Running a Productive Offsite

A couple OnlyOnce readers asked me to do a post on how I run senior team offsites.  It’s a great part of our management meeting routine at Return Path, and one that Patrick Lencioni talks about extensively in Death by Meeting (review, book) – a book worth reading if you care about this topic.

My senior team has four offsites per year.  I love them.  They are, along with my Board meetings, my favorite times of the year at work.  Here’s my formula for these meetings:

–          WHY:  There are a few purposes to our offsites.  One for us is that our senior team is geographically distributed across 4 geographies at the executive level and 6 or 7 at the broader management team level.  So for us, these are the only times of the year that we are actually in the same place.  But even if we were all in one place, we’d still do them.  The main purpose of the offsite is to pull up from the day-to-day and tackle strategic issues or things that just require more uninterrupted time.  The secondary purpose is to continue to build and develop the team, both personal relationships and team dynamics.  It’s critically important to build and sustain deep relationships across the Executive Team.  We need this time in order to be a coordinated, cohesive, high trust, aligned leadership team for the company.  As the company has expanded (particularly to diverse geographies), our senior team development has become increasingly critical

–          WHO:  Every offsite includes what we call our Executive Committee, which is for the most part, my direct reports, though that group also includes a couple C/SVP titled people who don’t report directly to me but who run significant parts of the company (7-8 people total).  Two of the four offsites we also invite the broader leadership team, which is for the most part all of the people reporting into the Executive Committee (another 20 people).  That part is new as we’ve gotten bigger.  In the earlier days, it was just my staff, and maybe one or two other people as needed for specific topics

–          WHERE:  Offsites aren’t always offsite for us.  We vary location to make geography work for people.  And we try to contain costs across all of them.  So every year, probably 2 of them are actually in one of our offices or at an inexpensive nearby hotel.  Then the other 2 are at somewhat nicer places, usually one at a conference-oriented hotel and then one at a more fun resort kind of place.  Even when we are in one of our offices, we really treat it like an offsite – no other meetings, etc., and we make sure we are out together at dinner every night

–          WHEN:  4x/year at roughly equal intervals.  We used to do them right before Board meetings as partial prep for those meetings, but that got too crowded.  Now we basically do them between Board meetings.  The only timing that’s critical is the end of year session which is all about budgeting and planning for the following year.  Our general formula when it’s the smaller group is two days and at least one, maybe two dinners.  When it’s the larger group, it’s three days and at least two dinners.  For longer meetings, we try to do at least a few hours of fun activity built into the schedule so it’s not all work.

–          WHAT:  Our offsites are super rigorous.  We put our heads together to wrestle with (sometimes solve) tough business problems – from how we’re running the company, to what’s happening with our culture, to strategic problems with our products, services and operations.  The agenda for these offsites varies widely, but the format is usually pretty consistent.  I usually open every offsite with some remarks and overall themes – a mini-state-of-the-union.  Then we do some kind of “check-in” exercise either about what people want to get out of the offsite, or something more fun like an envisioning exercise, something on a whiteboard or with post-its, etc.  We always try to spend half a day on team and individual development.  Each of us reads out our key development plan items from our most recent individual 360, does a self-assessment, then the rest of the team piles on with other data and opinions, so we keep each other honest and keep the feedback flowing.  Then we have a team development plan check-in that’s the same, but about how the team is interacting.  We always have one or two major topics to discuss coming in, and each of those has an owner and materials or a discussion paper sent out a few days ahead of time.  Then we usually have a laundry list of smaller items ranging from dumb/tactical to brain-teasing that we work in between topics or over meals (every meal has an agenda!).  There’s also time at breaks for sub-group meetings and ad hoc conversations.  We do try to come up for air, but the together time is so valuable that we squeeze every drop out of it.  Some of our best “meetings” over the years have happened side-by-side on elliptical trainers in the hotel gym at 6 a.m.  We usually have a closing check-out, next steps recap type of exercise as well.

–          HOW:  Lots of our time together is just the team, but we usually have our long-time executive coach Marc Maltz from Triad Consulting  facilitate the development plan section of the meeting.

I’m sure I missed some key things here.  Team, feel free to comment and add.  Others with other experiences, please do the same!

