Book Short:  Not As Deep As You’d Like

Deep Change, by Robert Quinn, is a reasonably interesting collection of thoughts on management and leadership, but it doesn’t hang together very well as a single work with a unified theme.  The promise is interesting — that we must personally abandon our knowledge, competence, techniques and abilities and “walk naked into the land of uncertainty” to undergo great personal change that can then lead us to organizational change — but the book doesn’t quite deliver on it.

That said, I enjoyed the book as a quick read for a few of its more interesting concepts.  For example, Quinn has a great crystallization of many things I’ve observed over the years called “the tyrrany of competence” where organizations can get paralyzed by people who are technically strong at their jobs but who are either disruptive culturally or who have such a chokehold on their role that they hold back the organization as a whole from growing.  Another good concept is a chart and some related commentary about how a person transforms from an individual contributor, to a manager, to a leader — great for any growing company.  The last interesting one was a grid mapping out four different types of CEOs — Motivator, Vision Setter, Anazlyer, and Taskmaster.  Quinn goes into some detail about the characteristics of each and then circles back to the inevitable conclusion (like most Harvard Business Review articles) that the best CEOs exhibit all four characteristics at different times, in different circumstances.

So not my favorite book overall, but some good tidbits.  Probably worth a quick read if you’re a student of management and leadership.  Thanks to my former colleague Kendall Rawls for this book.

Counter Cliche:  It’s Fun at the Top!

Fred’s VC cliche this week is a good one — that CEOs have the weight of the company on their shoulders, otherwise known as "it’s lonely at the top."  He’s right in a lot of ways, and his two suggestions for dealing with it are good.  To those, I’d add a third suggestion, which is to create a peer group of other CEOs that gets together periodically to talk, share ideas, and blow off steam.  It doesn’t need to be something formal like YPO or YEO — just have a quarterly dinner roundtable with a handful of other local CEOs you know and respect, whether from your industry or not. 

But the counter to Fred’s cliche is that while yes, it can be lonely at the top, it can also be a ton of fun.  Having the weight of the company on one’s shoulders also means having the ability to do some exciting things:

– Being social and interacting with people all across the organization, at all levels, to really understand what’s going on

– Being multi-disciplinary and working on projects with all departments to make sure things are in sync

– Periodically getting out of the organization and understanding what’s happening in the outside world, with customers, suppliers, partners, and investors

I’m sure there are others, and I’m certainly lucky to have an investor who has sympathy for the "weight of the company" problem — but there are many days where the weight is completely overshadowed by the fun!

Beyond CAN-SPAM:  The Nightmare Continues, Part II

A couple of months ago, I blogged about two well-intentioned but very unfortunate new laws on the books, one in Michigan and one in Utah, designed to protect children from advertising that’s harmful to minors, but in fact full of unintended consequences.

Today, the Detroit Free Press had a great article about how the law in Michigan is so poorly conceived and executed, that not only is it angering legitimate businesses, it’s actually angering the parents who were supposed to be its principle beneficiaries.  One parent’s quote in the article pretty much sums it up:

“What was the whole point in signing up if it’s not doing any good? Is this just the legislature and the governor trying to look good and tough, but in the end, just kicking up dust?”

Agreed, and well said!

Keeping Commitments

Today’s post is another in the series about our 13 core values at Return Path, about making commitments.  The language of our value specifically is:

We believe in keeping the commitments we make, and we communicate obsessively when we can’t

Making and keeping commitments is not a new value – it’s one of Covey’s core principles if nothing else.  I’m sure it has deeper roots throughout the history of mankind.  But for us, this is one of those things that is hard wired into the social contract of working here.  The value is more complicated than some of the other ones we have, and although it is short, it has three components that worth breaking down:

• Making commitments:  Goal setting, whether big company-wide goals, or smaller “I’ll have it to you by Tuesday” goals, is the foundation for a well-run, aligned, and fast-paced organization
  
• Keeping commitments:  If you can’t keep the overwhelming majority of your commitments, you erode the trust of your clients or colleagues and ultimately are unable to succeed
  
