CHAPTER EIGHT

THE CEO AS FUNCTIONAL SUPERVISOR

When it comes to talent, your primary role as CEO is to be the leader of the team as a team. You have to set an example, define the culture and create alignment across the organization, from executives to marketing interns. You also have to be a “functional supervisor” of every department at your company. Each presents a unique challenge.

RULES FOR GENERAL MANAGERS

The CEO's role in leading any particular function varies greatly with the CEO's experience. What follows are instructions that apply generally to all kinds of CEOs as the general managers of their companies.

• Supervising sales. One of your most important roles is to be a sales leader. This isn't an issue for many business-to-consumer (B2C) companies, but it's essential at business-to-business (B2B) companies. You have to know many of the customers yourself and you'll be personally involved in closing a number of key deals and maintaining customer relationships. Even if you don't have major enterprise deals, knowing your customers and visiting them from time to time is an important part of being “in-market.” For my part, I always tell our sales reps that I will go on any client call, at any time, as many times as I'm needed.
• Supervising business development. Great salespeople can close deals, with or without the CEO, but strategic business partnerships are more nuanced. They are about executive connections and a shared vision—things that CEOs should be able to communicate particularly well.
• Supervising marketing. A CEO doesn't have to do much to support sales in a B2C company. That doesn't mean they've got extra time on their calendar: in a B2C company, marketing is the main driver of revenue, and supervising marketing is the CEOs most important job. Keep an eye on every detail of marketing, from high-level messaging and positioning to key search engine optimization (SEO) and search engine marketing (SEM) metrics. Once your company has a chief marketing officer (CMO), you'll have a new challenge. For more than a decade, CMOs have had the shortest tenure in the C-suite (the current average is about 20 months). This is a difficult role, especially as online advertising and quantitative advertising continue to revolutionize marketing.
• Supervising finance. There are two financial tasks that a CEO (rather than a chief financial officer) needs to take the lead on. The first is guaranteeing the accuracy and timeliness of all financial reporting. You won't produce these yourself, but you have to vouch for them. You also have to set the tone for paying vendors. At one of my prior companies, management viewed every invoice as the starting point for a negotiation and never paid a bill on time. That's one approach. At Return Path, we negotiate prices hard in advance and pay our bills on time. Whatever approach you choose, communicate it and stick to it.
• Supervising legal. A solid legal team will protect you from liability risks by forcing you to do things “by the book.” What they won't do is protect you from “over-lawyering,” which is expensive and restrictive. The CEO's job is to make it clear that the lawyers report to the businesspeople, and not the other way around. They're called “counselors” for a reason. Another CEO I know used to say to his lawyer, “Your job is to keep me out of jail, and that's about it.” I'm not sure that's the right approach either, but it certainly kept that CEO's legal bills down.
• Supervising product. You don't have to be a technical CEO. But you do have to be attuned to product-market fit. That's the root of your business direction and your go-to-market approach. And while you may not be able to comment on database infrastructure, you have to pay close attention to the end-to-end customer experience. This often gets lost in the shuffle in companies with large product teams.
• Supervising operations. Depending on your company, the CEO's role in operations varies greatly. If you're not in an operationally intensive vertical like manufacturing, you can be hands off: have ops report to someone else, and just manage the metrics. If your company is operationally intensive, ops will be a key competitive differentiator. Pay attention to every detail.
• Supervising human resources. CEOs are often tempted to make HR a junior position that reports to Finance. But as I wrote in the previous chapter, your HR head is one of your most important strategic partners. Even if you're not a touchy-feely people person, you can't overdelegate cultural stewardship. Recruiting and onboarding are essential CEO tasks that pay huge dividends. At Return Path, our most senior HR person has always reported to me. I will never run an organization any other way.

If you are a product inventor who wrote the company's first code base, you're going to have a different relationship with your engineering and product team than a CEO whose last job was as a head of marketing. Whatever your specific background, you have to supervise every department in your company.