Ryan Leatherbury

Business. Tech. Life


10 Things Non-CEOs Can Learn from The CEO Tightrope by Joel Trammell

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Joel Trammell’s CEO Tightrope is an excellent book written by a CEO for CEOs. But you don’t have to be a CEO to take away some very important lessons about business and leadership. His insights are squarely aimed at other CEOs in tough roles where there is no formal job description, no instruction manual and no room for excuses. But as I read on, I realized many key points still apply at all levels of management throughout an organization, including senior level individual contributors on a team who act as “CEO” of a department or group at one time or another.

1. Don’t Wait until You Have All the Information to Make an Important Decision – Being able to make good decisions is critical. Unfortunately, you’ll seldom have the all the information you need to make them.  Trammell mentions Colin Powell’s advice that a good leader should make a decision when he has between 40 and 70% of the information he needs to make it. The analysis paralysis of waiting until you have more than 70% can hurt your business because of the high cost of inaction. The windows of opportunity usually close before you reach a total comfort level. On the other hand, making a critical decision with less than 40% is usually reckless.

2. You Get What You Measure – Picking the right metrics to gauge your business is crucial. Ideally, metrics should be easily measurable, correlate with current and future business performance, controlled by the group being measured and comparable to competitor’s metrics. And yes, coming up with the right metrics is not easy so expect some trial and error and lots of iteration with the people being measured.

3. Frame Requests for People and Money with Larger Business Needs – If you’re asking for new hires or more money to go buy a new software tool then look at the tradeoffs from the CEO perspective not just what you see as the obvious benefit to your group. This makes it easier for the CEO to judge your request with competing requests from different departments. Put the benefits in terms of the larger goals that the CEO has defined for the company to make a stronger business case.

4. Be Ready to Answer These Important Questions – If you’re going up to the big desk with hat in hand, make sure you know what you would say if asked what you’d do with significantly more money to spend. And what would you do with a lot less money? Business conditions can change on a dime, so it is important that you always be ready to make the cost-benefit tradeoffs in either case. You should be prepared for sudden windfalls or a quick change to austerity.

5. Understand How Your Actions Impact All Stakeholders – Think through how your actions impact shareholders, employees and customers. Are you making a decision for one stakeholder at the expense of the others? Or are you balancing the needs of all three? Are you doing what is convenient for your group? Or going all in on an unprofitable customer at the expense of larger business objectives?

6. Know What Role you Play in the Larger Mission and Vision – The CEO sets the vision and defines the mission to reach it. So if asked how your daily activities support the vision and mission, would you stumble for the right words or clearly articulate your role in the larger business objectives?

7. The Rule of 45 in Balancing Growth and Profits  – In order to achieve a high valuation in the market, a rule of thumb cited in CEO Tightrope is that a company’s operating margin plus annual growth rate should be greater than 45. Product managers and departmental VPs especially should keep this in mind and understand where you are in the overall business cycle as seen through the CEO’s eyes during business planning. Are you going for higher rate growth early on? Or higher margins in a maturing business line? Can you clearly articulate how your hiring plan and product strategy align towards an overall revenue or profitability goal?

8. Use Decisions as a Growth Opportunity – Trammell suggests breaking decision making process into 2 stages: Triage and communication & analysis. First, triage decisions into 3 categories based on business impact: Less significant, Easy but Significant and Difficult and Significant with increasing need for more of your direct involvement. Let team members who bring less significant decisions to the table make them as a growing opportunity. Support and challenge them throughout the decision making process by making sure they carefully weigh the impact to the business.

9. Communicate Decisions Clearly and Immediately – Once you make a decision that impacts others, communicate immediately to make sure people understand what you decided and why. Explain the reasoning involved and the trade-offs. Smart people always want to know why so tell them. It is also important to tie the decision back to the core operating principals of the business to reinforce how your actions align with CEO intent.

10. Always be Recruiting – Whether you are a manager or individual contributor, you should be recruiting the people in your networks that you enjoy working with. Even if you don’t have control over when you can make new hires, don’t make the mistake of frantically filling in a warm body when a slot finally opens in fear that it is better to hire poorly than not at all. The reality is that you’ll spend more time managing the mistakes of bad hires.

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Ryan Leatherbury • January 4, 2015

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