Ever wonder how situations like Tyco and Enron happen?  The argument of whether certain people are just born to lie, cheat and steal is best left to psychologists, theologists and sociologists.  Instead, we want to explore how leaders can negatively or positively influence a company’s culture.  Our position is that overlooked and unchecked small ethic violations will over a number of years lead to increasingly larger ethics problems and ultimately mushroom into a catastrophic breach of law or regulation.  It’s not enough to simply act ethically yourself; you must also police the ethics of your organization as what you allow you teach and what you teach becomes your standard.

One of the biggest mistakes a company can make (the founder or CEO) is not establishing early and clearly what the expected behaviors are for employees.  Is it okay for you to take a pen home?  Can you use the company computer to write personal email?  Can you accept shirts or other gifts from vendors? 

Does your company have a policy regarding any of this?  If not, they should.  Every employee brings their own set of moral standards to work with them but like any society there needs to be an agreed upon set of clearly defined principles that govern employee behaviors.  The absence of such principles creates moral ambiguity or worse,  a moral-least-common-denominator, where the lowest set of morals becomes the standard. 

When we were young executives it was quite common for our primary vendors to offer us Super Bowl tickets, or tickets to other high value sporting events.  We never took them even if our company at the time allowed such actions.  The larger and more established companies we worked for earlier in our careers had strict guidelines around what was acceptable and these guidelines governed our behaviors even as we went to companies that had not yet created such policies.  The reason such “no gift” policies exist is that the vendors giving such gifts do so to get closer to you and to sway your future decisions. The acceptance of gifts from partners can be seen as abuses of position and power.  If an engineer making $100,000 a year takes a pen or a pair of tickets to a baseball game, why shouldn’t a CEO making $1,000,000 a year use her company administrative assistant to pick up her children from daycare or make a stop to see her family in the company jet?  Without shareholder sanction and appropriate accounting, these actions from the engineer to the CEO are abuses of position and power and set a precedent by way of example for the remainder of the organization.

Following this scenario from the individual contributor to the corner office is a chart that trends from small dollar items to large ticket items in a graph that moves from lower left to upper right outlining abuses of position, responsibility and power.  We do not know Dennis Kozlowski, Kenneth Lay, or Jeffrey Skilling but we are fairly certain that the time they got caught was not the first time they lied, cheated or abused their positions for personal gain.  More likely, they had moral issues throughout their entire career but no one ever checked them on it and in fact they might have actually been promoted or praised for it.  With each promotion they took larger steps over the line that in time took them into what were clearly illegal acts including theft from shareholders. 

An example, which may appear unrealistic, is actually very similar to one that we have seen before and more than once.  A small company allows a senior executive to mislead the Board of Directors about revenue projections and working capital and routinely practices “smoothing” of results – the movement of financial performance between quarters to paint the picture of a more easily managed business.  The management team gets praised for operating results that are not completely correct.  The CTO knows of this behavior, at least in the abstract sense if not entirely clear about the details, and sees this behavior accepted.  In effect, the CTO has been conditioned that such behavior is accepted and he does not possess enough moral certitude to maintain the higher ground.  When it comes time to add more servers to the site instead of purchasing legal copies of the operating system and application server, he copies it and does not pay for it.  Again, the individuals involved get rewarded.  The engineers are now taught that such theft is okay and they in turn start making illegal copies of software for personal use.  What ultimately happens is that the company gets investigated by the Business Software Alliance and has to pay three times the original price for the software because of penalties, the BOD catches on to the senior management’s games and replaces the CFO, and across the entire organization moral starts to suffer and key people leave.

Our argument is not that you should not accept pens or shirts from vendors (although that is a pretty good position to take).  Rather, it is that you should draw clear boundaries for everyone and explain both those boundaries and the reasons for them to your employees.  Furthermore, you should create a culture where it is acceptable to question actions based on ethics without repercussion.  Doing so early and often, and rewarding people for doing so will help incent a culture of ethical excellence.  People can make mistakes, and inadvertently make a decision due to haste that can be perceived as ethically perilous without malicious intent.  Perception of an ethical violation is important here as the perception alone will incent the wrong culture, so to the previous point you should reward people for asking questions about certain decisions solely based on the notion of ethics.  This can be a very difficult thing to do, as it is easy to feel angered if someone asks you if a decision is ethically sound – it feels as though they are questioning your morality and that is never fun.  Nevertheless, if you can explain the reasons or alternatively you are willing to say “You know what, you are right – I did not think of it that way so let’s change the decision” you will go a long way to creating the appropriate culture for ethical success.

