This book explains why being a CEO is the hardest and most lonely job in the world and how to deal with the worries and pain of the job.
Who should read this book:
- Incumbent or successor directors and business founders.
- Those who want to learn how to be successful in business.
- Those in a position to hire or fire employees.
About the author
Ben Horowits is the co-founder of venture capital fund Andreessen Horowits. He previously founded and ran the technology company Opsware, which he later sold to Hewlett-Packard in 2007 for $1.6 billion. His personal blog has 10 million followers.
What will you learn from the book? How to become a talent manager
Leadership is a very lonely job.
The CEO is the person who makes the most difficult decisions, related to the destiny of the business. Every day they have to make life-or-death decisions. Sometimes they have to fire their closest friends, sometimes they have to lay off an entire factory while still driving the company forward.
In this summary you'll learn from Ben Horowits step-by-step from building a company, leading it, and then selling it for $1.6 billion.
You will learn how to overcome the uncomfortable, exhausting feeling of having to fire an employee.
In addition, you will also understand why hiring someone with some disadvantages can sometimes be beneficial.
Finally, you will learn how to be a leader.
Coping with pressure and shouldering the responsibility of running a business is something every CEO must do
Any founder or CEO has a dream. That dream revolves around building something beautiful and changing the world while enjoying the creative process and making lots of money.
Unfortunately, no company can go in this direction because events are such an integral part of building a business. There are simply too many things that can go wrong on this adventure.
A simple example is that companies are all affected by macro factors, such as economic crisis and recession, which lead to investors withdrawing capital; or more micro-factors like the wrong hiring cause the company to lose its biggest customer.
This is the challenge that the CEO must go through when the dream meets reality.
This challenge involves pressure and responsibility, which is an inevitable part of running a business' destiny. The CEO will carry the effects of this challenge with him throughout his life, physically and mentally, as well as his career choices and social relationships.
It is these factors that make the challenge so exhausting, and it is these same factors that make up the great achievements. After all, the CEO is the person responsible for solving the company's challenges and therefore it is they who will be praised for their achievements or lost their jobs for failure.
Team spirit, creativity and solution-oriented are the driving force to overcome challenges
Overcoming challenges is something every CEO needs to do. Fortunately there are a few strategies to deal with it.
The first thing to realize is that being CEO doesn't mean you have to overcome challenges alone. When faced with a crisis, find ways to get help from as many people as possible.
An example of this is when the author's software company, Opsware, fell into a technology crisis. As CEO, the author gathered the company in a meeting and honestly told all employees that if they couldn't upgrade the product, the company would have to shut down.
He added to employees that the company still has a chance to survive, but if they want to quit, this is their chance to leave. This job purifies and retains the company with individuals with high determination, dedicated to helping the company complete and launch new products. As a result, the company's stock skyrocketed from $.35 to $ 7.
The second lesson learned when facing a challenge is that when you are cornered with seemingly no way out, that's when you need to be creative.
During the tech crisis, the author's company, Loudcloud, was falling $2 million on revenue of $75 million, making investors hesitant to invest further. At this point the author felt stuck and did something beyond imagination, he put the company on the stock market and raised enough capital to maintain the company.
Lesson 3, remember that dealing with your own psyche is the hardest thing for any CEO. During the ordeal you will feel lonely and will encounter personal psychological problems.
To overcome this challenge, you must learn how adventurous riders do to keep their focus on the track in front of you instead of worrying about possible obstacles from the track barrier. You also have to focus on the immediate solutions instead of worrying about the problems around.
Being frank about your problems will help you find a solution quickly
No one wants to be the one to announce bad news. But if you're a CEO and the company is having a hard time, it's essential to communicate frankly with employees.
Bad news is automatically spread so there's no point in trying to cover it up. It's the secrecy that makes bad news all the worse and unexpected. That surprise destroys employees' trust in leadership and can be devastating to employees' morale, especially when they see that they could have prevented these problems.
Instead of keeping quiet, the CEO should quell speculation about bad news by mentioning bad news as soon as it arises. Only in this way can the company avoid discussions, doubts and focus on solving problems. On the other hand, the sooner the problem is faced, the sooner it can be resolved.
Imagine when a company is in crisis due to a sudden shift in technology in the market. When should a CEO do? If the CEO hid the problem or tried to figure out this new technology and its associated costs and applications on his own, it would take a lot of time. We all know in crisis management time is something we don't want to waste.
