The Beginning of the DMA’s Next Chapter

As I wrote a few months back, I recently joined the DMA’s Board of Directors and its Executive Committee to try to help the association – one of the largest and highest profile groups representing marketers – advance its agenda in a few specific ways.  At the time, I noted that my interests would be on consumer advocacy and engagement, execution around interactive marketing issues and the internet community, and transparency around the organization itself.

Yesterday, John Greco, the association’s CEO, announced he is stepping down to make way for the next generation of leadership.  John has done some great work the past five years running the DMA and has advanced it materially from where the association was when he took over in terms of interactive marketing, but he recognized (the hallmark of a good leader) that it was time for a change.

There are all sorts of questions people have about this announcement, and I’ve already gotten a number of calls and emails from people trying to read between the lines and get some inside scoop.  Some of the questions have answers – others don’t at this stage or can’t given confidentiality agreements. 

That said, as a new Board member helping the DMA build some bridges to the interactive marketing community, I thought I would share a few perspectives on this situation:

–          There is not a final search committee yet, nor are there final search criteria.  That said, there is a strong commitment to find a leader for the DMA who is not only capable of running a broad-based $30mm+ trade association and running a world class advocacy operating in Washington, but who also has deep roots in the Internet

–          There are many, many initiatives in the works – some of which have been underway for quite some time now – for the DMA to evolve as an association to more effectively execute its mission in the interactive marketing arena.  These will start to unfold relatively quickly

–          The DMA’s Board and Executive Committee are fantastic groups with very progressive, committed volunteers who understand the things that need to happen.  “Reform,” which probably isn’t quite the right word anyway, isn’t being pushed on the association – it is coming from within

–          The DMA is committed in its search process, and in its new “operating system” going forward, to embrace not just its membership but the broader interactive and direct marketing community as it evolves its strategy, broadens its mission, and looks for a new leader

So the bottom line is – this announcement of one change is the first of many.  Stay tuned, and look for much more open and transparent communication from the DMA, including a lot more community-oriented dialog as opposed to just one-way statements, than you’ve ever seen before in the coming weeks and months.

What Gets Said vs. What Gets Heard

I’ve been on the edge of a few different situations lately at work where what seems like a very clear (even by objective standards) conversation ends up with two very different understandings down the road.  This is the problem I’d characterize as “What gets said isn’t necessarily what gets heard.”  More often than not, this is around delivering bad news, but there are other use cases as well.  Imagine these three fictitious examples:

• Edward was surprised he got fired, even though his manager said he gave him repeated warnings and performance feedback
• Jacob thought his assignment was to write a proposal and get it out the door before a deadline, but his manager thought the assignment was to schedule a brainstorming meeting with all internal stakeholders to get everyone on the same page before finalizing the proposal
• Bella gets an interim promotion – she still needs to prove herself for 90 days in the new job before the promotion is permanent and there is a comp adjustment – then gets upset when the “email to all” mentions that she is “acting”

Why does this happen?  There are probably two main causes, each with a solution or two.  The first is that What Gets Said isn’t 100% crystal clear.  Delivering difficult news is hard and not for the squeamish.  What can be done about it?  The first problem — the crystal clear one — can be fixed by brute force.  If you are giving someone their last warning before firing him, don’t mumble something about “not great performance” and “consequences.”  Look him in the eye and say “If you do not do x, y, and z in the next 30 days, you will be fired.” 

The second cause is that, even if the conversation is objectively clear, the person on the receiving end of the conversation may WANT to hear something else or believes something else, so that’s what “sticks” out of the conversation.  Solving this problem is more challenging.  Approaching it with a lengthy conversation process like the Action Design model or the Difficult Conversations model is one way; but we don’t always have the time to prepare for or engage in that level of conversation, and it’s not always appropriate.  I’d offer two shortcut tips to get around this issue.  First, ask the person to whom you’re speaking to “play back in your own words what you just heard.”  See it she gets it right.  Second, send a very clear follow-up email after the conversation recapping it and asking for email confirmation.

People are only human (for the most part, in my experience), and even when delivering good news or assignments, sometimes things get lost in translation.  But clarity of message, boldness of approach, and forcing playback and confirmation are a few ways to close the gap between What Gets Said and What Gets Heard.

