Ep. 10 - The Teams You Need, Part 3 of 3
The people you hire to your executive team will impact how successful you can be as a business leader. It’s easy to surround yourself with friends and cheerleaders who share your vision, but you have to ask yourself, “Are they really right fit for the job?” If the answer is no, you might want to hire professionals instead that better fit your available positions. This reasoning also applies to you as the owner. Ask yourself, “Am I really fit to lead this company to the next-level?” These are tough questions but they have to be answered ASAP!
Listen to today’s episode with Dr. David Gruder and Jason Tuzinkewich as they talk about the best way to build your executive team. This is part 3 in "The Teams You Need" series, which explores the big challenges that effective executive teams face and how to turn them to your advantage. Find the right people to help you build a thriving business right now!
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The Teams You Need, Part 3 of 3
Your Executive Team
In this episode, we are doing part 3 of a 3-part mini-series on the three teams you need to thrive as a business and those three core teams that help businesses flourish. As a quick review, in the first part of this series, we covered your life after the ownership team, and in the second part of this mini-series, we covered your trusted advisor’s team.
In this episode, we are going to be exploring the big challenges that effective executive teams face and what to do about this. For those of you who are new to this show, I'm David Gruder, the business lifecycle exit planning and post-acquisition psychologist for Blue Sky Business Resources. With me, as always, is the illustrious and talented co-host, Jason Tuzinkewich, Blue Sky's Chief Operations Officer. Take it away, Jason.
It is great to be with you again. For all of those who are coming back, thanks for visiting us again. I'm excited about this particular portion of this three-part series because of the executive team. It’s the team that business owners are most familiar with. There is a lot of work to be done in this team. This is going to be the hardest of the three episodes to put into action for a lot of business owners. I'm excited to dig in and help facilitate some new thinking and changes.
There are a lot of daily challenges that executive teams deal with, but there are five big challenges that executive teams must face in their quest to be exceptional. The first of those challenges is composition. When you think about business owners starting a business, they are surrounded by the people they are comfortable with. They are surrounded by cheerleaders and champions of their vision. Those people tend to get placed in a seat because they are comfortable. They are cheerleaders and champions. They are behind the vision and the idea but are not always placed in a seat because of specific qualifications or their capability to be an alternate perspective and support critical thinking throughout the business development piece.
Taking the time as a business owner, an entrepreneur, and a leader to think about what does this team need? How do I find a home for my friends, my champions, and the people that are enthusiastic about building this vision but filling my executive team with the right people, skills, and perspectives in each of those critical chairs? It is important. It is something that doesn't get as much attention, especially in younger or closely held private businesses, as it could.
One of the challenges that founders of businesses have is the tendency to surround themselves with people who think similarly to them. A high-functioning executive team is composed of people who don't think alike. They are certainly unified in terms of vision and mission, all of those purpose-related things and values. Their perspectives and temperaments are diverse. That is challenging. The other thing that is challenging for business owners is to surround themselves with executives who are smarter than they are in their areas of expertise.
That ties into challenge number two, which is in addition to the composition of your executive team and getting them in the right seat on the bus. The role-matching dimension is the second challenge. Not everyone is right matched, first of all, to be an executive. They are right matched to being an executive or growing into being an executive if they get the necessary training and mentoring in order to step into an executive mindset and skillset. The question still remains. Which executive role are they best matched to excel in and contribute through?
This is another challenging decision for business owners to wrap their heads around. If you have founded a business, you already know in your heart that you can do it better than any place you have worked for up until starting your own business. However, there are many ways to achieve your vision, and even though you can do a lot of things better than were done in your prior employment, it isn't going to help your business grow if you remain the chief cook and bottle washer. You are trying to do everything that you can do well.
There is an old saying you may have heard, “Just because I can, doesn't necessarily mean I should.” Maybe yes, maybe no, but that is part of the honesty that is important for business owners to go through. We will go into a little more detail on this with some of the upcoming challenges. The last thing I will say for now is that a lot of business owners don't fully understand the importance of each seat that is necessary for a thriving executive team. We will go into details about that and connect with what each seat requires of that particular executive.