Peter Principle, Applied to Management

My Management by Chameleon Post from a couple weeks ago generated more comments than usual, and an entertaining email thread among my friends and former staff from MovieFone.  One comment that came off-blog is worth summarizing and addressing:

There are those of us who should not manage, whose personalities don’t work in a management context, and there is nothing wrong with not managing.  Also, there promotion to management by merit has always been a curiosity to me. If I am good at my job, why does it mean that I would be good at managing people who do my job? In other words, a good ‘line worker’ doth not a good manager make. I’d prefer to see people adept at being team leads be hired in, to manage, then promotion of someone ill-fitted for such a position be appointed from within. This latter happens far to often, to the detriment of many teams and companies.

For those of you not familiar with the Peter Principle, the Wikipedia definition is useful, but the short of it is that “people are promoted to their level of incompetence, when they stop getting promoted…so in time, every post tends to be occupied by an employee who is incompetent to carry out their duties.”

Back when I worked in management consulting, I always used to wonder how it was that all the senior people spent all their time selling business.  They hadn’t been trained to sell business.  And a lot of the people great at executing complex analysis and client cases hated selling. Or look at the challenge the other way around:  should a company take its best sales people and turn them into sales managers?

We’ve had numerous examples over the years at Return Path of people who are great at their jobs but make terrible, or at least less great, managers.  The problem with promoting someone into a management role mistakenly isn’t only that you’re taking one of your best producers off “the line.”  The problem is that those roles are coveted because they almost always come with higher comp and more status; and if a promotion backfires, it generally (though not always) dooms the employment relationship.  People don’t like admitting failure, people don’t like “moving backward,” and comp is almost always an issue.

What can be done about this?  We have tried over the years to create a culture where being a senior individual contributor can be just as challenging, fun, rewarding, impactful, and well compensated as being a manager, including getting promotions of a different sort.  But there are limits to this.  One obvious one is at the highest levels of an organization, there can only be one or two people like this (at most) by definition.  A CEO can only have so many direct reports.  But another limit is societal. Most OTHER companies define success as span of control.  You get a funny look if you apply for a job with 15 years of experience and a $100k+ salary yet have never managed anyone before.  After all, the conventional wisdom mistakenly goes, how can you have a big impact on the business if all you do is your own work?

The fact is that management is a different skill.  It needs to be learned, studied, practiced, and reviewed as much as any other line of work.  In most ways, it’s even more critical to have competent and superstar managers, since they impact others all day long.  Obviously, people can be grown or trained into being managers, but the principle of my commenter – and “Peter” – is spot on:  just because you are good at one job doesn’t mean you should be promoted to the next one.

I’m not sure there’s a good answer to this challenge, but I welcome any thoughts on it here.

The Advantage: Why Organizational Health Trumps Everything Else In Business is Patrick Lencioni’s newest book.  Unlike most or all of his other books (see the end of this post for the listing), this one is not a fable, although his writing style remains very quick and accessible.

I liked this book a lot.  First, the beginning section is a bit of a recap of his Five Dysfunctions of a Team which I think was his best book.  And the ending section is a recap of his Death by Meeting, another really good one.  The middle sections of the book are just a great reminder of the basic building blocks of creating and communicating strategy and values – about driving alignment.

But the premise, as the subtitle indicates, is that maintaining organizational health is the most important thing you can do as a leader.  I tell our team at Return Path  all the time that our culture is a competitive advantage in many ways, some quantifiable, and others a little less tangible.

A telling point in the book is when Lencioni is relaying a conversation he had with the CEO of a client company who does run a healthy organization – he asked, “Why in the world don’t your competitors do any of this?” And the client responded, “You know, I honestly believe they think it’s beneath them.” Lencioni goes on to say, “In spite of its undeniable power, so many leaders struggle to embrace organizational health because they quietly believe they are too sophisticated, too busy, or too analytical to bother with it.”  And there you have it.  More examples of why “the soft stuff” is mission critical.