If this madness all ended tomorrow, I would do…almost nothing

(This post originally appeared on FindYourNerve on October 21)

I don’t know what you call the last 12 months of global macroeconomic meltdown.  I’ve taken to calling it the Great Repression.  In part because it’s somewhere in between a Recession and a Depression, in part because it’s certainly repressed the wants and needs of startups and growth companies the world over.  And it makes for good cocktail party chatter.

Someone asked me a question the other day, which started off with “Now that the recession is over…”  I can’t even remember the end of the question.  I got lost in the framing of it, mostly because I’m not convinced it’s over yet.  Fine, fine, Bernanke says it’s over.  But he couldn’t possibly have used more caveats or more cautious language to couch his statement.  I haven’t seem great signs of a recovery, in any case.  But the question got me thinking.  What would I do if the recession really was over, or if I knew that, say, tomorrow, the heavens would open up and swallow our inflation fears, deflation fears, and collective global deficits whole?

You know what?  I wouldn’t do a thing.  That’s not entirely true.  I’d probably sleep better that night.  But I wouldn’t do a lot of other things out of the gate.  This last year has tested nerves.  My nerve as a CEO, my Board’s nerve, and the collective nerve of our organization.  And we’ve pulled off a great year.  We will still grow close to 50%, we greatly expanded our operating margins and are generating nice cash flow, and we preserved all jobs, salaries, and core benefits (all five of our objectives that I laid out 12 months ago when the &*%$ started to hit the fan). 

So, why wouldn’t I do anything different if I knew the world would be a different place tomorrow?  Because holding our nerve this past year has changed a lot of things about our organization for the better, and I don’t want to see us reverse course on those things just because we can.  Here’s one example, one of many we have – when we cut our travel budget by 50% this year, everyone on the team looked at us like we were crazy and said there was no way we’d be able to make budget.  Guess what – we BEAT the slashed budget by almost a third, without complaint!  Why should we triple it going forward to get back to where we were? 

Anyway, other companies can lose their nerve when they aren’t forced to have it.  As for me and Return Path, while we will certainly move some things back to normal over time as the world improves, it won’t be a wholesale reversion to yesteryear.

The Gift of Feedback, Part III

Last week, I posted about my new development plan.  I thought I’d also share a “team development plan” that we crafted this year for the entire Executive Committee at Return Path (basically me and my direct reports), coming out of all of our 360 live reviews taken as a whole.

1.  Push each other harder and be continuous in our effort to provide the team and each of us feedback and further develop:  Improve ability to handle conflict as a group; Drive this work deeper into the organization; “Eyes/ears/mouth open;”  Explore how to better serve as role models to the rest of the organization, especially our direct reports/the next level of management; How do we get the Level II to function in the way that we do?
2. Getting messaging out/improve our communications as a team to the rest of the organization
3. Be more hawkish with underperformers:  Exert a discipline in dealing with problems; Making tough calls that don’t feel very good; Do we accept mediocrity?
4. Take responsibility for everyone as a group
5. Do we have a team of A+ players?  How do we recruit them as we get bigger?  Can we attract the best?  Or pay differently?  Revisit incentive comp plan if we don’t feel like it’s working as intended?
6. At least 2x/year comprehensively evaluate next level management to assess bench strength
7. Goal: to have this executive team be the outlier and be able to grow and each and as a team be able to manage a $100MM company

Thanks to our friend Marc Maltz at Triad Consulting as always for facilitating these great sessions and distilling the learnings down into bite-sized pieces for us!

Book Short:  Go Where They Ain’t

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, by W. Chan Kim and Renée Mauborgne isn’t bad, but it could literally be summed up by the title of this post.  I think it’s probably a better book for people who aren’t already entrepreneurs.

That said, there are two chapters that I found pretty valuable.  One is called “Reconstruct Market Boundaries,” which is a great way of thinking about either starting a new business or innovating an existing one.  It’s a strategy that we’ve employed a few times over the years at both Return Path and Authentic Response.  It’s hard to do, but it expands the available territory you have to cover.  The classic Jack Welch/GE “we don’t just sell jet engines, we sell AND SERVICE jet engines” which expanded their addressable market 9x.