A lot of my entrepreneurial colleagues and friends are of the mindset, “None of us care about titles.” We don't want to necessarily be like, “I started the business. I have to be the CEO.” In having that mentality and this being my third startup, what I realize is you are short-changing yourself. There is a difference between respecting a role for the job function that is required and being super title conscious. All of these roles exist for a reason. There are specific expectations and requirements that the business has of the people that are fulfilling those roles.
There is a difference between respecting a role for the required job function and being title conscious.
If you think about it, the CEO has to be the flag bearer of the vision. The CEO is required to be able to be looking several years into the future and question all the time, “Where are we headed, and what can get in our way?” Leading the rest of the team in that strategic vision standpoint and orchestrating the rest of the people around them to achieve it. The skills of a CEO are visionary, great team facilitator, and good at taking a lot of feedback from a lot of disparate sources and translating it into momentum. A CEO doesn't necessarily have to be a great tactician. That is one of the great things to think about as you are looking at the rest of these roles. Before I go further, you were going to say something?
An add-on about purpose-based businesses. Where are we heading in a purpose-based business? The other question that is asked and that people stay connected with is, why are we heading there? Not where are we heading, but how is our direction that we are heading in serving our highest vision and the highest sense of purpose for being a business in the first place? Oftentimes, people don't devote time to the why question or sufficient time to the why question. They don't return to the why question often enough, in my experience.
That we that is encapsulated in the why isn't given a lot of credence either. When a CEO is answering the why question for us, us means shareholders or stakeholders, employees, customers, and vendors. Everybody has to be a part of that, answering the why. It has to make sense for each of them because, without that, nobody is going to fall behind your banner with passion, enthusiasm, heart, and pride to achieve it.
If you don't know how to have those why discussions, bring in a facilitator to facilitate those discussions among your executive team.
As we are talking through all of this, there are a lot of things that you may need to bring somebody in to facilitate and show you the first time. Later in the session, we talk about strategy versus tactics, how to execute and how to guide tacticians and operators versus how to guide strategists, and all of those things. Some of these concepts were familiar with the words, but the actions may be complex in some of the things we are talking about. There are always going to be specialists who can help you get the ball rolling. That is a good point.
I'm going to fly through some of the other executives very quickly, so you get an idea. There is always going to be a stability executive, somebody with a role like chief sustainability officer. That is the type of person that looks at ESG planning. They look at compliance and financial integrity, but they also look at stewardship.
Change executive, chief revenue officer or something like that, a director of R&D. They will typically be somebody that facilitates the bridge between the engineers and the salespeople, whether that is an actual R&D department, coordinating with the marketing division, to make sure that what they are researching has a market and they understand how to sell it. A role that coordinates new product development with placing those products into the marketplace.
I like this one when Dr. Gruder called it a doing executive. That is the chief operations officer. This is a role that I always jump into when I have the ability to be an executive because it is the guy or gal that bridges the gap between strategy and tactics. You have to be able to get into the analytical weeds and say, “How do we make this plan work functionally in the day-to-day grind of running our business? How do we make it efficient?” You also have to be able to talk with the visionaries and the strategists and deal with those why questions, but turn those why answers into how answers.
The chief operations officer is usually the right-hand person to the CEO. They are working in tandem, making vision actions. Chief integrity officer is one that is becoming more commonplace in the executive stack. Historically, in the old generation of, “I'm the boss, you do what I say.” Integrity wasn't something that came up a lot in many companies. Nowadays, especially with ESG and the changing dynamics of workforce expectations, business integrity is critical and essential.
The last one that I would say is a lot of young or small business owners don't give enough credence to but is critical is your financial officer. Somebody in that CFO role, I know, and a lot of you will laugh, but I have been in these businesses, but a lot of businesses start up with a family member controlling the books. That is helpful because it puts somebody in that seat. You know how to talk to them, and you can trust them.