Lencioni’s “Recipe for Organizational Health” (the outline of the book):

–          Build a Cohesive Leadership Team

–          Create Clarity

–          Overcommunicate Clarity

–          Reinforce Clarity

And his recipe for creating a tight set of “mission/vision/values” (the middle of the book):

1. Why do we exist?

2. How do we behave?

3. What do we do?

4. How will we succeed?

5. What is most important, right now?

6. Who must do what?

While there are lots of other good frameworks for doing all of this, Lencioni’s models and books are great, simple reminders of one of the CEO’s most important leadership functions.  We’re recrafting our own mission and values statements at the moment at Return Path, and we’re doing it using this 6-Question framework instead of the classic “Mission/Vision/Values” framework popularized a few years back by Harvard Business Review.

The full book series roundup as far as OnlyOnce has gotten so far is:

• The Three Signs of a Miserable Job (post, book)
• The Five Temptations of a CEO (post, book)
• The Four Obsessions of an Extraordinary Executive (post, book)
• Death by Meeting (post, book)
• The Five Dysfunctions of a Team (post, book, Field Guide)
• Silos, Politics and Turf Wars (post, book)
• Getting Naked (post, book)
• The Advantage (book)

Book short:  Myers-Briggs Redux

Instinct:  Tapping Your Entrepreneurial DNA to Achieve Your Business Goals, by Tom Harrison of Omnicom, is an ok book, although I wouldn’t rush out to buy it tomorrow.  The author talks about five broad aspects of our personalities that influence how we operate in a business setting:  Openness to Experience, Conscientiousness, Extroversion, Agreeableness, and Neuroticism.  These traits are remarkably similar to those in the popular Myers-Briggs Type Indicator that so many executives have taken over the years.

It’s not just that you want to be high, high, high, high, and low in the Big 5.  Harrison asserts that successful entrepreneurs need a balance of openness and conscientiousness in order to be receptive to new ideas, but be able finish what you start; a balance of extroversion and agreeableness so that you have enough energy but also have the ability to work with others; and not too much neuroticism, as you have to be able to take risks.

The book not only talks about how to spot these factors, but how to work around them if you don’t have them (that part is particularly useful, but he doesn’t do it for all five factors).  He also talks about the entrepreneurial addiction to success, and creating the all-important Servant CEO culture, which I certainly agree with and wrote about early on in this blog in my “Who’s The Boss?” posting.

Harrison does have a great section on how “Nice Guys” can and should be winners; how being nice and having guts aren’t mutually exclusive, and he gives a well-written Twelve Rules for expressing the Nice Guy gene:

– Don’t walk on other people, but don’t let them walk on you

– Respect the big idea in everyone

– Own everything

– Never let ’em see you sweat Keep it simple

– Never think in terms of “So what have you done for me today?”

– More is less

– Live your word consistently

– Don’t lie:  fix what’s causing you to think you need to lie

– Never forget to thank, congratulate, or acknowledge people for their efforts

– Keep your door and your heart open

– Never stand in the way of balance

The most annoying part of the book is that Harrison keeps making references to a handful of genetic studies about twins to prove on and off that traits are inherited and that inherited traits can be expressed in different ways.  These references are mildly interesting, but they detract from the substance of the book.

Overall, the book has some interesting points in it, but it’s too much like Jim Collins’ Good to Great and Built to Last, only without the depth of business research and case studies.  Plus, Harrison does the one thing I find most irritating in business books — he is clearly an expert in one thing (business), but he unnecessarily pretends to be an expert in another thing (genetics) in order to make his point.

New People Electrify the Organization

We had a good year in 2009, but it was tough.  Whose wasn’t?  Sales were harder to come by, more existing customers left or asked for price relief than usual, and bills were hard to collect.  Worse than that, internally a lot of people were in a funk all year.  Someone on our team started calling it “corporate ennui.”  Even though our business was strong overall and we didn’t do any layoffs or salary cuts, I think people had a hard time looking around them, seeing friends and relatives losing their jobs en masse, and feeling happy and secure.  And as a company, we were doing well and growing the top line, but we froze a lot of new projects and were in a bit of a defensive posture all year.

What a difference a year makes.  This year, still not perfect, is going much better for us.  Business conditions are loosening up, and many of our clients have turned the corner.  Financially, we’re stronger than ever.  And most important, the mood in the company is great.  I think there are a bunch of reasons for that – we’re investing more, we’re doing a ton of new innovation, people have travel budgets again, and people see our clients and their own friends in better financial positions.

