Whether they run a startup company or a $100 billion conglomerate, every CEO must master certain skills to lead a successful enterprise. The ability to motivate people. The wherewithal to think several steps ahead and not just in the moment. The strength to exercise financial discipline.
However, the 100,000 CEOs of U.S. companies that are neither startups nor mega-corporations have many unique challenges. Leaders of these mid-market firms (revenue of roughly $20 million to $300 million) operate at a major competitive disadvantage to the fleet-footed startups on one hand, and the deep-pocketed Fortune 1000 on the other.
The small startup company can move rapidly, grow without significant resources and make groundbreaking innovations – all without risking an existing business. A multibillion-dollar company has extensive resources to experiment with new businesses, offer new products and extend their services – all without having to put existing businesses at risk.
The mid-market company is too big to be as nimble as the small firm and has too much to lose to take the big risks of the much bigger firm. Yet the mid-market firm must compete against both the fleet-footed small firm and the cash-rich large firm. We refer to this as the dilemma of the mid-market company CEO.
The Shortage in Advice
Yet the dilemma is not just a competitive issue. Mid-market CEOs are underserved by the advisory community -- the consulting firms, banks, academic institutions, research companies and other entities that seem to gravitate to the very small and very large companies. As The Deal magazine said, “For whatever reason, academics, bureaucrats and financial analysts have all but ignored the subject of a detailed, quantitative assessment of the space in the middle.” One investment banker quoted in the article put it this way: “The characteristics of middle-market companies are vastly different from either large or small businesses. There are different business theories, different financing sources, different approaches to operations, different owners, managers and investors.”
Mid-Market CEOs Need a Unique Set of Skills
The profound differences in challenges for mid-market CEOs mean that they have a unique set of capabilities to master. These include:
- Developing talent fast enough to keep up with rapid growth. HR functions in mid-market firms often don’t have the resources or mindset to make leadership development a priority.
- Mentoring members of the management team despite having less resources and bandwidth.
- In companies with slower growth and a static middle-management team, creating advancement opportunities for young talent – the future leadership of the company.
- In firms without multiple business units, being unable to give aspiring leaders P&L responsibilities.
- In professional services firms, hiring not just for domain knowledge but also for leadership talent.
- In privately held firms, teaching the next group of owners how to be good owners.
- In investor-funded mid-market firms (both venture capital- and private equity-funded), overcoming many investors’ intolerance in allowing the CEO (and other managers) to learn on the job. Often investors believe that skills should be acquired from outside the company, talent is interchangeable, and on-the-job development takes too long.
- Developing and implementing business planning processes that are more formalized but not as bureaucratic as those in large firms.
- Shifting from a command-and-control style to a team leadership style.
- Communicating with a broader geographically dispersed team while maintaining the intimacy of a smaller team.
- Integrating the spark and intuition of the founder with processes and disciplines required for a maturing, growing firm.
We believe mid-market company CEOs need advisors who deeply understand their unique issues and can help them develop the particular abilities they need. We are dedicated to helping these CEOs build the unique set of skills to lead their companies to exceptional performance.