Keeps the Company President Up at
for the Business & Economic Review
by Peter Meyer
What is it that keeps the company president up at night? For that matter why should you care? You will find a description of the two issues that one group of CEOs find most critical in this article. If you run a business or advise or sell to those who do this information can help you grow it, even if your own answers are different.
This spring we interviewed a dozen people who run telecommunications equipment companies. We asked them to confidentially tell us the two things that keep them up at night. A short summary of their answers follows. Suggestions that you could use to run your own company follow that.
What Keeps the CEO Awake?
You might hope that there is a pattern from which to learn. We found there is. The two problems these executives viewed as the most difficult:
… Creating and/or dominating new markets and,
… Getting and keeping the right people.
… Of the two, markets are the biggest concern.
Creating, Dominating New Markets
Much of the emphasis is trying to define a future market through the company's own vision and technologies. There is an axiom that the first company to define a market has a good chance of dominating it. These executives are focused on doing exactly that. This might seem the purview of the marketing departments, but the company presidents feel the need to focus on it personally.
The president of one systems company hopes to use dominance in one market to define the market in another. "The idea is to get the wireless providers to follow the wireline companies." If they can get the new companies to define their needs in that way, the supplier "can use one architecture to grow the business." This is very much to the company's advantage. In this president's view it is too important to delegate.
Many executives talk of trying to set the rules of competition for a new market since setting those rules can make it easier to establish dominance. The president of a network products company said his priority was becoming "Can we set the ground rules?" for a new set of network technologies. "Can we capture the high ground and mind share of the buying community?" The head of a growing service provider wants to set the standards for the "governance and use of web control, (and) the smart use of technology to do that."
Ground rules of individual markets are always unique. For example, getting extreme reliability is not critical for most customers. If a supplier of Internet browsers ships an early version that is only 90% reliable, users adapt and accept. However, telephone companies and data communications customers will not accept that. Their products have to be so reliable that users measure downtime in minutes or seconds per year. Mature products are often more reliable, but building a new market cannot wait for mature hardware and software. This complicates the process of defining a market in order to dominate it.
Rolling out new products or businesses becomes "a balance of being first to get to (and define a) market, against waiting to be highly reliable. How do you balance those?" Walking this tightrope keeps several of these executives up at night.
The common lore is that senior management is very focused on ways to cut costs. However, none of these executives have bloat on their lists. Risks, when they appear, focus on markets and growth.
A top Japanese CEO looks at it differently. "We are entering a new world. Absorbing new information is a problem. Do we really know" the market? This executive is focused on "industry and technology trends to help guide headquarter's directions." Instead of trying to imprint the market with his technologies, he wants to "keep our eyes and ears open and not miss important trends." Yet even here "we have new products, but the market is not ready yet."
His response is to share the risk with partners. As difficult as this is, he is more worried about missing the growth opportunity than about costs. With him, as with almost every other executive, opportunity costs outweigh operating costs.
The CEO of a wildly successful network products manufacturer responded: "First has to be keeping great people and then attracting more of them." Most of the other CEOs said something similar.
However, the CEOs are not just focused on recruiting and benefits. They each have teams who do that for them. The value the CEO brings is to make the work attractive and interesting.
To the president of a Midwestern manufacturer recruiting is a team responsibility that cannot just be left to the human resources department. "Things are not what they used to be. Acquiring and retaining people is the most important thing we can do."
Another provider of network solutions is "frustrated that we are trying to do more than we can. Things could go better. Some people do not give a s_ _ _. Finding and keeping the right people" is the first thing on that executive's list.
"The thing that limits our ability to grow is finding and keeping people" says the COO of one dominant supplier. This is so important to his firm that it is moving key software from a proprietary code to a more common one. It is an expensive change, but it will improve the company's ability to recruit and retain good people.
Changing the software code is not a decision that Human Resources would make. It is a concern that a business unit head must consider. Countless others are concerned with the way company's structure works. These CEOs are involved in those decisions.
Benefits and income will go so far, but these executives are working to make the work itself more interesting. Employees will leave for benefits or pay, but they stay for better work.
Making work more interesting is a line management responsibility, not something with which Human Resources or training can help. These executives are looking for and using ways to increase satisfaction on the job. (For some techniques that work, please see Effective Incentives in Solutions Magazine , November 1995 and Can You Give Good, Inexpensive Rewards? in Business Horizons, December, 1994)
A note on methodology. The survey participants were chosen from a list of telecom equipment manufacturers. Some knew the author in advance. Some did not. The executives, told that their identities would be kept confidential, included CEOs, Presidents, COOs, and General Managers of complete businesses. All answers came from personal interviews. Answers other than markets and people came up, but no others occurred more than twice.
Most of the companies are or were public. (One was recently acquired by another.) They range in size from fifty employees to tens of thousands. The companies make software, hardware, and/or systems. All manufacture, all sell and distribute. Since this a small sample, the reader should not assume that the answers will apply to all company presidents. When you share these with your team, remember to coach them that other industries may not have the same concerns. (See sidebar)
Using This to Grow Your Own Company
What can you do with this information? If you run a business, or advise or sell to those who do, this information can help you grow your company.
