There is a big difference between being a CEO and a COO. I know, because I’ve been both.
At my first startup company I didn’t have a COO and, while the company was a success, it wasn’t until I learned to let go of certain tasks that the company flourished. Entrepreneurs, almost by definition have a vision of how things should be and how their company should be run, but first time entrepreneurs, myself included, often spend too much time on internal details which can be crippling to a startup venture.
An entrepreneurial CEO needs a lot of self-confidence, a willingness to accept risk, and a focus on execution in order to build a successful company. Yet, while its essential to focus on detail, especially when it comes to customer needs and satisfaction, its critical not to get bogged down on trying to do everything. Additionally, a CEO must also realize that simply hiring people doesn’t help if he or she insists on micromanaging their direct reports or worse, the personnel that the direct report is supposed to be managing. Time is of the essence in today’s business environment and an inability to effectively delegate internal tasks is like trying to sail while dragging an anchor or driving with one foot on the breaks.
Key things that a CEO should focus on include making sure that:
The CEO’s day needs to be occupied with attention to product development, business development, marketing and sales. These are all the external elements that are the reason the company exists and the reason the entrepreneur decided to start their own company. Everything else needs to be delegated.
Not that the CEO needs to ignore the other things, but it’s not what he or she should be focused on. Doing so will slow down the entire organization as the CEO’s attention and physical capability will simply be spread too thin. That’s where a COO comes in. The COO should manage HR, legal, finance, IT, engineering, customer support, facilities and fulfillment. These are the key internal functions that are like the foundation of a house. They’re not visible from the outside and customers, just like home buyers, take the foundation for granted, only caring about the product.
Therefore, every entrepreneurial team needs a CEO to focus on customers and a COO to build and maintain the foundation. Many people don’t think about this when forming their founding team, including most VCs and other investors. But the difference between a company that moves fast and one that struggles to get off the ground can often be traced to the lack of delegation by or lack of support system for the CEO. Advisors and the board of directors can offer great advice, but are the first to criticize the CEO for poor execution. The CEO needs a COO or someone who takes on that role who understands the mission and lays the foundation for execution.*
A CEO who can delegate and manage rapid growth will be able to maintain control of the company as it grows especially when it comes time for large capital infusions. How many CEO’s have been replaced by investors in the Series B or C round? By having an external facing CEO and internal facing COO a company is better able to carry out its vision and stand on its solid foundation.
* As and aside, a company’s mission statement is an internal message. Your customers don’t care about your company’s mission; they care about how your company and your products can help them fulfill their mission. A leading advertising executive taught me many years ago that a company should not put its mission statement on its web site. As he put it, “A mission statement is talking to yourself”.