Accounting is witchcraft. They do a lot of math backward. It is a weird structure with journaling and with dual-line reporting. If you don't have somebody skilled and proficient in that, you are going to be at risk of paying too much tax, in financial controls, and not being able to leverage all of your financial reports to inform operations and strategy.
I want to expand on this a little bit because the roles that you were talking about are important for executive teams and owners to understand at a deeper level. The reason is because what we have seen over the past couple of decades is a whole bunch of creative-sounding chief XXX roles, chief happiness officer, etc.
My perspective about that is that the reason that we have seen these kinds of novel and different kinds of supposed executive roles crop up is that businesses intuitively recognize that there is something out of kilter about the conventional executive team structure. What is out of kilter, especially in this world where we have transitioned from the experience marketplace or economy into the transformation marketplace or economy, is the composition of an executive team needs to reflect our fundamental composition as human beings. Businesses are fundamentally people.
There are five core archetypes the roles that Jason unpacked with you reflect. What I mean by an archetype is templates that capture crucial aspects of what it is to be human. I want to context the roles that Jason was talking about in a way that I hope will make it easier for you to remember. Think about the image of a big plus sign. You got a vertical axis and a horizontal axis. In the horizontal axis, you have two counterbalancing equally important roles or archetypal energies. One is stability, and the other is change.
A healthy organization and executive team need both. They need an officer who oversees the transformation process. That is what Jason was talking about in terms of a change executive who is overseeing transformational aspects of the organization, such as research and development, marketing, sales, and things along those lines. They are the revenue officer, not the financial officer, but the officer who is always looking at how you optimize revenues from the right customers and clients.
The stability officer is the counterbalancing energy of transformation or change in that horizontal access in the plus sign. They are responsible for sustainability, stewardship, compliance, and financial integrity. The chief financial officer may be the stability executive or the sustainability officer, or they may report to the sustainability officer depending on the size of the company and the needs.
The vertical axis is the beingness doing this axis. Both crucial. The doingness Jason covered is the chief operations officer translating the goals, intentions, and strategy into tactical implementation. The chief integrity officer is the missing executive that, in my opinion, most of the creative executive titles are unwittingly trying to fill. It is because HR got hijacked.
The whole initial original vision of the HR role was to nurture the team and individual development in a company. What HR rapidly acquired or was given was responsible for the compliance, following the rules, and sticking to the procedures. Both of those things are important, but they are different hats that require different temperaments, mindsets, and skillsets.
If you got a stability executive, they are handling the compliance pieces. The chief integrity officer handles the team's development as individuals and collectively. They are making sure that, at the same time, the reputation of the organization and the business out in the world is a high-integrity reputation because the customer experience is superb customer experience.
If you think about that plus sign, you got the energies of being this and doing this, the chief integrity officer and chief operations officer. In the horizontal, you got stability and change, the chief revenue officer, and the chief sustainability officer. At the intersection of those four energies of humanness being this, doing this stability and change is the orchestrator, the CEO. They are the choice maker about how to utilize the energies of being this, doing this stability and change on behalf of the higher vision and mission of the company.
If you understand this basic architecture of human beings and architect the design of your executive team around these five core archetypes of being this, doing this stability, change, choice making, decision making, and orchestrating. You will have a tight executive team that covers all the bases that need to be covered, with all of the managers and other people reporting to each of those executives, as appropriate.
At the end of the day, if you think that you are going to hire better candidates by calling your chief marketing officer or the master sensei to the sales ninjas, that is great. Have fun with it but make sure that beneath those fun titles, is clarity of purpose and functionality, and a true understanding throughout the organization of what they are responsible for.
Beneath every job title must be clarity, purpose, and a true understanding of what they are responsible for.
