After a discussion of "The Curse of Knowledge" with a colleague, I began to think about the venture approach to executive management.
Is it possible for the CEO to know too much? Can this individual have too much relevant experience? Can deep knowledge prevent this person from seeing new opportunity? Change the game? Let's hold off that line of questioning for a minute and take a quick look at the vanilla playbook for some guidance.
The traditional triad of a fundable venture usually includes some recipe for Team, Market and Product. These are the Big Three. Some investors like to emphasize one of these three over the others. You might hear an investor proclaim "We believe that the team is the key to everything. A good team will eventually create a good company." This means they invest in people and let those people figure out how to make the thing work.
The Team ingredient can also be boiled down to CEO. A strong CEO (according to the playbook) will pick a strong team, and fix parts of the team that aren't working. The CEO is the first and last lever for the board and the investors.
Has the person demonstrated the necessary skills and talents to navigate the board, the market, the funding, the plan, the finances, the team, the product, the customers? “Track record” also means that the investor can hand over the business building to the CEO.
But getting back to the original question, is it possible for the CEO to know too much? Can there be too much “been-there-done-that?” This question implies other considerations. When a CEO comes to a business situation with a limited experience with that business, this person will ask some very basic questions, such as “What business are we actually in?” “Who is the customer?” “Why would someone do business with us?” “How is our product different?” “What could we do that we haven’t even thought of before?”
I have observed first hand the opposite scenario, where the hyper-experienced team members say things like “we already know this market inside and out and there is just no more innovation left to do. Don’t waste your time trying to change the game. This cake is baked.” There is clearly such as thing as too much knowledge.
So how much ignorance is the right amount? If a CEO knows a market inside and out, is that a good thing or a bad thing? I can hear an objection now. “Deep knowledge is crucial to making good decisions.” Granted. But perhaps deep knowledge needs to be mixed with just the right amount of ignorance.
The right CEO depends on the stage of the company. I often see "been-there-done-that" CEOs in the expansion stages of companies. I see "grew-that-sold-that" CEOs come in when companies are preparing to be bought. I think experience counts for a lot. But I don't think experience is everything, as you point out. Chad Hurley was CEO of YouTube until it was sold to Google for $1.6 bln. Peter Thiel was CEO of PayPal until it was sold for $1.5 to eBay. They were first-time CEOs, that managed to have successful outcomes. They were the lucky 1%. I've seen more who failed, or had varying degrees of success. I think you have to have knowledge about running a team, picking the right team, knowing when to make tough decisions, knowing when to change course. When you say a CEO may need to be "ignorant" - I think you mean a CEO needs to be open to taking risks. I think a good CEO takes measured risks and understands how to get back up, if he fails.