• Communicating when commitments can’t be met:  Nobody is perfect.  Sometimes circumstances change, and sometimes external dependencies prevent meeting a goal.  The prior two parts of this value statement are, in my mind, pay to play.  What separates the good from the great is this third piece — owning up loud and clear when you’re in danger of blowing a goal so that those who are counting on you know how to reset their own work and expectations accordingly
  

It’s worth noting on this one that the goal is as relevant EXTERNALLY as it is INTERNALLY.  Internal commitments are key around building an organization that knows how to collaborate and hand work off from group to group.  External commitments — from meeting investor expectations to client deliverables — keep the wheels of commerce flowing.

I’m enjoying articulating these values and hope they’re helpful for both my Return Path audience and my much larger non-Return Path audience.  More to come over time.

Be Ruthless With Your Time

I have historically been very open with my calendar.  For most of my career, people who want to meet with me, both internally or externally (with the exception of random vendor solicitation), generally have gotten to meet with me.  Some of this is generosity, but I’m also a compulsive networker and have always made time proactively to meet with people just to meet them, learn more about different pockets of the industry or finance, meet other entrepreneurs and find out what they’re up to or help them, and connect more broadly from there.  I’ve also routinely been on multiple boards at the same time, as I’ve found that’s a very helpful part of my management routine.

But of late, I’m struggling more and more with calendar management.  There are more and more demands on my time internally as Return Path gets bigger.  There are more asks from people with whom I really don’t want to meet.  More travel, which sucks up a lot time.  A longer commute and more people who I want to see at home who have early bedtimes.  So I’ve taken to being more ruthless with my time.  I could probably do an even better job at it than I am now.

The main shifts I’m trying to make are to be proactive instead of so reactive; to cut meetings, shrink them, or group them when appropriate internally; to use videoconferencing instead of travel where possible; and honestly to just be a little more selfish and guarded with my time.  If the meeting doesn’t have something in it for me or Return Path — some promise of learning something or meeting someone either directly or indirectly helpful — I’m unlikely to do it any more as I once would, or I’m pickier about it (it has to be in my office so I don’t have to travel…it can only be 30 minutes long, etc.).

The two main tools I’m trying to use to manage my calendar proactively, mostly driven my brilliant executive assistant Andrea, might be useful to others, so I thought I’d share them here.

The first one is a networking list.  Andrea and I created a simple spreadsheet of everyone externally that I like to keep in touch with, and we prioritized it.  Every time I meet with someone on it, we mark the date.  Then when we meet to review my calendar periodically, we look at the list and figure out who I should reach out to in order to set up the next wave of meetings.  (I have one for internal check-in meetings with people other than my direct reports as well.)

The second is a time allocation model.  I am sure I got this idea from David Allen or Jim Collins or some other author that I read along the way.  First, we are religious about keeping an accurate calendar, including travel time, and we even go back and clean up meetings after they’ve happened to make the calendar an accurate reflection of what transpired.  At the end of each quarter, we download the prior three months’ worth of meetings, we categorize them, and we see where my time went.  Then we make changes to the upcoming quarter’s calendar to match my targets based on what I’m trying to accomplish.  For what it’s worth, my categories have changed over time, but currently, they are Free, Travel, Non-Return Path, Internal, Board, Client/External.  Pretty high level.  This exercise has been really helpful in keeping me proactive and on track.

I miss some of the more random networking that I used to do.  I am at least a moderate believer in serendipity, and the likelihood of serendipity goes down as I clamp down on my calendar.  And I will miss being on some outside Boards or helping new entrepreneurs figure out how to be first time CEOs.  But hopefully my combination of being selectively proactive and exercising good judgment about what inbound things to jump on will keep the machine humming.

Turn it up to Eleven!

For some reason, I didn’t do this the very first year I started writing OnlyOnce, but on December 6 every year since then, I’ve marked the anniversary of Return Path‘s founding here.