I continue to be a person who doesn't care about titles, but I respect the needs of the business. That is where we need to be. I like the way that you broke that down for us. Thank you. The next thing moving right from that into the next level of being this versus doing this. We got to talk about this idea of tactical versus strategic thinkers.
A lot of people start their own businesses because they are extraordinary tacticians. That is great that you can do functionally better than anybody you have worked with. That is why you think you should do it yourself. If you are a great tactician, recognize your proud tactical voice and get yourself partnered with a strategist.
The thing we are talking about here, this being this versus doing this, strategy is the vision. It is designing the sandbox in which you will play and determining where you are headed. It is pointing the bus in the right direction. Tactics are turning those plans into action. You need to have an executive team that is skilled in both. There aren't a lot of individuals that are exceptional at both simultaneously. They take a different perspective and mindset.
If you are good at strategic planning, but you find yourself like I do, getting into the weeds of how this happened, all of that energy that you spend thinking about the tactical elements of implementing a strategy are taking you away. They are bringing your attention down to the business and taking your attention away from looking above the business. Being a person who loves to dig into the weeds, I love to get an idea and put my head down and tacticalize it. I made that word up. I need visionaries around me to help keep me focused on that big picture. There always has to be somebody with their head up looking around.
It is not that strategy is superior to tactics or tactics are superior to strategy. They require each other. Where I have seen executive teams get gridlocked is when you have executives who are strategists trying to have strategic conversations with executives who are tacticians or executives who are tacticians trying to have tactical conversations with executives who are strategists.
In larger companies, I have come to advocate the separation of a larger C-Suite into a strategic suite, an S-Suite, and a tactical suite, a T-Suite. The strategists can talk amongst each other and share with the tacticians what they have come up with for the tacticians to translate into tactical decision-making, tactical planning, procedures, resources needed, and sequencing.
The tacticians need to be able to talk among each other and report back to the strategists about where the holes are, where the refinements need to be, and the strategy. There is communication between the strategists and the tacticians. I see gridlock happening over again when those two types of mindsets and roles are trying to have conversations with each other that aren't going to work. That conversation is a strategist talking to a tactician about strategy or a tactician talking to a strategist about tactics.
It is critical when you start recognizing these two camps of experts and leaders within your executive team. You start moving forward by letting them embrace their best capabilities within the organization. It is important when you come together to agree on the outcomes. Where this gridlock happens is the strategists want to be done when they have a strategic plan. The tacticians want to be done when they can visualize how to implement that plan. There is a feedback loop there.
The strategists will come up with a plan they feel good about. The tacticians will take that and say, “Let me work with it for a minute.” They will come back and say, “Here is what we got. Here are where we see the holes in it.” The strategists will say, “We can deal with those holes, but we don't like this thing tactically.” When you are meeting together and crossing that border, it is important to say, “Is this an overview discussion where we are getting the first framework, and the tacticians can develop a plan? Are we presenting a tactical approach and getting feedback, or are we trying to finalize our goal forward plan?” If you have an understanding of what type of conversation we are having, we can facilitate a lot more success.
I feel a need to emphasize one part of that, which is that the trap of the strategist is to wait too long to turn strategy over to tacticians. The trap of the tactician is to try to move into tactical implementation before the strategy is clear. This is where the collaboration between strategists and tacticians and the understanding of sequencing between those two functions is important. Strategy proceeds tactics. That doesn't make it more important than tactics. It is a sequencing issue. Two equally important things, sequencing-wise, strategy comes first. Tactics come second. Executive teams forget that.
Strategy precedes tactics, but that doesn’t make it more important.
Tacticians always want to go. I'm guilty of that all the time. I'm like, “I get the concept. Let's go.” Why don't you kick us off into challenge five, and we will start building some success here?
Let's do that. As a quick review, 1st) Composition of the executive team. 2nd) Role matching, making sure that each person on the executive team is in their best role. 3rd) Architecture. How are you structuring the selected roles in the executive team? 4th) Strategic versus tactical thinking. 5th) We wanted to illuminate around executive team development is constantly becoming whom your business needs you to be.
