Counter Cliche:  No Conflict, No Interest

The entrepreneur’s take on Fred’s VC cliche of the week — "No conflict, No interest" is that it applies equally but differently to management teams. 

Our nation’s first president, George Washington, is often said to have brilliantly placed political enemies Thomas Jefferson and Alexander Hamilton on his first cabinet so he would have differing points of view from which to choose when deciding some of the complex and delicate issues that faced our nation in its infancy.  And many of those early decisions of the Washington administration — things like how to pay down the debt from the Revolution, or whether and how to put down the Whiskey Rebellion — were critical in forming our nation and deciding how much power to invest in our government.

The tension between one executive and another on a management team is, though perhaps less historically important, no different.  A management team that finds itself 100% in agreement, 100% of the time, is in trouble.  A management team that can have disagreements and use that tension productively to drive decisions is much better off.  Building such a team requires the CEO to seek out executives who view the world differently, who have the courage to speak their minds in the face of strong opposition, and who have the ability to see different points of view.

I’ve always thought that the ability to stare down adversity in business — or turning lemons into lemonade, as a former boss of mine used to say — is a critical part of being a mature professional. We had a prime example of this a couple weeks ago at Return Path.

We had scheduled a webinar on email deliverability, a critical topic for our market, and the moment of the webinar had come, with over 100 clients and prospects on the line for the audio and web conference. There was a major technical glitch with our provider, Webex (no link for you, Webex), and after 5 or 10 minutes, we had to cancel the webinar — telling all 100 members of our target audience that we were sorry, we’d have to reschedule. What a nightmare! Even worse, Webex displayed atrocious customer service to us, not apologizing for the problem, blaming it on us (as if somehow it was our fault that half the people on the line couldn’t hear anything), and not offering us any compensation for the situation.

As you can imagine, our marketing guru Jennifer Wilson was devastated. But instead of sulking, she turned the situation on its head. She rescheduled the event for three weeks out with a different provider who was technically competent and a pleasure to work with, Raindance, and sent every person who’d been on our aborted webinar a gift certificate to Starbucks so they could enjoy a snack on our dime during the rescheduled event. Not only did we have full attendance at the rescheduled event, but Jennifer received dozens of emails from clients sympathizing with her, commending her on her attitude, and of course thanking her for the free latte.

It’s hard to do, and you hate to have to do it, but successfully turning lemons into lemonade is one of the most satisfying feelings in business!

People rarely comment on this blog (or most non-political blogs, I’ve noticed), so feel free to share your best lemons-to-lemonade story with me in a comment, and I promise I’ll post the best couple of them pronto!

Today, the FTC very shrewdly punted on the issue of the proposed “Do Not Email” list implementation, saying that authentication systems need to be put in place before such a list can be considered. This buys the world more time to work on more effective, market-driven solutions to the spam and false positive problems.

I read a few interesting posts on this today, including one from Jeff Nolan which nicely captured Chuck Schumer’s elegant combination of demagoguery and idiocy about this issue; and one from Anne Mitchell pointing out that they’re about six months late with their conclusion. Feels about right for the federal government.

What’s interesting to me is that all of the comments by and about the FTC and the proposed “Do Not Email” list focus on the wrong thing: they say that the problem with the list is that spammers would abuse it by hacking into it and stealing all the email addresses. Ok, I’ll admit, that’s one theoretical problem, but it’s not THE problem.

The structural problem with a national “Do Not Email” list is that responsible emailers, non-spammers, don’t need to use it since they get appropriate permission from their customers before sending them email…and spammers won’t bother using it since they don’t give a hoot anyway and will find a way around the list as they do everything else. In the end, the creation of such a list would do nothing to stop spam, but it would certainly create a lot of confusion for legitimate marketers and their customers around opting in and opting out. It would also, notably unlike the fairly successful national “Do Not Call” list, not do anything to reduce the volume of spam, which will create disappointment and anger among consumers (and hello, Senator Schumer, backfire on its political sponsors).

