How Gut Instinct Affects the Mid-Market CEO
I talk a lot about the differences between mid-market CEOs and their enterprise CEO counterparts. CEOs of mid-market companies – those between $1 million and $100 million in revenue – operate very differently from the CEOs of the enterprise and Fortune 500.
Being a mid-market CEO can be a lonely position; most mid-market CEOs were trained in something other than being a CEO. Enterprise CEOs are hired by sophisticated boards after lengthy hiring processes and were trained for the CEO role for 7 to 10 years.
Since few mid-market CEOs were trained for their CEO responsibilities, how do they develop their CEO skills? Where do they turn for training and help?
Leadership and Management Books
There are plenty of great business books written for Fortune 500 companies by CEOs and researchers (Good to Great, Jack, Execution, The HP Way, Titan).
And there are plenty of great books written for small business owners (The Art of the Start, The E-Myth Revisited, The Monk and the Riddle, Jumpstart Your Business Brain).
There are relatively few books, however, written specifically for and about mid-market companies: the $40 million electrical distributor in Waukegan, the $60 million trucking company in Wabash, or the $20 million pool manufacturer in Williamsport.
The mid-market CEO is often ignored, unable to deploy the general concepts suggested by business thought-leaders (because of bandwidth issues), or to find significant value in the recommendations given to small business owners.
Many mid-market CEOs turn to peer groups. Vistage is the largest CEO organization in the world, with over 14,000 members.
Peer groups like Vistage give mid-market CEOs an advisory board, 1-to-1 mentoring and exposure to expert speakers (like our partner Nick Setchell). They provide a forum to discuss the challenges with their business, personal problems and all the things that they can’t bring up for discussion with their executive team.
On-the-Job Experience and Gut Instinct
Since almost no mid-market CEOs are trained for their role in the same manner as most enterprise CEOs, and since they don’t have access to material geared specifically toward running a mid-market company, I’ve found that they develop most of their leadership skills from two places:
- their experience on the job
- their reliance on their gut instinct
The Problem with Gut Instinct
Since mid-market CEOs have fewer resources—training and intellectual capital, nor the budget to obtain it—they’re forced to make most decisions with far less clarity than the Fortune 500 CEO. It’s quite common for mid-market CEOs to use their gut instinct for important decisions instead of relying on relevant information that will confirm or refute their intuition.
While most mid-market CEOs have good gut instincts (which has substantially contributed to their success), many make far too many important decisions on gut instinct alone. This can occur for any of the following reasons:
- They don’t have the depth of resources needed to obtain the information they need to achieve clarity.
- They are too impatient to wait on the required research necessary to get the information needed.
- They don’t know that the information is available.
Having good intuition is an important trait for a CEO, but there are many complexities in business that can easily foil good intuition, such as
- slopes of supply and demand curves
- cash flow velocity
- the motivation of a key member of their leadership team
- the quality of their revenue
- a true understanding of how the market perceives their brand
- their profitability ratings
Or, in many instances, the CEO’s intuition might be correct, but
- a lower-level manager without the same degree of gut instinct might be handling the decision
- other team members don’t trust or understand your gut instincts
- when your gut instinct is wrong you don’t why or how to fix it
As strong as your intuition may be, it’s important to support it with quality information to confirm or refute your instincts.
Fortune 500 CEOs and executives understand this, and while they also have good gut instincts, they are trained to use and rely upon information to support their key decisions that affect their company’s performance.
Most of the information that mid-market CEOs need is within their reach; they just need to know how to find it.
I’ll show you how in my next post.