Feb 10 2021

Dealing with Reality in Business

I used to love the Matrix’s Red Pill / Blue Pill metaphor and still use it occasionally to try to make a point around dealing with reality in an entrepreneurial context. Several years ago, I became deeply bummed out about how this metaphor was being used in politics and gender equity situations. It’s gotten worse since then, and I find many of the cases it is used in and the people who use it reprehensible, so I don’t use it much anymore.

However, I used it today for a company that is doing well and has exceptional strengths and some fundamental weaknesses.

This is true of every company that is doing well.

But it’s hard to deal with reality all the time. When things are going well, leaders (and boards) often avoid dealing with weaknesses. Some board members and investors are great at motivating a CEO to level things up. Others aren’t. Some CEOs want to embrace the challenge of leveling up in areas where they, and the business, are fundamentally weak, even if it’s emotionally and functionally challenging. Others don’t, or their own behavior and wiring get in their way.

There are many points in a company’s life where the CEO and the board can either deal with or deny reality. When dealing with reality, a key factor is embracing the business, team, and individual’s weaknesses and then deciding how to address them. Collectively. With empathy and emotional support for each other.

This isn’t easy. Over the past 30 years, I’ve been in this position many times, often multiple times as a board member in a particular company. These are different than crisis moments, where everything is on the line. It’s often when many things are going well, but there are prominent areas of the business that aren’t keeping up with what’s working.

I’ve never figured out magic words to say as a board member in these moments. Instead, I say what is on my mind, take responsibility for my participation in any weaknesses, dysfunction, or challenges, and focus on where I think we need to put additional energy in improving the business.

This is often an acknowledgment that we need to add a few experienced people to the leadership team. The CEO has to drive this. When the right people are added, notable positive shifts in the weaknesses can happen extremely quickly. But, in the absence of them, the talk generally continues, without action. Reality is not dealt with – just poked around the edges.

One of an effective board’s roles is to speak clearly about the weaknesses and hold the CEO accountable for addressing them. When I am effective as a board member, I do this well. When I’m not, I don’t. I’ve got plenty of cases of both in the last 30 years.

My mantra as a board member is:

“As long as I support the CEO I work for her. If I don’t support her, my job is to do something about that, which is not to replace her, but to try to get back to the place where I support her.”

Ultimately, as a board member and major investor, I can participate in replacing the CEO. While I’d prefer not to do that, I’m not afraid of doing it. But dealing with reality with the existing CEO is much more enjoyable and has generally been a more successful path for me.

All of this is extremely challenging, as it has to do with personal growth in the context of business growth. It’s easier to have entrenched thinking, play out the exact historical patterns that worked or be resistant to addressing whatever the current reality is. It’s compounded by the fact that exogenous factors are constantly changing and often change extremely fast.

The probability of long term success increases with a CEO, a board, and a leadership team is tuned into whatever the current reality is, their strengths and weaknesses, and focus on continually leveling up the weaknesses while continuing to play to their strengths.

If you are a CEO, spend a few minutes today contemplating whether your board is highly effective at helping you grow, scale, and evolve the business. Are you systematically and continuously addressing your weaknesses as an individual, leadership team, and company?

Are you dealing with reality?