Looking at it through the lens of a startup (small team), years ago I had a great discussion with a group of VCs that the ideal core leadership in a company is(or, as appropriate to the type of business)
Explaining further, we discussed first that the CMO’s job is to answer why, for whom, with whom, when, and where. The CTOs job is to determine what and how. The CEO discerns all of that into a vision to align everyone and to draw the resources they need to build a successful company:.
I always liked that notion as it’s consistent with economist Peter Drucker’s observation that only two things create value in business: Marketing and Innovation. Drucker also noted that everything else is a cost…
So it could be said that the CEO’s job is to overcome and mitigate costs… so that Marketing and Innovation has what it needs to create value.
This is also why startups have the 3 core leaders and roles like CFO, COO, etc. are applicable only later. Until the company has created enough value, it shouldn’t have (or need really) other major cost centers.
Anyway, that was the thought provoking perspective. It’s a point of view that always stuck with me. So, more specifically, what does the CEO do?
The job varies a bit based on the organization’s mission (i.e. vision; CEO), product (i.e. what the market wants; CMO and CTO), goals (…CMO and CEO) and its need to operate profitably (er go – control costs; CEO). See it? It also varies depending on the size of the organization and the number of employees among other factors.
The Chief Executive Officer (CEO) is the highest-ranking executive manager in a corporation or organization. They’re the boss of the bosses.
The CEO has responsibility for the overall success, responsibility in that they are accountable to shareholders (by way of Directors), of an entire organization whereas the other roles are responsible for their organization. The CEO generally has the ultimate authority to make the final decisions; though if you’ve watched a season of Star Trek, you know the Captain doesn’t decide everything in engineering, do they?
But, they have overall responsibility for creating, planning, implementing and integrating the strategic direction of an organization. This is why the two roles figuring out what that is, CMO and CTO, are the other keys.
Day to day, the CEO works to inform the entire organization’s awareness of everything; both the external and internal competitive landscape, customer markets, opportunities for expansion, new industry developments and standards, etc.
Let’s be clear though now about how a CEO isn’t the title appropriate to just “the boss.” CEO is not the title of a business owner nor sole proprietor. CxO titles shouldn’t be handed out just because they run that piece of a business, or all of the business. Such titles are the President, VPs, etc. In a corporation, the CEO reports to the Board of Directors. The CEO serves at the discretion of the Board of Directors.
So, if you have a boss who says they are the CEO, but they can’t be replace at the whim of a Board… not actually a “CEO” in the conventional use of the title.
They may run the company, own the company, or be the President or some such, but CEO would be an erroneously used title.
And it matters! You might think, eh, it doesn’t, but it does. This is why you’ll often see titles such as CEO and Chairman of the Board (meaning they are on and chair the Board of Directors as well as being the Chief Executive Office) or President and CEO… “CEO” means, in the world, that there are Directors to whom the CEO is accountable. The Directors represent shareholders because a “Company,” means the business isn’t just solely owned or an LLC, corporations have shareholders, who have a say in what happens… Directors in a Board represent those voices, and a CEO is appointed to run the Company.
The CEO may own much of the business, and may have founded the business, so his or her commitment to the business is significant but as a Company, it’s no permanent nor guaranteed.
Note though, a Board of Directors doesn’t run the company and their authority is actually minimal and advisory to the CEO… but should they feel the CEO is no longer running a company in the best interest of the shareholders, they replace the CEO.
Responsibilities of a CEO
- Creating, communicating, and implementing the vision, mission, and overall direction. Leading the development and implementation of the overall strategy.
- Leading, guiding, directing, and evaluating the work of other executive leaders including presidents, VPs, and company directors, depending on the organization’s reporting structure. In doing that, the leadership makes certain that the strategic direction the CEO set filters down through the organization.
- Depending on the org’s structure, they work with the leadership to grow and enhance the skills and abilities of employees. Only if these significant players continue to learn and grow will the organization succeed at the level desired.
- Soliciting advice and guidance, when appropriate, from the Board of Directors.
- Assuring that the plan creation involves significant input and agreement from the organization so that there is little push back.
- Overseeing the complete operation of an organization in accordance with the direction established in the strategic plans. Controlling and mitigating costs as well as drawing resources.
- Evaluating the success of the organization in reaching its goals.
- Maintaining awareness of both the external and the internal competitive landscape, opportunities for expansion, customers, markets, new industry developments and standards, and so forth. Looking at potential acquisitions or the sale of the company under circumstances that will enhance shareholder value…. because… that’s how shareholders get their investment back!
- Most importantly, the CEO holds leaders accountable, in their cost-centered role. Guiding budgets, rewarding and recognizing leadership, and even coaching or removing those that are detrimental.
The organization’s CEO is a key player in that they are the DNA that binds the leadership to the goals of shareholders. Most effective companies are run by the other leadership: the CMO, CTO, etc. just like the Enterprise thrives because of Scotty and Bones, not Kirk deciding everything.
Why is this such a meaningful topic to me, in my work with startups. These C-series titles MEAN something, both legally and perceptibly. They distinguish your intentions and the expectations investors, partners, and advisors and (and should) have about your company. If you call yourself the CEO of your startup, it means you have (or intend to have) shareholders (investors) and that they then certainly can (and should) remove and replace you should the company need to do so.