The Product or Service Expert as CEO
By: Bob De Contreras
Many mature companies are led by CEOs who are more engineer (also includes other
creative and artistic backgrounds) by experience than skilled business persons.
These CEOs have led their companies through the beginning years and found some
level of success.
These CEOs have found that as revenues grow and employees are
added, the organization begins to take shape and a management structure has
developed. A more professional management approach is needed. At this point, the
engineer (and sometimes even the seasoned businessman) often stumbles, steps
aside, or is moved aside
This introduction leads to the question of what a founding CEO
needs to do in order to become a more successful business person and CEO.
How Can the Engineer or “Artist” CEO Succeed?
The question of how the engineer can succeed starts with a
simple, obvious answer – the person must want to succeed, recognize and admit to
their shortcomings, be willing to change and able to learn business and
personnel management skills. If these conditions are not possible, then the CEO
should consider hiring a President with the skills required to run the company.
If the CEO is going to find success on his own, then here are
some actions to consider that will start the process of building the required
business skills in the CEO:
Hire a Coach. Classroom training
will only begin to prepare you for the job of CEO. Hire a coach or mentor with
CEO skills and experience to guide you and advise you in your transition to risk
taker, manager, leader and profit maker. You need a mentor to help you see the
forest for the trees and the best solution here is someone outside your company.
Your coach should be someone who questions your answers, not answers your
questions. You don’t want someone to tell you what to do and make decisions for
you. You do want someone to teach you the management and financial skills you
need to find success. Don’t forget that it’s your company – you make the
Advisory Board. Assemble an
advisory board staffed with people who have the skills and knowledge that you
don’t already have in the company. For example, a person skilled in personnel
management and hiring practices, or a person skilled in market development and
alliances. Then use the advisory board as a sounding board and source of
alternative solutions to your issues.
Qualified Executives. Hire
executives/managers with experience and knowledge in more than one area. For
example, a marketing executive who also has experience in development or an
operations executive who also has experience in sales. Then you need to ask for
their advice and this is a hard one – you need to listen to and act on their
advice. Use your experts as instructors.
Qualified Staff. Hire employees
that are subject matter experts. Hire good people and get out of their way.
However, don’t hire experts that don’t fit your culture. Everyone you hire must
fit your company culture first – they must fit in. Ask for their advice and
listen to it because they are closest to the issues and the clients. That means
they have a better view on and ability to choose the best solutions. Use this
staff to learn what’s important to your clients.
Qualified Accountant or CFO. The
life-blood of your company is cash. Understanding your financial position,
forecasting your revenue and expenses, planning for organic company growth,
setting pricing and budgets are difficult for even the most seasoned CEO
veteran. Hire a financial expert to help you learn how to make those financial
Birds of a Feather. You don’t have
to reinvent the wheel. There are other CEOs out there that may have already
solved a problem you are facing. Find them and use them as a sounding board.
Joining CEO associations and business groups is a good way to meet other CEOs.
Your coach (if you hired one) is a good source of contacts that fit your needs.
Responsibilities the Engineer and “Artist” CEO Should Avoid
There are several functions or responsibilities that the engineer
CEO should avoid but seldom does. If you are an engineer CEO, you probably have
some of the entrepreneur tendencies like thinking you need to make all the
decisions. But, for example, how can that be correct when you don’t have
marketing or finance knowledge? Here are some responsibilities or decision areas
where the engineer CEO should avoid involvement:
Hiring. Human nature is to hire
someone like yourself because you want to be around someone in your comfort
zone. However, this is a problem. As an example, an engineer CEO who is looking
to hire a marketing executive will probably hire an analytical, everything is
black and white, engineer type – someone in their comfort zone. But, the
marketing executive needs to be someone who sees things in a dozen shades of
grey between black and white -- a person who asks what can be rather than what
Sales. CEOs think they are great
sales people because they make a sales call on a prospect CEO and close the
sale. Two CEOs get together and they are both bragging about their products.
They understand each other, they share a bond and they agree to sell/buy. These
CEOs never learn the sales process of needs development, vision of a solution,
value justification, risk mitigation and contract negotiation. So, the CEO is
ill prepared to guide sales or make valid decisions about sales programs,
processes or investment.
Operations. The operations
executive or manager role is a complex one. The responsibilities could include:
liaising with clients, general administrative and sales support, business and
personnel performance reporting, managing, motivating and developing a
successful team. The engineer CEO attempting to complete these tasks is simply a
“duck out of water.” The CEO should attempt to build these skills over time but
they should be left to the trained and experienced executive.
Market Development. The market
development executive or manager responsibilities include: Identifying target
markets, assessing the existing sales organization and developing it as
necessary, establish strategic direction, design lead generation strategies, and
more. These are tasks the CEO does not have time to focus on nor, in many cases,
Success Through Balance
The engineer CEO must make a transition from specific technical
or aesthetic skills to proficiency in all areas of the business. Communications,
leadership and technological understanding are helpful, but in addition, these
CEOs need the skills of financing, marketing and management.
