The Expertise Trap for CEOs
The danger of leading an enterprise company like a startup
There are two approaches to the CEO job.
The first approach, and the way most people perform the CEO job, is from a position of expertise. Their mindset is: I am the person who knows the most about everything and am the best person to make all the decisions. In order to make those decisions I need to collect data from all parts of the business and have it available at my fingertips to quickly decide and execute. This is how most startups run, and it is in fact the most effective and efficient way to run small organizations—say, 20 employees or less.
The challenge is that as the organization grows, eventually the CEO becomes overwhelmed with data and people and can no longer direct everything personally. We see many startup founders floundering at this stage as the organization becomes too complex for one person to be the expert in all the areas of the business.
Once a CEO realizes they have reached this stage, they need to shift to the second approach, to leading from a position of strategy. They must move from a tactical focus, where they make all the decisions, to primarily setting the direction for the organization. They must move from working primarily on current issues to anticipating and managing issues in the future. And they must go from making all the decisions themselves to teaching their managers how to make decisions.
In strategic mode, the CEO’s default mode is not taking in information but passing down intent. While they have a strong grasp on how the company’s product is made, marketed, and sold, they don’t spend a great deal of time sifting through the historical data generated by these departments. Their priority, instead, is setting the vision and holding people accountable to delivering results.
Think for a second about which type of CEO you’d rather work for if you’re at a large organization.
The CEO in expertise mode not only demands a lot of busywork from the team (I’ve seen highly paid executives spend hours a week preparing essentially meaningless reports for operations meetings). They also imply that they are the “brains” of the operation. As long as enough data flows up from the organization to them, they can handle the thinking part.
Some CEOs become addicted to getting all the information they can. They become like an episode of Hoarders. They can’t pass up anything because what if it contains the one tidbit of data they need to heroically steer the business?
Ultimately, it’s very hard to lead a company at scale unless you’ve graduated to the strategic mindset and become a real enterprise CEO. Here’s how that leadership approach works:
1. Set the vision, decision criteria, and high-level goals. Strategic CEOs carefully craft these elements and consistently communicate about them to the team.
2. Gather metadata on the goals to monitor progress. CEOs in expertise mode love raw data. Strategic CEOs ask for the metadata. They have their executives interpret the data and answer what really matters: Will we meet our goals on time?
3. Manage people based upon their ability to accomplish and predict goals. Rather than getting directly involved in people’s work, strategic CEOs manage employees based on how effectively they accomplish their goals. They prize not just simple achievement but how well those employees are able to predict the outcomes of goals and communicate early when roadblocks arise.
4. Adjust the plan as needed. Based on how the future unfolds, the CEO calibrates the longer-term goals to reflect changing reality on the ground, while keeping the team fired up about the ultimate vision.
It’s the sign of an amateur CEO to insist on being the ultimate recipient of all the information the company produces. To try and be the whole company’s singular brain is to neglect the intelligence that’s at every level of the team.
As Steve Jobs once famously said, “It doesn’t make sense to hire smart people and then tell them what to do. We hire smart people so they can tell us what to do." Especially if you’re growing up from a founder-CEO role to an enterprise CEO role, you have to work to break out of the mindset of personal expertise. Leading at scale requires a broader, more future-focused, and more strategic view.