What a View, Part III

We are in the middle of our not-quite-annual senior team 360 review process this week at Return Path.  It’s particularly grueling for me and Angela, our SVP of People, to sit in, facilitate, and participate in 15 of them in such a short period of time, but boy is it worth it!  I’ve written about this process before — here are two of the main posts (overall process, process for my review in particular, and a later year’s update on a process change and unintended consequences of that process change). I’ve also posted my development plans publicly, which I’ll do next month when I finalize it.

This year, I’ve noticed two consistent themes in my direct reports’ review sessions (we do the live 360 format for any VP, not just people who report directly to me), which I think both speak very well of our team overall, and the culture we have here at Return Path.

First, almost every review of an executive had multiple people saying the phrase, “Person X is not your typical head of X department, she really is as much of a general business person and great business partner and leader as she is a great head of X.”  To me, that’s the hallmark of a great executive team.  You want people who are functional experts, but you also need to field the best overall team and a team that puts the business first with understandings of people, the market, internal dependencies, and the broader implications of any and all decisions.  Go Team!

Second, almost every review featured one or more of my staff member’s direct reports saying something like “Maybe this should be in my own development plan, but…”  This mentality of “It’s not you, it’s me,” or in the language of Jim Collins, looking into the mirror and not out the window to solve a problem, is a great part of any company’s operating system.  Love that as well.

Ok.  Ten down, five to go.  Off to the next one…

The Art of the Post-Mortem

It has a bunch of names — the After-Action Review, the Critical Incident Review, the plain old Post-Mortem — but whatever you call it, it’s an absolute management best practice to follow when something has gone wrong. We just came out of one relating to last fall’s well document phishing attack, and boy was it productive and cathartic.

In this case, our general takeaway was that our response went reasonably well, but we could have been more prepared or done more up front to prevent it from happening in the first place.  We derived some fantastic learnings from the Post-Mortem, and true to our culture, it was full of finger-pointing at oneself, not at others, so it was not a contentious meeting.  Here are my best practices for Post-Mortems, for what it’s worth:

• Timing:  the Post-Mortem should be held after the fire has stopped burning, by several weeks, so that members of the group have time to gather perspective on what happened…but not so far out that they forget what happened and why.  Set the stage for a Post-Mortem while in crisis (note publicly that you’ll do one) and encourage team members to record thoughts along the way for maximum impact
• Length:  the Post-Mortem session has to be at least 90 minutes, maybe as much as 3 hours, to get everything out on the table
• Agenda format:  ours includes the following sections…Common understanding of what happened and why…My role…What worked well…What could have been done better…What are my most important learnings
• Participants:  err on the wide of including too many people.  Invite people who would learn from observing, even if they weren’t on the crisis response team
• Use an outside facilitator:  a MUST.  Thanks to Marc Maltz from Triad Consulting, as always, for helping us facilitate this one and drive the agenda
• Your role as leader:  set the tone by opening and closing the meeting and thanking the leaders of the response team.  Ask questions as needed, but be careful not to dominate the conversation
• Publish notes:  we will publish our notes from this Post-Mortem not just to the team, but to the entire organization, with some kind of digestible executive summary and next actions

When done well, these kinds of meetings not only surface good learnings, they also help an organization maintain momentum on a project that is no longer in crisis mode, and therefore at risk of fading into the twilight before all its work is done.  Hopefully that happened for us today.

The origins of the Post-Mortem are with the military, who routinely use this kind of process to debrief people on the front lines.  But its management application is essential to any high performing, learning organization.

Solving Problems Together

Last week, I started a series of new posts about our core values (a new tag in the tag cloud for this series) at Return Path.  Read the first one on Ownership here.

Another one of our core values is around problem solving, and ownership is intrinsically related.  We believe that all employees are responsible for owning solutions, not just surfacing problems.  The second core value I’ll write about in this series is written specifically as:

We solve problems together and always present problems with potential solutions or paths to solutions

In terms of how this value manifests itself in our daily existence, for one thing, I see people working across teams and departments regularly, at their own initiative, to solve problems here.  It happens in a very natural way.  Things don’t have to get escalated up and down management chains.  People at all levels seem to be very focused on solving problems, not just pointing them out, and they have good instincts for where, when, and how they can help on critical (and non-critical) items.