In the midst of an otherwise fantastic year, this hasn’t been a particularly good couple of weeks for us.  We have been targeted by a company we’ve never heard of before for a lawsuit that angrily denounced our business, and while the suit doesn’t have a shred of merit, it will probably cost us an arm and leg to make it go away.  And the recent phishing attack incident is a long way from being behind us as well.  We’ll come through both of these fine, and stronger, as we have with all our challenges of the past 11 years, but it does make some days feel a bit long.

That said, today is our 11th anniversary, and we should all celebrate that con gusto! To paraphrase Nigel from Spinal Tap said, we’re going to turn things up to 11 this year.

There’s no finer group of people to work with than my colleagues and directors at RP, there’s no more exciting business to be a part of, and I’ve enjoyed every minute of the journey that we started back in 1999.  I won’t say I’m looking forward to the next 11 years, because that’s way too hard to wrap my head around, but I will say Happy Anniversary Return Path!

From the archives, the prior anniversary posts are found here at:  6, 7, 8, 9, and 10.

Selling a Line of Business

It’s been a couple of years since Return Path decided to focus on our deliverability business by divesting and spinning out our other legacy businesses. That link tells some of the story, and the rest is that subsequently, Authentic Response divested part of the Postmaster Direct business to Q Interactive.  Those three transactions, plus a number of experiences over the years on the buy side of similar transactions (Bonded Sender, Habeas, NetCreations), plus my learnings from talking to a number of other CEOs who have done similar things over the years, form the basis of this post.  The Authentic Response spin-out was also partially chronicled by Inc. Magazine in this article earlier this year.

It’s an important topic — as entrepreneurs build businesses, they frequently end up creating new revenue opportunities and go off on productive tangents.  Those new lines of business might or might not take off; but sometimes they can take off and still, down the road, end up being non-core to the overall mission of the company and therefore candidates for divestiture.  Even if they are good businesses, the overall enterprise might benefit from the focus or cash provided by a sale.  Look at the example of Occipital building the Red Laser app, then selling it to eBay to finance the rest of their business.

Here are some of the signs of a successful divestiture:

• Business is truly non-core or relies on starkly different competencies for success (e.g., one is B2B, the other is B2C)
• Business is growing rapidly and requires assistance to scale properly (either technology, or sales)
• Business has its own culture and operations and “a life of its own”

Conversely, here are some of the reasons why a divestitures of a business unit might stall or fail:

• Lack of a very compelling story as to why you’re selling the business unit
• Stand-alone financials of the unit are too hard for the buyer to determine with confidence
• Operations of the unit too tethered to the mothership
• There is some problem with the leadership of the unit (there is no stand-alone leader, the leader isn’t involved in the divestiture, the leader isn’t squarely behind the divestiture)
• Business performance weakens during the process

I have a couple points of advice to entrepreneurs in this situation.  The first is to clarify for yourself up front:  are you selling a true line of business, or are you selling assets?  If you are selling assets, you need to clearly define what they are, and what they aren’t, and you need to make sure all legal details (contracts, IP, etc.) are buttoned up before the process starts.

If you are selling a true line of business, beware that buyers will not be interested in doing any hard work, or if they feel like they have to do hard work, the price they pay for the business will reflect that in the form of a steep, steep discount.  The financials must be understandable and credible on a stand-alone basis.  The business must be completely separated from the core already.  The business must have its own management team, completely aligned with the decision to sell.

You also have to be extremely cognizant of the human aspects of what you’re doing.  Every culture is different, and I’m not advocating one style over another, but selling or spinning out a business is very different than selling a company.  There’s going to be a big difference in reactions, perceptions, hopes, and fears between the people in the core who are staying, and the people in the business unit that’s going.  Having a heightened awareness of those differences and factoring them into your communications plan is critical to success, as a poorly managed effort can end up harming both sides.

In terms of valuation expectations, don’t expect to get any credit for synergies.  You have to present them and sell them, and they may make the different between getting a deal done and not, but they will most likely not impact the price you get for the divestiture.

