Leadership Advice for the Young CEO

By Piyush Agarwal, Principal, Parthenon-EY

The corporate boardroom has witnessed a transformation unlike anything seen before. The seat at the helm is no longer reserved for grey-haired seasoned business leaders. Young prodigies have taken the business world by storm.

Young CEOs bring with themselves the novelty of new technology and the audacity of going “all-in”. However, this energy comes bundled with inexperience. While some learn quickly and build well founded organizations, many are unable to cope with the sudden on slaughter of responsibilities and limelight. This is the root cause, businesses that rise too fast, often go through a period of redemption and transformation.

As an emerging markets specialist, I have worked extensively with rapidly growing companies across the globe. And have found such businesses to be in a constant state of flux. They share common objectives and the challenges faced by rapidly growing businesses are also similar.

Below are the top 4 challenges that nouveau CEOs face when trying to scale up their venture -

1. Letting Go of Control

Entrepreneurs are passionate people. They are passionate about their vision and their venture. Often, this passion makes the CEO extremely possessive of the business. They try to control every minute detail. If you see from the lens of the founder, giving up control can be stressful: “Can I trust this person?”, “What if this person does not do it right?” and so on. Therefore, it is natural for the CEO to hold on to as much responsibility
as possible.

As the business grows, this creates bottle necks. Everything has to wait for the boss’s approval. Much worse, such tight control leaves little breathing space for the talented managers. Employees feel suffocated and leave. No wonder attrition rates at start-ups are as high as 30% - 40%.

Therefore, it is extremely important for the young CEO to be comfortable with giving up control. As Molly Graham explains in her popular article “Give Away Your Legos”, if you want your firm to grow, you need to give away your responsibilities every few months and find newer and greater responsibilities for yourself.

2. Sharing the Long-Term Vision

Meaningful companies are built upon a strong timeless vision.

Founders that I’ve met or worked with all had a grand vision. However, what differed was the degree to which the founders were able to transmit their vision to people around them: their customers, investors and most importantly their own employees.

Look for instance at Amazon. Its vision is “To be earth’s most customer centric company” and CEO Jeff Bezos has done a phenomenal job of ensuring that every Amazon employee lives by that vision. This is one of the fundamental reasons behind Amazons’ success in various markets.

Therefore, the young CEO should emphasize on sharing his/her vision with the surroundings. He/she should make sure that everyone envisions the company’s vision and that a common goal is shared. Only then can the team step with their leader.

3. Shaping Firm Culture from Day 1

Start-ups have what is known as “The Cowboy Culture”: no rules,no restrictions. The individual is expected to know what’s best for the firm and act accordingly. For the early few this works well. They have significant skin in the game and what’s good for the firm is usually good for them.

However, as the head count grows, things change. Very soon the firm realizes the need for policies and processes. For the early employees, it is a bitter awakening.

As cognitive psychologists Daniel Kahneman et al, proved in their experiment on the “Endowment Effect”, losing something evokes a much stronger negative reaction than not having it at all. Therefore, the early employees who had come to feel entitled to “The Cowboy Culture” find it highly demotivating to give up something they had before.

Therefore, the young CEO needs to set the tone of the firm from day 1. It is important to set the expectation that what’s happening now is transient and very soon things will have to change. Expectation management is one of the key virtues of a strong leader.

4. Investing In the Team

Building a company involves a lot of work. It is natural for things to fall through the cracks. Investing in the team is one task that often gets ignored something that can be seriously detrimental.

A Harvard study found that young high achievers are in a non-stop job hunt. Many of these exits are fuelled by dissatisfaction with employee-development efforts. The study found some alarming gaps. Employees were often thrown in the deep end of the pool and expected to learn on-the-job. Employers are reluctant to make big investments in training, especially since the workers might not stay long enough.

However, high attrition is a lousy argument for not investing in team development. The young CEO should find ways to work-around the problem. Richard Branson has been quoted as saying "Train people well enough so they can leave, treat them well enough so they don't want to." While sound firm culture can reduce churn, technological innovations exist that can significantly reduce training costs. Online training, Training-on-the-go and Just-in-time trainings (JITT) are some of the innovative solutions to this problem.

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