REID HOFFMAN: Hi, listeners, it’s Reid. You’re about to hear a special episode of Masters of Scale called “6 leadership traps and how to avoid them.”
When you were a kid, you may have played a game called “The Floor is Lava.” It involves scattering cushions, books, and possibly your caregiver’s prized possessions across the living room floor — then precariously hopping from one item to the other — without touching the floor. Because: “The Floor is Lava.”
For entrepreneurial leaders, the situation is similar. Except it’s not just a molten floor you need to worry about. Your path to scale is littered with all kinds of deadly traps.
Many of these will be as easy to spot as a pool of bubbling magma. But others will be far harder to detect, like an invisible trip-wire that shoots a silent, deadly poison dart.
Some of these traps will be slow-working. Others will be more like superheated magma – they will burn you up instantly. What unites them all is how they can spell doom for your business.
Many leaders have only learned about these traps the hard way – by falling into them. In this episode, we’ll share some of the learnings of the most successful scale leaders, who have had to spot these traps — and propel themselves beyond them.
Some spoke to me, and some spoke to Bob Safian on Masters of Scale: Rapid Response. These are critical insights about some of the most deadly pitfalls business leaders at all stages of scale face. These are the six leadership traps and how to avoid them.
I’m Reid Hoffman, co-founder of LinkedIn, partner at Greylock, and your host. And this is “6 leadership traps and how to avoid them.”
Trap 1: Organizational Jam
No one likes bureaucracy. But every organization has its own rules and culture. Ideally these help us lean into our strengths and maximize our advantages.
But things can get so jammed up with processes and rules that rigor mortis sets in and it gets difficult to get anything meaningful done.
That’s exactly what Marissa Mayer discovered when she took over as CEO of Yahoo, a Zombie-filled organization that stifled its employees’ creativity.
But rather than just slash through the bureaucracy indiscriminately, from the top down, Marissa looked to the team itself to dismantle what wasn’t working. Her solution was to foster a culture in which everyone felt empowered to call out problems and offer solutions.
MARISSA MAYER: We created something called “PB and J”: process, bureaucracies, and jams. Basically, you could report process, bureaucracies, and jams that didn’t make sense to you. We wanted to come up with something that was kind of catchy and memorable and an acronym. We were like, process, bureaucracy. I was like, “Well let’s do jams.”
Patricia did a company meeting every Friday called FYI and Patricia would use the Peanut Butter Jelly Time song as her intro music when she would come up and talk about the different changes and things that we were gonna make as a result of “PB and J” that week.
HOFFMAN: Under “PB and J”, anyone in the company could suggest a problem for the Red Tape Machete to take on, as long as they also proposed a solution for it.
MAYER: We basically came up with a really scalable wisdom of crowds, like solution to point us where the problems were. They were everything from like, we had a doorway on the stairwell in Bangalore that would get locked. It would make everyone walk all the way around the building to use the staircase on the other side. They were just like, “Can we just unlock the stairwell?”
All of those types of things to just start making the company work better, but also really empowered the people there, to make them feel like: “You need to be part of the solution.”
HOFFMAN: Notice how Marissa made employees part of the process. She could have cut through bureaucracy from the top down, with edicts and pronouncements. But by engaging employees in the process — by making them her partner in routing out bureaucracy — they became part of the solution.
And here’s an important thing to note: Marissa didn’t simply stop at cutting through the processes and jams that had been holding Yahoo back. She used her “Red Tape Machete” method to inspire and surface new ideas that had the potential to reinvigorate the business.
So she issued something she called the “CEO Challenge,” asking anyone, anywhere in the company, to propose new ideas to build the business.
MAYER: If you could come up with an idea that could make $5 million dollars a year extra, we had a really amazing prize. I think it was like $250,000 per team, or $50,000 per individual. I thought we’d maybe get two dozen ideas, maybe green light six of them, get $20 or $30 million dollars of extra revenue.
Instead, we got, I believe, 840 submissions of ideas from across the company. There were a lot of really amazing ideas in there. I think in the end, we greenlit almost 200 of them. We started seeing tens of millions of dollars of new revenue come through that.
