I’m a big fan of Fred Wilson.
He’s a highly regarded NYC based venture capitalist who writes a fascinating blog on investing and technology.
This time of year, he’s spending his time in board meetings planning for the upcoming year.
When you are involved in a successful enterprise, board meetings are exciting. It’s fun to talk about growth and expanding market share. But when you are in struggling enterprise, board meetings can be very challenging and often stressful.
Wilson believes the keys to success are having a strategy and building a winning team. Here’s what he has to say:
“You have to get the strategy right and you have to have a team that can execute it without your day to day involvement. The CEOs that I work with that are struggling are usually running into issues with their team and/or their strategy. And the CEOs that I work with that are doing great generally have gotten the strategy set and have built a strong executive team underneath them.
This sounds so simple. But it is not.
Most of the companies I work with didn’t really start out with a strategy. They started out with an idea that turned into a great product that found a fit with a market. And they jumped on that and used it to build a company. Most of them wake up at some point and realize that a single product in a single market is not a strategy and they need to come up with a plan to get a lot bigger and build a sustainable and defensible business. I like to think that this is one place where a good investor group can help. If we are doing our job, we push our portfolio companies to work on their long term strategy and refine it to the point where it makes sense and is executable. But an investor group cannot give a company a strategy. It has to come from the founder/CEO and a small group of senior leaders. The smaller the group that is working on strategy, the better. Strategy is not something that can be done by committee.
The second thing, building an executive team that can execute the plan without day to day involvement of the CEO, is even harder. Most of the companies I work with go through a lot of hiring mistakes on the way to building this team. Some hire too junior. Some hire too senior. Some hire bad cultural fits. Some hire people that are nothing but cultural fit. And an investor or investor group can help with this but I believe that founders/CEOs need to learn how to do this themselves and make these mistakes. The best thing an investor group can do is to help a founder/CEO to understand when they have the wrong person in the job. Or help them understand that more quickly.
These are both areas where experience is huge. The CEOs I work with who have done the job multiple times get these two things right much more quickly. But even they can take a year or two to get these right. First time CEOs often take three or four years to get these things right. But sticking with founders who are first time CEOs through this process is usually worth it because they have a connection to the initial vision and mission that a hired CEO has a hard time replicating. There is not a good rule of thumb on this issue (who should run the company). Facts and circumstances on the ground will generally determine how that should go.
My final point on this is that once you have the strategy and team locked down, you should step back and let the machine do its thing. I like to say that CEOs should do only three things; recruit and retain the team, build and evolve the long term strategy and communicate it effectively and broadly in the organization and externally, and make sure the company doesn’t run out of money. When those are the only things you are doing, you are doing the job right. Very few CEOs get to focus on only these three things all of the time. Things break and you have to fix them. But when the machine is working and you can step back and watch it hum, it is a thing of beauty.”
This blog likes to focus on cities and there is a real parallel between what Wilson is talking about and building a successful community. And there are some differences.
First, strategy can be substituted for a community vision and while for business Wilson recommends a small group be involved in crafting strategy, in a city it helps if you have as many stakeholders involved as possible. It’s the job of elected leadership to prioritize, hone and drive the vision and it’s the job of city staff to implement in a timely and efficient manner.
But cities get in trouble when there is no strategy, vision or plan. And they get in trouble when egotistical leaders decide to keep their own counsel and cut themselves off from input or debate.
They also get in trouble when they decide to micromanage and delve into the day to day operations of the city. If you find that you are doing this, you need to stop. If you find that you need to do this because your staff can’t or won’t execute, you need to get new staff. But elected officials need to stay in their policymaking box (which is plenty big) and allow staff to do their jobs. Ideally, you should try to create a culture of experimentation and innovation not fear.
If staff can feel confident enough to think outside the box and solve problems legally, ethically and efficiently you will succeed. If they feel bullied, micromanaged and or afraid to make a mistake you have created a culture that will fail to solve problems or seize opportunities. Your best talent will flee, you will not be able to attract top tier talent and you will turn lemonade into a lemon.
I happen to believe in outcomes over process. That does not mean that process is not important or that you shouldn’t have a process. But it does mean that outcomes are more important— as long as you act legally, ethically and morally.
It shouldn’t take three weeks to type a basic building permit. It shouldn’t take a year to approve a mixed use development. It shouldn’t require an act of Congress or a deity to get a parking agreement and or a developer agreement. If it does, you got a problem.
Strategy and team; you need them both. One doesn’t work without the other. And if you are deficient with either or both, you have major problems and you cannot succeed.