Those aren’t bigger problems than spam to be sure, but why should we implement a solution to the problem that doesn’t work at all and that causes its own ancillary problems along the way?

And here I am. In the middle of that “once.” Fred Wilson wrote a great posting by that title on his blog, and it has stuck with me. When I decided to start a blog, it was the first thing that came to mind as a main theme for the blog, so there you go. Only Once it is.

I’m not entirely sure why I’m doing a blog. Part of it is fascination with the newest corner of the Internet and its related areas like RSS (clicking on that link will get you the RSS feed of this blog). Part of it is to try out the medium and see how it might work for the hundreds of marketers and publishers who are my company’s clients. I suppose part of it is to generate some interest in my company, Return Path, which in my extremely biased opinion is one of the most interesting companies in the email services business.

My one hesitation about starting a blog is that the other part of me feels like blogs are a bit narcissistic, and I can’t imagine who on earth would want to read whatever it is that pops into my head. But I’ll give it a try and promise not to go overboard on the extraneous postings.

So, I will probably post periodically about experiences of an entrepreneur, of the one time I’ll ever be a first-time CEO. But I may also post on other things periodically that match my interests: book reviews, travelogs, Princeton, great wines, maybe even the occasional political commentary to prove to my predominantly New York friends that (a) not all Republicans are bad, and (b) not all Jewish New Yorkers are Democrats.

So, here we go…enjoy!

Naked Talking

Naked Conversations:  How Blogs Are Changing The Way Businesses Talk with Consumers, by Robert Scoble and Shel Israel, would have been mildly interesting had I never read, let alone written, a blog.  So chances are if you’re reading this blog regularly, it’s not a great use of your time or money, but if you just ran across this post while trying to learn more about blogging – or really about any form of post-2002 Internet marketing – it’s probably worthwhile as a primer. But if you’re knee-deep in internet marketing or blogging, it may be a bit of a snoozer.

I find it entertaining that leading bloggers like Scoble and Israel, who are part of the ultra-small group of hardcore bloggers, as they describe, that “posts 50 times a day, mostly at 4 a.m.,” think blogs are really conversations.  Don’t get me wrong, I believe that blogs are revolutionary in that they allow anyone to run his or her own printing press.  I also think it’s critical for companies to have corporate blogs (Return Path had one of the first), for CEOs and other executives to blog (obviously I do), for companies to allow their employees to blog relatively unencumbered by corporate policy, and, perhaps most important, for companies to track and listen to what others who blog are saying about them and their products.

But let’s not get too caught up in our own euphoria as bloggers to think that what’s happening is actually a conversation the way we humans think of conversations.  Blogging allows more people to have their voices heard, and it certainly allows for transparency and authenticity, as the authors say, but there’s almost never dialog.  Many popular blogs don’t have comments at all.  Those who do allow comments have few if any posted.  And those who have comments posted rarely have any other readers who actually see the comments, since the blog is a publishing forum and RSS is a publishing format, neither is a truly interactive medium like chat.

I’m sure there are some blogs that have active commenters, particularly political ones, and hopefully someone, somewhere, reads and internalizes those comments when they’re relevant. And certainly, high circ bloggers who read and know each other participate in a dialog by talking AT each other via their blog postings, not via comments (meaning that for the “dialog” to make sense to the greater world, the greater world must read all blogs participating in a “conversation.”). But, please, let’s not pretend there is really a 20-million-way conversation happening.

Transparency Rules

I think each and every one of our 13 core values at Return Path is important to our culture and to our success.  And I generally don’t rank them.  But if I did, People First is a leading contender to be at the top of the list. The other leading contender would be this last one in the series:

We believe in being transparent and direct

The big Inc. Magazine story about us last year talked a lot about our commitment to transparency and some of the challenges that come with being transparent and direct with people. I’d like to highlight here some of the benefits of being transparent, and the benefits of being direct (sometimes those two things are the same, sometimes they are different).

Transparency’s benefits are so numerous that it’s hard to pick just one or two themes to write about, but my favorite benefit is empowerment.  Especially in a world where information is increasingly available and free, hoarding it comes at a high cost.