HOFFMAN: Marissa’s solution was itself an organizational process. When thoughtfully designed, process can be an incredible benefit.
Cathy Zoi, CEO of electric vehicle charging station maker EVgo, spoke about this with Bob Safian on an episode of Rapid Response.
CATHY ZOI: If you’re a student of organizational behavior and institutions, the middle managers have to be empowered to say, “Yep, let’s go.” And that’s a really unusual large organization that truly has that empowerment, right? And again, I’m talking about the new tech companies too. They are no different from the old guard. Once a company becomes big, it’s like, “Uh-oh, how much autonomy do I have in saying yes to something?” All of the business books I’ve read over my whole career, it’s sort of like there are companies … They hold up companies that allow that autonomy but it’s very, very difficult in practice to maintain the financial discipline and the rigor, and allow total autonomy.
HOFFMAN: Cathy has an example of a big company that managed to strike that balance of rigor and autonomy. In the 1990s, Cathy worked with the US government’s Environmental Protection Agency where she helped create Energy Star, a program dedicated to reduce energy consumption and emissions.
ZOI: We were working really closely with Intel. And Intel was inventing a super energy efficient chip, and they were really excited about it. In fact, in these early days they etched an Energy Star logo onto that little tiny chip. And they were so much fun to work with, and they were already a pretty successful company, this is probably the late 80s. And I said, “Wow, what is your guys’ organizational structure?” It’s like, “Oh, we change it so frequently, we never even write it down.” And I remember that being so like, “Wow. I’m going to aspire to do that, to run a company that way.” Well, now that I’m running a company and we’re only 300 people, there’s no way we could function if we didn’t have an organizational structure of some sort.
So it’s just the practical reality of decision making is we want it to be faster, but we also want it to be disciplined.
HOFFMAN: Cathy was shocked – and impressed – to see that a huge company like Intel with a long history didn’t have a static structure. Indeed, this was part of its secret to avoiding the trap of getting organizationally jammed. Note that Cathy’s not saying Intel had no structure. As a leader, she knows that some structure is valuable. But by keeping its structure moving and flexible, Intel avoided the trap of jamming up.
I urge all leaders to keep on reviewing, modifying and even scrapping processes, whatever stage of scale you’re at — while also inventing new processes that drive creativity.
Trap 2: Being a bullhorn
All good leaders know the importance of communication. However, it can be hard to realize how your attempts at communication are perceived by different stakeholders, employees at different levels of seniority, and across different company cultures.
In the worst cases, you may actually be causing problems with your eagerness to communicate.
People will feel ignored. Ideas will become extinguished, and you will know less and less about the people around you.
To avoid this trap, you need to listen more, get curious, and ask questions.
Mellody Hobson learned this from a trusted mentor, basketball player turned senator Bill Bradley. Mellody is the co-CEO of Ariel Investments, the first Black-owned asset management firm in the United States, and the chair of the board of Starbucks.
At a pivotal moment in Mellody’s career, Bill gave her some hard but valuable advice.
MELLODY HOBSON: I remember him looking at me one day, and he’s like, “It’s going to be really interesting to see if you develop into a whole person.” I’m like, “What?” He’s like, “Everyone doesn’t make it.” And I’m like, “What do I need to do?” He’s like, “We won’t know for a long time.”
HOFFMAN: Out of context, this might seem like some rough advice. But Bill was a longtime mentor, someone Mellody trusted implicitly, which is what made the next piece of advice even harder.
HOBSON: He’s like, “You’re going to have to really work hard not to be a ball hog. Because you have a personality that when you walk into a room, you could suck the life out of it.” And I am sitting there, and I’m telling myself in my head, “Don’t cry. If you cry, he will never speak to you like this again. Just be curious. He loves you, keep going.”
HOFFMAN: This is incredibly personal and specific advice Bill Bradley gave Mellody. And she absolutely had the option of not taking it. But instead, she found it resonated with her. Even the most dedicated learners have blindspots. And it’s important to keep advisors around you who aren’t afraid to point them out.