Finally, remember that buyers understand your psychology as well.  They know you’re selling the business for a reason (you need to raise cash, you’re concerned about its future performance, it’s become a distraction or has the potential to suck scarce resources out of your core, etc.).  They will completely understand the costs you carry, whether financial, opportunity, or mental, in continuing to own the business.  And they will factor that into the price they’re willing to offer.  Of course, as with all deals, the best thing you can do to maximize price is have multiple interested parties bidding on the deal!

Automated Love

Return Path is launching a new mini feature sometime this week to our clients.  Normally I wouldn’t blog about this — I think this is mini enough that we’re probably not even saying much about it publicly at the company.  But it’s an interesting concept that I thought I’d riff on a little bit.

I forget what we’re calling the program officially — probably something like “Client Status Emails” or “Performance Summary Alerts” — but a bunch of us have been calling it by the more colorful term “Automated Love” for a while now.

The art of account management or client services for an on-demand software company is complex and has evolved significantly from the old days of relationship management.  Great account management now means a whole slew of new things, like Being The Subject Matter Expert, and Training the Client.  It’s less about the “hey, how are things going?” phone call and more about driving usage and value for clients.

As web services have taken off, particularly for small businesses or “prosumers,” most have built in this concept of Automated Love.  The weekly email from the service to its user with charts, stats, benchmarks, and links to the web site, occasionally with some content or blog posts.  It’s relatively easy (most of the content is database driven), it reminds customers that you’re there, working on their behalf in the background, it tells them what happened on their account or how they’re doing, it alerts them to current or looming problems, and it drives usage of your service.  As a bonus for you internally, usually the same database queries that produce a good bit of Automated Love can also alert your account management team when a client’s usage pattern of your service changes or stops entirely.

While some businesses with low values of any single customer value can probably get away with having a client service function based ENTIRELY on Automated Love, I think any business with a web service MUST have Automated Love as a component of its client service effort.

Book Short: Beyond 10,000 Hours

In Outliers: The Story of Success, by Malcolm Gladwell (post, buy), we are taught, among other things, that it takes 10,000 hours of practice to become an expert at something, as well as a dash of luck and timing, as opposed to huge amounts of innate and unique talent.  In Talent is Overrated, by Geoff Colvin, this theory comes to life, with a very clear differentiating point – it’s not just logging the 10,000 hours, it’s HOW the hours are spent.

Colvin’s main point is that the hours need to be spent in what he calls “deliberate practice.”  The elements of deliberate practice are best explained with his example of Jerry Rice, although you can apply these to any discipline:

• He spent very little time playing football (e.g., most of his practice was building specific skills, not playing the game)
• He designed his practice to work on specific needs
• While supported by others, he did much of the work on his own (e.g., it can be repeated a lot, and there are built-in feedback loops)
• It wasn’t fun
• He defied the conventional limits of age

If you’re the kind of person who cares deeply about your own performance, let alone the performance of people around you, it doesn’t take long to be completely riveted by Colvin’s points.  They ring true, and his examples are great and cross a lot of disciplines (though not a ton about business in particular).  I wasn’t 50% done with the book before I had made my list of three key things that I need to Deliberately Practice.

There are some other great aspects to the book as well — including a section on Making Organizations Innovative, from creating a culture of innovation to allowing people the freedom to think, to a section on where passion and drive come from, but hopefully this post conveys the gist of it all.  Want to be a better CEO?  Or a better anything?  This is a good place to start the process.

Thanks to Greg Sands for sending me this excellent book.  I’m going to work it into my rotation for Return Path anniversary presents.

What Does a CEO Do, Anyway?

Fred has a great post up last week in his MBA Mondays series caled “What a CEO Does.”  His three things (worth reading his whole post anyway) are set vision/strategy and communicate broadly, recruit/hire/retain top talent, and make sure there’s enough cash in the bank.

It’s great advice.  These three are core job responsibilities of any CEO, probably of any company, any size.  I’d like to build on that premise by adding two other dimensions to the list.  Fred was kind enough to offer me a “guest blogger” spot, so this post also appears today on his blog as well.

First, three corollaries – one for each of the three responsibilities Fred outlines.