• If everyone in the company knows that you’re short of plan and disappointed about that, the majority of people will exercise hawkish judgment about expenses.  The opposite is true as well.  If people know you’re running ahead of plan, they will be more willing to take risks and make investments. Without transparency of financials, people are just more in the dark and looking for all answers and judgment to come from above
• If everyone on your staff understands the process you went through to make a tough call about an element of your strategy, they are not only more likely to understand and support the decision, but they learn from you how to make decisions in the first place
• If your Board knows you’re having a tough quarter from the get go, they’re not surprised at the quarterly meeting and don’t force you to spend painful and precious minutes in the meeting On the firing line reporting on the details. Instead, they can spend time leading up to the meeting thinking about the details of the problems and how they can help or what insights they can bring to bear

Transparency does have some limits, even today.  There are three main limits we run into. One is compensation — still too touchy and wrapped up in people’s self esteem to post on the wall (though I have heard about a couple companies that do that, believe it or not). Another is terminations. Although you might want to tell the company that you fired Sally because she wasn’t carrying her weight, the long term value you derive from dignity and kindness trump any short term value you might derive from such a statement (plus, people know when Sally isn’t carrying her weight, anyway). The third limit to transparency is around half-baked ideas. Although you might sometimes want to try ideas on for size publicly, you have to be careful not to send people scurrying off in the wrong direction just because you blurted something out in a meeting.

The second half of this value statement is about being direct.  Being direct mostly has benefits in terms of efficiency. You can be direct and still be polite and kind.  But being direct means not beating around the bush, being political, or being conflict avoidant.  It means nipping problems in the bud and saving yourself time or money in the long run.

• If you are direct with an employee who is not performing well with data to back it up, the employee has a much better shot at improving than if you delegate the feedback to HR, wait for the next annual performance review, or go passive and skip the feedback entirely
• If you are direct with a boss who you think is treating you unfairly, your odds of fixing the situation go way up
• If there’s bad news to deliver, be direct about it — look the other person in the eye, deliver the news crisply and succinctly, and as quickly as you can after finding it out or deciding on it yourself

Avoid euphemisms at all cost. Telling someone you “might have to rethink things” is not the same as saying “I will have to fire you if xyz don’t happen in the next 30 days.” Saying “xyz would be good for you to do” is not the same as saying “the way for you to get promoted is to consistently do xyz.”

Being transparent and direct are increasingly table stakes for successful companies full of knowledge workers who want to be empowered and clear on where they stand.

I’ve really enjoyed writing all of these values out in living color. I will do a wrap up post shortly.

An Execution Problem

My biggest takeaway from the TED Conference this week is that we — that is to say, all of us in the world — have an execution problem.  This is a common phrase in business, right?  You’ve done the work of market research, positioning, and strategy and feel good about it.  Perhaps as a bigger company you splurge and hire McKinsey or the like to validate your assumptions or develop some new ones.  And now all you have to do is execute — make it happen.  And yet so many businesses can’t make the right things happen so that it all comes together.  I’d guess, completely unscientifically, that far, far more businesses have execution problems than strategic ones.  Turns out, it’s tough to get things to happen as planned BUT with enough flexibility to change course as needed.  Getting things done is hard.

So what do I mean when I say that humanity has an execution problem?  If nothing else, the intellectual potpourri that is TED showed me this week that we know a lot about the world’s problems, and we don’t lack for vision and data on how to solve them.  A few of the things we heard about this week are the knowledge — and in many cases, even real experiences — about how to:

– Steer the evolution of deadly disease-causing bacteria to make them more benign within a decade

– Build world class urban transportation systems and growth plans to improve urban living and control pollution

– Drive down the cost of critical pharmaceuticals to developing nations by 95%

– Dramatically curb CO2 emissions

We have the knowledge, and yet the problems remain unsolved.  Why is that?  Unlike the organized and controlled and confined boundaries of a company, these kinds of problems are thornier to solve, even if the majority of humans agree they need to be solved.  Whether the roadblock is political, financial, social — or (d) all of the above — we seem to be stuck in a series of execution problems.

