Whether your company is privately or publicly held, as an executive leader you are held accountable by the owners of the company, whether those are the original founders, a set of VC companies, or public shareholders. They have mandated you to lead their company on their behalf, and as such they want you to think and act like an owner – i.e. with their interests at heart.
That all sounds like common sense, however, truth be told, few executive leaders REALLY act like owners. Their pay package might be structured in such a way that they are incentivized to help make the company grow and be profitable, but on a day-to-day basis few leaders REALLY act like owners. They just don’t have enough skin in the game. It is not their money that they are spending in their budget. It is not their personal reputation that is wrapped up with the company’s success or failure. Except for the CEO, the reputations of the rest of the leadership team are pretty shielded as the buck stops with the CEO and any failure gets usually 100% credited to the CEO.
Before founding my own business I was one of those senior executive leaders. I was certainly a very financially savvy, conscientious & prudent senior executive leader. I also was a very pro-active, forward-driving, highly engaged, can-do and GS*D senior executive leader. However, since founding and bootstrapping my own business I’ve gained a completely new perspective and insight on what it REALLY means to TRULY act like an owner. Moreover, it has made me realize that so many leaders would be so much more effective, and make their organizations so much more successful, if they TRULY felt and acted like an owner.
Below I have summarized 4 key insights regarding what it means to act like an owner. Have a read. I hope they inspire you to step up your “act like an owner” attitude as a leader.
1. You focus solely on what the next “ONE THING” is to move closer to your goal and the rest are just distractions – until they become the next “ONE THING”: The two key constraints that companies of any size have to manage each day are time and money. When you run a small company those constraints force you to every day ask “What is the next best ONE thing that I can do to move closer to achieving our goal?”. That is a hugely freeing question, because though there are many things that you ultimately want and need to do, most of them are NOT that ONE best thing you need to do right then to move closer to your goal.
Few leaders who are part of a big company practice this. Why? Because they don’t feel the constraints as much. They have large budgets and lots of people. However, we all know that big companies move slower despite those advantages. This is often blamed on the fact that in big companies it takes more time to get more people to agree to act. However, I beg to differ: A lot of the ‘slow down” is because many leaders apply their resources – their budget, their own time and their team’s time – to do too many things at the same time, which results in a loss of focus and time spend on many activities that are useful but not the ONE best thing that can help the company get closer to its goal.
So if you want to be a more effective leader who acts like an owner, then start by reviewing each project that you and your team are spending money and time on. Are these really the best next actions to help move your team and/or company closer to its goal? Or are they useful but not yet critical? Also, is there a next best action that you and your team are not even investing time and money in. Decide what you and your team SHOULD be spending your time and money on. Kill or postpone the projects that are non-critical and refocus on the real priorities. You will be surprised how much faster the critical things will get done and therefore how much more impact you and your team will have on the success of the business – by focusing on doing less 😉
2. You constantly look for what you might be getting wrong – so you can fix it, save money, or make more money by making your business more efficient or effective, etc.
As a leader you are charged with growing a business – not keeping it in the same place. So innovation and continuous improvement should be every leaders middle name. Alas, many leaders are too busy with just managing the day-to-day and fail to focus on what could drive those big changes. Moreover, many leaders fail to seek opportunities for continuous improvements because they fail to question their own work. They fail to proactively ask their teams and their peers to keep searching for ways to do things better, more efficiently, or effectively. Why? Because they are good at what they do and this stops them and others from questioning openly whether it could be done better.
However, when you are an owner, you don’t for a second take any criticism personal. You are only interested in making things better, saving money, not making costly mistakes, and so forth. So you are always looking for people to take the time to review, critique and feedback on how your business does things.
So acting like an owner means becoming more critical of your own and your team’s work. Ask everyone to constantly question the status quo – and never ever TAKE or MAKE feedback or critiquing personal. It’s just a sound and necessary business practice to help you and your business become more successful. Which solutions or processes are behind the times? Are there new ways of doing things that could save money or help you do things more effectively? Also, be ready to stop and kill something – a project, an initiative, a campaign, a rule, etc- which you build previously because times have changed and now there may be new or better information or tools out there which allow you and your team to address the issue more efficiently or effectively.
3. You think like your CFO – constantly questioning expenses, ROIs etc: We all know that you’ve to spend money to earn money. But when you are spending the money that you earned and saved up yourself, then that really makes you think twice. First, I’m keenly aware that I had to earn $2 pre-tax for every $1 that I now spend to grow my business. Second, I know that if I instead invested that same $1 in the markets, I would on average make about 7%-9% per year and double my money in about 6 years. That is the opportunity cost of investing my money in my venture.
Third, there are always unforeseen circumstances due to which you may need to cancel a business commitment or contract, often involving fees, notice periods etc. When you run and bootstrap your own business you are super-focused on this, as you want to minimize the risk of losing money. In a similar vain, you want to always try and time your expenses as close to the actual cash-generating event that you are funding with it and as such you seek out vendors who require no or small upfront deposits ahead of the actual time of delivery of their service.
You get the gist: Acting like an owner means acting like your budget is YOUR HARD EARNED MONEY. Require your team to manage their budgets as if it is THEIR HARD EARNED MONEY. Introduce policies around not signing contracts with vendors or suppliers who ask for more than x% of their fees upfront, or who have onerous and expensive cancellation policies. And so forth.
4. You understand the power of FIOY and learning-on-the-job: In a small business you don’t have the budget to have a specialist for everything – whether in-house or outsourced. You just don’t have the money. So you need people who have a willingness and ability to Figure It Out Yourself (FIOY) – i.e. you need people who are able and willing to learn on the job.
In large companies leaders often get into the mindset of hiring to fulfill new specialized skills that are required to grow. In doing so they ignore the fact that in many cases, their existing team likely could have learned those skills on the job. In fact, it would have created an opportunity for professional development, which even helps retain talent for your company. It may even create an opportunity for one of your team to increase their salary by acquiring those new skills and taking on that new area of expertise. Moreover, by investing in the development of in-house skills, instead of solving it through outsourcing or using freelancers, you are building a stronger team for the long run.
Therefore, next time when you identify a new skill that you or your team need to achieve your goals, take a moment and check whether you and your team could FIOY. It may take a little longer in the beginning but in the long run it may save you $, help retain talent and build a more powerful team.