On the contrary, if the CEO openly discusses with employees, they can learn about this new technology more quickly than engineers can uncover technical problems, the accounting department can calculate the Related costs and other departments may also be involved.
So why are most CEOs reluctant to share bad news? In fact, they are affected by the positive misconception – a view that their employees cannot accept bad news but need to hear positive news in order to do good work. Employees tend to absorb bad news better than CEOs. Because the CEO is responsible during crises, when bad news comes, they find it heavier than everyone else.
Simply by facing the problem as soon as it is discovered you can help find the right help to solve the problem.
No one wants to fire someone, but if necessary get it done quickly and reasonably
One task that any CEO wants to avoid is laying off employees. However this is inevitable and how you deal with it will have a big impact on the company.
First, if you must fire an employee, do so as quickly as possible. As soon as a decision is made, it must be implemented immediately. Postponing a resignation is like rubbing salt on a wound.
If you don't announce your decision to lay off staff early, information leaks are bound to happen. Then all employees will live in fear of not knowing if they will be laid off or not. They will go to their manager for more information and if you insist on keeping it secret, the manager will be forced to lie to the employee – this will lose trust between the employee and the manager. On the other hand, if you do not inform your manager, they will be quite passive when subordinates ask about this issue.
Also, deal fairly with employees who are leaving. Give them a good contract compensation and cover letter for the next job. This will create a good impression for the employees who stay and create good conditions for future recruitment. After all, it is the right thing to do with conscience.
When giving a reason for the layoff, the CEO must make it clear that it is the company's fault for not being able to retain employees.
Why is it important to admit fault?
First, admitting mistakes strengthens trust among employees who stay in the CEO.
Second, people should understand that the company has encountered difficulties and has taken wrong steps, thereby finding a new direction.
Should we actually do that?
If you need to cut staff because the company hasn't met its goals, don't argue that the company is cutting staff to make up for inefficiencies.
Explain that, because the company failed to meet its goals, it was unable to retain some of its talented people.
When firing a manager, take responsibility for your bad hiring decision and make sure the company continues.
When the company encounters difficulties, not only employees will be cut, but sometimes the CEO will have to let some managers quit. This is many times more difficult than firing an average employee because management positions have an important influence on the company both financially and culturally.
So what is the right way to fire a manager?
First, the CEO must understand that the wrong hiring decision is his responsibility and must clearly explain this to the board of directors.
Explain why you made a mistake in this position and what you will do to avoid it in the future. If possible, thoroughly analyze the cause and present it to management. This will increase management confidence in you.
Second, you must prepare carefully before informing the manager you are about to leave. From choosing words to offering a reasonable contractual compensation. Remember that you will end the contract with this person and the meeting is not about their qualifications anymore.
You certainly don't want to embarrass this employee. Famous CEO Bill Campbell once said, "You can't let an employee keep working, but you can certainly let him continue to respect the company."
Respecting fired employees strengthens morale and confidence in those managers who stay. thereby helping to ensure smooth operation even after this employee quits.
Think about it, if you criticize this employee, those who stay will also feel apprehensive about their position and lose interest in working.
The most important thing in this layoff is to ensure business continuity. That means making sure affected parts can continue to function properly. If necessary, you will even have to temporarily take over the management of that department.
In the chapters that follow, you'll learn how to build a great organization.
Take good care of employees by training them and building a good human resource structure.
Many companies emphasize in the media that human resources are extremely important to them, but not all companies understand that taking good care of their employees is the only way to create a great company. Your employees are even more important than the product or the company's profits.
How to take good care of human resources?
First, build a reliable human resource management team because they will be the ones who know important information and issues in the company that you may not know. They are like the quality management team of the enterprise. Although they can't build a business on their own, they are diligent in pointing out weaknesses in the company.
For example, you wouldn't be able to tell if your company's compensation isn't competitive with the market if no one complains to the human resources department. Knowing this information, you will find ways to adjust your current salary.
Second, it is necessary to invest in employee training so that they increasingly develop the right capacity for the job. Every company has its own methods and tools, and you would be making a big mistake assuming that anyone new to the company can start working without training.
What else? Must train by job function – that is, train employees with the skills and experience necessary to succeed in the position they accept.
In addition to functional training, you should also provide management training for managers in the company. In this step, you teach managers how to train their subordinates, how to give feedback, and what types of feedback they should give.
These two factors – a good human resource management team and rich training methods – are the foundation for taking good care of employees.