In a recent series of virtual events organised by FirstMinute Capital, I got to hear Peter Fenton, partner at Benchmark and a fixture of the Forbes Midas List, since 2007. Peter invested in companies like Cloudera, Elastic Search, New Relic and Zuora, to name a few.
On the chat, he mentioned a book he recommends to every startup CEO he invests in: The Five Temptations of a CEO by Patrick Lencioni. I ordered the book and finished it in less than 48 hours. Without spoiling it too much (it’s a business/management book told in the form of a fable/story), I wanted to summarise the main points here.
Framing
The CEO (Andrew) is about to celebrate the first year anniversary as the CEO of a company he’s been working at for years. He’s stressed abut the upcoming board meeting, as the company has been struggling. In a train ride home, he’s ‘enlightened’ in a conversation with a passenger (Charlie) who makes him understand that being a CEO might be challenging, but it shouldn’t be complicated.
Temptation #1 – Choosing status over results
To diagnose this temptation, Charlie asks Andrew (the CEO) – what was the happiest day of your career? Andrew’s response was ‘being appointed as CEO’. Attachment to the title, while evidently a result of hard work, shouldn’t be the goal. Instead, the CEO should want to achieve something.
“The most important principle that an executive must embrace is a desire to produce results. As obvious as this sounds, it is not universally practiced by the highest-ranking executives in many companies. Many CEOs put something ahead of results on their list of priorities, and it represents the most dangerous of all the temptations: the desire to protect the status of their careers.”
A strategy for overcoming this temptation is to publicly commit to results, and evaluate success based on results.
Temptation #2 – Choosing popularity over accountability
Avoiding tough conversations or conflict with direct reports is a sign of choosing popularity over accountability. In the story, Andrew fired his CMO without first having a performance conversation with him. Communicating expectations up front and having discussions about performance would have helped the CEO hold his direct reports accountable.
Temptation #3 – Choosing certainty over clarity
Nobody likes to be wrong, but CEOs are often tempted to make sure their decisions are correct and prefer to postpone decisions rather than being wrong. Often this means choosing certainty over clarity and leaving the team in limbo. Lack of clarity makes it hard to hold the team accountable. Without perfect information, making decisions is a risk, and CEOs should optimise for clarity rather than certainty even at a risk of being wrong. This means being ok with saying “I was wrong” – easier said than done!
Temptation #4 – Choosing harmony over productive conflict
This one might initially look to overlap with #2 (making decisions under uncertainty), but it’s different. To make good decisions, a leader must be able to extract the true opinions from her team, even if it means creating a tension or disagreement. It’s in the CEOs power to draw different opinions from team members and encourage passionate discussions around key issues, which according to Patrick Lencioni, is ‘productive conflict’.
Steve Jobs and Jeff Bezos are known for creating this tension in meetings and getting their management teams to speak up. Ray Dalio, the billionaire hedge fund manager and founder of Bridgewater Associates took this to the extreme by promoting “radical transparency” in the team. Watch his TED talk to see what extent his firm took this.
Temptation #5 – Choosing invulnerability over trust
Being vulnerable is not something you’d expect to see in the job description for the CEO role. The opposite of vulnerability is basically driving the team to position itself in the optimal way in front of the CEO, to gain power or favour, and reduces the chance of creating ‘productive conflict’, because they don’t feel safe to do so (if no one else is willing to stick up their neck, why should you?).
At the heart of it all, for a CEO to be a great leader, they need to trust their team and vice versa. Do you trust your CEO with your career? will you give it all because you know they got your back?
Side note
As I recently shared on a Linkedin post, I love buying used books because it’s better for the planet. A nice surprise with this one was all the scribbles the previous reader (presumably a CEO) made in the points she found interesting. When you see every line in a paragraph underlined, you’re bound to remember it more. Buy used books :-)
In conclusion
Business books tend to be 150 pages because publishers found the ‘thickness’ people expect to have in a book to assign it value and justify the cost, but in reality, you could usually summarise the concept in 15 pages, and the rest is filler content and examples. The Five temptations of a CEO was a ‘skinny’ book and the way the principles are communicated as a fable, make a fun, quick read despite having a deeper message. In some ways, it reminded me of The Goal by Eli Goldratt.
To be successful, CEOs need first and foremost to be good human beings. Business is personal. The CEO’s role is very much about providing direction and listening to people to make the best decisions they can under imperfect information. A good day on the job is a day where the team achieved results, not when you get the title. Highly recommend this to founders and emerging managers.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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