When Andrew C. Florance founded his company as a 21-year-old in 1987, he got nervous when he realized how much money his idea had pulled in. He soon knew he had to hire an experienced chief executive to lead the firm.
But in the end, that CEO -- although he had the skills and experience -- was not what Florance wanted for his company, the CoStar Group Inc., a commercial real estate information provider. What Florance wanted was someone with a vision for the company and a desire to move it in the direction he wanted it to go. In other words, he wanted himself.
"I think the core role of CEO is to have a vision of what a company could be, and you have to be able to communicate that vision, persuade other people that vision is worth working for or investing in," he said.
Thus far, that role has seemed to suit Florance, whose company is now a 1,000-person business.
So, what does it take to be a chief executive? Are the good ones moved up from lower ranks within an organization, or are they plucked from jobs outside? Might it be better if they have experience in a different industry altogether?
There seem to be no right answers to those questions, especially as we watch companies go through very public transitions when their chief executives do not work out. Although many firms help executives climb the ranks into the top office, a chief operating officer doesn't always make a good chief executive. It's a tough job (obviously) that demands skills and attributes that are different from those for any other job, as many CEOs have discovered. Traits they have picked up along the way may help them in the big corner office, but it is, essentially, a different beast.
"The CEO . . . is the person who is setting the vision and leading the company. You can't expect everyone is going to have the same level of investment as they do," said Lee Maxey, chief learning officer for Pathlore Software Corp. of Columbus, Ohio. Maxey has spent years training top executives at such major companies as Lucent Technologies Inc., American Express Co. and Microsoft Corp. "A manager needs to be passionate in how they handle the people they are managing. A CEO has to be more focused on the passion of what got the essence of the business started."
And that, of course, is not always easy.
Keith Olsen, chief executive of Switch and Data of Tampa, has been in the telecommunications business for 25 years. He spent his first years as a sales manager at a small, specialized telecom firm, where he sold a product but did not understand how it worked. He did well, but something wasn't clicking. "The real seminal point for me was around, I have to understand the real levers and dials for the people I'm dealing with," he said. "My customers and my peers became my best mentors."
He began to focus on what got the business started and learned from his colleagues and clients.
"They taught me things I should never do, which is probably as important as the things you really should focus on," he said. Olsen eventually moved on to AT&T Corp., headed a group inside the huge corporation, then worked his way to Switch and Data, where he became chief executive nine months ago.
He says he knows where he wants to take the company because he understands all the various aspects of it, including how the technology works. But although learning the technical aspects of the industry helped Olsen to get ahead to and form a vision, even he acknowledges a different sort of learning probably helps him be a better chief executive.
Olsen still calls on his team from AT&T to discuss business and how he might improve. "We call each other and say, 'How should I have operated differently?' I get much better feedback from people who don't work for me anymore," he said.
Florance of CoStar also says learning the technical aspects of the business is important in envisioning his company's direction. But it's not the key. "Obviously, there's so much technically I learned," he said. But "my whole evolution as CEO has come from other people. I learned from my board, that first CEO. I get tremendous education from my [chief financial officer, chief information officer] different operational managers . . . and also from my clients."
Learning through experience, whether at one company or through a patchwork of jobs, is necessary. Paul A. Toback, chief executive of Chicago's Bally Total Fitness Holding Corp., said his various jobs have all, in some way, provided him with a basis for a job as head honcho.
He started as a corporate lawyer, then went into government work for a few years, working for Chicago's mayor, Richard M. Daley, as director of administration. He also worked in the Clinton administration for two years. "At every one of these jobs, you learn something you could take with you," Toback said. "In government, you learn you need to be inclusive and talk to different constituency groups. This is a large company, with many groups. My . . . being inclusive and reaching out is very important."
And what he learns from those constituencies, he has to learn in order to make a decision. In the past, he advised people. He finds it is much easier to give advice when it's not his own ultimate responsibility. But if he gets stuck, he remembers the best piece of advice he ever received, from Daley: "Whether you make a right decision or a wrong decision, just make a decision," he said. "So many people are paralyzed."
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