I almost called this post the ideal team for RUNNING your company. But that would be wrong. You can run it however you want. Some people want to be in charge of everything. Fine. Some want to just do stuff and not think about process or monitor any results except the bottom line. Fine. Some want to operate on a whim and change direction on impulse. Fine too. You can run a company any of those ways. Just don’t expect it to grow very large or very fast.
If you want a company to grow, you have to have a team that executes. Hence the term “executive.” By executive, I mean someone who can take an idea and run with it: make it happen. I don’t mean they run away with it. Executives need to be monitored and accountable but they don’t need hand holding. They take responsibility and initiative.
There are two reasons you need a team and they both relate to the fact that a growing company is constantly changing. There are new activities and new challenges all the time. (This same is true of a turn around situation so the team concept is applicable there as well even though the company may actually be shrinking not growing).
Reason # One is there are too many moving parts for a single person to do them all. If the same stuff is happening over and over again, maybe one executive can deal with it. But by definition, this won’t be true if you’re growing.
Reason # Two is because of the shower syndrome. You know those ideas you get in the shower? Or maybe as you’re falling asleep, or out walking the dog? I often get them when I’m in the car by myself – another reason not to text and drive.
Those are the result of your non-conscious mind working on a problem after your conscious mind has let it go. They aren’t always right but they can be very very powerful. The reason for a team is you only get these ideas about one thing at a time. If you’re focused on raising a new round of investment, you won’t be focused on opening a new market.
You need a team so more people can get these kind of ideas in the shower. Not that I recommend group showers or anything.
So without further ado here’s your team:
NOTE: The ideal team size is not 7 even though I’ve listed 7 categories below. The best team size is either 3, 4, or 5. It makes sense to combine responsibilities based on your industry, company size and individual’s skill sets. But you do need a “buck stops here” person at the top of each of these categories.
Sales & Marketing. I know these are separate skill sets, but they both serve parts of the same process (turning a person into a lead, then a prospect then a customer). So you need a person at the top who can make this happen and do it in a way that supports the strategic goals of the company. At different times that means opening up new markets, shifting the sales mix toward, or away from certain product lines, more profitable sales at the expense of market share – or vice versa.
Operations. This person is charged with developing an organization to deliver what the sales people sell. They must focus on effectiveness, not just efficiency. They should be able to accurately project lead times, quality assessments and costs.
CFO Everything the company does affects cash. Someone needs to be focused on the cash aspects of every decision the company makes. Someone need the time and bandwidth to routinely hit up vendors for better prices, make sure sales are collected early and bills are paid at the optimal time.
This person need not be an accountant. But they need to understand accounting well enough to “speak the language” and relate accounting to management decisions. And she (or he) must understand the differences between short term spending and long term investment.
Legal Almost everything the company does has legal implications. This person should not be in-house council. They should probably not even be a lawyer (like the CFO need not be an accountant). But they have to “speak the language.” This person should know when something needs to be sent to the company’s counsel and when it doesn’t. They should be able to mark up legal documents and negotiate contracts to a point where you’re not paying lawyers to do things that a mere mortal can accomplish. This way the firm can get the most benefit from what it does spend on legal fees.
IT Here I’m talking of IT as a strategic function – not a support function. Increasingly, every company has some informational or knowledge component to what they sell or how they make and sell it. Someone needs to know how to tap into the latest technology to provide a competitive advantage in that aspect of the product or process. This is the person I’m talking about.
For some historical perspective, consider this. Before factories were run by electricity, they were powered by an external source – often water. No matter what they produced, they needed an intricate arrangements of wheels, belts, pulleys etc to get the power from the river or waterfall outside the building to the machines and devices inside. The ability to design and implement the power transmission often became a strategic advantage to the firm – despite that fact that what they sold did not contain water, belts, or pulleys. That is the aspect of IT that I’m referring to here. It is of course, more critical in some companies than in others, but worth considering in all companies.
New Products Every market is moving faster and faster. Just selling the same stuff year after year is a way to consign your company to the commodity market (at best and the graveyard at worst). Someone should be thinking 1,2 or 5 years out about and developing new products for existing customers as well as new markets. This job is very much in the Important but not Urgent category.
CEO The CEO is the keeper of the business model. It’s up to her (or him) to understand how the trends and cultural changes outside the company affect and are exploited by the systems and organizational structure on the inside.
This person is the captain of the ship, or more aptly, the conductor of the orchestra. Did you ever stop to think that the conductor makes none of the sound the audience hears? Their job is in two parts. One faces outside the company where they need to make key relationships and notice trends. One faces inside the company, where they develop the size and scope of the organization to profit from those trends and relationships.
It takes a big cultural shift for many companies – especially ones that were founded by a single individual.
I’m a big fan of the bootstrap – that phase when you do it or make it rather then buy it, when you spend time rather than money, and pay in stock options rather than cash. But a company can only bootstrap so far. If you’re going to build a top notch team, you have to hire the best and pay them market rates. But just as importantly, you have to structure the organization so those expenditures are investments rather than costs.
Another big attitude shift is that of control. When one person’s at the top they are expected to know everything and all the decisions rest on their shoulders. A company like that can’t scale past a certain point. To grow you must be thrilled to give up control, and be happy to find people who are much better than you at certain tasks.
Another cultural shift is that as a company grows it becomes more dependent on process and less on just getting the job done. Not to say that process should be allowed to impede the results – that’s bureaucracy. But the wisdom and experience that people develop can’t be allowed to live in a few people’s heads. It has to spread throughout the organization so that best practices abound. That takes process.
Many of the ideas here were inspired by a discussion I had with Mark Volchek about this topic. Mark is a co-founder and the CFO of Higher One. The company was founded in 2000 by students right out of college, was on the INC 500 in 2009 and went public in 2010.