The other useful chapter was “Get the Strategic Sequence Right.”  The sequence of questions to answer, according to the authors, is:

• Will buyers get enough utility out of it?
• What’s the right price?
• Can you cost it low enough to make good margin?
• Are you dealing with adoption hurdles?

The reason I found this sequence so interesting is that I think many entrepreneurs mix the order up once they get past the first one.  It’s easy to start with market need and then quickly jump to adoption hurdles, cost things out, and go with a cost-plus pricing strategy.  The book documents nicely why this order is more productive.  In particular, pricing first, then costing second, is both more market-focused (what will people pay?) and more innovative (how can I think creatively to work within the constraint of that price point?).

The common theme that’s most interesting out of the book is that new frameworks for thought produce killer innovation.  That’s clearly something most entrepreneurs and innovators can hang their hat on.

Sometimes You Just Need a 2×4 Between the Eyes

Freshman year in college, fall semester, my friend Peggy and I were in a small seminar class together on Dante. We thought we were pretty smart before the class started. And that we were great writers. Lots of As in high school. Then we wrote our first paper. Professor Bob Hollander gave me a C-. I think Peggy got a D. We were devastated. And pissed. Sure, the ensuing cocktail took the edge off (this was college, after all), but we both scheduled time with the professor during his office hours to figure out where our carefully honed academic trains had gone off the tracks.

Essentially what he said to each of us was this (you have to picture the 60-something professor in a turtleneck smoking a pipe with gravely voice for full effect): “Matthew, your writing wasn’t the worst I’ve ever seen. But I feel like you can do better, and sometimes you just need a 2×4 between the eyes.” End of meeting. Thank you, sir, may I please have another?

I couldn’t have been more irritated. But I will tell you one thing. I worked four times as hard on my next paper, got an A-, and elevated my game permanently. Not just for this one class, but for all of them. Bob was right. His 2×4 between my eyes worked.

Sometimes when we deliver performance feedback in business, this approach makes sense. There are times when someone is really doing poorly and needs harsh (fair, but honest) feedback. There are also times when someone is doing so-so but generally just not living up to his or her promise and should be doing better. And in those cases, you have to just make a judgment call about whether to give feedback on the margin or go for the full 2×4 to drive the point home and get someone to really elevate his or her game for good.

What if There’s No Reason to Eat the Dog Food?

There’s an expression in software about producing a product and market testing it — “seeing if the dogs will eat the dog food.”  I’ve heard it mangled many times around the employees of a software company using the software their own company produces as “seeing if the dogs will eat their own dog food.”  This is always true in consumer software and service companies. 

Employees are often the best users, the power users, and the source of the best feedback to the organization about the product and competition.  We certainly saw this phenomenon in spades at MovieFone, where I used to work before starting Return Path.  There was no more of a power user to be found than Andrew, the CEO, and there was a frenzy every Thursday and Friday as employees called into 777-FILM to buy their own tickets for the upcoming weekend.

But what if there’s no reason to eat your own dog food?  What if your software company develops a specific business application that only one or two people inside your company even care about?  Our services are a great example.  One or two people in Marketing, maybe one or two people in Technology, are users.  When I think about some of the web applications we as a company use, the same must be true of their companies as well.

If this is the case with your company, how do you make sure you get that same level of raw feedback from passionate users inside the four walls of your office, and not just from user groups, which are ok but have some inherent problems in terms of their objectivity and representation. 

I’m not sure I have a good answer to this – it’s more of a question to my readers than a prescription.  I’ll happily reblog the best responses!

Book Short:  A Twofer

My friend Andrew Winston, who is one of the nation’s gurus in corporate sustainability, just published his second book, this one from Harvard Business Press — Green Recovery:  Get Lean, Get Smart, and Emerge from the Downturn on Top.  It builds on the cases and successes he had with his first book, Green to Gold (post, link to book), which came out a couple years ago and has become the standard for how businesses embrace sustainability and use it to their financial and strategic competitive advantage rather than thinking of it as a burden or a cost center.

Green Recovery is a shorter read (my kind of business book), and it hits a few key themes:

• Going green not only shouldn’t wait for better economic times, it’s a key way out of this mess

• Businesses have relied on layoffs to cut costs for far too long — it’s time to get lean on stuff, not people
• This is about survival for many businesses:  Detroit died because it missed the green wave of environmental interest and rising energy prices
• And the overarching theme…Green doesn’t raise costs, it lowers them – it’s a source of profit and innovation
  

The book reminds me a lot of my post Living With Less, For Good, which I wrote at the beginning of the financial market freefall last fall, talking about how we as a company were figuring out how to cut back without cutting people (something we’ve managed to do).  Although I wasn’t talking about green initiatives specifically, the point of getting leaner on “stuff” really resonates with me.

