The Most Valuable Lesson I've Learned as a CEO

 

I was recently invited to join the CEO of a Silicon Valley tech company for a fireside chat at his annual global leadership summit. He's been interviewing other CEOs at the event for years as he and his team value hearing the perspectives, experiences, and best practices of other companies. He did a great job moderating and I truly enjoyed the event.

One of the questions he asked is one I get frequently: What's the most valuable lesson you've learned as CEO?

My answer was simple: Don't leave the pitcher in the game for too long.

For those less familiar with baseball, some explanation may be necessary. Picture the following:

It's the eighth inning of a game. A star pitcher is on the mound and has been pitching well. His team is up by a few runs. The bullpen is well rested and ready for action should he start to tire. The inning opens and the pitcher gets the first out, continuing his already strong performance. Then it begins.

The opposing team gets a hit.

And then another.

It's increasingly clear the pitcher's arm is tiring and his velocity is wavering. His manager, recognizing the situation, approaches the mound and asks how he's feeling. The pitcher replies exactly as you'd imagine (remember he's a star pitcher; he didn't get that way for lack of confidence):

"Skip, you've got nothing to worry about. I misplaced that first pitch and that last hitter got lucky. I've got this."

The manager returns to the dugout and watches in disbelief as the opposing team eventually ties the game and goes on to win in extra innings. For baseball fans, you may be nodding in agreement with how familiar this scenario is. (To Red Sox fans, my apologies for reminding you of this.)

I've seen the same scenario play out countless times, both directly and indirectly. However, I'm not referring to baseball. I'm talking about business.

Leaving a member of your team in a key role when it's no longer the right fit is one of the most common -- and costly -- mistakes a manager can make. The good news is that with practice and experience it's also one of the most avoidable.

Here are a few of the lessons I've learned to help address the issue:

1. In nearly 20 years of doing business, no one has ever approached me and said they couldn't do their job. Not once. 

No matter how challenging the role, people will be inclined to believe they can get it done. It's human nature, equal parts ego and optimism. Simply put, we're programmed to finish what we've started. Admitting that we can't do it is just too hard for most of us, a particularly acute trait among overachievers.

As a result, just like the star pitcher in the late innings of an important game, most individuals are not in a position to objectively evaluate their own performance. That's where management comes in.

As a manager it's up to you to identify the potential performance issue and act accordingly. Perhaps that will result in leaving that individual in the role, perhaps not. Regardless, it's ultimately your responsibility, not theirs. The sooner you hold yourself accountable for that decision, the better for everyone involved.

2. If you have to ask whether or not someone is up to the task, you already know the answer
 
Deep down, we all know how to identify performance issues as soon as we see them. The challenge is that given the consequences, many of us may not want to admit the issues exist. In turn, we may end up asking others for their opinion in the hope we've somehow got it wrong, which may only serve to further muddy the waters.

There is a simple rule of thumb here: If you have to ask yourself (or others) whether or not someone on your team is doing their job, you likely already know the answer. They're not.
The key to managing out under performers or poor cultural fits is not so much about identifying the fact they're falling short of expectations. If we're being honest with ourselves, we're already well aware of the problem. The key is in determining whether or not that person will ever be capable of doing the job. Which brings us to #3...

3. Create a timetable

Once you've recognized a performance issue with a member of the team, more often than not, the natural inclination is to rationalize it away. This is typically a byproduct of fear: Fear of how difficult it will be to replace the individual, fear of hurting them, fear of how their team will react, etc. That fear will inevitably lead to sub-optimal decisions that have the potential to do far more harm than the fear itself.

The solution is to create a timetable as soon as you've recognized an issue exists, i.e. how long will you give the situation until making the final determination that the person can't perform in the role?

Bear in mind, there is not a single, uniform answer for this. It all depends on the individual and the situation. Whether one month, three months, six months, or a year, make sure you are doing everything possible within the allotted time to help the individual clear the bar. Be transparent about your timing and expectations. Let them know the specific measures you'll be putting into place to assist them, e.g. coaching, access to specific learning and development tools, reduced workload, organizational changes, etc. Hopefully, the changes work and that individual begins to flourish over time.

However, if it's still not enough, do everything within your power to transition them out of the role compassionately.

4. Managing compassionately should not be confused with avoiding difficult decisions

Whenever talking about this subject, inevitably the question arises: How can you transition someone out of their role compassionately? Given how much it's going to hurt them, isn't that an inherent contradiction?

My response is that the least compassionate thing you can do in this situation is leave someone incapable of doing their job in that role for too long.

Think about the last time you saw someone on your team that was struggling: The slumped shoulders, the increasingly hushed tone of their voice, their overall lack of presence during important discussions. It's all a byproduct of the fact they know consciously or unconsciously that they aren't getting the job done. Subsequently, it's draining their self-confidence, and it's only going to get worse over time. Their inability to perform is hurting them, their team, the company, and perhaps worst of all, they are bringing that energy home to their families.

The most compassionate thing you can do in this situation is to alleviate their suffering by transitioning them out of the role as gracefully and constructively as possible.

One person I know who went through this kind of transition returned several months later and said as much as they fought to hold onto their job, and as fearful as they were about the repercussions, moving on was one of the best things that had ever happened to them, both professionally and personally.