But by far, I think the most impactful change to the organizational mood we’re seeing is a direct result of one thing:  hiring.  We are adding a lot of new people this year – probably 60 over the course of the year on top of the 150 we had at the beginning of the year.  And my observation, no matter which office of ours I visit, is that the new people are electrifying the organization.  Part of that is that new people come in fresh and excited (perhaps particularly excited to have a new job in this environment).  Part of it is that new people are often pleasantly surprised by our culture and working environment.  Part of it is that new people come in and add capacity to the team, which enables everyone to work on more new things.  And part of it is that every new person that comes in needs mentoring by the old timers, which gives the existing staff reminders and extra reason to be psyched about what they’re doing, and what the company’s all about.

Whether it’s one of these things or all of them, I’m not sure I care.  I’m just happy the last 18 months are over.  The world is a brighter place, and so is Return Path.  And to all of our new people (recent and future), welcome…thanks for reinvigorating the organization!

A Perfect Ten

Return Path turns 10 years old today.  We are in the midst of a fun week of internal celebrations, combined with our holiday parties in each office as well as year-end all-hands meetings.  I thought I would share some of my reflections on being 10 in the blog as I’ve shared them with our team. What being 10 means to me – and what’s enabled us to make it this long:

• It means we’ve beaten the odds.  Two major global economic meltdowns.  The fact that 90% of new small businesses fail before they get to this point.  Probably a higher percentage of venture backed startups fail before they get to 10 as well
• We’ve gotten here because we’ve been nimble and flexible.  Over our 10 years, we’ve seen lots of companies come and go, clinging to a model that doesn’t work.  We may have taken a while and a few iterations to get to this point, but as one of my Board members says, “we’re an overnight success, ten years in the making!”
• We’ve also made it this long because we have had an amazing track record with our three core constituencies – employees, clients, and investors – including navigating the sometimes difficult boundaries or conflicts between the three

What I’m most proud of from our first decade:

• We’ve built a great culture.  Yes, it’s still a job.  But for most of our team members most of the time, they like work, they like their colleagues, and they have a fun and engaging time at work.  That’s worth its weight in gold to me
• We’ve built a great brand and have been hawkish about protecting our reputation in the marketplace.  That’s also the kind of thing that can’t be bought
• We haven’t sacrificed our core principles.  We’ve always, going back to our founding and the ECOA business, had a consumer-first philosophy that runs deep.  This core principle continues to serve us well in deliverability (a non-consumer-facing business) and is clearly the right thing to do in the email ecosystem

What I most regret or would do differently if given the chance:

• We have not raised capital as efficiently as possible – mostly because our company has shifted business models a couple of times.  Investors who participated in multiple rounds of financing will do very well with their investments.  First or second round angel investors who didn’t or couldn’t invest in later rounds will lose money in the end
• I wish we were in one location, not five.  We are embracing our geographic diversity and using it to our advantage in the marketplace, but we pay a penalty for that in terms of travel and communication overhead
• We have at times spread ourselves a little too thin in pursuit of a fairly complex agenda out of a relatively small company.  I think we’re doing a good job of reigning that in now (or growing into it), but our eyes have historically been bigger than our stomachs

Thanks to all our investors and Board members, especially Greg Sands from Sutter Hill Ventures, Fred Wilson from Flatiron Partners and Union Square Ventures, Brad Feld from Mobius Venture Capital, and Scott Weiss for their unwavering support and for constantly challenging us to do better all these years.  Thanks to our many customers and partners for making our business work and for driving us to innovate and solve their problems.  Thanks to our many alumni for their past efforts, often with nothing more to show for it than a line item on their resume.  And most of all, thanks to our hardworking and loyal team of nearly 200 for a great 2009 and many more exciting years ahead!  

Book Short: Chip Off the Old Block

I have to admit, I was more than a little skeptical when Craig Spiezle handed me a copy of The Speed of Trust, by Stephen M. R. Covey, at the OTA summit last week. The author is the son of THE Stephen Covey, author of the world famous Seven Habits of Highly Effective People as well as The Eighth Habit (book, post). Would the book have substance and merit or be drafting off the dad’s good name?

I dog-ear pages of books as I read them, noting the pages that are most interesting if I ever want to go back and take a quick pass through the book to remind me about it (and yes, Ezra, I can do this on the Kindle as well via the bookmark feature). If dog-ear quantity is a mark of how impactful a book is, The Speed of Trust is towards the top of the list for me.

