Encourage chief executive talent

Although becoming chief executive is seen by many technology leaders as a prime career target, the appointment usually comes with a host of demanding targets and expectations, making it a high-risk environment.

All too often, failure to meet expectations leads to the premature demise and downfall of the men and women who have taken the top job.

Independent research commissioned by the European Leadership Programme (ELP) found 92 per cent of venture capital (VC) firms expect to replace a company founder with a new chief executive officer (CEO).

One in three investors gives the replacement CEO less than a year to prove a success.

Such short-termism squanders talent and VCs responses are mixed when questioned about the level of support provided to CEOs. “The UK is a good place to do business,” said one VC responding to ELP research. “I just cannot rank it in terms of the support we give.”

Overall, however, the opinion seems to be that a CEO should be left to sink or swim; a strategy that has created a lack of successful leaders in Europe.

The single largest reason for the firing of chief executives is a failure to meet VC expectations.

Such dismissals are not necessarily a comment on the ability of the CEO, and more often leaders are forced to work with over-egged targets.

In addition, the facilities to mentor and coach talented executives are almost non-existent, which is bad news for the individuals that invest millions of pounds in VC funds.

Fortunately, the situation is changing. The first generation of VC funders are being replaced by competent, internationally focused managers who realise talent is rare and needs to be nurtured.

Make no mistake, the VC industry has had its fare share of naive managers, but business has changed over the past decade. If you are competing for the best deals you have to prove that you can control the smart money.

There is strong demand for CEOs with the vision to take difficult decisions and who have the capability to drive aggressive growth.

One decision may be to ensure the forecast is calibrated correctly and that the executive is going to have sufficient time available to execute on a business plan.

Today, there is still a shortage of experienced CEOs, especially in the UK where there is a four to one chance in favour of getting fired before the job is complete.

History has dictated that CEOs are brought in to run the business ­ yet at the first sign of a problem, leaders are ejected.

In other words, firing the CEO is the only tool in the box for assisting with underperformance and dismissal rarely helps.

However, we know the climate has changed, and there are a growing number of VCs who recognise that coaching and sharing experiences in a structured, training environment works.

ELP considers CEOs to be similar to extreme sportspeople that never stop developing, learning and coaching.

The VC industry can rightly celebrate how far it has come in recent years, especially through the support of initiatives that can really help develop the portfolio of company leaders.

Ashley Ward is a serial chief executive and programme chairman of the European Leadership Programme

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