One final thought on the subject: After responding to the question about the most valuable lesson I've learned as a CEO, the moderator of the fireside chat added a somewhat unexpected observation. He said that while the other interviewees had not used the same baseball metaphor, 100% of the CEOs he's interviewed thus far responded with the same answer. 

Hope you can benefit from the lessons we've learned. 
Posted by:Jeff Weiner

Should A University Directly Invest in Student Start-ups?

Stanford recently announced that it will be directly investing in start-ups founded by students. If a company is accepted into a campus incubator and if it raises at least half a million dollars from outside investors, the university will also put money in through its endowments. The investments aren't going to be huge sums, either for the start-ups or for Stanford, whose endowment exceeds the GDP of Jamaica.

I've written extensively about these questions before, and have a long post up on newyorker.com describing Stanford's new policies and the questions surrounding them. The great virtue of the investments is that it will help train students in important life skills: raising money, running companies, creating, building. Stanford students have given the world important companies, like, for example, LinkedIn. (As a disclosure, I'm an alum with a small start-up I helped found called The Atavist.) But here are some of the questions raised:

* Stanford professors often invest in student companies. This creates potential conflicts of interest: could it, for example, affect a student's grades? Coercive power, which professors have, is not a good thing to pair with financial opportunity. Fortunately, this new fund is designed to limit such issues. But it's an issue other schools should examine if they start similar programs.

* Could such a fund encourage students to drop-out? Successful start-up C.E.O.s work all the time at their companies. Could the university promotion of start-ups lead to fewer students graduating, and could that be a bad thing?

* How does intensive university promotion of start-ups change the culture on a campus that has always prided itself on its intellectual diversity?

Silicon Valley has provided the world with extraordinary innovation, and Stanford has always had intensely close relations with Silicon Valley. But these are all important questions and reasons why we should watch this experiment.

Photo: Bloomberg via Getty Images

Posted by:Nicholas Thompson

The 5 Rules for Silicon Valley Success That Can Work Anywhere

BY Victor Hwang

Businessweek/Ian Philip Miller

It doesn't matter where you are or what kind of business you're starting, you can learn to be a better entrepreneur by looking at what makes Silicon Valley tick. Even if you own a small neighborhood business, the ability to innovate, adapt and grow is crucial to keeping your company alive. What looks like a sustainable business one day can quickly become obsolete the next. I've seen this happen too many times over the years.

How do entrepreneurs in Silicon Valley adapt? By staying flexible. That flexibility is maintained through a set of unwritten rules about how people interact with one another. These rules form an invisible social contract that supports entrepreneurs as they innovate and adjust to the ever-changing marketplace.

Here are five unwritten rules Silicon Valley follows that you should too:

1. Trust and be trustworthy. I've noticed it often takes longer to forge new business relationships outside of Silicon Valley. In some places, newcomers are eyed with suspicion for years. In Silicon Valley, however, coffee shop meetings can turn into business partnerships the next day. High social barriers, whether caused by geography, networks, culture, language or distrust, can stifle relationships before they are born. The rate of innovation increases when people break down these barriers and create bridges of trust outside their normal circles. Doing so is crucial because innovation thrives when people contribute different ideas, backgrounds skills and networks.

2. Seek fairness, not advantage. I find that most people treat business as a zero-sum game, where one side wins and the other loses. Investors are often the worst at this. However, the most successful venture capitalists know they should treat their entrepreneurs fairly. Here's a lesson some people have a tough time learning: You can't innovate alone. You need partners to take on the journey with you. Wise businesspeople have the humility to seek out long-term, positive-sum collaborations with others, and are willing to sacrifice some of their immediate self-interest for long-term gains.

3. Pay it forward. Take an up-and-comer to lunch. Introduce others to your network. Return phone calls. Become a mentor. You may think you're getting nothing back, but you are getting something of incredible value: a great reputation. You've become an expert, a go-to person, someone others know they can trust and, just as importantly, think of fondly. You also give yourself the opportunity to hear your own ideas aloud, creating the opportunity to assess whether they are still sound practices.

4. Open doors and listen. I once pitched a deal to another venture capitalist who spent most of the time typing a message on his phone. He missed a great opportunity. Listening is a key to building relationships and assessing needs. You don't want to be the one who blows off the next Mark Zuckerberg, nor do you want to be carrying on a monologue in your interactions. Ask questions and keep learning. Create an environment where diverse opinions and talents are valued and where newcomers don't remain strangers.

5. Experiment and iterate together. Here's a little trick taught to me by my design friends at Stanford: Practice saying "yes and" instead of "no" to every idea. Will all of these opportunities be good or even come to fruition? Of course not. But create a workplace where there are no bad ideas, just early incarnations of good ones. Thomas Edison tested more than 2,000 materials before developing a functioning light bulb. Mistakes don't define you. They refine you. Don't let fear of failure stop you from trying something new or taking advice from others. If things don't work out right, adapt, reload and try again.

Victor Hwang

Victor Hwang is CEO and co-founder of T2 Venture Capital, a Silicon Valley firm that builds startups and the ecosystems that grow them. He is also the author of The Rainforest Blueprint: How to Design Your Own Silicon Valley (Regenwald, 2013).