The bright spot out of all of this (at least from this week’s discussions) is that, perhaps more than ever before in the history of mankind, many of our most talented leaders AND our wealthiest citizens are taking more of a personal stake in not just defining the problems and solutions, but making them happen.  They’re giving more money, buiding more organizations, and spending more time personally influencing society and telling and showing the stories.  It will take years to see if these efforts can solve our execution problems, but in the meantime, the extraordinary efforts are things we can all be proud of.

The Value of Paying Down Technical Debt

Our Engineering team has a great term called Technical Debt, which is the accumulation of coding shortcuts and operational inefficiencies over the years in the name of getting product out the door faster that weighs on the company’s code base like debt weighs on a balance sheet.  Like debt, it’s there, you can live with it, but it is a drag on the health of the technology organization and has hard servicing costs.  It’s never fun to pay down technical debt, which takes time away from developing new products and new features and is not really appreciated by anyone outside the engineering organization.

That last point is a mistake, and I can’t encourage CEOs or any leaders within a business strongly enough to view it the opposite way.  Debt may not be fun to pay off, but boy do you feel better after it’s done.  I attended an Engineering all-hands recently where one team presented its work for the past quarter.  For one of our more debt-laden features, this team quietly worked away at code revisions for a few months and drove down operational alerts by over 50% — and more important, drove down application support costs by almost 90%, and all this at a time when usage probably doubled.  Wow. 

I’m not sure how you can successfully scale a company rapidly without inefficiencies in technology.  But on the other side of this particular project, I’m not sure how you can afford NOT to work those ineffiencies out of your system as you grow.  Just as most Americans (political affiliation aside) are wringing their hands over the size and growth of our national debt now because they’re worried about the impact on future generations, engineering organizations of high growth companies need to pay attention to their technical debt and keep it in check relative to the size of their business and code base.

And for CEOs, celebrate the payment of technical debt as if Congress did the unthinkable and put our country back on a sustainable fiscal path, one way or another!

As a long Post Script to this, I asked our CTO Andy and VP Engineering David what they thought of this post before I put it up.  David’s answer was very thoughtful and worth reprinting in full:

 I’d like to share a couple of additional insight as to how Andy and I manage Tech Debt in the org: we insist that it be intentional. What do I mean by “intentional”

•  There is evidence that we should pay it
• There is a pay off at the end

 What are examples of “evidence?”

•  Capacity plans show that we’ll run out of capacity for increased users/usage of a system in a quarter or two
• Performance/stability trends are steadily (or rapidly) moving in the wrong direction
• Alerts/warnings coming off of systems are steadily or rapidly increasing

 What are examples of “pay off?”

•  Increased system capacity
• Improved performance/stability
• Decreased support due to a reduction in alerts/warnings

 We ask the engineers to apply “engineering rigor” to show evidence and pay-offs (i.e. measure, analyze, forecast).

 I bring this up because some engineers like to include “refactoring code” under the umbrella of Tech Debt solely because they don’t like the way the code is written even though there is no evidence that it’s running out of capacity, performance/stability is moving in the wrong direction, etc. This is a “job satisfaction” issue for some engineers. So, it’s important for morale reasons, and the Engineering Directors allocate _some_ time for engineers to do this type of refactoring.  But, it’s also important to help the engineer distinguish between “real” Tech Debt and refactoring for job satisfaction.

Post Traumatic Job Disorder.

As we have been scaling up Return Path, we have been increasingly hiring senior people in from the outside. We believe in promoting from within and do it all the time, but sometimes you need an experienced leader who has operated at or ahead of the scale you’re at.  Someone with deep functional expertise and a “been there, done that” playbook. When you get a hire like this right, it’s amazing how much that kind of person gets done, how quickly.

One of the pitfalls of those hires, though, is cultural fit. Many of the larger organizations in the world don’t have the kind of supportive, employee-centric cultures that we have here, or that startups tend to have in general. They tend to be much more hierarchical, political, command-and-control. There is a real risk that hiring a senior person who has been trained in environments like that will blow up on you — that, as I’ve written before, the body will reject the organ transplant.