• Setting vision and strategy are key…but in order to do that, the CEO must remember the principle of NIHITO (Nothing Interesting Happens in the Office) and must spend time in-market.  Get to know competitors well.  Spend time with customers and channel partners.  Actively work industry associations.  Walk the floor at conferences.  Understand what the substitute products are (not just direct competition).
• Recruiting and retaining top talent are pay-to-play…but you have to go well beyond the standards and basics here.  You have to be personally involved in as much of the process as you can – it’s not about delegating it to HR.  I find that fostering all-hands engagement is a CEO-led initiative.  Regularly conduct random roundtables of 6-10 employees.  Send your Board reports to ALL (redact what you must) and make your all-hands meetings Q&A instead of status updates.  Hold a CEO Council every time you have a tough decision to make and want a cross-section of opinions.
• Making sure there’s enough cash in the bank keeps the lights on…but managing a handful of financial metrics on concert with each other is what really makes the engine hum.  A lot of cash with a lot of debt is a poor position to be in.  Looking at recognized revenue when you really need to focus on bookings is shortsighted.  Managing operating losses as your burn/runway proxy when you have huge looming CapEx needs is a problem.

Second, three behaviors a CEO has to embody in order to be successful – this goes beyond the job description into key competencies.

• Don’t be a bottleneck.  You don’t have to be an Inbox-Zero nut, but you do need to make sure you don’t have people in the company chronically waiting on you before they can take their next actions on projects.  Otherwise, you lose all the leverage you have in hiring a team.
• Run great meetings.  Meetings are a company’s most expensive endeavors.  10 people around a table for an hour is a lot of salary expense!  Make sure your meetings are as short as possible, as actionable as possible, and as interesting as possible.  Don’t hold a meeting when an email or 5-minute recorded message will suffice.  Don’t hold a weekly standing meeting when it can be biweekly.  Vary the tempo of your meetings to match their purpose – the same staff group can have a weekly with one agenda, a monthly with a different agenda, and a quarterly with a different agenda.
• Keep yourself fresh…Join a CEO peer group.  Work with an executive coach.  Read business literature (blogs, books, magazines) like mad and apply your learnings.  Exercise regularly.  Don’t neglect your family or your hobbies.  Keep the bulk of your weekends, and at least one two-week vacation each year, sacrosanct and unplugged.

There are a million other things to do, or that you need to do well…but this is a good starting point for success.

Style, or Substance?

I had an interesting conversation the other day with a friend who sits on a couple of Boards, as do I (besides Return Path’s).  We ended up in a conversation about some challenges one of his Boards is having with their CEO, and the question to some extent boiled down to this:  a Board is responsible for hiring/firing the CEO and for being the guardians of shareholder value, but what does a Board do when it doesn’t like the CEO’s style?

There are lots of different kinds of CEOs and corporate cultures.  Some are command-and-control, others are more open, flat, and transparent.  I like to think I and Return Path are the latter, and of course my bias is that that kind of culture leads to a more successful company.  But I’ve worked in environments that are the former, and, while less fun and more stressful, they can also produce very successful outcomes for shareholders and for employees as well.

So what do you do as a Board member if you don’t like the way a CEO operates, even if the company is doing well?  I find myself very conflicted on the topic, and I’m glad I’ve never had to deal with it myself as an outside Board member.  I certainly wouldn’t want to work in an organization again that had what I consider to be a negative, pace-setting environment, but is it the Board’s role to shape the culture of a company?  Here are some specific questions, which probably fall on a spectrum:

Is it grounds for removal if you think the company could be doing better with a different style leader at the helm?  Probably not.

Is it fair to expect a leader to change his or her style just because the Board doesn’t like it?  Less certain, but also probably not.

Is it fair to give a warning or threaten removal if the CEO’s style begins to impact performance, say, by driving out key employees or stifling innovation?  Probably.

Is it fair to give feedback and coaching?  Absolutely.

This is one of those very situation-specific topics, but probably a good one for others to weigh in on.  I do come back to the question of whether it is part of a Board’s role to shape the culture of a company.  Is that just style…or is it substance?