3 Leadership Lessons That Must Be Part of a CEO's Playbook!
Introduction: The Value of "Hard Things"
For any serious student of leadership, reading Ben Horowitz's "The Hard Things About Hard Things" is not a one-time event; it is a recurring study. I have read, listened to, and then re-read while listening to this book, and to say it is one of my favorite books would be an understatement. Horowitz has done an exceptional job in crafting a book that has made things real, providing an insider's look at management, leadership, and business drivers.
From this deep engagement with the material, three main takeaways emerge that every leader should incorporate into their playbook:
- Avoid Management Debt
- Appoint the Right Leader (War Time CEO vs. Peace Time CEO)
- Go Down an Invisible (or Unknown) Path (What have you not thought of?)
- Bonus: Build a Strong Circle of Mentors
Lesson 1: Avoid Management Debt
The Concept of Technical Debt
To understand management debt, one must first understand the environment where the concept originated. In this day and age, efficiency concepts and buzzwords like Agile, Lean, and SAFe (Scaled Agile Framework) are not a rare commodity. Within these frameworks, there is a critical concept known as Technical Debt.
At a high level, technical debt is a burden that a team carries from one iteration (aka sprint) to another. It accumulates when deliverables are not fully met in a specific sprint, or when shortcuts are taken that must be fixed later. It is the interest paid on speed when quality is sacrificed.
Defining Management Debt
For management and leadership, "Management Debt" is akin to this philosophy [source]. It is the accumulated cost of short-term leadership failures that require long-term correction.
The primary cause of management debt is a lack of clarity. When a leader is not clear and I mean crystal clear, in the framing of the ask, the receiving entity will generate an output that requires constant hygiene. Instead of a finished product, the leader gets something that needs to be cleaned up, corrected, or redone.
The Sources of Management Debt
The source identifies specific leadership archetypes that manufacture this debt:
- Fly-by Bosses: All "fly by bosses/leaders" create management debt. These are leaders who drop in, issue vague directives, and disappear, leaving confusion in their wake.
- One-Line Scope Definers: Most (if not all) one-line scope definers create management debt [source]. Brevity, in this context, is not a virtue; it is a source of ambiguity.
- Weekend Warriors: All "weekend warriors" are a result of someone’s management debt . When work spills into the weekend, it is often because the initial direction was poor, requiring extra cycles to correct.
Structural Management Debt: Two in a Box
Other kinds of management debt include structural errors, such as "putting two in a box". This occurs when there are two drivers for a single initiative.
The result is that no one is in charge. The employees don't know who to ask for a decision or direction because there are two captains at the helm. This lack of a single point of accountability creates paralysis and confusion. Having a primary owner and a backup is a better approach than splitting ownership equally.
Person-Firm Misfit
Another nugget regarding management debt involves hiring an outsider (expert) without taking the business maturity cycle into consideration. This leads to what is called a person-firm misfit.
This concept is similar to market-product fit. Even if a candidate has exceptional capabilities, if those capabilities do not address the specific problem the firm is facing at its current stage, it will lead to failure. Hiring a corporate executive for a startup, or a startup hustler for a mature corporation, creates debt because the fit is wrong.
The Takeaway: Use the SMART Framework
To avoid creating management debt, a leader must frame their ask using the SMART framework. The ask must be:
- Specific
- Measurable
- Achievable
- Realistic
- Time-bound
It is crucial to note that "Measurable" is not a metric here; it is the definition of done. It means that all parties know exactly what the ask or outcome is. Additionally, leaders must know when to hire, from where, and why, to ensure they are solving the right problem with the right person.
Lesson 2: Appoint the Right Leader (War Time vs. Peace Time)
The Context of Hardship
The life of an entrepreneur is not all roses and sunshine. Ben Horowitz draws his experience from the time of the dot-com bubble. I remember it quite well, as I was wrapping up college and had just entered the workforce while starting my Master's program. This era was defined by rapid collapse and existential crisis, the perfect breeding ground for "War Time" leadership.
The War Time CEO
CEOs during war time have to make tough decisions. The defining characteristic of this mode is that it is not a democracy, it's a dictatorship. During war time, the luxury of consensus does not exist. Everything is the CEO's fault.
- If the product sucks, it's the CEO's fault.
- If the growth has stagnated, it's the CEO's fault.
- If the market strategy is laxed, it's the CEO's fault.
- If the sales force can't sell, it's the CEO's fault.
Because of this total accountability, CEOs have to make the best decisions now. The consequences are left to the "Harvard Case-studies". The good ones become legend, whilst the others simply fade away. Good or bad, it is what it is.
The Peace Time CEO
In contrast, the Peace Time CEO operates in a completely different reality. They have the luxury of time, hindsight, resources, money, and other advantages. In essence, collaboration is a viable option for a Peace Time CEO. They can afford to build consensus, foster culture, and focus on long-term optimization because the ship is not sinking.
The Takeaway: Alignment with Business Needs
A War Time and Peace Time CEO require a different skill set. Therefore, it is the board's and the founder’s responsibility to understand the state of the business and have a leader who is aligned with the needs of the business. Placing a peace-time leader in a war-time crisis, or vice versa, is a recipe for failure.
Lesson 3: Go Down an Invisible Path (What have you not thought of?)
The Plan B Fallacy
I was listening to a talk by Arnold Schwarzenegger, where he stated that if you have Plan B, you will fail. The logic behind the statement was that an individual will not apply their full potential to Plan A if there is a luxury of Plan B. While this may be true in limited scenarios, the reality of business often demands a different approach.
Reframing the Question
The right question to ask is not just about commitment, but: what have you not considered?.
Consider a dire scenario: If your business only has one month of runway left and the market has just collapsed, do you give up? NO. You go to Plan B, then C, then D. There is no right or wrong answer here, but there is another perspective, that is, a leader must change their frame, label it differently, and then ask, "Have we pursued that Avenue?".
PA vs. PDCA
For War Time CEOs, there is no time for analysis/paralysis. The standard management cycle of Plan, Do, Check, Act (PDCA) is too slow. Instead, the War Time CEO operates on Plan Act (PA). You plan quickly and you act immediately.
The Takeaway: Change the Frame
When there is no possible solution visible, you must change the frame of the question. You must explore the option of what has not been considered. Whilst not an easy task, it will force you to consider an avenue which may or may not even be on your radar. This is how leaders find the "invisible path" to survival.
Bonus: Strong Circle i.e. Mentors
It may not be called out by name in the book, but you'll read a lot of names that Ben leveraged during difficult times—these were Mentors.
One of the best pieces of advice I got from a mentor was regarding the composition of this circle. In addition to mentors in your company (inner circle), you must find mentors outside your firm. They will provide perspectives that are not part of your internal thought process.
Final Thoughts: The Hierarchy of Value
The ultimate lesson boils down to a strict hierarchy: People then Product and then Profits .It is a CEO's or Leader's responsibility to ensure product/market fit, which drives profit for all employees and shareholders [source]. However, none of this is possible without People.
Take care of your people, and the other two (Product and Profits) will automatically fall in place.
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