A Company's First CEO Has a Hard Job, But What About the Second?
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“The early bird gets the worm, but the second mouse gets the cheese," someone calling himself "alt.buddha.short.fat.guy." famously posted to a newsgroup, in 1994.
Regardless of who short.fat.guy was, however, the phrase became an oft-cited one because everybody loves the business world’s early birds -- those brave people who take the entrepreneurial leap and found a startup.
That venturesome spirit is deeply rooted in the American soul and embodied by countless successful heroes, from Steve Jobs to Sam Walton.
Less heralded is the other type of business leader, brought in to drive a company forward after its founder moves on, for whatever reason. In the life cycle of a company, this second CEO can be just as important as the first. Just ask those who have held those jobs, from Steve Ballmer of Microsoft to John Donahoe of eBay.
I myself learned these lessons firsthand starting in 2015, when I was hired as CEO at a fast-growing software company. I was brought in to fill the shoes of a founder who had led the business since its earliest days, seven years prior. And the learning curve I faced in this new role was steep, as it so often is for many second CEOs ("SCEOs," let's call them): executives charged with steering and scaling a company through its next phase of growth, while maintaining the company's previous momentum.
In my own case, the skill set that learning curve afforded me was invaluable. SCEOs may not immediately seem to observers to be the “renaissance entrepreneurs” of start-up CEOs; but they’re every bit the same change agents, managing and stewarding business transformation in a wide range of ways, from bringing on new leadership and renovating old processes, to introducing new products and innovating new solutions.
So, what did I learn during my time as an SCEO? Here are some of the dos and don’ts from my 18 months on the job:
Do's and don'ts
Do: Aggressively seek out areas that need improvement. Change is central to the SCEO’s charter. Indeed, it's the reason many SCEOs are brought on in the first place. These executives must take frequent stock of what’s working and what isn’t, and be willing to act swiftly.
More to the point: It’s crucial that an SCEO take a kind of company-wide temperature -- connecting with direct reports, informally surveying offices and holding town halls where needed, in order to learn where to focus attention and what sort of timetable to keep. This kind of transparency has far-reaching benefits: Mobile-phone operator Three UK, for instance, saw its customer numbers rise and its business performance improve because of what The Guardian called its CEO’s “open, two-way communication.”
Meanwhile, it’s important for SCEOs to block out the noise from a previous leader who was popular and successful. As Tim Cook at Apple put it: “I thought I was reasonable at that before, but I’ve had to become great at it. You pick up certain skills when the truck is running across your back.”
Don’t: Assume that everyone will take to change in the same way. It can be tough stepping into the shoes of a much beloved founder or long-time leader. It's hard to introduce change to a business while respecting its past accomplishments. And it's tougher still to arrive at a company that’s in the midst of a transition."
Empathy is an important skill here. So, treat change as a process, not something that happens overnight. Expect to be questioned. You are joining their team, not the other way around. Be open, and work to build those connections and a shared understanding.
Humility is another helpful characteristic. As the now-retired Donahoe, at eBay, said: “There’s no perfectly woven theme. Hindsight is really easy. There wasn’t one moment during the last 30 years where I was certain I was doing the right thing. There wasn’t one moment when I was in the middle of it that I felt, ‘Great, I’ve got this all figured out.’ I still don’t.”
Do: Be prepared to sell changes to employees, rather than merely issue edicts. Make yourself available and accessible, however you can, so that the change taking place feels like a discussion, rather than a mandate.
Also consider putting employees in your own shoes, if you’re able. In their 2005 book Blue Ocean Strategy, W. Chan Kim and Renee Maugborne recommended an approach centered on empathy -- exposing employees directly to the “harsh realities” that make change necessary. An example occurred in the 1990s when the New York Police Department’s top brass regularly rode the city’s subways to understand why “frightened New Yorkers” called it the “Electric Sewer.”
The goal in such a scenario, to be clear, isn’t to scare employees into submitting to change; it’s to treat their concerns as credible, and to answer these concerns credibly, in a way that respects their intelligence.
Don’t: Fixate on a company’s past mistakes or missteps. Such a fixation is off-putting, for one thing, especially to longstanding employees who have already invested a great deal in the business. It also discourages growth, for another, and suggests to others that you have nothing of your own to contribute -- nothing original beyond your differences from your predecessor.
As a Forbes writer noted, dwelling on past mistakes is often seen as a hallmark of cowardice and may well undercut your authority later on: Leaders that lack “respect and restraint” only “stir resentment.”
Do: Stay true to your vision and to the direction you’ve chosen. Change may not come easily or immediately, and not everyone will be on board; not everyone will stay. But it’s important to trust that members of your leadership and the departments they lead will bend eventually to the path you’ve set forth.
Don’t: Distinguish between new hires and company veterans. That's a trap I found only too easy to fall into initially, as do countless other SCEOs; change is intoxicating, and it can be easy to get ahead of yourself, to prioritize your vision for the future ahead of the people in the present. That’s why it’s so crucial for SCEOs to listen twice as much as they speak, and to assure employees old and new that the mission remains the same even if everyone’s histories differ.
Do: Solicit and value the opinion of every team member. A diversity of ideas can only help you as you chart your company’s course.
Don’t: Let consensus get out of hand. There’s a fine line between encouraging debate and making decisions as a committee; be careful you don’t cross it. That was an early stumbling block for me. As the Huffington Post has noted: it’s essential that company leaders balance “rational” decision-making with the “intuitive.”
Do: Account for the geographical breadth of your business. It can be a challenge rallying troops across a company as widely dispersed as mine. So, think of ways you can bridge the distance: a video conference that connects the various offices digitally, or an off-site that brings everyone together for a few days.
Don’t: Solve for distance in a vacuum. A group of executives in a boardroom, all from the same office, can’t possibly account for every nuance and hitch in a global organization.
Instead, some kind of working group or executive council can have proven dividends. A study by the Harvard Business Review, for instance, found that the Royal Bank of Scotland’s Group Business Improvement teams were able to manage and implement change, including a merger and acquisition, requiring the migration of technologies and of people across RBS’s many businesses,” in Europe and the United States.
Apparently, the Scots understood the whole first and second mouse thing. But for future SCEOs facing these types of issues, CEOs appointed to be “second mice” can successfully tackle the opportunities and obstacles that make the job unique.