Do you think an oblivious CEO, one who doesn’t know many of the details about his or her business, can perform better than a CEO who is more hands-on and informed?
Well, if you’re a fan of the television show Undercover Boss, you might (possibly correctly) believe the oblivious CEO performs better.
If you’ve never seen the show: The CEO of the company spends a day doing front line work. And the key is that nobody knows that they are the CEO. (The image here is from the Undercover Boss Boston Market episode.)
It’s very interesting to watch the CEO do the “dirty work” and learn about the daily functions at the front lines. Many viewers are surprised, even outraged, to see how little a few of the CEOs know about the core functions of their businesses. Now, while it can be beneficial for the leader of the company to have an understanding of basic business functions, there is a good reason many do not.
Corporate CEOs stay very busy developing the vision of the business and building the right strategies and relationships to realize that vision. They are very rarely involved with the actual production or sale of the product or service provided by the company.
They are captains at the helm of their business.
They can do this because they have a team that runs the business. The best leaders have faith in everyone that has been selected to complete other tasks.
While I can’t say that you should be oblivious to what goes on in the front lines of your business, I can tell you that if you are too involved in the front lines, you will never grow your business effectively. The key is to build your business, not just run it.
Here are three steps to do just this:
Step #1: Build The Systems
Many business owners start out as a jack of all trades. They launch the business, carry out the marketing, make the sales, provide customer service, develop the product or provide the service and operate all the back office functions such as invoicing and accounting.
If this is your starting point, do it intelligently. Document your processes. Write down the steps it takes to complete each task. Then go a step further by carefully documenting the skills and aptitudes it takes to do the task well.
By doing this, you are creating the details that can be used as a job description and help you select the best candidate when it is time to hire staff or outsource a set of functions.
Use this information to sketch your organizational chart and prioritize your staffing needs. What functions can be delegated that are currently taking most of your time?
Step #2: Hire People Who Know More Than You
Whether you are hiring internally or outsourcing to a contractor, find experts in the requisite fields. Look for loyalty and beware of arrogance. A candidate that tries to impress you by speaking over your head is wasting your time. A true contributor will take the time to explain even the most complex processes to you in a way you can understand and use to make a decision.
Let’s take your IT staff as an example. If you never know what your software developer is saying, how do you know he or she is carrying out your vision? How do you know if they are being productive?
Remember, cultural fit can be more important than skill. You can teach skills, but if a person isn’t aligned to your vision, they will never be successful in your organization. An otherwise qualified candidate who is very uptight and needs structure to thrive may fail miserably in an environment where free thinking and spontaneous innovation is encouraged.
Once you have your team in place. Develop them. A confident business team is a successful business team. Keep their skills sharp, and teach them ways to continuously improve their productivity. The sharper your team, the more you will trust them. That frees you to focus on growing the business while leaving them in charge of daily operations.
They key is to stay connected enough to develop them and keep them accountable.
Step #3: Inspect What You Expect
Even with a highly reliable and trustworthy team, it is important to keep an eye on your KPI’s. KPIs or Key Performance Indicators are metrics that you track that give you a comprehensive feel for the health of your business. Think of yourself as the captain of the ship — you have instruments and reports that tell you the speed, direction, fuel consumption, etc. — everything you need to know to ensure you are on course to your target destination.
Carefully consider your operations and then establish metrics and thresholds that will give you warning if something is going wrong. Have checks and balances, dotted lines, and redundant procedures to ensure proper inventory control, money handling, deposits, payroll, etc.
For example, if gas mileage expenses have been running $1,000 per week, and one week the report shows a total of $3,286, this is an anomaly that needs to be investigated. By having a report that shows trends and thresholds, this is easily detected.
In summary, in building a great business, you cannot know every detail about it. Rather, you need to create systems, hire the right people, and track the business’ KPIs. When you do this, you no longer work for your business; rather, it works for you.
And that’s how it should be.
Anita Campbell
Hi Dave, When I first saw the title of this article, I thought “surely that has to be a rhetorical question”! 🙂
As my team will tell you, I often use that phrase “inspect what you expect.” I think it was first said by management consultant Demings, but a number of business leaders since have used it (including me).
The challenge for new managers is always to get the right balance between delegation and leadership. It’s one of the trickiest things to learn. Reports and metrics are crucial for staying informed and leading, yet not constantly being in your team’s hair.
– Anita
Great comments Anita – thanks!
Ivana Taylor
Hi Dave – Thanks for writing such an insightful article! I am a HUGE fan of Undercover Boss for a variety of reasons. Yet I find myself teetering between the shock you explained (that they don’t know what’s happening) and the reality of the situation — their job is NOT to be on the front lines.
And this is what brings me to the core of why I love the show. What is shows is that a great leader has the courage to get out on the front lines and not “look good” but use the experience to collect information that they then use to propel their vision and as you and Anita say “Inspect what you expect”.
I give a lot of credit to the CEOs who do this because they recognize the marketing value of having your company be on TV for an entire 43 minutes (who can afford that kind of ad time during prime time) and because they are leveraging this exposure to actually grow their company.
I’d be interested in seeing if any of these activities were actually useful to some of the CEOs who were first to be on the show.
I am the President of a small business and we recently filmed this Very Small Business Edition of Undercover Boss. Maybe some of the elements will resonate with your readers: http://www.youtube.com/watch?v=tF3Yg7UhQGA
If you’ve never seen the show: The CEO of the corporate spends an afternoon doing front line work. And the hot button is that no-one knows that they’re the CEO.