This will be true even if your own answers are different. Whether or not these problems describe what keeps you awake at night, you can use the question to focus:
… Your negotiations,
… Your management team,
… Your sales force, and
… Your vendors.
If you are the CEO or advise one, the results of this survey can help you.
You may be negotiating an acquisition, a contract, or a price. If you accept that it is good negotiating practice to focus on the other person's needs, you are only half way there. When we are negotiating with another CEO, how do we know what those needs are? Too often we assume when we should know.
In your next negotiating session, ask the other side how their markets are changing. What do they need to do to define or get to these new markets? If you can offer something that will help them do that, it could be worth much more than a few more dollars or shares in one deal.
Save Time, Manage Your Own Team Better
As a leader, you gain real value when you let subordinates know what keeps you awake. Most presidents do not give priority to concerns that are less than critical to the business. What is important enough to be on the top of your agenda should be important to the company. If one of your people knows what keeps you up at night, he or she can help deliver the answers that will help you and your stockholders sleep peacefully.
But, are the managers in the two layers below you focused on something besides what is truly important? They may be doing many things right, without doing the right thing. The result is fractured effort when your business barely has time to get things done if you all pull together.
Direct Sales Teams
Ask how your sales teams start a sales process. Do your teams lead with cost savings and technical superiority? Wouldn't you rather that they approach projects in a way that can help your customers get to market acceptance sooner?
If your teams are focusing on technology or how to do something cheaper, customer CEOs may want to delegate the discussion to others. When your sales teams lead with a way to grow the business, then the CEO is much less likely to delegate.
Consider showing your team how you buy. Do you focus personally on purchases that help you get to market acceptance sooner? Do you delegate technical buys? Use it as an example your sales team can appreciate. If your sales team is addressing issues less important to your customer CEOs, you may be discounting to get sales. When your people are not solving problems that presidents find compelling, they are not working on the things of highest value. That makes it difficult to use "added value" to justify a price.
Getting More From Vendors
A discussion of what keeps the senior manager awake is bound to get the attention of any wise vendor. Such a supplier will want to build their sales and delivery plans around the boss' needs. As the customer, that can work to your advantage.
If your suppliers know what keeps you up at night, they can craft a solution that truly helps your company. If not, they are likely to focus on their own company. That may not be much use to you.
Are your key suppliers focused on your real needs or on some issues that your purchasing procedure defines? Worse yet, are they focused on the needs of their own executives? If the companies who support you really understood what kept you awake at night, could they do a better job of helping you grow your company?
Tell Everyone That You Can't Sleep,
and Tell Them Why
Whether or not these problems describe what keeps you awake at night, you can use them to focus your team, your sales force, and your vendors. Start by handing this to them and asking whether these two problems are tops on their lists. Then tell them what two things are the ongoing top priorities in your mind. Ask them to find out the same for your customers.
Ask your people and vendors to forget common lore. Cost cutting is not the key to the executive suite. All these CEOs have people to keep costs down. However, most get personally involved in dominating markets and in getting and keeping the right people.
You will always find a hundred reasons not to share your concerns with employees and suppliers. And a hundred more to ask your sales teams to focus on your own needs instead of the issues that keep your customers awake. There is one overriding reason to share your concerns and to direct your sales teams to understand the concerns of others. That compelling argument is that what is of highest concern is what gets done. Make sure that everyone knows what keeps you up at night.
Sidebar - Does This Apply to Others?
The study of CEOs is focused on telecommunications equipment suppliers, a narrow niche. However, you can apply the lessons to a much larger audience.
First, remember that the topics themselves (markets and people) are less important than asking about them. The best use of the idea is in learning the answer and then helping to resolve the issues. If you are the President, let people know. If you wish to serve or sell to the President, find out and act accordingly. (See main article.)
However, markets and people are a good place to start with any business larger than one person. We also talked to CEOs from publishing, insurance, software, telephone services, and education. Defining and controlling markets and getting and keeping good people were top in the responses.
For example, Jerry Ascolesi, CEO of a major insurance brokerage quickly responded with "What keeps me up at night? A - How do I continue to provide a long term secure environment for our employees."
"B - What products do we develop and value added services do we come up with, develop a better mousetrap to make it unique to our industries." Doing that "allows us to have an incredibly high retention ratio and to develop a high level of service. We do not want customers to come to us one year and leave the next."
What matters most is not that you (or your CEO) have the same concerns, but that you focus your team on those concerns. If the people you are negotiating with, your managers, sales teams, and vendors all know how to give you the most leverage, they can do you the most good.
Ask yourself what keeps you awake, and then use it to your own advantage.
A similar piece first appeared in the Fall 1997 issue of Business & Economic Review. It is copr. 1997 by the Meyer Group, all rights reserved
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Keeps the Company President Up at