Becoming a Stage 2 CEO
Becoming a Stage 2 CEO
"It all looked so easy when you did it on paper — where valves never froze, gyros never drifted, and rocket motors did not blow up in your face.”
~ Milton Rosen, rocket engineer
The first stage of a rocket is designed to be abandoned.
Stage 1 carries 90% of the fuel, generating the raw thrust necessary to break free from Earth's gravitational pull. Once its fuel is spent, Stage 1 separates and falls back to Earth.
At higher altitudes, Stage 1 becomes a liability. What once provided power now creates drag. Efficiency demands detachment.
As a CEO, you inevitably face the same dilemma. What got your business off the ground now prevents it from achieving escape velocity.
CEOs go through two distinct stages as their business scales:
Stage 1: Operator
Taking the business from zero to one. You're deeply involved in building the product and acquiring customers.
Stage 2: Business Builder
Creating the conditions for the business to scale beyond your personal capacity.
The Stage 1 approach breaks down as the team expands. The CEO can no longer be involved in every decision. Like a rocket, you must shed the machinery that once propelled you.
Separation happens at altitude. Ultimate success requires destroying what made initial success possible.
The Obstacle is the Way
You'll know it's time for Stage 2 when you're working 80-hour weeks out of necessity, just to keep your head above water. You have become the bottleneck. This typically happens when your team reaches 15-20 people, though timing varies.
It sounds simple: just abandon Stage 1. But you're not a rocket. You can't simply detach. Your identity was built on being the best operator.
Stage 1 represents comfort, pulling you back to the familiar work you're still excellent at. You feel productive, and the feedback is immediate. Stage 2 offers indirect evidence and delayed rewards. When you create the conditions for others to perform, results take time.
The efficient solution always makes sense in isolation. For any single task, doing it yourself is the fastest and most effective way to ensure it gets done right. However, repeated local optimization ultimately leads to failure. You’ve reached the stage where your execution prevents others from executing.
Stage 2 survival depends on your team's capability exceeding your own capacity. That requires investment: coaching takes longer than solving, delegation creates short-term inefficiency, and watching others stumble feels wasteful. It’s not. You're trading speed today for leverage tomorrow.
Discomfort means you’re on the right path. Every time you resist jumping in to play hero, tolerate mistakes as part of training, or protect strategic thinking time, you’re reinforcing your new identity. Pushing through that discomfort is the work.
What Only the CEO Can Do
The day-to-day scope of a CEO is vague, broad, and messy. This makes productivity difficult to quantify. Clients often ask me, “What am I supposed to be doing, anyway?”
My answer is always the same. Your job as CEO is to do what only you can do.
It's about position, not capability. As CEO, no one else has your authority, perspective, and ultimate accountability. If you don't do it, it won't get done—or it will be attempted without the necessary context.
The clearest distinction for identifying the work only you can do comes from the classic “The E-Myth Revisited”: “Am I working in the business or on the business?”
Stage 1: You're the best operator, and the business needs every operator it can get. You code, fundraise, and close deals, whatever it takes.
Stage 2: You become a business builder, shifting from execution to empowering and from doing to directing.
The Six Roles of a CEO
Six roles define the priorities of a successful CEO: Coach, Strategist, Innovator, Investor, Ambassador, and Student. The framework below defines Stage 2 for each role.
The trap is convincing yourself you're working on the business when you're actually working in it. This is being a shadow CEO—hiding in execution by doing work that can be justified, but isn't work that only you can do.
If you're spending significant time in the Stage 1 version of these roles, that's a red flag. Delegate or eliminate those responsibilities.
COACH: Develop Your Leaders
As the coach, you don’t solve problems; you help your team build problem-solving capacity. You're the information router, connecting people and context so your team operates effectively.
Coach: What Only You Can Do
Ensure that people are in roles that align with their strengths.
Track your team’s development and hold them accountable for outcomes.
Systematically build your team's capabilities.
The Trap: "It's faster if I just do it."
The Reality: You're avoiding the harder work of building your team’s capability.
STRATEGIST: Set the Direction
As the strategist, you bridge market reality and organizational capability. You determine the opportunities to pursue and what is needed to pursue them. You protect the strategy from drift.
Strategist: What Only You Can Do
Define a compelling mission for the business to achieve.
Set meaningful goals that clarify what to focus on and what to ignore.
Select the right leverage points to drive desired outcomes.
The Trap: "I don't have time to be strategic."
The Reality: You're afraid to make hard choices, so you stay busy with tactical work.
INNOVATOR: Define the Future
As the innovator, you set the course. You’re the navigator, not a rower. The team needs your perspective and context on what to build and why.
Innovator: What Only You Can Do
Define the product vision and establish quality standards.
Make key product decisions on what gets built.
Initiate necessary pivots and directional changes.
The Trap: "I need to stay close to the product."
The Reality: You don't trust your team, or you miss being a maker more than you want to admit.
INVESTOR: Allocate Resources
As the investor, you make the capital allocation decisions that determine the business’s pursuits, balancing current needs with future capacity.
Investor: What Only You Can Do
Secure the capital needed to execute.
Determine which initiatives get funded and when.
Manage cash runway and financial health.
The Trap: "I need to get a handle on the numbers."
The Reality: Your quest for certainty enables you to delay making the hard calls.
AMBASSADOR: Represent the Business
As the ambassador, you represent the business externally and internally. You open doors others can't and you establish the standard for how the team shows up.
Ambassador: What Only You Can Do
Close key customers and partnerships.
Recruit critical talent when you can have an impact.
Serve as the primary role model for business values and standards.
The Trap: "I'm building the brand."
The Reality: You're seeking validation instead of risking rejection.
STUDENT: Learn What You Need
As the student, you link the outside world to the business through targeted learning. You're building knowledge for anticipated challenges, not learning for its own sake.
Student: What Only You Can Do
Identify and address capability gaps.
Understand the changing landscape relevant to your strategy.
Cultivate relationships with advisors who've solved your future challenges.
The Trap: "I need to understand this space."
The Reality: You're using learning to avoid taking action.
Getting Started — The Role Audit
Track everything you do in 30-minute work blocks for one week.
Label each block by role and stage:
Role (Coach, Strategist, Innovator, Investor, Ambassador, Student, Other)
Stage 2 (on the business) or Stage 1 (in the business)
Aim for at least 10% but no more than 30% on each of the six roles. The benchmark for Stage 2 within the roles increases with team size. Under 30 people, 50% Stage 2 is an ambitious but achievable target. Above 50 people, shoot for 70%+.
After this audit, most CEOs discover they’re underinvesting in multiple roles, most commonly Coach and Strategist. The fastest path to rebalancing is to reallocate time away from the role where you feel most comfortable.
Awareness is useful, but taking action will start the flywheel. Choose what you'll stop doing.
Select three recurring tasks where you’re working in Stage 1 and commit to handing them off. Identify who will own each task. If it's an existing team member, have the handoff conversation this week. If that person doesn't exist, define your criteria and kick off the search.
Nailing the Transition
The rocket reaches orbit by shedding Stage 1. You reach the next stage in the same way: by letting go of execution to empower others.
The six roles define where to prioritize. Within each role, the work is shifting from Stage 1 to Stage 2. From execution to empowering. From doing to directing.
Stage 2 is self-reinforcing. The more you step back, the more your team can step up. Their growing capability unlocks your capacity to focus on what only you can do.
Set the course.
About the author:
I’m Chris Sparks, an executive performance coach advising founders, executives, and investors on how to achieve elite performance.
Thanks for reading! You can read more of my writing, subscribe to my monthly newsletter, and download my workbook Experiment Without Limits.
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