HOBSON: I tried to think after that conversation of how I could make sure I was never a ball hog. I mean, that day I remember flying back to Chicago and saying, “How could I make sure that’s not me?” And one of the things I do as a result of that, and I am maniacal about it, whenever I meet anyone all the way down to an assistant who comes and picks me up in the lobby, I just start asking people questions about themself. And that way, turn the conversation on them. And I learn a lot.
HOFFMAN: The trap Mellody fell into was thinking that because she talked a lot, she was a good communicator. And it took a trusted mentor to point out that her approach could actually be detrimental.
If you’re questioning your leadership communication, think, who could you call? What one person would be honest with you about how you communicate? At a minimum you need to have a regular gut check to make sure your channels of communication are truly two way.
When it comes to avoiding the trap of being a bullhorn, you don’t always need a revelation that flips your perspective. In fact, it’s better to take a more iterative approach. This is why you always need to be looking out for signs that you’re falling into a miscommunication mismatch.
For an example, we’re going to hear from Eric Schmidt, Google’s former CEO, speaking in 2022 at the Masters of Scale Summit, our annual live event. This story takes place before Eric’s time at Google, as he joined software company Novell.
ERIC SCHMIDT: A long time ago I was recruited to be CEO of Novell, and Novell was headquartered in Utah. Culturally extremely different from where we are today. I mean, trust me, very different. And I was sort of naive, but well meaning. So I show up and I sort of meet everybody and I ask for advice and everyone’s very generous. Bill Gates said, “Spend 80% of your time on 80% of your revenue.” Good advice. Jim Barksdale said, “If it’s a snake, kill it.” He had a whole bunch of Texas sayings that were very funny. And what I did is I took a notebook and I wrote everything down. And I found myself on one of these United flights in coach next to somebody who wanted to give me lots of advice. I had five hours of note pages of advice of what to do. People were really helpful.
So here I am, and I start meeting people and so forth, all sorts of problems in the company. And the company at the time had a little shuttle, knee-to-knee seats going from Utah to San Jose. And I find myself … I said “I can’t quite figure out who the really smart people are.” I’m just casually saying this because I’m an elitist. And my friend says, “Find one and they’ll know the others.”
Okay, good advice. So I’m sitting there and this guy, right, he’s brilliant. And I go, “Stop. Okay, give me the list of the 10 smartest people in the company.” Write down, and I put it in my little briefcase, go to the meeting and I give it to my assistant and I said, “I want all of these people to come to my office each for half an hour, and I just want to listen to them.”
So a week later I’m in my office in Utah and the first gentleman comes in and he’s white as a sheet. I’ve never seen someone so upset. And I thought, “Well, maybe this is Utah culture.” They’re just … it’s not a normal place. And he’s nervous, he’s really nervous. This is one of the smartest people. And I said, “Well, okay, I’m sorry to ask you but why are you so upset?” And he says, “You’re firing me.” And I go, “What?” And he goes, “In Novell, the way you’re fired is, it’s a 30-minute appointment with no agenda.” And I realized that I had notified the top 10 smartest people in the company, right? And I have a hundred examples of Eric’s stupidity of that nature. But here’s what I learned. What I learned is that culture does trump everything else. Excuse the pun … the Trump part, not the culture part. You think you understand how people work, and you don’t. And you have to take the time to listen. So at that point I decided I would go get Utah training, and this is code for Mormon. And so I would sit down and I would listen and I would learn and so forth and actually work with them. And that produced a good outcome.
HOFFMAN: Note how at the start of the story Eric was being the opposite of a bullhorn. He was taking an extreme listening approach. There was no danger of him sucking the air out of a room by over-communicating. But sometimes being an extreme listener can be just as stifling to your team.
Recall what Eric said:
SCHMIDT: I want all of these people to come to my office each for half an hour, and I just want to listen to them.
HOFFMAN: That last part of the message, “I just want to listen to them,” didn’t make it through to each of those employees. That, combined with the culture at Novell — where out-of-the-blue one-to-ones tended to mean bad things — caused confusion, fear and a communication breakdown.