Another example, again relative to other workplaces I’ve either been at or seen, is that people complain a lot less here.  If they see something they don’t like, they do something about it, solve the problem themselves, or escalate quickly and professionally. The amount of finger pointing tends to be very low, and quite frankly, when fingers are pointed, they’re usually pointed inward to ask the question, “what could I have done differently?”

The danger of a highly collaborative culture like ours is teams getting stuck in consensus-seeking.  Beware!  The key is to balance collaboration on high value projects with authoritative leadership & direction.

A steady flow of problems are inherent in any business.  I’m thankful that my colleagues are generally quite strong at solving them!

Challenging Authority

My dad told me a joke once about a kid who as a teenager thought his father was the dumbest person he’d ever met. But then, as the punchline goes, “By the time I’d graduated college, it was amazing how much the old man had learned.”

The older we get as humans, the more we realize how little we know — and how fallible we are. One of our 13 core values at Return Path gets right to the heart of this one:

We challenge complacency, mediocrity, and decisions that don’t make sense

I will note up front that this particular value statement is probably not as widely practiced as most of the others I’m writing about in this series of posts, but it’s as important as any of the others.

Very few things make me happier at work than when an employee challenges me or another leader — and quite frankly, the more junior and less well I know the employee, the better. No matter what the role, we hire smart, ambitious, and intellectually curious people to work at Return Path. Why let all that raw brainpower go to waste?  We thrive as a company in part because we are all trying to do a better job, and because we work with our eyes open to the things happening around us.

I have no doubt that some real percentage of the decisions that I or other leaders of the company make don’t make sense, either in full or in part. And I’m sure that from time to time we become complacent with things that are running smoothly or quietly, even if they’re not optimal or even moderately destructive.  That’s why I’m particularly grateful when someone calls me out on something. We have made great strides in and changes to the business over the years because someone on the team has challenged something. We’ve terminated employees who were poisonous to the organization, we’ve reversed course on strategic plans, we’ve even sold a business unit.

One of the things we do well is blend this value with one I wrote about a few weeks ago about being kind and respectful to each other.  The two play together very nicely in our culture.  People are generally constructive when they have feedback to give or are challenging authority, and people who receive feedback or challenges assume positive intent and nothing personal.  We specifically train people around these delicate balances both via the Action/Design framework and a specific course we teach called Giving and Receiving Feedback.

It takes courage to challenge authority. But then again, nothing great is ever accomplished in life without courage (and enthusiasm, so the old adage goes).

Beyond Policy

Policies are an important part of managing employees. Similarly, contracts are an important part of running the commercial side of the business.  But it’s impossible to legislate every potential down-the-road situation ahead of time. That’s why one of the 13 core values at Return Path is

We believe in doing the right thing

I’ll admit that more than most of our values, this one sounds like Motherhood and Apple pie. Who doesn’t want to do the right thing?  The reason this value is an important part of our culture is that when we are in a tough situation, we stop and ask ourselves the most basic, yet thought provoking question — what’s the right thing to do here?

• When you fire an employee immediately before a major block of stock options vest, what’s the right thing to do?  Vest the options
• When you have a client who for some reason can no longer use your product or service or legitimately can’t pay their bill, what’s the right thing to do?  Let them out of their agreement, or at least let them suspend their agreement, even if it’s a long term contract
• When you make a payroll mistake and the employee doesn’t notice it but you discover it after the fact, what’s the right thing to do?  Let the employee know…and make them whole (the reverse is true of course as well, in cases where employees are the beneficiaries of an unnoticed payroll error – the right thing is to let the company know and make the company whole)
• When you have a choice of a car service (price equal) that runs only hybrid cars or more luxurious gas guzzlers for your routine trips to the airport, what’s the right thing to do?  Go green, baby!
• When you make a mistake and a client is adversely impacted but doesn’t notice it, what’s the right thing to do?  Fess up, quickly and thoroughly

I’m sure we don’t always get the tough calls right. That’s part of being a community of humans with emotions and faults. But we know that our reputation as a business goes well beyond following our policies and contracts and try to do the right thing as circumstances dictate.