The book builds nicely on Seven Habits and The Eighth Habit and almost reads like the work of Stephen the father. The meat of the book is divided into two sections: one on developing what Covey calls “self trust,” a concept not unlike what I blogged about a few months ago, that if you make and keep commitments to yourself, you build a level of self-confidence and discipline that translates directly into better work and a better mental state. The other core section is one on building trust in relationships, where Covey lists out 13 behaviors that all lead to the development of trust.

In fact, we just had a medium-size trust breach a couple weeks ago with one of our key clients. Reading the book just as we are struggling to “right the wrong” was particularly impactful to me and gave me a number of good ideas for how to move past the issue without simply relying on self-flagellation and blunt apologies. This is a book full of practical applications.

It’s not a perfect book (no book is), and in particular its notion of societal trust through contribution is a bit weak relative to the rest of the book, but The Speed of Trust is an excellent read for anyone who wants to understand the fastest way to build — and destroy — a winning culture. It reads like a sequel of Covey senior’s books, but that’s a good thing.

Like an Organ Transplant

I’ve often said that hiring a new senior person into an organization is a bit like doing an organ transplant. You can do all the scientific work up front to see if there’s a match, but you never know until the organ is in the new body, and often some months have gone by, whether the body will take or reject the organ.

New senior people in particular have a vital role in organizations. Often they are brought in to fix something that’s broken, or to start up a new position that growth has created. Sometimes they are replacing a problematic person (or a beloved one). Usually the hope is that they will also bring a fresh perspective and good outside view to bear on people whose heads are too much “in the business.” In all cases, their role as leaders makes them higher visibility and higher profile than most, and therefore more impactful if they succeed. It also makes them more problematic if they don’t.

What happens that causes the body to reject the organ? It could be a few things, but in my experience it’s usually one of three. Sometimes the execution isn’t there — in other words, the person knows what needs to be done but isn’t effective in getting it done, for any number of reasons. Usually you feel like you were sold a bill of goods. Other times, specifically in cases where the person is coming into a new job that didn’t exist before, it turns out the job was poorly specified and doesn’t need to exist, or that the person coming in is the wrong person for it. Usually the person feels like he or she was sold a bill of goods.

But I think in most cases, the cultural fit just isn’t there. And that’s not really anyone’s fault, although it *should be* something you can interview for to a large extent. These are the most painful ones to deal with. Decent to stellar execution (good enough to not end employment over it), but poor cultural fits.

How quickly does this take? I’ve seen it take a quarter. I’ve also seen it take a year. But in both cases, the warning signs were there much sooner.

A footnote on this is that as Return Path has grown, I’ve come to a new thought about this — it doesn’t just apply to senior people. It applies to almost any new hire. It may be an outcome of having a really strong and consistent culture, or it may just be the natural extension of this axiom.

Closure

This past weekend was a weekend of closure for me. As I prepare to leave the city after almost 17 years and the apartment I’ve lived in for almost 15, we had my two original roommates from this apartment in town for the weekend with their families for a bit of a farewell party. Times certainly have changed – from three single guys to three families and 7, almost 8 kids between us. Sitting around and noting that all three couples had either gotten engaged or first started dating within the confines of Apartment 35B, then saying goodbye as everyone left the apartment for the last time, was a little surreal. But overall, having everyone around was great fun and was a fitting way to mark the occasion.

If that wasn’t enough to drive the point home, we were lucky enough to get tickets to the Yankees game last night, which was the last home game the Yanks will play in their 85-year old stadium before moving across the street next season to their fancy new home. The ceremony before the game, which featured a bunch of prominent Yankee greats and their progeny (Babe Ruth’s daughter threw out the opening pitch!), was similarly surreal, but a fitting ending to a long-standing tradition.

Why is closure important? I’m not a psychologist, but for me and my brain anyway, celebrating or formally noting the END of something helps move on to the BEGINNING of the next thing. It helps compartmentalize and define an experience. It provides time to reflect on a change and WHY it’s (inevitably) both good and bad. And I suppose it appeals to the sentimentalist in me.

