Leading the technology function can be challenging for many CEO’s. Yet, for other CEO’s it comes more naturally. Every CEO can learn how to become an effective leader of their technical teams by improving their leadership skills. There are things that will make a difference when leading technical folks, either positive or negative. In this four-part series I will cover those things that will help CEOs better lead their technical team and avoid those things that undermine the effectiveness of their leadership.
In part one of this four-part series, I discussed the foundational communication strategies for a CEO leading a technical team. In part 2 I specifically outline how CEO should communicate their direction to the technical team, and what things to stop doing that are undermining efficiency.
Once you have built a solid foundation of communication and rapport with your technical team (see part 1: Casting a Spell) you are ready to take the next step: Guiding the work of the team to produce measurable business value for the company.
Providing the right direction to the technical team makes all the difference. Providing the wrong direction is not only going to distract the team, but it will result in friction between you and the team and increase costs. If you already have unhealthy friction read Part 1 and then return here to learn how to give more effective direction to the technical team.
Unhealthy friction manifests itself in several ways. One of the most common ways is seen when the technical team says, “it can’t be done,” or “it will take 500 person years to do it!” If you are getting these types of unreasonable responses, chances are the direction you are given them is part of the cause.
Unhealthy friction also occurs when senior management believes that the value derived from the technical team is much less than the cost. In other words, the company feels that it is spending too much on technology. Cutting technology spending is rarely the right answer, especially in a highly competitive market. Technology has and is an enabler in most cases. The correct prescription is to find a way to get more business value from your current team. That starts with how you give them direction. Good direction will yield business value. Incorrect direction results in poor business value and a perception that technical costs are too high.
When the technical team says that something can’t be done, they are also likely to think the requested idea is a bad one. When technology teams cost too much, they are typically working on too many things and not doing any of them well. The fix for both is providing the team with high level objectives with effort allocations and delegating accountability for their achievement. High level objectives are typically the same objectives the company is working to deliver to its shareholders. Effort allocation is the amount of engineering effort, as percentage of the total available, to be allocated to the objective. If you don’t know how much capacity you have in your engineering team see Part 3 of this guild where I explain what things your CTO should be providing to you to enable you to effectively guide the team toward delivery of business outcomes and value, which includes total engineering capacity and actual allocations by initiative. Note: this capacity is not in dollars or person days neither of which represents the team’s ability to get work done.
Lead with objectives, not features and delivery dates
In 2019 I was in a board of directors meeting reviewing Q3 results. During the meeting, feeling inspired and full of optimism, a new CEO turned to me and said, “The site is too slow. You and the team need to make it faster! Please take care of that this quarter.” I received direct communication from the CEO to make the site faster. Do you think that was good direction from the CEO?
It was not. And, sadly, these types of request/demands/direction happen all too often and drive-up technology costs and result in unhealthy friction between the technology and leadership. What should the CEO have asked for? Since I was in the board meeting, I knew the answer. The company recently raised a round of financing. With this round came the new CEO and the expectations of significant revenue growth. What the CEO should have asked me to do is grow revenue!
There are many ways to grow online revenue. Improving the site speed is one of them, but in this case, it was not going to move the needle much. There were better ways of doing this with limited engineering capacity. If I didn’t know better, the CEO may have heard from me that it can’t be done, or it will take too long, or that it will cost too much. If I were to attempt to do it, it would add to the already present belief that the company was spending too much on technology and not getting enough business value from it because after completing the project the business value would not have been there.
So, what is the right direction? It sounds like this: “I need you and your team to help grow our online sales by 50% next year. I’d like to see your plan in a week for doing that. That plan should include your top three hypotheses for growing revenue along with the measures you will be using to evaluate your success. Once I have that, I’ll assign engineering capacity to each of the hypothesis and look forward to seeing the results.”
As a CEO, you should expect to see a response from the CTO that looks similar to this:
Top three hypothesis to help grow online revenue.
1. We have too many customers dropping out of our checkout funnel. We believe it is in part due to page speed, but also due to unnecessary complexity and distractions in checkout. We believe that if we simplify the checkout process, remove the distractions related to abandonment and improve the page responsiveness we will increase conversion. We will be using funnel conversion metrics as our key measure, and we are looking to improve it from 45% to 50% by the end of Q1 resulting in an improvement in revenue.
2. Search abandonment is too high. We believe that by improving our search results and by improving the search page load time we can improve search conversion and thus improve overall site conversion. Our measure of success will be the conversion rate from search to the product detail page. Right now, it is 20%. Our goal is to increase that to 40% and improve overall site conversion from 12.2% to 12.4%. This will result in a significant impact on revenue.
3. Our customer loyalty is low. Typically, we see 2.5 purchases a year. We believe we can achieve up to 4 purchases a year by improving personalization in our emails and on the commerce site. This will have a meaningful impact on revenue.
In this example, the CEO provided the high-level objective to the CTO: Revenue Growth. The CTO then came back with three ideas for improving online revenue, which did include making some pages faster. However, the objective was not to make the pages faster, but to achieve revenue growth.
The mistake I see CEOs make most often when leading a technical team comes down to a single, repeated act. CEO, with only the best of intentions, micromanaging the technology team by giving them specific features they are to build or specific hypothesis for which they believe will improve a business result. And, in the latter case, often being wrong about their hypothesis. When CEO’s lead with business objectives or outcomes such as revenue growth, customer growth, growth in loyalty and expect the technology team to establish their hypothesis for achieving the objective and their success measures the outcomes are much better!
This way of communicating doesn’t always have to start with the CEO. Rather, the CTO or the CPO can initiate process changes that will lead to better outcomes. In fact, on many assignments as an interim CTO, I’ve done just that with good results.
The key learning here for a CEO is that if you are hearing responses to your direction that include “it can’t be done,” or “it will take 500 person years to do it” it may be because the direction being given is landing equally as poorly as the response. Try again, but frame the request in terms of the desired business outcome you are looking to achieve. This will bring the technology team closer to the objectives you have for the company. And you will grow another effective team that can solve business problems and enable business value.