Protecting the Inbox

We only have one out of our 13 core values at Return Path that’s closely related to the content of our business. But as with the other values, it says a lot about who we are and how we approach the work that we do. That value is:

We believe inboxes should only contain messages that are relevant, trusted, and safe

We occupy a pretty unique space in the email universe – we serve senders and receiving networks, but aren’t directly in the mail stream and therefore don’t directly touch end users.  So much of our business, from our Certification or whitelisting business, to our new Domain Assurance anti-spoofing/anti-phishing business, revolves around building trust in our company that this core value is critical to our survival. If we ran afoul of this core value — and it comes up all the time — we’d be dead in the water.

Here’s how it comes up:  because our Certification program is the closest thing on the Internet to guaranteed universal email delivery, every spammer and grey mailer in the world wants to be on it. We don’t just SELL access to our whitelist. Even once a prospect has been converted to an under-contract client, they have to APPLY for Certification.

It’s not easy to GET Certified. You have to be a really, really good mailer. Not just a real entity. Not just a big spender. You have to send mail that is safe and secure and wanted by end users. We have a variety of qualitative and quantitative methods we can use to determine this, and the requirements for Certified status and therefore Inbox placement are carefully negotiated and regularly reviewed with our ISP partners. Once a client is Certified, it’s not easy to STAY Certified because we are monitoring all of those same standards in real time, 24×7. Clients who go out of bounds get immediately suspended from the program until they are back in bounds. Clients who go out of bounds enough, we just terminate from the program for good.

By the way, just because we won’t certify a particular client isn’t an indictment that they are a spammer. It just means that their email programs still need to be subject to all the state of the art filtering and security measures that our ISPs have in their arsenal.  And most of the time, it doesn’t mean that we won’t work with them to improve the quality of their mail programs so their messages are relevant, trusted, and safe.

But at the end of the day, we’d rather not take money from questionable clients than compromise the quality of our Certification program. That’s a hard decision to make sometimes.  I’ve had to call large clients who are poor mailers and fire them more than once, and I’ve had to take angry phone calls and threatened legal action from clients or prospects many times over the years.  But for us, respect for end users and inbox security are deeply baked into the culture.  It’s why we developed the Domain Assurance product and launched it earlier this year.  And that’s why it’s one of our core values.

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.

Building the Company vs. Building the Business

I was being interviewed recently for a book someone is writing on entrepreneurship, which focused on identifying the elements of my “playbook” for entrepreneurial success at Return Path.  I’m not sure I’ve ever had a full playbook, though I’ve certainly documented pieces of it in this blog over the years.  One of the conversations we had in the interview was around the topic of building the company vs. building the business.

The classic entrepreneur builds the business — quite frankly, he or she probably just builds the product for a long time first, then the business.  In the course of the interview, I realized that I’ve spent at least as much energy over the years building the company concurrently with the product/business.  In fact, in many ways, I probably spent more time building the company in the early years than the business warranted given its size and stage.  This is probably related to my theme from a few months ago about building Return Path “Backwards.”

What do I mean by building the company as opposed to building the business?

• Building the business means obsessing over things like product features, getting traction with early clients, competition, and generating buzz
• Building the company means obsessing over things like HR policies, company values and culture, long-term strategy, and investor reporting

In the early years, I did some things that now seem crazy for a brand new, 25-person company, like designing a sabbatical policy that wouldn’t kick in until an employee’s 7th anniversary.  But I don’t regret doing them, and I don’t think they were wasted effort in the long run, even if they were a little wasted in the short run.  I think working on company-building early on paid benefits in two ways for us:

1. They helped lay the groundwork for scaling – what we’re finding now as we are trying to rapidly scale up the business, and even over the last few years since we’ve been scaling at a moderate pace, is that we are doing so on a very solid foundation
2. The company didn’t die when the product and business died – because we had built a good company, when our original ECOA business basically proved to be a loser back in 2002, it was a fairly obvious decision (on the part of both the management team and the venture syndicate) to keep the business going but pivot the business, more than once

Starting about four years ago, for the first time, I felt like we had a great business to match our great company.  Now that those two things are in sync, we are zooming forward at an amazing pace, and we’re doing it perhaps more gracefully than we would be doing it if we hadn’t focused on building the company along the way.

