Companion piece to my conversation with Nick Fraunfelder on The Sure Oak Podcast. Listen here:redactedYou are the CEO of the deal, not the company. I said that to Nick Fraunfelder on his podcast recently, and of everything we covered in an hour, it’s the idea I most want investor-backed CEOs to internalize. Here is what I mean. When a private equity firm or an investor group buys a company and installs you to lead it, you tend to draw your job description around the org chart below you. The employees, the customers, the operations, the P&L: that’s the company, and you’re its CEO. The board, the sponsor, the lenders, the reporting calendar: that’s the context you operate within, with terms handed down from above that are yours to accept and to answer. That mental model will hurt you. The deal, the whole system of capital, governance, management, and employees assembled around this business, only works if someone holds the vision for it and moves every participant toward it. The sponsor cannot do that job, and neither can the board. You are the only person at the table positioned to do it, because you are the only one who actually knows the company. I’m writing about this as I figuratively stare at the scars from my past mistakes. I’m not talking about theory. The deference trap There have been multiple points in my career when I held a position of operating leadership but was subordinated to sponsors in governance, and I deferred. My internal logic ran something like this: “The sponsor has seen dozens of these deals, and I’ve seen one or a few, so they must know more,” or, “The sponsor controls the board, so their preference wins.” I thought it would be better to comply, deliver the numbers against their strategy, and keep the relationship aligned with the governance control. Every part of that logic was flawed. The sponsor had seen dozens of deals, but pattern recognition across deals is a different asset than knowledge of this company, these customers, these employees, and this moment. They had less of that knowledge than my frontline managers did. And yes, they technically controlled the business, but control without sufficient knowledge produces confident decisions, not necessarily good ones. Some of the worst decisions I made were the direct result of that deference. I executed strategies that I suspected were flawed because I had subordinated my own judgment to the cap table’s. At best, I overweighted the sponsor’s input and underweighted my own intuition. Nobody forced me to. I did it to myself. I see the same move constantly in the CEOs I work with now, whether they were in leadership prior to the sponsor’s acquisition, joined at the deal close, were recruited into a PE portfolio seat, or were promoted from within. They say some version of “well, firm X owns this company, and they know the industry, so I have to follow their plan.” And the person saying it knows more about the business than anybody else in the room. Why your board manages you the way it does To understand why deference is so corrosive, you have to look at the other side of the table. My view, which I hold more strongly every year, is that it is irresponsible for a capital sponsor not to take ownership of the CEO’s operating conditions. The CEO works for the board. The board is controlled by the sponsor. So the sponsor’s method of managing the CEO, and facilitating her success (or not), becomes, over time, the company’s method of managing everything. If the board harangues the CEO only about the numbers, she will, whether she intends to or not, eventually manage every person and every decision in relationship to those numbers. The culture the sponsor claims to want and the culture the sponsor’s behavior produces are two different things, and the second one wins. Most board members default to the numbers because the numbers are easy. It is much easier to read a reporting package and pronounce a CEO good or bad than it is to sit with her on the hardest problem in the business and feel uncertain together. But that harder work is where a board member earns their keep, because the sponsor only does well if the CEO does well. Leaving her alone with the hard thing is abdication. Nick told a story on the episode that captures this. He was presenting to a board at a prior company, walking through the up-and-to-the-right charts, and one board member stopped him cold: “Nick, is this really what you want to talk about?” It wasn’t. He had three things terrifying him, and they spent the meeting on those instead. Nick calls that man the best board member he ever had. You cannot wait around hoping you drew that board member and they’ll volunteer to help. Lead the deal The prescription, if you sit in one of these seats, is to lead upward. Vision is the CEO’s role, and the board is inside the boundary of that role. Your job is to help every stakeholder understand what needs to happen in this business, and then to secure from each of them what success requires: capital, patience, expertise, air cover, a seat at the table for the hard conversations. This is not a license for defiance, and this is where the risk lives. You can lead the deal badly. You can confuse conviction with stubbornness and get yourself fired being righteously wrong. The board does hold formal power, and a CEO who forgets that tends to remember it abruptly. The protection against that failure is the same discipline I’d urge on you with your own team: treat influence as a marketing exercise, never as an exercise in being right. Who are these board members, how do they receive information, what do they care about, and what have they been burned by? A sponsor who lives in spreadsheets needs the case made in her language before she can hear it in yours. You are not entitled to be understood. You have to earn it, the same way you earn it with a shop floor that has thirty years of tribal knowledge and no reason to trust you yet. And when you have earned it, be direct about conditions. If the value creation plan requires a hire the board hasn’t budgeted, say so. If the timeline requires patience the board hasn’t offered, say so. I teach CEOs to put it plainly: here is what this business needs to succeed, here is what I need from you to deliver it. Boards respect that far more often than deferential CEOs expect, because most sponsors are starving for a CEO who will tell them the truth about their own investment, and what they can do to improve it. I could be missing something; there may be governance situations so broken that leading upward is futile, and if you’re in one, the best move is to leave rather than to comply. But in most rooms I’ve been in, the constraint was not the sponsor’s willingness to follow. It was the CEO’s willingness to lead. You don’t need to have the conversation with your board this week. You do need to answer one question for yourself: at your last board meeting, were you reporting to the deal, or leading it?