I’ve taken to calling the problem PTJD, or Post-Traumatic Job Disorder. Some of the stories I’ve heard from senior people about their experiences with their bosses or even CEOs at prior companies include such things as:  being screamed at regularly, having had a gun pulled on you, having had a knife pulled on you, having been ignored and only spoken to once or twice a year, being the victim of sexual harassment. Nice.

Just like PTSD, many people can recover from PTJD by being placed in a different environment with some up-front reprogramming and ongoing coaching. But also like PTSD, there are times where people can’t recover from PTJD. The bad habits are too engrained. They are (virtually) shell shocked.

Assuming you do the same reprogramming and coaching work on any PTJD employee, the difference between an employee who recovers and one who does not recover is really hard to smoke out in an interview process. Almost all candidates like this (a) are very polished and now how to interview well, and (b) genuinely think they want to work in a more relaxed, contemporary environment.

Here are five things I’ve learned over the years that can help identify a PTJD candidate who is unlikely to recover, before you make the hire:

1. Look for candidates who have bigger company experience, but who also have startup and growth/scaling experience.  As I’ve written before, stage experience is important because the person is more likely to really understand what he or she is getting into — and what their playbook of action is.
2. Try to understand, if a candidate has been in a workplace that breeds PTJD, whether that person was just in the machine, or if the person actually ran the machine. In other words, a senior manager might be a better fit to recover from PTJD than a senior executive.
3. Note that not all big companies are dysfunctional or lead to PTJD, so try to understand the reputation of the person’s employer. For example, in New York, it’s a pretty safe bet that someone coming from American Express has not only been well trained, but well cared for.
4. Do reference checks differently. Do them yourself. Do them as if you were doing a 360 on the person (manager, peer, subordinate, even a junior person from another department). Do reference checks on the references (seriously – ask the references about each other) so you understand the biases each of them brings to the conversation with you.
5. Focus on the first 90 days. Be relentless about how you onboard a potential PTJD victim. Give them more care, structure, praise, guidance, and criticism than you might otherwise give. Use an outside coach to augment your work, and assign a good executive buddy internally. And listen carefully to the feedback from the organization about the person, doing a deep 360 after a few months to see if the person is recovering, can recover, or can’t recover. If the latter, time to cut your losses early.

Thanks to some of my new executive colleagues here for inspiring this post, and I hope none of my friends who have served in the military take offense at this post. I am drawing an analogy, but I’m not truly suggesting that PTJD compares in any way, shape, or form to the horrors of war.

If I had to pick one human trait that is the single most impactful in one’s ability to have positive and successful interpersonal relationships, there’s a hands-down winner: Self-Awareness. This is true no matter what kind of relationships you’re talking about — parent, manager, executive, friend, partner or spouse.

Someone shared a framework with me years ago that helps explain why this is true, which I’ve been meaning to blog about for a long time. I found this image, which is close enough to the 2×2 that was once drawn for me on a whiteboard.

The framework is at once incredibly simple and incredibly complex.

Having true self-awareness and the ability to be reflective, to take in input and feedback, and the ability to accurately self-assess is where it all starts. “I am unhappy today,” “I am doing a bad job right now,” “I am not good at doing this task” are all pretty difficult things to say to yourself. And yet, without those, it’s impossible to progress through this framework.

I learned this framework where boxes II and III in what you see in this graphic are the other way around, but I’m not sure that matters as much as box I being first and box IV being last.

Once you have a solid level of self-awareness, you can exert some level of self-control. That’s not a guarantee — self-control is its own animal, but you can’t manage what you can’t understand. Empathy is similarly a follow-on to self-awareness, but also its own trait. How can you possibly understand what someone else is going through if you don’t understand what you’re going through?

The final box — Influence — is the result of building on all three of the prior traits. It’s impossible to influence others, to have deep and lasting relationships, and to be able to work productively together, without having a solid level of empathy and self-control.