The heart of executive development is that your business if it continues to grow and continues to move forward, what your business is going to require each of your executives is supposed to evolve and change. Sometimes there are executives that are brilliant with startups, for example, but they are not brilliant with scaling and vice versa.
There are some executives who are brilliant at scaling, but they are not brilliant at startups. Those are a couple of examples of what I mean. No harm, shame, fault, or blame. There are certain people who want to continuously grow and become whom the business needs their role to be as the business grows. That is fine if you have that temperament. If you don't, it is important to know when the business has outgrown your way of filling a particular role.
An important warning story about that is the founder of Uber. The founder of Uber had a huge hand in developing Uber into a large, viable, and profitable business. His mindset was a founder's mindset. It was an early-stage CEO mindset. As Uber continued to grow, what it needed its CEO to be capable of doing, exceeded what Uber's founder had the capacity or the willingness to do. I don't know which of the two it was. It might have been a combination of both.
The bottom line was that the board finally said to Uber's founder, either expand, become whom Uber needs you as the CEO to be now in its development, or get out of the way. When Uber's founder did not do that, not only did the board remove Uber's founder from the CEO role, the damage that the founder was doing, in the board's opinion, was significant enough because Uber had outgrown that founder's capacities. The board bought Uber's founder out and completely removed the founder from the business altogether. They didn't just remove him from the CEO role.
That is a warning story about how important it is to constantly become who your business needs you to be or to recognize that it is time for you to get out of the way of a particular role. For a CEO, what getting out of the way might be is moving out of CEO into chairperson of the board and bringing in a CEO whose skillset is more properly aligned with what the business needs the CEO to be able to do at this point in its development.
This gets back to what I said at the beginning. Sometimes this is hard work. For any founder of any business who has put their heart and soul into that business, it is hard work to say, “I'm not the steward that is going to drive this business to its next level of potential and make the necessary changes.” That is challenging work, but it is important work.
It is something not to do in a vacuum. This is where advisors, facilitators, and mentors are important.
The executive team isn't just the operational executives. There is always the advisory board that is part of this decision-making and understanding process. The trusted advisor's team that we talked about last session are great voices. They are close enough to the business. They understand what is going on, but their arm's length is enough. They can sometimes make less emotional assessments of how the team is doing.
This leads us to how we take this information, which for a lot of people, some of this information is new information. How do we take this in and start translating it into success for our business? The first step is going to be something that you will hear from me often. That is to get an educated, clear-eyed, fact-based, and operations-based understanding of where you are at. There are assessment tools that can be utilized to do that. There are all of the stakeholders that we have talked about. The three teams that make your business successful over the long haul, as well as your board of directors, that you can talk to.
You can start taking in the voice of your employees, customers, and vendors, but get as much information as you can, distill this information with your team and get clear-eyed about, are we all, as leaders, the right people for the seats we are sitting in? Are we executing the demands of our role? Does some reshuffling or retraining need to be taken into account?
When you make an assessment the first time, and you establish that baseline, if you are not performing at the level of need of your business, that doesn't mean you necessarily have to step away. If you can get there, bring in a mentor or a coach, educate yourself and get there, that is great. Let's do it. Sometimes it will mean, “I have been sitting in the CEO role forever, but I'm a lot more of a tactician. Maybe I should step into the COO role. I take a step aside and put a strategist into that CEO role and let's see how much more our business can do.” Getting clear-eyed in that assessment is always step one.
If you are not performing at the level your business needs, that doesn't mean you necessarily have to step away.
Step two is implied or built into what you were saying, which is doing that, getting that education, doing clear-eyed assessments, and making informed decisions about these things, requires an external executive team development consultant.