So be clear in your communication ABOUT communication. Don’t be a bullhorn – whether it’s one that stifles with noise, or with silence. And constantly seek out advice so you can keep your lines of communication clear.
Trap 3: Bloated meetings
This is one of the more obvious traps — meetings that eat up the day and leave precious little time for actually running your business.
No doubt some meetings are essential, but it is easy to fall into the trap of holding meetings that take up too much time, and have few results.
This is a dangerous trap because time is our most precious resource. So how do we make meetings more worthwhile and effective?
Shishir Mehrotra is the co-founder and CEO of Coda, a document collaboration platform that brings data and teams together. Shishir has come up with a number of creative ways to keep meetings on point.
SHISHIR MEHROTRA: One of the things we do is, inside of every meeting is done in a Coda doc, but there’s a section of every Coda doc that’s usually two parts. One is a Q&A section where everybody adds questions and then they up-vote each other’s questions. There’s another part that is what we call sentiment tracker, where everybody has a space where they add, say we’re trying to decide should we launch this feature? It says, everybody puts in one to five stars. I think we should or we shouldn’t, and a little comment.
The key is, it’s hidden from everybody else. In this meeting everybody does that process. Then we unhide it and we see, here’s what everybody thinks. We remove a lot of groupthink out of that process. Then we go through the questions in order. If you think back to the incentives of most teams and meetings is: loudest voice wins. In this way, you give a chance for everybody’s voice to be heard.
It forces you to talk about the things that are most important. It also gives you a sense of accomplishment. You leave this meeting and you say, “We didn’t answer every question, but we answered every question that had at least three up-votes.”
HOFFMAN: You’re actually really polling the room for the good ideas. Making sure the important subjects you get the wisdom of the team going, and that participation actually is to some degree, encouraged in the right way. Versus the, “I just feel vaguely disconnected and I don’t know how to get my voice in here. I don’t know if it’s welcome.” You change all that with the work process and with the tool.
MEHROTRA: That’s right.
HOFFMAN: At the start of every meeting they open that document and start filling it out. Everyone knows what to do. But most importantly, everyone knows what they get out of this ritual. Rather than drudgery of the powerpoint presentation, this ritual brings excitement – and results.
Shishir and his team hacked the standard approach to meetings. And it was in a way that aligned with their culture. You need to find unique shortcuts to get your meetings working for you. This might mean using tools you’ve never thought of. These could be a new tech platform – like Coda – that surfaces ideas and talking points in a new way; or a humble hacky sack that participants toss between each other to indicate who has the floor.
Finding new approaches is especially important for remote meetings — which thanks to the COVID pandemic went from novelty to necessity for many companies.
When Priya Parker, a facilitator, strategic advisor, and the author of The Art of Gathering: How We Meet and Why It Matters joined Bob Safian on Rapid Response, she discussed how individuals can ensure virtual meetings play to the strengths of the system and avoid the pitfalls.
PRIYA PARKER: Why are we meeting at all? The facilitator, Rae Ringel has this wonderful chart. What she put forward was a two-by-two where people benefit from being in person when the content is complex and when it’s emotionally complex. If you’re reading off numbers or if you’re sharing data, unless it’s very confidential, you could probably just do that virtually. Highly sensitive, complex, conflict-filled conversations, you benefit from being in person. If you get to the point where you say, okay, we’re going to have some people be in person. We’re going to have the reality, some people will be online. Then to say, have a host, have a team leader, whatever you want to call it, be holding each room.
BOB SAFIAN: Separate hosts.
PARKER: Separate hosts, who are coordinating. Kind of co-hosts. There’s someone paying attention to the Zoom, and there’s someone paying attention to the room. Orienting it, starting the meeting, connecting the group to each other. Even how you start a meeting, the first 5% of how you start a gathering creates all sorts of norms and expectations and a pathway dependency on how people behave for the rest of the meeting. Doing things like starting the meeting with a question to have people pop into the chat, all of a sudden you see a hundred answers in there.
