The “Professional” CEO

I’m some­times asked what makes a hired “pro­fes­sion­al” CEO dif­fer­ent than a founder CEO.

The obvi­ous answer is expe­ri­ence.

Some great ques­tions to ask are: “What does expe­ri­ence specif­i­cal­ly give a ‘pro­fes­sion­al’ CEO that is typ­i­cal­ly lack­ing from founder CEOs? Can the lat­ter sup­ple­ment that knowl­edge gap in some way to remain CEO with­out the typ­i­cal down­sides asso­ci­at­ed with a founder inex­pe­ri­enced in the CEO role?”

This is a nuanced and com­plex top­ic that can’t be cov­ered ful­ly in a sin­gle arti­cle. How­ev­er, I will high­light one par­tic­u­lar skill that tends to come with expe­ri­ence.

Expe­ri­enced CEOs rec­og­nize data pat­terns that reveal under-appre­ci­at­ed oppor­tu­ni­ties and over­looked prob­lems.

Let me give you an exam­ple from an entire­ly dif­fer­ent domain. As a learn­ing pro­fes­sion­al, I do a lot of cross-train­ing in mul­ti­ple busi­ness and non-busi­ness fields.

For the last two years, I’ve devot­ed myself to cross-train­ing in the med­ical field as a wilder­ness first respon­der and search-and-res­cue pro­fes­sion­al, and I’ve been work­ing toward becom­ing an EMT.

When I first learned vital signs, I was very focused on how to take them and on mem­o­riz­ing what accept­able high/low ranges were for each. Once we cov­ered the basics of each vital sign, we were taught how to inter­pret a com­bi­na­tion of vital signs in the con­text of the over­all clin­i­cal pic­ture.

For exam­ple, if a patient’s pulse and breath­ing rate were both abnor­mal­ly high, these two data points have enor­mous clin­i­cal sig­nif­i­cance.

One of the things I learned about vital signs is to always take a base­line set of vitals that can be used for lat­er com­par­i­son. This allows me and those that lat­er pro­vide a high­er lev­el of care to a patient to do trend line analy­sis. This helps to deter­mine if the patient is doing bet­ter or get­ting worse.

If the patient had just fin­ished a work­out, breath­ing hard with a rapid pulse would be expect­ed (with both vital signs return­ing to nor­mal in a few min­utes after the work­out end­ed).

If the patient had these same vital signs while sit­ting on the sofa watch­ing Net­flix and the vital signs con­tin­ued to get worse, that would be of con­cern.

Your body pumps blood faster and breathes hard­er for a rea­son; a first respon­der’s or clinician’s job is to fig­ure out why the abnor­mal vital sign is hap­pen­ing and how to address it.

Is the patient’s air­way open? Is he get­ting enough oxy­gena­tion? Is there anoth­er rea­son behind this vital sign pat­tern? There are fair­ly stan­dard pro­to­cols to assess each of these ques­tions.

In the mid­dle of learn­ing about patient vital sign pat­terns, I had an epiphany. Some­thing about the process seemed extreme­ly famil­iar to me, even though none of the details were famil­iar to me.

I real­ized that the vital signs for a patient are real­ly the exact same as key per­for­mance indi­ca­tors (KPIs) for a busi­ness.

Ever since I worked with my first client at McK­in­sey 26 years ago, I always get a client’s cur­rent month KPIs/financial state­ment and at least a 12-month trail­ing his­to­ry.

I want to know if dif­fer­ent parts of the busi­ness are improv­ing or declin­ing. In busi­ness (as well as in med­i­cine), a rela­tion­ship exists between KPIs (and vital signs). When one met­ric goes up (like sales) and anoth­er goes down (like gross mar­gin %), that means some­thing. It has “clin­i­cal” sig­nif­i­cance.

The dif­fer­ence between an inex­pe­ri­enced CEO and an expe­ri­enced one is that the lat­ter has a much larg­er pat­tern recog­ni­tion (men­tal) “data­base.”

They notice the oppor­tu­ni­ties over­looked by less-expe­ri­enced CEOs. They also see prob­lems that, to them, are as glar­ing as fin­ger­nails scratch­ing a chalk­board, but that don’t seem unusu­al to the inex­pe­ri­enced CEO.

Every indi­vid­ual (myself includ­ed) has an upper lim­it to their skills. There’s a point beyond which it real­ly makes sense to have some­one else run your com­pa­ny instead of you.

How­ev­er, you can raise that ceil­ing fair­ly sig­nif­i­cant­ly by sup­ple­ment­ing what you might lack in terms of pat­tern recog­ni­tion expe­ri­ence with out­side resources.

The four most com­mon sources of this exper­tise are:

1. Advi­sors
2. Board Mem­bers
3. Val­ue-Added Investors (who pro­vide exper­tise in addi­tion to cap­i­tal)
4. Expe­ri­enced Exec­u­tives to Run Func­tion­al Areas (e.g., VP of sales)

I’ve seen all four sources (often con­cur­rent­ly) work out well for an inex­pe­ri­enced CEO. I work in the first two roles as an advi­sor and board mem­ber. I often work with clients to recruit the right investors and sea­soned exec­u­tives, work­ing along­side them once they are brought on board.

You don’t always need to hire a pro­fes­sion­al CEO to run your com­pa­ny. What you do need is to ensure that across your entire team of exec­u­tives, board mem­bers, and advi­sors, you col­lec­tive­ly have the same skills as an expe­ri­enced pro­fes­sion­al CEO.