I have a formula that I have been working on for about a decade. It measures the effectiveness of the performance of tech CEOs. I have personally experienced this formula thousands of times, and now, as a coach, I see it play out in 100% of my coaching conversations and engagements. It’s remarkably accurate in gauging how impactful a CEO or leader can be. As for the formula, I will get to that in a moment. But first, it’s essential to understand effectiveness, which you must grasp to fully comprehend the meaning of success.
Let’s start with success.
Success is the measurement of long-term prosperity or the attainment of goals. I also won’t pretend that luck tends to be involved to some degree when it comes to success. For me, it defines a positive impact on life and lifestyle when macro goals have been accomplished that may span multiple projects and groups of people, which lead to the prosperity of the whole.
If success is the measurement of long-term prosperity, then naturally, effectiveness is the measurement of short-term momentum toward producing the desired result. In other words, it determines how well your current activities are supporting your long-range pursuit of success. Effectiveness is more tactical than success. It uses logic to figure out what works, what does not work, and how you can maximize the positives to become as profitable as possible. Effectiveness is, in a sense, the fuel that allows your tech startup to grow. Understand the significance of specific practices, and you have figured out what to do to reach those new heights.
To better understand effectiveness, we must also understand the reality of success. What does it mean for the individual to be successful? How can you define that? My tech CEO coaching doesn’t focus on startups still in the pre-seed or seed level of maturity. I work with companies that have reached a level of maturity that demonstrates a viable product-market fit that warrants the next level of an A or B round of investment. I call it the “grow like hell” investment stage, where speed of growth is the focus. The good news is that you don’t have to figure it out alone. We do it together. That's what we do in my CEO coaching program.
Let’s break down this formula for effectiveness together, shall we?
The formula I propose is based on the principle that “effectiveness” is how individuals impact people around them, at work, home, and with friends, to achieve desired results.
This phenomenon happens because of something called “Unconscious Incompetence” (UI) or, in other words, the ineptness we have of which we are not even aware. We all have them and I speak about this concept regularly. UI’s kick into gear and execute themselves on autopilot without our cognitive input. Becoming aware of them and overcoming them is an ongoing process for all of us. We’ll dive into how to do that a little later. For the purposes of this formula, simply know that the higher our UI, the lower our effectiveness.
Now that you know what we’re focusing on, let’s put some numbers into play to show the theoretical impact of this effectiveness formula. Using a scale of 1 as “low” and 10 as “high,” apply these numbers to the following sequence where the formula is -
Effectiveness = (Effort X Learning Agility X Talent) / UI
If I am a CEO that scores a 9 on effort, 7 on learning agility, and an 8 on talent, notice the lifetime performance impact if I score a 3 (low UI) as opposed to a 7 (higher UI) in this formula:
Effectiveness with a lower level of UI: (9 X 7 X 8) / 3 = 168
Effectiveness with a higher level of UI: (9 X 7 X 8) / 7 = 72
In this construct, effectiveness with a higher score is better than a lower score. We rob our effectiveness when we demonstrate a higher level of “Unconscious Incompetence” (UI). Although these numbers are arbitrary, you can see that there is a linear correlation between the level of UI leaders exhibit and their effectiveness. A higher level of UI directly counteracts all your effort, ongoing learning, and strengths. Therefore, the fastest path to increasing your effectiveness is NOT more effort, more education, or more focus on your strengths; rather, it is reducing the time you spend operating in a state of UI because this one change multiplies your efforts, education, and strengths or crucially robs any effort, training or talents you exert.
Not being aware of the realities of this formula costs CEOs precious time and resources every day. They set lofty goals which do not transform into reality. Their results fall short. They push to do more, learn more, and develop their strengths only to find they continue to achieve lackluster results.
Here's just one example to get your mind going on the application of this effectiveness formula:
I was scheduled to give a presentation as the Sales & Marketing VP for the startup in one of our first full board meetings. We had recently received funding from some of the premier investors of the mid-90s—Hummer Winblad, Kleiner Perkins, and Integral Capital Partners, to name a few. I walked into the meeting to give my portion of the presentation. A particular board member, Will, had arrived and was pounding the table with an expletive-laden string of comments and advice. I was surprised he exhibited this level of emotion, didn’t absorb any part of his tirade as a personal attack. Looking back, I guess there could have been reason to be more nervous or even afraid of the environment and mood in the meeting. When it was my turn, I stood up and shared the presentation slides, giving my recommendations along the way. After my proposal, Will asked me in a gruff tone, “Why the hell can’t you sell directly?”
While there was a palpable feeling of quiet nervousness in the room, I was in my zone of expertise and had anticipated such a question. Without hesitation, I gave him an answer. “Will, with our employee base of just over 60, and with our goal to grow top-line revenue fast, we can achieve our target with an army of in-country channel integrators who already have relationships with customers that will buy at our upsell rate. Hiring, training, and creating relationships of similar value and impact would take too much time and resources to achieve the same results. I hope you can see this line of logic.”
My response exhibited confidence, not arrogance, and my CEO was just as relieved as I was to hear Will verbally agree with me. When you have prepared for a presentation or a role and are aware of your value and how you can contribute, you are in a competent mode, and the likelihood of withering under pressure is less likely. We all want to appear competent
unconsciously and naturally. It requires preparation, however, the result is always worth it. We need to be aware of our impact and have a subconscious belief in ourselves.
The formula for effectiveness is based on the principle that individuals impact those around them to achieve desired results. Unconscious Incompetence (UI) is a key factor that impacts effectiveness, with higher UI leading to lower effectiveness. By understanding and reducing UI, individuals can increase their effectiveness and achieve better results. This formula can be applied to various aspects of a tech startup, such as effort, learning agility, and strength focus.
Awareness of the realities of the formula is crucial for CEOs to avoid wasting time and resources. By understanding and applying the insights gained from the formula, CEOs can break the cycle of lackluster results and achieve greater effectiveness. Had my UI been any higher (at least in that instance), Will’s inflammatory approach could very well have cost us our start-up. This example highlights how my prior effort, my established learning agility and my ability to focus on my strengths in this presentation lead to desired outcomes (even when board member’s personalities are less-than-desirable).
Understanding and applying the formula for effectiveness is essential for CEOs to achieve success in the tech startup world. The insights gained from this formula can have a transformative impact on their leadership and overall outcomes. So, take the time to understand and apply the formula for effectiveness, and watch as your success and impact grow.