If you don't even know where to look for that, you can always reach out to us, but your trusted advisors will be another resource to find those people. The next step in this transition into a more successful executive team is recognizing that your C-Suite doesn't have to be the sole decision-making body. We have alluded to this a lot, but if the people that have helped you get to where you are, your friends, your colleagues, your cheerleaders, and champions, aren't necessarily the right people for these executive roles, there are other roles you can take to still drive the trajectory of the business and guide success.
You may want to be more of an operational standpoint and take a management or a functional role in the business itself. Leave all that obnoxious executive in work to people who enjoy it. You may want to take a seat on the board and guide from a little bit more of an arm's length. Even if you have a seat on the board, you could still be in operations and working, but not sitting in that C-Suite.
Understanding that there are all kinds of different roles within an organization where you, as a founder or an executive, can still guide, lead and have a voice, even when you take that clear-eyed look, you are like, “I'm not the best person for the CEO role. There are a ton of other roles that are equally important.”
What you are talking about is a formula or an approach to not falling into the trap of management by crisis. We are talking here about being proactive rather than reactive. The final piece of the roadmap in terms of looking for a solution is to take to heart what we have illuminated in this episode about C-Suite architecture. I can't emphasize the importance of that strongly enough. I want to encourage you to re-read that segment to what Jason described as the C-Suite architecture roles and the archetypes that those roles correspond with. That plus sign is a visual to help anchor that clarity for you.
As always, we like to leave you with a couple of takeaways. The nuggets that we thought were the things we like you to carry with you after this episode. The first little nugget that sticks with me as we were putting this together is that myself included, business owners and entrepreneurs, historically, we haven't seen and don't come across a lot of business owners who have taken the roles and the formation of their executive team seriously.
When I hear origin stories of why did you pick this person for COO? It was like, “He has been my right-hand man forever. He is my buddy. He was my first employee. He is sitting next to me. I'm the CEO. I founded the company. My first employee is the COO, and he is doing whatever I say.” That is great. I love the loyalty and respect inherent in how most smaller businesses and privately held companies put together their leadership structure, but a little bit more thought and diligence in creating those executive teams can mean millions more dollars in your retirement. A lot more success and fun in the future of your business.
Putting a little bit more thought and diligence into creating your executive teams can mean more dollars in your retirement.
What you are describing is non-blood, relative nepotism. Nepotism notoriously implodes a business. The second takeaway is we have emphasized this quite a bit in this episode already. I'm going to review this as a reminder or underlining, which is don't assume that because you founded your company that your role should be even in the beginning, or if it was, that it should always remain to be the CEO. This is a hard pill for a lot of founders to swallow. If you are truly a servant leader to your business, and you are truly dedicated to allowing your business to grow and helping your business grow, it is important to stay awake about that decision-making.
Following right in line with these takeaways, don't automatically assume that you are going to populate your executive team with your family and those friends of yours that are like family. Sometimes it works and makes sense. You got somebody that you know you trust. They are extremely skilled, and you have already been through conflict with them and know you can disagree in a productive way.
If you can say all those things, maybe that family member or close friend is a great executive for your team. If you can't say those things, especially the conflict piece, and you haven't experienced those, and you can't say, “Definitively, this is the strongest person that I can think of for this role, and I can disagree productively with them,” take pause, think long and hard before you make that decision, because it is not a business decision at that point.
The final takeaway is that if you want to do a deep dive into the C-Suite architecture and understand how the perspectives, mindsets, and temperaments of each of your officers and executive team need to be different from each other. Everyone can appreciate each other's differences rather than get gridlocked, and power struggles over who is right and who is wrong. Even if it sounds self-serving, I will encourage you to read the book The Nimble C-Suite, which I co-authored with Mark S A Smith.
I have no bird in the hunt on this one, but I have read it. It is a powerful book and an easy read. I'm fully behind. You all take a look at that. With that, on behalf of Dr. Gruder and myself, thank you very much for joining us. I hope you enjoyed this time as much as we did. Please do consider subscribing. If you use any platforms, leave your comments in the comments section.
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