The church of dumb

The role of a CEO is not that of a crystal ball visionary. Perhaps a dumbed down leadership is better. At least this is what I am hearing.

I must concede the following lessons taken from current scientific knowledge:

  1. Performance of a startup or any company is not so dependent on the CEOs as we may think
  2. Predictions from the top are riddled with illusion and planning fallacy. Frequently they assume a best case and neglect the history of past peers
  3. Professionals are often chosen because of their optimistic predictions. And so they are compelled to grandstanding, although they are probably not much better than luck or peers. Assuming the reality that reality cannot even remotely be predicted has never gotten any CEO appointed or Politician elected
  4. On top of that, the more celebrated one becomes, the more errors a leader is bound to make. 

All this is I'm the acclaimed scientific realm so I'm taking it as correct for now[1].

Personally and historically speaking, this is true. Most of my forecasts were too optimistic. Despite minor accomplishments I feel proud about, I have no rational motives to feel like I can or will accomplish anything meaningful business wise in my life. Skin.pt was great to launch, but it has not become the worldwide catalyst for change in dermo-cosmetics it was meant to be. Centroid was the coolest tool to ever fail miserably. All my initial plans were changed, and the plans that replaced them were, too replaced. Yet I continue to press ahead, investing more of myself into these impossibly hard challenges called startups. It's seems odd.

So what should we be doing instead? The opposite:

  • making short term planning key, and leaving people the room to adapt
  • introducing small, mostly rigid goals that are simple to understand and easy to calculate. Example, growth of X per week, CAC of Y USD
  • establishing simple self monitoring processes that can be done by the teams, measuring performance indicators and closing the loop all the way to the objectives 
  • using broad frameworks that include a universe of possible actions, allowing managers to determine their course of action freely and responsibly within their rigid objectives
  • being more willing to kill ideas and change courses of action when a reasonable amount of data is present. Furthermore, killing ideas even before they get trialled, by practicing the Premortem exercise [2]. Finally, distrusting complex ideas that promise unicorns. They assume a path of successes that only materialize in the medium to long future, and so are prone to all the biases
  • being highly intolerant to bullshit. Everyone and everything which produces or helps produce "magic" is absolutely necessary. Magic is revenue, margin, features, satisfaction, speed, all those good things. Controllers and analysts that are not a profit center or who create long term strategy should be few and far in between
  • standing back and observing others. Because WYSIATI [3], people in operations can be extremely short-mineded about their problems. Perspective lets you know how the relationship of different functions at the company adds value. Let them iterate and decide on their functional jobs like we established before, and reserve yourself the right to do short-term changes in the whole dynamic of the company. You want better decisions for the whole, not the part. 

This does not mean a vision is not important. It is very much so. Long term thinking is good. To set up a goal, a story, a customer problem-solving orientation, a team mindset. To commit yourself. Also use big plans mostly for steering the company in investment decisions, which comes in lumps and sometimes is used in lumps too. Property, plan, equipment, platform and expensive hires are a type of investment that needs a far reaching plan. 

For the rest, shorter planning cycles and dumber execution-iteration should fare better. 

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  1. Thinking Fast And Slow, mostly in Chapters "The Illusion Of Understanding" and "The Engine Of Capitalism"
  2. It goes like this: you assume that you introduce this idea or pivot. You assume it's 6 months down the road and that it failed. Then the exercise is to come up with a plausible story to what has happened. This is very much prescribed to small and big companies alike [1]
  3. WYSIATI - what you see is all there is