You can be a leader without any of these traits if you’re an autocrat, whether a political one or a corporate one. If people MUST listen to you, then you can tell them what to do. But founders, especially ones who control their companies, shouldn’t be under the misapprehension that they are influencing others if what they’re really doing is ordering them around.

Can self-awareness be taught, or is it something you’re either born with or not? While most traits have a balance of nature and nurture, I am a big believer that self-awareness can largely be learned over time, so let’s call it a 10/90 on the nature/nurture scale. I’ve had a lot of influencers in my life who have, in their own ways helped me learn the practice of self-awareness, from my parents, to the professor in college who gave me my first 2×4, to my first couple of managers in my early jobs, Neal and Eleanor, to my coach, Marc who gave me my first 360, to my long-time colleagues along the way at Return Path and Bolster, to my wife, Mariquita, even to my kids. I’m sure I’m forgetting many others along the way. I’m thankful to all of them.

Want to improve your practice of management? Leadership? Collaboration and teamwork?

It all starts with self-awareness.

Book Short – Blink part III – Undo?

I just finished reading Michael Lewis’s The Undoing Project: A Friendship That Changed Our Minds, and honestly, I wish I could hit Life’s Undo button and reclaim those hours.  I love Michael Lewis, and he’s one of those authors where if he writes it, I will read it.  But this one wasn’t really worth it for me.

Having said that, I think if you haven’t already read both Malcolm Gladwell’s Blink (review, buy) and Daniel Kahneman’s Thinking, Fast and Slow (review, buy), then it might be worth it.  But having read those two books, The Undoing Project had too much overlap and not enough “underlap” (to quote my friend Tom Bartel) – that is, not enough new stuff of substance for me.  The book mostly went into the personal relationship between two academic thinkers, Daniel Kahneman and Amos Tversky.  It also touched on some of the highlights of their work, which, while coming out of the field of psychology, won them a Nobel prize in Economics for illuminating some of the underlying mechanics of how we make decisions.

The two most interesting pieces of their work to me, which are related in the book, are:

First, that human decision-making is incredibly nuanced and complex, and that at least 25% of the time, the transitive property doesn’t apply.  For example, I may prefer coffee to tea, and I may prefer tea to hot chocolate, but that doesn’t necessarily mean I prefer coffee to hot chocolate.

From the book, “When faced with complex multidimensional alternatives, such as job offers, gambles or [political] candidates, it is extremely difficult to utilize properly all the available information.” It wasn’t that people actually preferred A to B and B to C and then turned around and preferred C to A. It was that it was sometimes very hard to understand the differences. Amos didn’t think that the real world was as likely to fool people into contradicting themselves as were the experiments he had designed.  And the choice created its own context: Different features might assume greater prominence in the mind when the coffee was being compared to tea (caffeine) than when it was being compared to hot chocolate (sugar). And what was true of drinks might also be true of people, and ideas, and emotions. The idea was interesting: When people make decisions, they are also making judgments about similarity, between some object in the real world and what they ideally want. They make these judgments by, in effect, counting up the features they notice. And as the noticeability of features can be manipulated by the way they are highlighted, the sense of how similar two things are might also be manipulated.”

Second, what Kahneman and Tversky called Prospect Theory, which is basically that humans are more motivated by the fear of loss as opposed to the greed of gain.  I’ve written about the “Fear/Greed Continuum” of my former boss from many years ago before.  I’m not sure he knew about Kahneman and Tversky’s work when he came up with that construct, and I certainly didn’t know about it when I first blogged about it years ago.  Do this experiment – ask someone both of these questions:  Would you rather be handed $500 or have a 50% chance of winning $1,000 and a 50% of getting nothing?  Then, Would you rather hand me $500 or have a 50% chance of owing me $1,000 and a 50% chance of owing me nothing?  Most of the time, the answers are not the same.

For fun, I tried this out on my kids and re-proved Prospect Theory, just in case anyone was worried about it.

Anyway, bottom line on this book – read it if you haven’t ready those other two books, skip it if you have, maybe skim it if you’ve read one of them!