“I didn’t realize Bob was in Detroit. Oh, I didn’t realize Priya was in Brooklyn. Oh wow, they’re back in the office.” There’s so much context that just allows people to feel a sense of psychological togetherness even if they’re on Zoom. Similarly, the people in the room, are you doing some kind of check-in? First board meeting in eight quarters. How have you all been? The question then becomes do the people in the Zoom need to hear the people in the room and vice versa? It’s a design question. The answer is: it depends on your purpose.
SAFIAN: For a board meeting, say, you may determine like, “Hey, it’s important that all of these board members connect with each other, so that the communication across them becomes comfortable.” If it’s a Zoom meeting with 3000 people, maybe that priority is not core to the purpose in the same way.
PARKER: It depends on what the purpose and the need is of the group. Different town halls have really different needs at different moments in time. Right? Sometimes it was people who are completely burnt out and exhausted and just needed a moment to refresh and reconnect with why they’re there. Sometimes trust is super low, and we need to take time to slow it down and reconnect to our purpose and how we actually make decisions around here.
One of the deep skills of virtual meeting in this era is creating a sense of psychological togetherness when we can’t be physically together.
HOFFMAN: Key to both Shishir and Priya’s approaches is identifying and adhering to the purpose of your meetings. Part of identifying purpose — especially if you’re scaling a new company — is intentionally designing your own work process. You have to design your own work goals, culture, and tool set. Like Shishir with Coda, that might mean reinventing a routine with your own tools and methods. Or like Priya, you can take a look at assumptions underlying how and why you meet.
But whatever you do, don’t hold too many meetings about deciding your new approach to meetings.
We’re back with “6 leadership traps and how to avoid them.” If you’re enjoying this episode, share it with friends by clicking the “share” button in your podcast app. And to hear my complete conversations with iconic founders like these, become a Masters of Scale member at mastersofscale.com/membership.
Trap 4: Valuing speed above everything
It might be surprising to hear the author of a book titled Blitzscaling to say that valuing speed above all else is a trap. But I would counter that Blitzscaling isn’t simply about prioritizing speed at all costs.
And I’m definitely not saying that speed isn’t super important. We just need to be clear on the difference between incisive speed that boosts you ahead of your competitors, and thoughtless speed, which jeopardizes precision, focus and can in fact slow you down in the long run.
Anne Wojcicki, the co-founder and CEO of the personal genomics company 23andMe, had to rethink how she thought about speed when she received news that threatened her company.
In 2013, the FDA sent a cease and desist letter to 23andMe. Anne was going to treat it like all of their previous run-ins with the FDA.
ANNE WOJCICKI: So when we got it, my first reaction was, “Oh, it’s not a big deal. This is manageable. No one panic. It’s fine.”
HOFFMAN: However, this time it was a big deal. The FDA claimed that because 23andMe was offering medical advice, it was a healthcare product. It was a clash that had been brewing since 23andMe had launched.
WOJCICKI: But by Monday morning when the FDA published it and press came out, and some of that original team from FDA advisors had called and they were like, “This is no joke.” It was the first time in my experience where the problem was not solvable. I really had to shift mentality.
HOFFMAN: At first Anne took the classic approach of any entrepreneur. She tried to find the smart workaround that would let her get back to scaling as quickly as possible.
WOJCICKI: I was like, “I don’t know what the solution is.” I called around. I spent weeks in my pajamas calling people and getting advice.
My first instinct was: I represent the consumer and the consumer has a First Amendment argument here. It’s their information and they’re just interpreting their information.
HOFFMAN: But then, Anne had a revelation, sparked by an encounter with one of the very regulators she was preparing to do battle with.
WOJCICKI: I had one very wise regulator who asked me, “What do you want to do? Do you want to sell this company in two years? If you want to do that, this is your strategy. But if you really want to change health care, you just sit down and you work with the FDA and you do the hard work. And it’s gonna take you years. And you’ve got to be ready. At the end of those years, you will have really changed society, but you’ve got to know that you’re committed to doing that.”
And I said, “Look, I’m 30 or whatever. I’m not going anywhere. What else do I have to do? I’m committed.”
