The Startup CEO #3: The Nexus of Competence

When I was twelve years old, I studied to be an expert at splitting wood.  I studied the grain, the dryness, the number of knots. I placed the wedge where I thought it would split easiest, and tapped the wedge in, and even planned when I would snap my wrists while swinging the sledge, when I lifted with my legs and how I put my back into it.  I rejoiced when the wedge sailed through cleanly.

Parents, do not deny your children the wonder of hard work.  I did none of that willingly, but it taught me excellence and gave me trunk strength that made me the best 185 lb pulling guard in college football. :-)

There were times at Innegrity when I was startled by the excellence of the people around me.  They had such skills and raw talent, could manage customers and make material and build parts.  They made the company go!

The Nexus of Competence

We had a board member at Innegrity, a gentleman who had started at Milliken, then become CEO of a large textile company, the sold the company and moved on to get a PhD in business and become a professor of strategy.  He captured strategic leadership in three words: Character, Competence and Community.  When I asked what the leaders had to be competent at, he replied first that they should always continue to learn, to never be satisfied.  I joked that academics could do that, so he then gave a definition that said they should learn a little of everything--operations, sales, product development, marketing...  I challenged him again, "How much of this do I need to know, versus having a team that has that competence?"

Les is not someone who struggles with clarity, but we finished our conversation without a clear answer.

Often small companies are spread so thin that everyone is a front line contributor, and it's not uncommon to hear of leaders who are packing orders or cleaning bathrooms.  Where they contribute isn't all that important, and I've seen leaders who were excellent technically, who were accountants, who had great organizational skills, or who were salespeople or marketers.

In a small company, people don't care what the leader can do, but the company will live and die on what they believe the leader can get done.  They rely on the CEO to ensure that the product is designed perfectly, that the product is made flawlessly, that it is shipped on time and in good shape, that the company will be financially stable, that the investors will not interfere with the company's operations.  The CEO is the one place they turn for all of this. 

It is not enough for the leader to be believable.  There are people who have the talent of being believable, but that will break down over time.  Rather, the leader must actually ensure competence, and in time it will become believable.  Causality here is very, very important.

This is the Nexus of Competence:  a customer or investor or employee must be able to rely on the CEO to get things done.  The CEO builds credibility by building a credible organization--but the credibility absolutely begins and ends with her.  She has to make sure things happen as designed.  This is a role the CEO cannot delegate.  The trains must run on time, or the company will fail.

How it Breaks Down

It is clear that at the end of my time at Innegrity, the Nexus of Competence broke down.  The environment was very difficult in 2009 and 2010, and the business was building more slowly than we had hoped.  We went from one end-user at the beginning of 2009 (the Brawn Formula 1 team--now Mercedes) to 18 end-users at the end of 2009, and 60 when I left in November 2010.  The last contract I signed was with Head Tennis Rackets, and both the first and last contracts produced world champions.  But product sales had only brushed the underside of $1 million/year and were choppy and unpredictable.  Most of the applications were small sporting goods applications--we had yet to land a big ballistic contract. 

People were growing frustrated and looking over each other's shoulders.  Our salespeople questioned the quality coming out of manufacturing.  The manufacturing guys asked for a few sales accounts, thinking they could do better.  A few investors became very active, questioning everything and calling for change.

The important point here is that the breakdown wasn't in the competence of the organization--there were a few mistakes, but the organization was producing a quality product, getting it into customers' hands and those customers were adopting it and launching new products at a very fast pace.  The breakdown came when everyone questioned everyone else, when people's arrogance and pride helped them become "experts" in things they knew nothing about.  The unknown became a source of paranoia that took hold like a virus.

The competence did not break down--rather it was a breakdown in the confidence that others had in that competence--a breakdown in the Nexus of Competence.

I describe one of my principle skills as a CEO as having a very deep keel.  I don't get rattled by the rough seas, and can stay on path even as others waver.  This confidence is contagious, and allows me to form the Nexus of Competence--I provide a vision, I solve problems, I help the team to function and to keep focused.  Others believe in me and in the competence of the team, and the ship holds together.  This comes with its requisite number of sleepless nights, early mornings and lots and lots of prayers.

My Personal Story

I am continually humbled by those who join when I start something new.  It's not something I deserve or could force, and so much more gets done because these people join.  Most of the time it happens in an informal "what are you working on," "oh, just this," "that sounds interesting" "it's great" "how can I help" conversation, which ends with someone else joining in and me going to bed thanking God for the people he has surrounded me with.

I hate that I was not able to hold Innegrity together at the end--that the same people who risked a lot to join began to question each other and, eventually, me.  My only consolation is that, compared to what came after I left, we were a model of competence and efficiency.  That does not alleviate the breakdown in confidence others had in the team under my watch.  Now that I have been given a second chance, I am being ever so more careful and diligent to make sure that we both far exceed the competence of the last time, and also do not put ourselves into the risky situation that we were in before, with high costs and not enough revenue.

This puts me in an interesting predicament--my job is to ensure that everyone has confidence in the team.  Yet I am already and continually humbled by the confidence already shown.  So I work ten times as hard to help the team live up to their expectations to ensure that the confidence is not ill-placed.