Once one acknowledges the realities of cognitive bias – be that sub conscious or otherwise – the next step is to understand one’s own skillset.
It is highly likely that a CEO is more capable than many other people in the organisation and will be widely accomplished, but they will not be better than everyone at everything.
Indeed, even where an individual has exemplary and unrivalled skills, these still need to be honed and fine-tuned. As we explored in an article on skilled living, those who reach the highest levels push themselves the most, but also recognise weaknesses and will work hard to improve them.
It is also true that not all CEOs are made equal. The skills required to run a small organisation are quite different to those needed to drive a large multi-national company.
As a CEO’s business grows from a micro-operation of one or two people to a small business of up to 50 people with a sub £1m turnover, through to developing a medium sized enterprise with 50 employees and a turnover of up to £5m until it becomes a large company with many hundreds of employees and £5m plus turnover, so the skillset must adapt.
The following example helps illustrate how skills evolve and the importance of recognising one’s own strengths and weaknesses.
Meet Bob. He has a passion for coffee and runs Star Ride Coffee from a stand in London’s Canary Wharf. The stand has an excellent reputation and a loyal following thanks to Bob’s attention to detail and superior brewing skills.
Before long, Bob is making enough to rent a small coffee shop on the Wharf. He retains his customer base and carries on delivering to his high standards. Bob hires a sales assistant to help with the burgeoning queues, and he adds a limited line of cookies and baked goods.
The shop does so well, Bob opens two more branches in the City of London, expanding his product range at the same time.
Bob has gone from owning a micro business where he only needed to know about brewing coffee and doing his easy accounts, to running a small business which employs 12 staff and is making £250,000 a year.
He now needs to be capable of hiring staff, managing accounts and finances and putting systems in place to keep track of the success or otherwise of each outlet. In the first year of opening his third shop, Bob struggled to keep on top of the different revenue streams from each branch. He also suffered from high staff turnover and found it challenging to keep on top of overheads.
Bob appreciates that his natural skills lie in brewing coffee and chatting to customers, but as CEO of a small business he needs to start adding to his repertoire. He takes several courses in financial management and hires a HR manager to help with recruitment.
Once Bob has equipped himself with the requisite skills to run a small business, he is keen to expand. He takes on a silent partner and using their finance buys 20 more shops. He is now overseeing a medium sized company with 40 employees.
Quite quickly it becomes clear that Bob needs a senior management team who can take responsibility for the key areas of the business. He asks his HR manager to help him hire heads of sales, marketing, finance and legal.
These individuals take on the burden of the day to day running of each department, but Bob realises he needs to motivate and manage that senior layer of employees. Again, he finds his skillset wanting since each senior manager has their own agenda and he needs to manage conflicts frequently.
Bob takes another course and works with a consultant to build his man management skills. He learns techniques and strategies for getting the best out of people.
With a robust senior management team in place, Bob takes Star Ride coffee to the next stage; he goes global, opening 30 more branches in 15 countries.
The company is a massive success and turnover is now £10m. He has hundreds of employees in different countries. Bob no longer has any connection with customers. Instead his sole interactions are with his senior management team other than his newly appointed board of directors. His job now is to drive the company forward; to appreciate the nuances of building a brand in different countries; to develop a a strategy and a vision; and ensure shareholders are kept happy.
As CEO of a global multi-national, Bob needs to ensure the company has the right resources and these are allocated effectively, and that he has the right team surrounding him (we will explore this in further detail in a later chapter).
Bob was able to develop his skills and adapt to the changing circumstances. He was able to hire a robust team and eventually got the best systems in place to run the business effectively.
However even though he has become and effective CEO, he must revisit the essential skills and ensure he is still at the top of his game. As we discovered in the previous article, Bob needs to ensure he has the right feedback from relevant experts to keep bias under control and to sense check important decisions.
There are key skillsets to being a CEO and their relevance varies depending on the size and scope of the organisation. Broadly, these are: interacting with customers; sales and marketing; accountancy; legal; internal operations; PR; technology; and developing a long-term strategy and vision.
It is essential to know where one’s strengths lie and where it is necessary to seek external support.
Even where one is skilled, it is necessary to practise, improve and above all test oneself to ensure belief in oneself matches the reality.
The best CEOs recognise their skills and their weaknesses and above all they know thyself and then plan for the next stage.