HOFFMAN: Note how Anne realized she had to shift her founder’s mindset that valued speed above all else to something more nuanced. She wasn’t wrong to value speed; but she needed to recognize that a different approach — one that seemed more painstaking and slow — was actually faster in the long run. By engaging with the FDA, she opened up an exciting new sector and placed her company at its forefront.
Maëlle Gavet, the CEO at pre-seed investors Techstars, knows just how tempting the speed trap is. On Rapid Response, she spoke with Bob Safian on how easy it is for early-stage entrepreneurs to fall into this trap.
MAËLLE GAVET: The first thing I push back on with the young entrepreneurs is the idea that you are going to be successful almost overnight. One of the key questions I ask them: “Are you ready to spend the next 10 years of your life going through a rollercoaster of emotions, because you believe so much in that problem.” And if the entrepreneur says to me, “10 years? No, I think I can do it in five,” I usually tell them that they are probably in the wrong job, because it will take them about 10 years, and that’s if they’re successful. Less than 1% of start-ups which get funded at the pre-seed level will actually be successful.
HOFFMAN: It’s also important to avoid the trap of thinking speed is the exclusive domain of early-stage startups.
GAVET: I also push back on people who say, “Oh, you cannot be innovative, you can’t be an entrepreneur if you work in a big company.” There are absolutely large companies where it is totally impossible because you have to follow the rules and all the approval processes. But there are absolutely companies where you can come up with a new idea, run it on the P&L, go to the board, and get the next stage of funding.
HOFFMAN: Placing speed above all else can capsize a business of any size. You don’t avoid that trap by slowing down. You avoid it by taking clear sight of your objectives, and considering all routes – even those that initially seem slower — as these may be faster in the long run.
Trap 5: Striving too hard to be authentic
Think about how you speak and act with your closest friends, and compare this to how you speak and act around your grandparents. I’d be surprised if you told me there’s no difference at all. But you are still being authentic in both situations. And you do it without even thinking about it.
An excellent example of how this can be a trap for even the most experienced leaders comes from Dara Khosrowshahi, the CEO of Uber, again speaking at our inaugural, sold-out event Masters of Scale Summit. Here, he’s talking about advice he took when he first came in at Uber. The advice was meant to help him connect authentically with his team. But instead, it made him seem inauthentic.
DARA KHOSROWSHAHI: I’ll give a little bit of an anti-lesson, call it, which is… It goes to all the advice that you took. You can take all the advice, but ultimately don’t try to be someone else. Be authentic to yourself. I still remember, I read a, I think it was a Forbes article about this manager who walked the halls. He managed by walking the halls. And that’s how he found out what was really going on at the company. I’m like, “I’m going to walk the halls.” So I start and I’m pretty structured. I started booking walk-the-halls time. And I started walking the halls and it was so awkward. I’d be like, “What are you doing?”
“I’m working. Get out of here.” Or go into a conference room and dead silence. “How’s it going, everyone?” So I just started hating walking the halls. And my assistant, she saw how much I hated it. So she took glee, she’s like “Dara, it’s time to walk the halls.” And so eventually, listening, it profoundly didn’t work for me. Now I’m sure I would say “walk the halls” is good advice, but I do think it goes to what you started with, which is ultimately whatever you do, whatever advice you choose to take, whatever fits in with you, you’ve got to be authentic. And only if you’re authentic, can you then affect authentic change with an organization.
HOFFMAN: Here, Dara was attempting to build a connection with his employees by walking the halls. But instead of thinking, “how would I, Dara, connect with my employees,” he tried something that other leaders — not him — would do. And because it was inauthentic, it didn’t work.
So before you implement a new method or routine with your team, think how you as a leader would achieve that goal — not someone else.
Tony Fadell is the founder of Future Shape and Nest, and the co-creator of the iPod and iPhone. Tony has a clear example of authenticity that comes from his early professional days working at the legendary company General Magic in the early 1990s.
TONY FADELL: Why? Why? Why? Why are you making what you’re making? Not why is the company going to be what the company’s doing? What does that product mean? Why do they need it? What pain are you solving? Too many times, engineers and designers, especially early in their career, are trying to make something to impress the person next to them. So like, “I want to impress them with something that’s going to be new for them.”
