In my life before business and leadership coaching, I got to work at or found some pretty interesting companies. Through my current lens, I’ve been able to reflect on those experiences and find lessons from the eight young companies that helped shape my understanding of leadership.

You can check out my first four lessons here:

Good leadership is a prerequisite for a good business

Why you need access to inspiration and experience

It’s All About the People, the Team, and its Values

The Best Growth Strategy is to Make Yourself Dispensable

The fifth company taught me how disastrous the consequences can be when you don’t have the right people in the right roles.

In 2002, I joined as the CEO of a six-person automotive innovation company. The position was a big shift away from the software world where I’d spent more than a decade, into the automotive parts industry, something I knew very little about. I’m not even sure, at that point, that I had ever opened the hood of my car.

I met the company and was encouraged to take the job by their attorney, Steve Goodman of Morgan Lewis, who was a mentor to many entrepreneurs in the Philadelphia area. I had met Steve as outside counsel to CDNOW (see Lesson #4). It was Steve’s belief that a good jockey can ride any horse.

The company was founded by a mechanical engineer and his father, a physicist. They had a design for a new spark plug that allowed an internal combustion engine to provide more power with a cleaner burn. The research had come out of Princeton University, and the company had spent six years trying to commercialize the technology.

I was their third CEO. When I joined, they had already exhausted several million in angel investment and needed to find additional capital and industry development partners to fund the next stages of development.

The technology was pretty cool, though it was still a concept. Using plasma physics, we had a spark plug that burned hotter and faster than any other. The result was more power and a cleaner burn, which effectively increased the performance capability of an internal combustion engine. Our product tested well but was not yet commercialized. The manufacturability, cost, and lifespan could not yet meet industry standards.

The mechanical engineer who’d founded the company was operating as the CTO, and we were in agreement that he didn’t really have the leadership experience or business skills for a company focused on big automotive manufacturers. Unfortunately, we didn’t have the budget to hire someone, so we were doing our best.

Bonus lesson: sometimes your best isn’t good enough.

The jockey rides a new horse

Through the company’s reputation and a helpful Board of Directors, I was able to quickly navigate the automotive industry. We had existing relationships with major US auto manufacturers and suppliers. The company was well networked with any industry that relied on engines, including boating and racing.

US automotive manufacturers are notoriously difficult to work with. They’re more of marketing companies than technology innovators. They didn’t want to invest in concepts. They wanted to buy finished parts.

I shifted our strategy to focus on “low hanging fruit,” those markets which would be able to more quickly co-develop a solution that increased the power curve of their engines. More power, less emissions. As we worked with those small engine manufacturers, we discovered they didn’t have the resources - budget or team - to work with us. They, too, would be happy to buy a commercialized, finished product.

I spent well over a year trying to get manufacturers, researchers, and even racing companies, to work with us on the product. I also spent way too much time fundraising. And we continued to advance our development in only small increments.

Given my focus on the business, I suggested to the Board that they perhaps brought in a non-technical CEO too soon. The company needed to be back in the lab, not on the road. I offered my resignation and was asked to give one more push. I agreed to try one more initiative, and that we’d have to hit a home run if it was worth my staying.

So I had us head to Europe, specifically Germany, where there was more investment in innovative engine technology. I got us an invitation from one of Germany’s oldest and best known auto companies to visit them in Munich and test our spark plug in one of their experimental engines.

When the rubber hits the road (or the spark hits the gas)

We head to Germany, flying over with a trunk filled with high voltage ignition equipment.

We visit the manufacturer in Munich and have the opportunity to install our plug on one of their multi-million dollar test engines. It’s in a sealed room with a big window and a rack full of computers monitoring the engine’s performance.

Our spark plug is installed in the engine and the testing is incredible. The product does exactly what we said it was going to do. They are impressed and the test engineers call down some of the VPs to see what’s happening.

After a morning sausage break (a Bavarian tradition which makes our “coffee break” seem lame), the execs see our performance and are impressed. They ask us if we can show them specifically how the spark plug works.

We’re concerned about opening our black box and exposing our intellectual property. We instead offer an up-close demo from our homemade suitcase demo kit. They agree. We discuss whether to do the demo in the nearby lounge where there is more room. Our CTO asks the test engine’s computer operator whether the metal computer rack is grounded. The German-speaking operator says it is, so we offer the demo there on the spot. We plug in our suitcase to wall power and ground it to the computer rack. Our CTO flips the switch on.

And in one instant, we knock all of their computers offline and dark the whole area, nearly blowing up BMW’s multi-million dollar test engine.

Tests are over for the day — for the entire visit — and the manufacturer suggests that we come back when our product is a little more...ready.

Two halves don’t make a whole

That night at a restaurant, I asked the founder if he’d known there was a risk we might blow up the test engine when we plugged in the demo kit. He had. He had a mechanical and electrical engineering background that I didn’t.

“We really need a CTO,” I said.

We both knew we couldn’t afford it. He thought that when you combine my knowledge of product, project and risk management, and business with his knowledge of engineering and the sciences, together we made a CTO. Two halves make a whole.

Perhaps in some circumstances, that could have been true. It wasn’t in ours.

The founder knew there was a risk that he could blow up their test engine, but he didn’t have the business insight to communicate that risk to me. I wouldn’t have been willing to take the risk had I known about it, and I didn’t have the technical knowledge to identify it as a possibility.

Yes, he had technical skills, and yes, I had management and business skills. Putting those together did not add up to a CTO. We were like the right and left sides of a brain that didn't know how to communicate with each other.

One person with all the skills isn’t the same as two people who each have half

While blowing up an auto manufacturer’s test engine would have been a pretty extreme outcome of not having the right people in the right jobs, I see the same issue all the time in organizations large and small. Companies try to stretch their budget by promoting from within and don’t communicate the skills people need to succeed or give them adequate training to do so.

It happens frequently in growth stage companies. Someone who is “good with people” and “okay with paperwork” (or process) gets promoted to a management position. They may be a very good individual contributor and employee, but they don’t have any training in performance management, conflict resolution, recruiting, or any of the myriad of things that require more specific skills than being a people person.

Managers and leaders must be developed.

If you’d like a culture that grows your organization from within, to hire internally, (which is a great way to hire, when done well) you need to be intentional about developing those skills. You need to be able to communicate to a team member: these are the skills that you’ll need to develop over time. Here’s where you are and here’s how we’re going to get you where you go next. There should be a model for the continuous development of competencies.

To build that level of proactiveness, you also need to know who’s accountable for what. That doesn’t mean just taking the accountabilities and dividing them up amongst whoever’s available. It’s how I got my first management opportunity, and that was disastrous. It’s not the ideal scenario. Sometimes it’s necessary, but you do it knowing that you’re compromising by not hiring the best person for the job.

You’ll also need mentors and good role models. Many young and small organizations don’t have enough.

Building from within takes time. It’s why sometimes a leader also needs to bring in experience from outside of the company. As long as you take a transparent and inclusive approach when looking to the outside, it’s an equally fine (or sometimes better) strategy than promoting from within.

Final thoughts

Clearly I didn’t hit a home run that day in Munich. I subsequently resigned so the company could focus its resources back in the lab.

The experience left a big impression on me. Leadership isn’t theoretical. There are real, perhaps even dire, consequences to poor leadership. Fudging it doesn’t work, and pretending that two wrongs add up to a right could end with you thanking your lucky stars that you don’t have to explain to your Board how you blew up an expensive test engine.

Leadership coaching can help identify and resolve gaps in your team. Contact us to learn more.