Are You A Leader Or An Obstacle?

This expert opinion by Howard Tullman, General Managing Partner at G2T3V and Chicago High Tech Investors, was originally published on Inc.com.

Entrepreneurs are terrible control freaks – very often for good reasons – but, just as frequently, they hang on too long and too tightly to all the reins and end up unintentionally holding their businesses back. I understand that many of the relationships a CEO has to confront and manage are complicated. Stepping aside or back to let others handle a given situation can sometimes be very tough and close calls. And to be clear, in many cases, only the “boss” does know best.

One typically hard decision is determining when the CEO should stop making every sales call. In the early days, and while the product or service itself is still finding its way to market fit, it’s essential that the CEO be in the field because he or she is the only one with the power and authority to make choices, representations, and commitments regarding changes, features, and deliverables that: (a) can make or break key early adoption and critical bell cow sales and (b) can positively influence and alter the direction and development of the offering itself.

The most powerful and direct feedback you ever get is straight from the customers and prospects themselves, and the buyers’ voices need to be heard and heeded. So, while, as the leader, you might need to be there in the early days, you also need to know when to step aside.

Sometimes The Boss Needs A Shove

In some cases, it’s absolutely essential that senior team players and sometimes board members and outside advisors pitch in. They need to help pry the CEO away from the front lines and from other early fixations, which can get in the way of growth and, even more importantly, profitability. As startups grow and the number, variety, and specific demands of their customers change and expand, the nature of the company’s connection to each individual client, user or buyer needs to change as well, even if the CEO doesn’t necessarily agree.

Maybe if your product is a mass produced, inexpensive widget you can get away with a “one size fits all” approach, but that won’t cut it in most instances. And it’s psychologically hard for the founders and early team members to step back from the “high-touch, hands-on, 24/7, always there” philosophy, which they believe is what made the business successful in the first place.

They’re not wrong. But what worked in the early days simply doesn’t scale economically in most businesses. The trick today is to maintain the “personal” connections, but to also control and contain the costs of service and delivery. This is never easy when customers want Four Seasons service at McDonald’s prices.  

How SaaS Changed Customer Management

The delicate and often touchy migration away from face-to-face and on-premises interactions with clients and customers to remote services has largely been driven by cloud-based software and other technologies that were championed early on by Salesforce. Remember  the company’s “The End of Software” campaign in 2000?  Its signs, buttons and even dressed-up cartoon characters declaring “No Software” with a big red slash were suddenly everywhere you looked at tech conferences. The clear message was “you didn’t need to own and operate the cow (servers and other computer equipment) to enjoy the milk”, and further you also didn’t need your own IT department.    

In truth, even though companies took a while before they made substantial SaaS adoptions, it was fairly easy to virtually move an end user’s computer activity from a mainframe somewhere in their building to software located in the cloud because – as long as the service wasn’t interrupted – the person sitting in some office at a computer terminal absolutely couldn’t tell the difference.

The more challenging transitions were in the next stage of the technology migration toward DIY: when other service vendors started to pull their people from the field and – immeasurably assisted by the fact that everyone had a phone – began to educate and train their customers to do more of the “work” involved in the service themselves.

Taking Complexity Out Of Photography

A simple example is event photographers. In the old days, photographers would spend hours moving through a crowd with expensive SLR cameras snapping shots which would be delivered to the event’s host some weeks later and eventually the physical copies of the photos would find their way to the attendees if they were lucky. The photographers were expensive, the photo preparation and delivery costs were considerable, and the delays – in a world of instant gratification – seemed interminable.

Today, employing technologies from firms like Spot My Photo event participants are told to load the vendor software on their phones, they register their face and phone with their first photo, people in the photos taken during the event are identified in the cloud by facial recognition tools, and — in real time — copies of the photos are sent to the phones of the individuals pictured in every shot. Spot My Photo’s tagline is “Let Your Photos Find You.” The company receives a fee per event from the host organization and basically has no marginal costs.

Even more importantly, there are enormous flywheel and follow-on advantages and benefits to the vendor because the installed software on each phone remains live and active and additional photos from other events or subsequent occasions can be directed to the user’s phone automatically.   

The final step in the typical vendor’s migration is to step away entirely from the individual events or other activities on site and simply license the software for a fee to third party providers who then assume all the costs and responsibilities involved in sourcing, servicing, supplying and supporting end users. Each step in the migration away from the field – done properly – increases the main vendor’s margins and profitability, reduces its headcount and overhead burdens, and simplifies the business.

Simple steps from service to SaaS to ultimately a hands-off attitude of “so what” are initially difficult for diligent and conscientious CEOs to manage emotionally–but easy for their CFOs to love.