CEO Accountability May Save Your Team and Your Company
On a recent walk with a CEO I work with—one whose company is likely to double in size within a year—I heard something people rarely say:
“Accountability has made me a better CEO.”
We had been talking about CEOs that don’t have to update a board and investors. Yes, there are some who don’t. On the face of it, that can seem like a luxury. Accountability can be a real pain, but it has a purpose: it keeps the aims and trajectory of a company clean and clear.
In my work with founders and teams, the most difficult and troubling situation I see is when a CEO without accountability begins to spiral. By “without accountability”, I mean either without a board or without meaningful levers to reward performance and correct misguided direction. By “spiral”, I mean succumbing to a cycle of bad decisions and increasing isolation that causes a company to lose its way. The spiral of the unaccountable CEO is almost impossible to correct. Once underway, it can be fatal for the company.
How often do I see this? 2-3 times a year. In one case, the CEO’s spiral resulted in a complete turnover of the leadership team and a far more difficult round of fundraising. In another, the spiral caused open revolt on the team and irreparable damage to the company culture, which flattened financial performance. In a third, the CEO doubled down on knowing how to engage the market, then doubled down again when several advisors urged him to seek advice from experienced marketers. He lost most of his team and—despite having a client list other CEOs would kill for—continues to hover below $5M in annual revenue. That’s likely going be as good as it gets.
This isn’t just a problem in small startups. Lyft has been criticized for a dual-class structure that grants its founders 20 votes per share compared to the one vote all others get. Dropbox and Snap sold a class of stock that had no voting rights at all. Slack and AirBNB both have founders with supervoting power, albeit with those terms ending several years post-IPO. Research has suggested that overconfident CEOs around the world are a danger to their own businesses. The trend toward founder power has powerful implications for company performance and longevity.
“Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”
— Abraham Lincoln
For what it’s worth, I don’t begrudge any of these CEOs and founders the instinct to protect themselves and their vision. Building a company is hard work, and no one knows that work better than the CEO. Investors having too much power and influence can be constricting to the point of paralysis. What I’m talking about here is the other extreme: the CEO having so much power and so little accountability that there is no check on bad judgment, distorted perception, and misguided decisions. Checks and balances are useful for investors and employees, but for the effective CEO they are essential.
In most facets of life, accountability means achievement and belonging. If you want to run a marathon, you sign up for a training group or let your friends know your training schedule. If you are trying to build a new habit (or break an old one), you let your friends know what the new behavior will be. If you want to reach new heights in your work, you commit to goals, rocks, or OKRs. After some period of time, someone (or something like a habit tracker on your phone) will check in to see how you’re doing. You set an objective, but you never travel alone.
Most CEOs and executives get this from two directions: their board and their leadership team. Boards are a mechanism to establish checks and balances so that plans make sense and teams make progress toward those plans. Leadership or executive teams work a little closer to the action by maintaining a weekly cadence and reporting key results toward objectives. These bodies act as a sounding board and as a social pressure to be disciplined and focused in service of growing a company.
Then there are the CEOs or founders who engineer exemptions from the normal board oversight through maneuvers like the ones at Snap, Lyft, and Dropbox. These heads of companies enjoy unfettered freedom to make choices without consulting boards, exec teams, or advisors; and they can move quickly to take advantage of opportunities. They often are charismatic and persuasive, and they recruit with an almost religious fervor—so long as those recruits don’t get wind of the inevitable restraints on their autonomy and contribution. They capture the hearts of their employees, though not necessarily their direct reports. They are darlings to people who do not know them well. People will go to extremes to deliver to these leaders’ impossible expectations, whether through love or through fear.
Unchecked power can be great—up to a point. When you don’t need permission or consensus, everything you want to do gets easier. Decisions take less time, calculated risks move forward with little to no resistance, and company velocity increases without friction. The company responds to shifting market conditions with agility and commitment. Interminable meetings and analysis paralysis fall by the wayside. This is the posture of a general or a wartime president. The fight is too important to bother with the niceties of collaboration and consensus. You have your orders.
The downside is probably obvious: most of what happens in a company is not a wartime decision. Treating everything like a battle to be won exacts a price from the company and the team. In the very best case, this posture causes people to look at every situation in the frame of winners and losers. In worse cases, this orientation undermines the trust and interdependence within the team, which plays out in a defensive mindset and a tendency toward infighting. Once that dynamic sets in, you have a team that will only work together when it serves individual agendas to do so. Trust gives way to self-interest, and nowhere more so than in the way people interact with the CEO.
Know this: No one tells the CEO the entire truth.
CEOs who believe they are getting the unbiased truth are fooling themselves. Even in the most trusting, transparent companies, everyone is to some degree dependent upon the CEO—for status, for rewards, for stability—and act out of awareness of that dependence. Concurrently, even the most enlightened CEOs have biases and reactions. No one brags about shooting the messenger, but we all do it sometimes. People know this, and they often (subconsciously or intentionally) select the facts that put them in the best light with the CEO.
When trust gives way to self-interest—when people know that the CEO makes expedient decisions as a rule—the CEO gets an even more skewed view of reality. CEOs always consider decisions with imperfect information, but the ones who lead with less collaboration get a CEO-pleasing view of what really happens in their companies. Skewed views lead to decisions with blind spots, decisions with blind spots lead to disenfranchisement of executive team members, and disenfranchisement leads to more skewed views that serve to retain or regain the CEO’s favor. Don’t think for a moment that this cycle doesn’t happen in your company. To some degree, it happens in every company. This is where accountability becomes important.
All that power comes at a cost: you make your own decisions, but you do it with dangerous blind spots. You don’t have to get anyone’s permission to do what you think is right, but what you think is right is clouded by everyone’s competing agendas. Even with the best of intentions, people are going to select facts to look good to the boss.
With the guardrails of a board, investors, or even just regular financial and OKR reporting, it’s hard for those blind spots to accumulate. The psychosocial dynamics of an executive team will always be there, but results tend to speak for themselves. Truth becomes easier than perspective.
The CEO was right about accountability: it did make him a better CEO. Reporting financial performance to his investors on a regular basis cut through superstition and showed him what worked. Implementing EOS made his exec team more accountable to him and each other, but it also made him accountable to them by placing overall performance in front of the executive team on a weekly basis. With frequent doses of reality, he no longer had room for superstition. He saw where he needed to get better, and he rose to the challenge.
Bottom line: individual autonomy can seem like power, but the real power is the strength in numbers—a team of board members, advisors, and executives that cares enough about the CEO to hold that leader accountable. That only comes when reality matters more than ego.