Every promotion you receive will present new challenges to your character.  Draw immovable boundaries for yourself team today and live by them.  Teach those boundaries and their reasons to your team not only through direct discussion, but through your actions and expectations of the team.

Almost all of our clients ask us the same question, albeit phrased in different ways.   Boiled down to its core element, the question is whether the technology and product teams are moving quickly enough in executing ideas.  In other words, “Is my team good enough?”  Our answer, after some investigation, is almost always the same:  “Your team can do better and be better, but so can you.”

In our experience, there are 5 major reasons for this “C level executive” concern and a resulting 5 attributes or characteristics that would help keep the concern in check and your teams on track.  The reasons range from unrealistic expectations, to not consistently practicing some basic management principles.  Not every issue exists in every company, but we’ve attempted to identify five important attributes that you as an executive, product manager or technology manager can adopt today to ensure that you are getting the best results out of your team.

1)   Understand that Creating Value Should Take (Some) Time
There is not much to say here that we have not already said in our entry Getting from Idea to Product  The key point here is that value creation should take some time and while you should have aggressive goals and you should manage execution aggressively, great things seldom happen overnight.

2)   Seed, Feed and Weed your Garden (Your Team)
Please see our articles on Building High Performance Teams and Seed, Feed and Weed to Succeed.  The important point here is that you must build and maintain a stellar team to maximize shareholder wealth and have the best time to market. 

3)   Be Appropriately Technically Proficient
You do not need to be a technical expert.  See our article on How Technical Does the CEO Need To Be?  But it is your responsibility to bridge the experience chasm between you and your technology teams and to make them more productive as a result of your interaction.   It is also your responsibility to expect that your technical and product teams will move your way and better understand your business and your business drivers. 

4)  Be a Leader
We could not possibly do this topic justice in its entirety in a single blog posting and possibly not even in a single book.  But we think that there are four things that you can do really well that will help increase your company’s chance for success.  In our article Be A Leader, we identify these four areas as:  limiting the churn in your strategy; creating aggressive but achievable goals; instilling a causal mental roadmap to success in your employees; and making timely, sound and morally correct decisions.

5)  Be an Effective Manager
Great CEOs and executives know that the game is not about “adding features”; it is about improving business metrics related to your customer and in so doing maximizing shareholder wealth.  To do that effectively, you need to measure, communicate, and plan.  These three pillars of management are discussed in some detail in our article Management 101.

So you are an energetic and inspiring leader who is beloved by your teams but you are missing dates and the teams are getting frustrated.  What could be the problem?  It is possible that you are not demonstrating the necessary management skills alongside those great leadership skills.  Whereas leadership is all about having vision, developing strategy and inspiring teams, management is about methodical attention to detail in developing a plan, communicating the plan, and then measuring against the plan.  The word methodical should not be confused with the oft- used pejorative “micromanagement”; “methodical” in this context means a consistent and persistent diligence on the details that get things done. 

Plan
We use the term “plan” here to cover everything regarding your product plans; from product vision and product roadmap to the actual project plans that implement them.  The project plan is something that is probably left to your CTO, VP of Engineering, or Director/VP of Project Management depending on your organization but it does not hurt for you to understand what a good project plan looks like.  A project plan can take shape in a variety of forms from an excel spreadsheet to a Microsoft Project Plan to story cards depending on the product development methodology being used (agile, waterfall, etc).  Some factors that are important in determining the level of detail of the plan are the complexity of the project and the maturity of the team (not maturity as in whether your team shoots spitballs in meetings, but rather as in repeatability, see Capability Maturity Model).  The longer the project, the higher quality required, the more modules of code, and the greater the number of engineers are all likely to require a greater level of planning in order that the project complete on time, on scope, and on budget.  A great rule of thumb is that no single task on a plan should constitute more than 3 days of effort.  The reason is that it is difficult to notice if you are behind schedule when given a 5 or 10 day block of effort for a task.  The bottom line here is that the more complex your undertaking is, the more focused and precise your planning should be.

