CEO Coaching: Big Personalities Don’t Trump Business Models
Bet On The Jockey But Make Sure The Horse Is Healthy!
What do Tesla, We, and Uber have in common? At least two things: unprofitable business models (as I write this) and founders with egos the size of Saturn. It turns out that a bunch of hot air is not the same as a good-looking P&L.
I’ve worked with some very engaging, big personality CEOs who were successful (and many who were introverted and more reserved), but they all had a business model that profitably addressed a market need. If push came to shove, they would modify their business model or strategy before they would suit up and ask for more money to fund a flawed model or product.
I’ve seen CEOs who had an unprofitable product or service at a unit level (e.g. store or widget) that thought their entire job was to find more funding to build more unprofitable units! And the funny thing is that there are “professional” investors willing to write them large checks!
There used to be a prevalent thought back in the dot com run-up that said you didn’t bet on the horse, you bet on the jockey. In other words, if you found a smart, charismatic CEO they’d figure it out. A few did. Many didn’t.
I am understanding of CEOs who run into unexpected challenges and are unable to maintain or achieve profitability. It happens, but even those who are smart and driven are still accountable for the failure of their business. It doesn’t mean that they are failures as CEO, in fact many talented leaders, if not most, have had some failure in their career.
What galls me is the CEO or founder who is all bluster, enthusiasm and certainty, when in fact they don’t have a plan for profitability. I had one of these for a coaching client years ago. He was a master salesman and able to find funding from many who should have known better. When queried about unit profitability he was able to change the conversation quicker than Rudy Giuliani. After opening many units with borrowed money, they went broke. Business is not supposed to be a Ponzi scheme, with never ending funding rounds.
As I’ve said before, being a CEO is hard work if done right and identifying a profitable business model is one of those hard things. A big personality won’t cut it.