That’s the wrong way to think.
Don’t try to geek out and impress the other geeks. Give superpowers to everyday people that you would love to have, just so they go, “Wow, look at what I can do.”
I started going, “What’s the right device? Who’s the audience? What are we making, and why are we making this?” So, I started penning up a specification for what a mobile professional device was.
HOFFMAN: Those “geeks” at General Magic were trying too hard to show off their geek cred. It was a constant game of one-upmanship — and it was played at the expense of their product — and ultimately, their company.
Despite being a young upstart engineer keen to make his way in the world of tech, Tony didn’t let himself get sucked into this game. Tony saw straight through it — and clearly saw the fatal damage it was doing.
Instead, Tony did what was authentic to him — and that was use his skills to make a great product that consumers loved. Which of course, he did to spectacular effect with the iPhone.
If you try to be authentic by blindly adopting methods that work for other people, you’ll come across as inauthentic. So avoid this trap by adapting advice so it fits your personality and your goals.
Trap 6: Outstaying your welcome
HOFFMAN: There comes a time when every leader needs to consider passing the baton. Sometimes, the reason is as simple as age. Sometimes, it’s because your current tour of duty is coming to its natural end. Or maybe you’ve realized you’re not the right person to lead your organization through its next stage. There could be any of many different reasons to move on from your leadership role.
Above all, you need to accept that the succession of leadership is a key part of being a great leader. And most leaders tend to fall into the trap of not thinking about succession at all.
It’s hard to spot this trap because leaders can become hyper focused on being the main hero, the main innovator, the sole captain. They begin to think the position is just about them. However, as a leader you need to realize that leadership is not just about you. Leadership is about the I and the we.
And when you can adopt that truth, you start to realize that you need to act on it even if you’re not ready to step down yet.
You’ll need to start communicating clearly about looking for the right person for the company and not just the right person for the role. Start talking to your board, or your mentors or your network.
I had to do this when I stepped away from LinkedIn and worked with Jeff Weiner to be my successor as CEO. In his over 10 years as CEO, Jeff grew LinkedIn’s users from 33 million to more than half a billion. He grew revenue to more than $6 billion and ultimately stewarded LinkedIn into its acquisition by Microsoft.
When it was agreed that Jeff would take over as CEO, we had to work together. I had to find a way to put my ego aside. My ego was still present, but it wasn’t active. I needed to have compassion not just for Jeff and his position, but also compassion for the whole company and what it meant to put Jeff in the leadership role.
Let’s listen to a piece of Jeff’s episode.
JEFF WEINER: Before I started, I called him, and I said, “How would you like this to work? What decisions would you like me to make? What do you want to make?” And he said “That’s easy, it’s your ball. You run with it.”
HOFFMAN: You get the whole organization to adjust to Jeff being the CEO.
WEINER: And he said, “It’s really important when bringing somebody in from the outside to make sure that everyone understands that that person will be responsible for the decisions.” He planned about six to eight weeks of time outside of the office over the course of my first 10 weeks at LinkedIn.
HOFFMAN: I was accepting any speaking engagement. It’s the only time in my life where if the Weaver’s Society of Canada asked me to speak, I would go speak to the Weaver’s Society of Canada. I would get back, I would say, “Is it solved or not?”
WEINER: People had to re-establish connective tissue with the new guy.
HOFFMAN: More than half the time the person would get impatient, go solve it with Jeff and other people and would say, “Oh yeah, we got it solved.”
I didn’t allow any exceptions. “Jeff’s the CEO, you gotta work for Jeff.”
WEINER: I don’t think I can overstate the importance of how this was set up.
HOFFMAN: It was like, “Oh, right. Actually, Jeff’s great, we can work together on this. This really, really works.” But it required that rewiring.
WEINER: Without a foundation like that where you have that clarity in terms of leadership and who is responsible for what, it’s going to be really challenging to scale.
