Whatever your level of performance, you can always do better. I set a very high standard for myself. Anyone who actually cares should do the same.
If you’ve been following me for a while, you already know that I’ve found fault with people at every level of the Built World industry. I’ve picked apart all the things sales and marketing people do wrong. I even critiqued the customers, including builders, architects, and big boxes.
Now it’s time for me to share my thoughts on the leaders. This is how the CEOs and Presidents of Built World companies are failing and what they can do to be better.
Now, don’t get me wrong. There are great leaders in the Built World. In fact, most of the higher-ups at these companies are great in a few areas.
The problem is the other areas – the ones that most leaders are weak in.
Built World leaders tend to come from one of two backgrounds. They either come to leadership through finance or engineering.
In larger companies, it tends to be the former. The bigger the company, the more likely it is that the CEO used to be the CFO.
Small and medium-sized companies are likely to be led by the engineer who invented their signature product or process. Those leaders often feel a close, personal tie to the company they helped build. That makes it hard for them to let go of parts of the company as they get more successful, which holds back their growth.
Both of these types of company leaders, however, share one main weakness.
CEOs with backgrounds in finance like to keep tabs on the numbers.
The problem with numbers, though, is that they’re a lot easier to measure than to predict. You know how many sales you had last quarter, how many customers you gained and lost over the same period and the exact cost of every expense you had to deal with.
But the number of customers you’ll gain and lose over the next year? That’s a prediction. It’s an educated guess, but still basically a guess.
Tomorrow has too many unknowns and that makes CEOs very uncomfortable. They much prefer dealing with yesterday because yesterday already has results you can measure.
CEOs who started off as engineers and inventors are the same way. They’re a bit less focused on the money but they’re just as concerned with things that can be measured, like the tensile strength of their product.
Because of their technical expertise, many of them think they know what the customer needs better than the customer does. Even when they’re right, they still can’t do a good job of showing the customer why.
Again, the problem is certainty. Customer demand is unpredictable. Their problems change and so do the kinds of solutions they need.
Engineering-minded CEOs are much more at ease thinking about the product and how great it is on a technical level. That’s something they can control. Day after day, the specs stay the same and the product performs just as well as it always did, even when demand for it fluctuates.
These leaders like to see things in black and white terms. They don’t like anything to be gray and fuzzy. They’re not comfortable with risk.
They like to play it safe, and that means they have a hard time with vision.
Vision is what true leaders have. You see it in Steve Jobs and Elon Musk.
Finance and engineering aren’t really about vision. Their role is to support the vision.
That doesn’t mean they’re not important. On the contrary, successful companies need a strong understanding of and respect for finance and engineering. Without these strengths, they are likely to fail. Even a great sales or marketing leader with a superior product is likely to fail without strong finance and engineering.
That’s why so many Built World leaders come from those backgrounds. It’s also why their companies quickly hit a limit to their growth.
Companies whose main strengths are finance or engineering can achieve a level of success. They may reach billions of dollars of sales but they will always hit a ceiling. Once they reach that ceiling, they start to decline.
The larger the company the more it focuses on protecting the status quo and becomes a target for an innovative competitor. An example of this is asphalt shingle manufacturers who see no need to find better ways to roof a home.
They act like a retired seventy-year-old who is focused on protecting their assets. They may not know it but they are closer to death than to a successful sustainable future.
Without a strong vision at the helm, the company can’t thrive when the market changes. They fail to adapt and they’re left behind.
I’m not going to say that you can’t be a successful CEO just because you have a finance and engineering background. But you do need to embrace some degree of uncertainty.
Here are two simple and effective ways to start doing that.
Don’t let your knowledge of your customers get filtered through the people who report to you. You should always have some first-hand customer knowledge.
Call a random customer each week. Ask them if they’re satisfied with your company and what you can do better. Ask about their business and what challenges they are facing.
At trade shows, spend some time meeting with customers who stop by your booth. Not just the most important ones, either. Meet with everyone you can. Introduce yourself and ask the same questions you would ask in your weekly customer phone calls.
If you do this, you’ll be able to build a very close relationship with a few key customers. This is invaluable because you can ask them anything. Before raising your prices, overhauling your customer service, or changing the way you distribute your products, you can get feedback from the people who would be directly affected by those changes.
Talking to customers means going out of your comfort zone. It’s less predictable than looking over reports with executive summaries. It’s also far more valuable. You’ll be much more successful if you’re not relying on second-hand, watered-down information about your customers.
Most leaders don’t expect much from their employees. They’re pleased so long as their employees are good enough.
That’s fine for jobs with clear, step-by-step procedures. When it comes to something like quality control, all you need is someone who will go through the process without any deviations.
Sales and marketing is a whole other story. With those jobs, being innovative and having good problem-solving skills can create a significant competitive advantage. And yet, I keep seeing these crucial positions staffed by employees who are expected to just be adequate. These are key employees who could be moving the company forward, but instead, they’re focused on keeping their jobs by doing what they’re told.
A marketer or a salesperson who is just holding down their job is worth a lot less than an engaged employee who feels valued and challenged.
To get that value out of them, you need to raise your expectations. Don’t settle for good enough. Allow yourself to be amazed.
Instead of telling them what to do (“we’re going to a tradeshow and we need to design a booth”) give them a problem to solve (“we need to grow our commercial new construction sales – what’s the best way to do that?”). And don’t settle for the obvious solution. Tell them you’re looking for their best thinking. That’s the only way you’ll get game-changing ideas.
Maybe they won’t blow your socks off every single time. That’s okay. You can still go to the trade show even if their ideas didn’t amaze you. But when you challenge them, you get their best effort. And when they do manage to come up with something amazing, it will give you a real competitive advantage.
That can be difficult for a lot of CEOs because it means opening yourself up to new solutions instead of doing business as usual.
If you’ve been to the trade show, you know what to expect when you go again. It won’t be much, but it’s safe and predictable and expensive.
Being open to new ideas is riskier. But the pay-off is worth it. Maybe you don’t go to the trade show this year. Maybe you invest that money in something you haven’t tried yet. Chances are the ROI is going to be much better. But you’ll never find out unless you take the risk and let your employees wow you.
Another reason this is important is in attracting and retaining high-performance employees. The Built World industry is not high on the list of industries for the best candidates. Leaders who allow and expect their employees to fully use their talents and skills will attract and retain the best talent.
A lot of leaders think that success in the Built World is about creating better products/services or following some set-in-stone management system.
Success is about taking risks, having a vision for your future and knowing how to adapt when things don’t turn out the way you expected them to.
In other words, it’s about embracing uncertainty instead of avoiding it.
Engineering and finance matter. Some amount of certainty is important to give your company a stable base. But to be truly successful, you need to take a few steps outside of your comfort zone. Because no company can keep succeeding and growing without taking a few risks – and that takes a bold leader who can empower and engage their employees.