Communicate
Once you have worked with your team to develop the vision, the product roadmap, and the project plan, you must then become the advocate for the plan and constantly communicate with your teams.  You are a change agent and change requires communication.  Most “change consultants” will explain that the most common reason in failing to create change is the failure to communicate.  Simply put, you cannot communicate enough.  You have to take every opportunity afforded to you to communicate your vision, goals, milestones, and most importantly why your plan is important.  Explain and create the causal roadmap and perhaps most importantly ask questions and receive guidance.  Communication, after all, is a two way street.

Measure
Nearly everything you do in the technology and product world can be measured.  You should measure the costs of your initiatives, and their return to the shareholders.  You should measure availability of your product, customer satisfaction, the speed of your product (site speed if you are a SaaS platform), cost of operations to deliver your product offering, time to market, etc.  Do not allow your team to argue that their efforts cannot be measured.  What we do not measure, we simply cannot baseline, compare and improve.  Measurement is an absolutely critical component in attempting to improve teams and it is absolutely your job to demand that it happen.  As emphatically as we believe things should be measured, we also understand that people’s behavior changes because of measurements.  Consider individual’s reactions to measurements and ensure you are motivating the right behaviors.  For example, you may want to have higher quality releases but by insisting on measuring individual engineers might make them not want to work on larger features or not help each other out on bug fixes.  An alternative would be to make quality in this scenario a team goal where everyone gets rewarded for meeting it. 

Not everyone who is a great leader practices or focuses on sound management basics, just as not every great manager practices or focuses on sound leadership basics.  They are fundamentally two different disciplines and focus areas.  It is possible to do both well, but only by focusing on both.  By focusing on the three areas of management above (plan, communicate, measure), you can improve your effectiveness in management and improve your team’s performance.

Putting the bottom line up front, it is not the CEO’s job to be a technical wizard in ANY company.  The CEO has to be worried about too many other things to also need to worry about being the CTO or for that matter the CFO, CMO or any other “C”-level position within the company.  You need competent people in the CTO/CIO position doing the technical heavy lifting.

From our perspective it is also inexcusable for the CEO of a technology company to not attempt to make a connection and better understand the teams and technology that build and comprise the product offerings of their companies. 

It is hard to imagine that someone would rise to the position of CEO and not understand how to read a balance sheet, income statement or statement of cash flow.  That same person, unless they have an accounting background or were a former CFO is not likely to understand the intricacies of each accounting policy nor should they need to do so.  The CEO’s job is to ask the right questions, get the right people involved and get the right outside help or advice to arrive at the right answer.

The same holds true in the technical world – the CEO’s job is to understand some of the basics (the equivalent of the statements mentioned above), to know which questions to ask and to know where to get help.  Here is some advice for CEOs who have not been a CTO/CIO, do not have technical degrees, or have never been an engineer:

Ask Questions and Look for Consistency in Explanations
Part of your job is to be a truth seeker, because only with the truth can you make sound and timely decisions.  While we do not think it is commonplace for your team(s) to lie to you, it is very common for teams to have different pieces and perceptions of the truth.  When you do not understand something, or something does not seem right, ask questions.  When you are unable to discern fact from perception, look for consistency in answers.  If you can get over any potential ego or pride issues with asking what might seem to be ignorant questions, you will find that you not only quickly educate yourself but you will create and hone a very important skill in finding truth.

Seek Outside Help
Seek help from friends or professionals who are proficient and knowledgeable in the area in question.  The proper approach is not to bring them in and try to sort things out for you – that can be very damaging.  The approach we suggest is to create a professional or personal relationship with a firm or peer who is more technically literate and can help you generate the right questions or coach you on approach to your technology team or technical concern.

Improve Your Technical Proficiency
Create a list of your weaknesses in technology – things about which you have questions -and go get help to become smarter.  You can ask questions of your team and outside professionals.  Read blogs on technology relevant to your company or product or attend workshops on technology for people without technical backgrounds.  You probably already do this through professional reading lists on other executive topics – add technology to the list.  You do NOT need to learn a programming language, understand HOW an operating system or database works or understand how “Collision Detection Multiple Access/ Carrier Detect” is implemented.   You SHOULD understand simple concepts such as the interactions between time, cost and quality in development.

We know that your responsibilities as a CEO are enormous, and your time rather limited.  We believe that simple changes to your self-education approach, additions to your professional and personal network and modifications to the way in which you ask questions can pay huge dividends to your company. 

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