I’m not saying that there’s a right path or a wrong path here when you compare business building with company building, although as I wrote this post, my #2 conclusion above is a particularly poignant one, that without a strong company, we wouldn’t be here 12 years later.  Of course, you could always argue that if I’d spent more time building the business and less time building the company, we might have succeeded sooner.  In the end, a good CEO and management team must be concerned about getting both elements right if they want to build an enduring stand-alone company.

Retail, No Longer

I’ve evolved my operating system as a CEO many times over the years as our business at Return Path has changed and as the company has scaled up.  I’ve changed my meeting routines, I’ve delegated more things, and I’ve gotten less in the details of the business.

But there’s one specific thing where I’ve remained very “retail,” or on the front lines, and that is the interview process.  I still interview every new hire, usually on the phone or Skype and in most cases only for 15-30 minutes, and then I also do an in-person 15-30 minute check-in when someone is around the 90-day mark as an employee.  For me, these have both been great mechanisms for collecting data about the organization, for making a personal impression on the culture, and for continuing to get to know all employees, at least a little bit.

But the system is starting to break as we scale.  Last year, we hired 82 people.  In the first six months of this year, we hired 80 more.  My calendar is groaning under the strain — and I assume, though they’ve never uttered a complaint about it, that my assistant and our recruiters feel like they’re playing a game of Sudoku with invisible ink trying to make it all work.

So today I changed the policy.  I’ll still do interviews and 90-day check-ins for all manager hires, but otherwise I’m delegating it to my staff.  We all feel that it’s critical for executives to stay as close as possible to the front lines, so we’ll share in the responsibilities.

It’s definitely a bittersweet moment.  It’s great that we’re big and growing fast, and it’s important for us to evolve.  But I will miss the personal connections with everyone, and I’ll have to work harder just to remember names as I walk through the hallways, particularly of our Colorado office, which has the majority of our staff but which I only visit 6-8 times/year.

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.

Learning to Embrace Sizzle

One phrase I’ve heard a lot over the years is about “Selling the sizzle, not the steak.”  It suggests that in the world of marketing or product design, there is a divergence between elements of substance and what I call bright shiny objects, and that sometimes it’s the bright shiny objects that really move the needle on customer adoption.

At Return Path, we have always been about the steak and NOT the sizzle.  We’re incredibly fact-based and solution-oriented as a culture.  In fact, I can think of a lot of examples where we have turned our nose up at the sizzle over the years because it doesn’t contribute to core product functionality or might be a little off-point in terms of messaging.  How could we possibly spend money (or worse – our precious development resources) on something that doesn’t solve client problems?

Well, it turns out that if you’re trying to actually sell your product to customers of all shapes and sizes, sizzle counts for a lot in the grand scheme of things.  There are two different kinds of sizzle in my mind, product and marketing — and we are thinking about them differently.

Investing in product sizzle (e.g., functionality that doesn’t actually do much for clients but which sells well, or which they ask for in the sales process) is quite frustrating since (a) it by definition doesn’t create a lot of value for clients, and (b) it comes at the expense of building functionality that DOES create a lot of value.  The way we’re getting our heads around this seemingly irrational construct is to just think of these investments as marketing investments, even though they’re being made in the form of engineering time.  I suppose we could even budget them as such.

Marketing sizzle is in some ways easier to wrap our heads around, and in some ways tougher.  It’s easier because, well, it doesn’t cost much to message sizzle — it’s just using marketing as a way of convincing customers to buy the whole solution, knowing the ROI may come from the steak even as the PO is coming from the sizzle.  But it’s tough for us as well not to position the ROI front and center.  As our Marketing Department gets bigger, better, and more seasoned, we are finding this easier to come by, and more rooted in rational thought or analysis.

In the last year or two, we have done a better job of learning to embrace sizzle, and I expect we’ll continue to do that as we get larger and place a greater emphasis on sales and marketing — part of my larger theme of how we’ve built the business backwards.  Don’t most companies start with ONLY sizzle (vaporware) and then add the steak?