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Archive for November 5th, 2011

The CEO is the Most Confident Man in the Company

Posted by Bob Warfield on November 5, 2011

I heard somewhere that one definition the Navy has of a ship’s captain is that he is, “the most confident man on the ship.”  A CEO could be similarly defined.

Why confidence as the defining quality for these leadership roles?

It’s because these roles will ultimately have to deal with leadership in the absence of data.  A lot of folks, particularly those from the engineering disciplines, view decision-making as a matter of waiting until there is enough data to make the decision obvious and then making it.  Unfortunately, leaders frequently have to make decisions absent sufficient data.  To be clear, another role of the leader is to make a determination whether the necessary data for a good decision is “tragically knowable“, but if it isn’t knowable, they still have to lead.  They can’t afford to heave to in the information doldrums and wait it out until inspiration strikes.

I’ve been thinking about all this after reading a series of posts in various places that have absolutely harpooned Reed Hastings of Netflix.  These posts have labeled Hastings egotistical, arrogant, full of hubris, and most recently Om Malik says he’s a narcisist.  None of these is very sympathetic to the man or to the role of CEO.  Wikipedia defines narcisist as:

“narcissism” usually is used to describe some kind of problem in a person or group’s relationships with self and others. In everyday speech, “narcissism” often means inflated self-importance, egotism, vanity, conceit, or simple selfishness. Applied to a social group, it is sometimes used to denote elitism or an indifference to the plight of others.

I don’t know whether Om means to be so derogatory, and I suppose the article he links to good be interpreted as giving narcists a back handed compliment by implying the can be good leaders.

Nevertheless, I do wonder whether all of these bloggers really understand what it means to be in a leadership position without sufficient data and with a scenario that demands rapid, decisive, decision-making.  I know Reed Hastings reasonably well, having had a startup acquired by him and going on the work for him for a short time after.  All I can say is that “arrogant, egotistical, full of hubris, and narccissistic” are the furthest things I would use to describe the man.  In my experience, he is self-deprecating, humble (he sold the Porsche he bought not long after his first IPO because he thought it was too ostentatious), and filled with a need to collect as much data as possible to do the right thing.  In fact, I’ve chided one of my all-time favorite bloggers, Seth Godin, on the need to collect data if it is available rather than “Just doing it.”

Based on what I know about the man, some set of circumstances were happening at Netflix that forced him to make some decisions without data that have led to the company’s current problems.  More than likely, the circumstances involved the content owners radically increasing their prices to Netflix.  They created one of those times when there was no opportunity to test, decisions had to be made, and it was “bet your company time.”

Watching this debacle, I am reminded of a common Silicon Valley saying:  CEO’s never deserve as much credit as they get when times are good nor as much blame when times are bad.

Is your CEO the most confident man in the company?  I hope so, because they sure will need to be.

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Seth Godin on Why the Minimum Viable Product May Not Be the Right Strategy

Posted by Bob Warfield on November 5, 2011

Great post by Seth Godin this morning on “When minimum viable product doesn’t work.”  I had also recently written a similar post on how minimum viable is largely a capital conservation strategy that benefits the investors more than the entrepreneurs:

We live in a world that has learned to embrace and even worship the notion of a “minimum viable product,”  not products that are the best that we can do.  This is done for risk mitigation reasons.  We are concerned that we may not know what’s best, we need to get feedback, and we need to move cautiously rather than boldly. It’s born of a desire to conserve capital and to raise capital.  Capital, in many ways, has trumped Vision, Passion, and Products.  Venture capital is hard to come by for Vision.  They’ve been burned too many times, and it is too hard to identify Visionaries.  It’s easier to fund traction.  Let the markets decide.  Let the people decide.  It’s democratic.  It’s safer.  But it will never produce Insanely Great the way Steve Jobs has.

Seth always has a great way to turn things on their head and look at them sideways to derive great insights.  In this case, Godin’s point has more to do with whether you can sustain the creative energy long enough in the face of repeatedly shipping something in the name of “minimum viable” that doesn’t quite get to critical mass.  His central point is that Marketing just doesn’t work like Engineering.

He’s right, as usual.

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