggered by a system: we didn’t see improvement in client retention, so we’re shifting the retention strategy and assigning accountability for the changes.)
I have no doubt that if something happened to me today, the mission of Two-Brain would continue.
Reading “Built to Last” was a bit of a relief: to tell the truth, while I love meeting with our clients face-to-face, the pressure to write motivational speeches and perform on dozens of stages every year isn’t really exciting for me. The great news is that none of us have to be a flamboyant “cowboy” leader to build a great company. While it feels good to have all of the answers–to be the time-teller–in the short term, the mission really depends on building a ticking clock.