HOFFMAN: With the clarity of knowing that he would be setting the rhythm, Jeff set out to start his own drumbeat at LinkedIn. Note: For a founder, setting that drumbeat is often instinctive. You get to set the beat right from the outset. You have no legacy to overcome or accommodate. But if you’re joining a company at a later stage, it’s a lot more complicated. No matter how inspiring your own drumbeat is, it takes time to sync up with the beat that was in place when you arrived.
In this case, from the co-founder to the next leader, you have to make a clear and thought out transition to the next CEO. And you, as the co-founder and former leader, have to make room to walk away.
A note of caution: There’s a trap within a trap that even the best leaders fall into. Picking the wrong successors.
You need to be careful and open minded to figure out the best way to select your successor well. It’s not enough to be willing to move on. And if you’ve swung the bat and missed badly on the succession already, that’s OK, it’s probably not too late. You can come back and learn how to build towards the succession again.
The point is, don’t outstay your welcome. You always want to be considering who is the best leader for your organization, for the next phase. Maybe that’s you. But, if only because of time, there will always come a moment in your company’s journey when the best person needs to step in to lead, and it won’t be you.
And remember, stepping down from your current leadership role, whether it’s CEO, president or executive chair doesn’t mean that you’re abandoning your company. There are always ways to stay involved, or stay in touch.
Restaurateur and ShakeShack founder Danny Meyer did this when he handed off the CEO title of Union Square Hospitality to Chip Wade. Danny talked about this move with Bob Safian on Rapid Response.
SAFIAN: Now you recently announced that you’re stepping into an executive chairman role at Union Square Hospitality, handing off the CEO title to Chip Wade. I know that succession had been planned, had been discussed before the pandemic, but I wonder how the stress of the last couple of years may have impacted the timing?
DANNY MEYER: It was exhausting, and yet this industry’s always been exhausting. My license to grow as a leader has always been the degree to which I can delegate things that I used to do to people who could do those things as well or better than I can, and then increasingly do fewer things, but make sure that those things are things that uniquely coincide with my gifts.
For the last five to 10 years, I’ve been conscious about saying, “Wouldn’t it be great to have a CEO in the company?” So that, rather than my being responsible for the day-to-day operations, spending more of my time outside of the business, getting ideas, bringing back the creativity so that our restaurants can continue to innovate and improve. Having had an amazing leader, Chip Wade, who’s been the president and chief operating officer of our company for the last three plus years, it became evident to me that he was the guy. There’s not even a crack of space between the two of us in terms of how we approach workplace culture, hospitality. He happens to be way more experienced and gifted than I am at running large organizations. He also acknowledges that I should still continue to focus on, who are the chefs going to be? What’s the wine going to be? How do we represent ourselves to the public in terms of everything from graphics to design? So we’ve flirted with a whole lot of different titles for me. And finally, I don’t need a title at this point. I’m happy to just say Danny Meyer, but my official title is founder. The great thing about “founder” as a title, you can never get fired from that one, and executive chairman.
I had a journalist recently say, “So does this mean you’re stepping down or stepping aside?” And I said, “Actually I’m stepping up.” Because what I want to do is to get higher up into the tree, so I can see a lot more of what’s going on in the company and use 37 years of experience to hopefully make some more strategic observations.
HOFFMAN: That 37-year-long perspective is something that can’t be replicated in a new leader. And this is why, even when you step down, you should consider making your unique perspective available to your successor — whether formally as a board member, or informally as a friend. And if you are a new leader stepping up into the captain’s chair, I urge you to foster an ongoing relationship with your predecessor. Don’t fall into the trap of casting that invaluable advice aside.
I hope this episode has highlighted some of the leadership traps that are scattered across your entrepreneurial journey to scale.
Remember, many leaders have found themselves in these traps. For some, the traps have been fatal to their businesses. Others have managed to sidestep them. Others have used them as springboards into the next stage of growth. But whatever the outcome, these traps are learning opportunities.
For more lessons on leadership advice, you can hear a wide range of full length interviews with the world’s greatest scale leaders, and specific-courses on our Masters of Scale app. Visit mastersofscale.com/membership to download it right now.
I’m Reid Hoffman. Thank you for listening.