I think it’s important to create these moments in business as well as in one’s personal life. We and I have done them sporadically at Return Path over the years. Moving offices as we expand. Post-mortems on projects gone well or badly. Retrospectives with employees who didn’t work out, sometimes months after the fact. Whether the moment is an event, a speech at an all-hands meeting, or even just an email to ALL, one of the main jobs of a leader in building and driving a corporate culture is to identify them and mark them.

Book Short: How, Now

Every once in a while, I read a book that has me jump up and down saying “Yes! That’s so right!” How: Why How We Do Anything Means Everything in Business (and in Life), by Dov Seidman, was one of those books.  But beyond just agreeing with the things Seidman says, the book had some really valuable examples and two killer frameworks, one around culture, and one around leadership.

It’s a book about the way the world we now live in — a world of transparency and hyper-connectedness — is no longer about WHAT you do, but HOW you do it. It’s about how you can have a great brand and great advertising, but if your customers find out via a blog and YouTube clip that you run a low quality sweatshop in Malaysia, you are toast. It’s about you can…not outwork the competition, not outsmart the competition, but how you can out-behave the competition.

The book, which talks about principles like mutual gain, and thriving on the collaborative, reminds me a lot of a basic tenet of negotiation I learned years ago at the Harvard Program on Negotiation about finding a “third way” beyond a “me vs. you” negotiation by expanding the pie so both parties get more out of a deal.

Here are a few snippets from the book to inspire a purchase:

– How encouraging doctors to say “I’m sorry” radically reduces lawsuits

– How “micro-inequities” can subtly leech productivity from an organization

– How the majority of workers expect from their workplaces: equity, achievement, camaraderie

– How companies whose employees understand and embrace their mission, goals, and values see a 29% greater return than companies whose employees don’t

– How reputation is the new competitive advantage

– How people will do the right thing because in self-governing cultures, not doing the right thing no longer betrays just the company; it betrays individuals’ own values

– How increasing self-governance means moving values to the center of your efforts and making it clear — in how you reward, celebrate, communicate, and pursue — that those values form the guiding spirit of the enterprise

What type of organization do you run? One based on Anarchy & Lawlessness, one based on Blind Obedience, one based on Informed Acquiescence, or one of Values-Based Self-Governance? (Hint, it’s most likely the third category.) Read the book to find out more.

Wither the News? (Plus a Bonus Book Short)

It’s unusual that I blog about a book before I’ve actually finished it, but this one is too timely to pass up given today’s news about newspapers.  The Cult of the Amateur: How Today’s Internet is Killing Our Culture, by Andrew Keen, at least the first 1/2 of it, is a pretty intense rant about how the Internet’s trend towards democratizing media and content production has a double dirty underbelly:

poor quality — “an endless digital forest of mediocrity,”

no checks and balances — “mainstream journalists and newspapers have the organization, financial muscle, and and credibility to gain access to sources and report the truth…professional journalists can go to jail for telling the truth” (or, I’d add, for libel)

So what’s today’s news about newspapers?  Another massive circulation drop — 3.6% in the last six months.  Newspaper readership across the country is at its lowest level since 1946, when the population was only 141 million, or less than half what it is today.  The digital revolution is well underway.  Print newspapers are declining asymptotically to zero.

Don’t get me wrong.  I’m an Internet guy, and I love the democratization of media for many reasons.  I also think it will ultimately force old media companies to be more efficient as individual institutions and as an industry in order to survive (not to mention more environmentally friendly).  But Keen has good thoughts about quality and quantity that are interesting counterpoints to the revolution.  I hope at least some newspapers survive, change their models and their cost structures, and start competing on content quality.  The thought that everyone in the world will get their news ONLY from citizen journalists is scary.

I’m curious to see how the rest of the book turns out.  I’ll reblog if it’s radically different from the themes expressed here.

Update (having finished the book now): Keen puts the mud in curmudgeon. He doesn’t appear to have a good word to say about the Internet, and he allows his very good points about journalistic integrity and content quality and our ability to discern the truth to get washed up in a rant against online gambling, porn, and piracy. Even some of his rant points are valid, but saying, for example, that Craigslist is problematic to society because it only employs 22 people and is hugely profitable while destroying jobs and revenue at newspapers just comes across as missing some critical thinking and basically just pissing in the wind. His final section on Solutions is less blustry and has a couple good examples and points to offer, but it’s a case of too little, too late for my liking.