The Engineer CEO needs to surround him/her-self with
complementary and superior management who have the appropriate business skills
and experience, to offset their own shortcomings and provide opportunity for
self-development and heightened success.
Through it all, there is no substitute for desire, dedication and
determination. These character traits, along with a good idea and a good team of
people, can guide the engineer CEO in finding success.
The Product or Service Expert as CEO Case Study
By: Bob De Contreras
In this example you will read about two clients – an accounting
firm and a national staffing company. Join us as we explore how a CPA and an
entrepreneur take on the role of CEO.
An Accounting Firm
This “green eye shade” CEO is no ordinary CPA. She is a tax and
business consultant. Her firm focuses on clients in one industry so that their
specialization allows them to provide the best possible service to their
When we first met her, she had 50% employee turn-over. The
company had grown to six employees and was in the process of shrinking. The firm
had a few clients that should have been “fired” because of slow payment,
excessive demands on the firm or constant changes in their needs. Her employees
were having a hard time satisfying client needs consistently and there was high
This was a profitable company and the CEO had earned several
awards for herself and the firm. She hired us to coach her, help develop her CEO
skills and guide the growth of her company.
In bullet form, here are some of the changes we helped her
implement and the results:
was hiring the best skilled person for the job and overlooking fit in the
company culture. We helped her hire for fit in the culture first, skills second
and train internally to build the skills where needed. Turn-over was reduced to
couldn’t bring herself to fire an employee who was not performing. She always
stepped in and took up the slack “saving” the employee. We helped her set goals
and objectives for her staff and hold them accountable. She built a written
record of their performance and was able to use it to help her see why she must
take action and release the poor performers.
was continually distracted with opportunities to purchase and merge with other
accounting firms. Each one ended in a no-go decision after the due diligence. We
helped her cut down the distractions from these opportunities and she learned to
shut them down before they ate into her precious time.
had a business plan but the marketing and sales plan portions were weak. We
helped here enhance these plans and she was able to gain visibility in her
market and grow the number of clients steadily each month.
This CEO made the decision to build her CEO skills by using a
coach. She was willing to change and accept some of the tough decisions she
needed to make. She was able to build on her soft side skills and build her
business by making decisions she was not able to make before.
A Staffing Company
This entrepreneur CEO came from an entrepreneurial family and was
following in his father’s foot steps. The insult to the injury, so to speak, was
that his father-in-law was also an entrepreneur. This CEO was young and a
graduate of a fine business school. Unfortunately, he had never worked anywhere
but in the family business. Kindly, I have to say he didn’t know the first thing
about a financial statement. Before we met him he had never fired an employee –
even though several needed to be released for poor performance and one for
embezzlement. In the fourth quarter of each year his business volumes were down
and he had to borrow money from this father to pay expenses until business
picked up again in January. He won new business by under biding the prices of
his competitors. This was a five million dollar business with profits in the
neighborhood of ten to fifty thousand dollars.
He hired us to help him with his business planning and to help
improve profits. In bullet form, here are some of the changes we helped him
implement and the results:
helped him understand sales and the sales process. With our help he started
selling (something he had not done before) in the third quarter. The sales
success he found has eliminated the fourth quarter revenue downturn for three
years now. His father is very happy.
believed that he had to run and grow his company on cash from operations. We
convinced him to get a credit line from his banker so he could better withstand
the ups and downs in business cycles and fund his growth. The bank was happy to
help and he bears less stress from operations now. The company has grown from
500 employee/contractors to 3,500.
didn’t have any financial checks-and-balances in place, so it was easy for an
employee to embezzle. He didn’t have any insight into how the bookkeeping should
be set-up. He was using Microsoft spreadsheets to track business. He hired an
outside bookkeeper and she put a credible accounting system in place with the
helped him with some financial analysis and proved to him that he could grow his
profits by one hundred thousand dollars by simply raising prices by one percent
and reducing expenses by one percent. To his credit he was able to take the
risk, make the changes and find a new high in profits.
CEO was just not an organized or consistent business person. He had no process
bones in his body and he kept falling into holes he’d fallen into in the past.
So, we suggested he hire an operations executive to run the national operations.
He agreed and asked us to help him find the right person. We recommended a
person we knew well and for the past two years (after hiring her) operations
have not been an issue. He’s happy because he hated it – she’s happy because she
gets to run things.
Admittedly, this is not an example of an engineer or “artist,”
but it is a clear example of a CEO who did not have the skills for the job, but
was able to learn and get help to make the right decisions.
Brought to you by:
Bob De Contreras
RTBA | Cary | Greensboro | Raleigh | Research Triangle Park | North Caroliina
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