CEO Decision MakingTags: CEO, decision making, startups
I discussed how I analyze companies based on a certain analytical framework in this previous post. Today, I want to complement that analytical framework with a CEO heuristics I always use when interacting with the CEO of a company we are contemplating investing in at R66.
Namely, how does the CEO process information and how does he drive to decisions. There is obviously much more detail that comes into play when assessing a C-level executive. This framework I use early on in my evaluation process to gauge the type of person I am dealing with.
The framework could not be more simple.
Grounded vs Ungrounded: On the one hand there are CEOs that ground their assumptions and their thinking prior to acting a decision. This grounding happens via analyzing and understanding facts and via creating an environment that elicits, values and takes into account feedback from colleagues, consultants, peers, mentors, clients and board members. On the other hand there are CEOs that do not care much for facts or listening to others.
Consensus vs Conviction: Certain CEOs are inhabited by an internal conviction about their business, the vision, the path. That conviction drives what they do, how they decide, what they decide and where they lead the company. Others rule by consensus by deferring too much to third parties convictions and trying to reach a middle ground.
Needless to say I seek CEOs with strong convictions and a grounded mind. These CEOs deliver the best outcomes obviously. I can work with CEOs that prefer consensus and are grounded as long as they are well surrounded. The results they deliver may not be as optimal but the play is safe.
I shy away from “ungrounded”. Everyone should. Someone told me long ago “You are entitled to your opinion but you are not entitled to the facts”. If a CEO disregards the facts, twists them and becomes ungrounded, bad things happen fast. I am unsure which is worse actually, ungrounded with consensus or ungrounded with conviction. An effective leader with conviction that leads along the wrong path will be a disaster to any company. So will an ineffective leader mind you.
My two cents when dealing with a CEO: Try to figure out early on in the relationship how he/she processes information, interacts with others and what inner fire drives them.