Tuesday, December 30, 2014

Why Was 49ers Head Coach Harbaugh Like a Startup CEO?

Rocky Richard Arnold

      The head coach of the 49ers left the organization on December 29, 2014 after a year of fractious rumors and innuendo involving the team owner and president/CEO, Jed York; the GM, Trent Baalke; and Head Coach Harbaugh that many think affected the performance of the on-field players.

      Coach Harbaugh came to the 49ers with a strong background of leadership in both college as a head coach (University of San Diego and Stanford University) and the NFL as a starting quarterback (Chicago Bears, San Diego Chargers, and Indianapolis Colts).  Many fans viewed him as being a coach that had a style well-suited to the younger players found in college, and they wondered if he would fit in the NFL where more mature players have to be led and managed.

      49ers Coach Harbaugh took a collection of players and made them into a team that performed at a very high level.  And he did that in the first year and the following two years—three years of high achievement—followed by a sub-par fourth-year 8-8 record in 2014.  That the players played for the coach and vice versa was well understood by the fans—loyalty extended both directions.  Harbaugh was appreciated for his over-exuberant behavior and energy-laden motivating tactics designed to elevate the adrenaline and performance of the players.

      NFL teams are just like any other business.  They have head coaches that are hired by the owner-investors.  Both owners and coaches are responsible for performance.  However, in the absence of success (i.e., winning the Super Bowl), owners have the upper hand and the greater responsibility for achieving organizational success.  Shortcomings are almost always totally ascribed to the head coach without considering the responsibility of the team owner—fair or not, that is the way it is.  Given the excellent competencies of Coach Harbaugh, however, most fans will turn to Jed York and hold him responsible for the performance of the team next year and afterward based principally on his choice for the next head coach.  And that is the way it should be.  Owners are responsible for hiring the top manager (head coach or CEO).

      An NFL team owner (in this case, the York family) and investors are both intensely focused on success.  An NFL team owner wants to win the Super Bowl and realize the emotional highs and pride that comes from winning as well as increase the value of the franchise.  Investors in a company seek to increase the value of the investee company and ultimately exit with the highest ROI possible.  Both NFL team owners and investors in businesses are challenged with the need to secure a talented leader (Head Coach in the case of an NFL team and CEO for business organizations).

      Startups are typically led by the original vision holder, inventor, or founder whose skills in a leadership role are uncertain.  In the world of startups, the replacement of a startup founder/CEO is not unusual, especially when initial successes are replaced with shortcomings in sales, revenue, and profitability.  Investors assume that the shortcomings are the result of CEO failures in leadership and/or mismanagement and decision-making.  Or in some cases, investors assume that a less-experienced founder/CEO lacks the requisite knowledge, skills, and experience to take the organization to a higher level of performance.  Investors, like NFL team owners, are wise to carefully dissect the reasons for shortcomings.  Investors quickly think that a new so-called professional CEO is needed—a person who will come in and build on the initial work of the startup CEO by installing and monitoring processes and setting the strategies that will lead to success.

      It must be remembered that players may be strongly bonded to each other as a result of the intense external pressure to win.  Removal of a well-liked founder/CEO or the head coach raises the risk that the founding team or players are disaffected both by the action of removal as well as the unsuitability of a newly-hired head coach or professional CEO.  This is the risk for the 49ers owner, Jed York.

      Here are some differences between a startup CEO and a professional CEO that must be considered before replacing a startup CEO (or a winning NFL head coach):

    A startup CEO is focused on winning key initial sales and on revenue growth.  A professional CEO is focused on developing reliable processes for generating revenue and profit.
●    A startup CEO is heavily involved with the selection of people.  A professional CEO is driven to develop policies and processes that guide the hiring process.
    A startup CEO interacts directly with personnel.  A professional CEO interacts primarily with the next level of management.
    A startup CEO has a naturally high affiliation with team members where loyalties are strong.  A professional CEO has a high affiliation with investors and senior managers and loyalties between employees and management is lower by comparison.

      In important ways, Coach Harbaugh was like a startup CEO.  He moved the organization from mediocrity to success in a single year based on his leadership style.  His affiliation and loyalty was with the players and not with ownership.  He had a strong focus on immediate success, which the 49ers needed.

      Was he the coach for the long term?  Perhaps not, according to the owner, but on the other hand, his style was perfect for an NFL whose players were young and in need of coaches who understood the pressures of both maturing and performing at the same time.

Rocky Richard Arnold provides strategic corporate and capital acquisition advice to early-stage companies founded by entrepreneurs wishing to successfully commercialize high-value-creation opportunities, ideas, and/or technologies.  More information about Rocky can be found at www.rockyrichardarnold.com.  His book is available for purchase on  Amazon at http://tinyurl.com/pv248qq.  Financial software for use by startups can be purchased on Amazon at http://www.amazon.com/gp/product/B00K2KPSI2.  He posts articles about entrepreneurship on his blog at http://thesmartentrepreneur.blogspot.com.