At the end of the day, Andrew proves that steering your company to go green — no matter what industry you’re in — is a twofer:  you can increase the strength of the business and simultaneously do your part to clean up the environment.  That’s definitely the “change we can believe in” mentality applied quite pragmatically!

Senders No More

February marked the official end of Return Path being in the email sending business, even a little bit. Of course we still have corporate email servers, and we still have basic retention email marketing programs for our customers and prospects (with explicit permission of course!), but after a 9 1/2 year run, we no longer have direct consumer email-based relationships.

As we announced last fall, we recently divested all of our businesses other than our deliverability and whitelisting business — Postmaster Direct (list rental), Authentic Response/MyView.com (surveys), and ECOA (change of address). Those were great businesses, but they increasingly diverged over the years from each other and from our core deliverability business, so it made sense for them to belong to different companies in the end.

Besides diverging from each other, being a bulk sender of email had both advantages and disadvantages for us as a company. On the one hand, it was good for us to see firsthand what some of the issues are that impact our clients. We were, in fact, our own clients, one business unit to another. But on the other hand, being a bulk sender carried a real business risk of compromising our position as a trusted intermediary between senders and receivers. It was always a fine line to walk, and while we never got in trouble for it, we were always concerned — to the point where for a long time we didn’t allow our other business units to apply for our whitelist, Sender Score Certified, even at “arm’s length.” At least we weren’t an ESP!

But now that risk is gone. We are senders no more. Be sure to read our CTO’s description of what it was like to send a transactional privacy policy notification to 20mm addresses, most of which hadn’t been mailed in months or years.

Why Are We Financing Fortune 500 Companies?

And here’s another problem of the economic meltdown — companies are stretching out their payables like mad.  Our average payable has increased 50% in the last 120 days. That translates into millions of dollars of cash shortfall versus our plan.  We believe it’s all still collectible, but we just can’t seem to speed up payment.  We are going to launch some new and more meaningful efforts to collect, but it just shouldn’t be that hard.  And you hate to be heavy handed with customers in this environment.

Is it a good idea to threaten to suspend service?  When do you cut someone off?  Is it appropriate for the CEO to make a collections call?  All these questions now come into play.  We never had to think about them before.

What’s particularly irritating is that, with very few exceptions, every company on our account roster is larger than we are, with bigger balance sheets.  So we find ourselves in a position where WE are financing big companies.  It is absolutely maddening.

Education and Entrepreneurship

Fred posted his thoughts the other day that you don’t need a college degree to be a successful entrepreneur. He is clearly right in that one CAN be successful without it.  Gates, Zuckerberg, Dell have proven that. 

I’ve always said that I didn’t think an MBA was a prerequisite for a successful business career.  That’s easy for me to say, as I don’t have one despite many years of applying, deferring, cancelling, reapplying and general hand-wringing over whether or not to go in the mid-90s.  An MBA is probably a positive on a resume for the most part (hard to argue it’s a negative), but it’s not a prerequisite.  Every time I see “MBA preferred” on a job posting, I cringe (we never say that at Return Path).  Really?  You’d *prefer* to hire someone with an MBA over someone with two additional years of relevant work experience? 

That said, I’d note that there are things one gets out of a good college education that are critical to success in life.  Yes, they can be learned outside the classroom.  But unlike business school material, which is in many cases the stuff of work experience and more easily augmented by observation and the occasional business article or book (as far as I can tell), the things one learns in college which are applicable to entrepreneurship aren’t about the subject matter of the course.  They are things like:

– learning and applying new concepts quickly

– critical reasoning

– crisply presenting ideas

– respecting deadlines and guidelines

– understanding and appreciating other points of view

As with business school, these things *can* be learned outside a university environment, and certainly there are unusually talented people who have these traits hard wired.  But I do think the university environment cultivates and nurtures these skills in a way that is easier than the “do it yourself” world of teenage entrepreneurship.