(Post 1 of 4 in the series of Scaling CPDO’s).

For most startups the idea of hiring a CBDO is a pipedream, it’s a role that only global corporations have, right? After all, strategic partnerships and M&A are rare events for a startup and can be handled by the founder/CEO, or potentially by someone in Sales.  If a startup is partner or channel heavy, those areas may be the focus of the Sales team in general.  Or, if there is sporadic M&A activity that can be handled by external advisors or bankers. So how do you know when it’s time to hire your first CBDO?

You know it’s time to hire a CBDO when you are spending too much of your own time on things that a CBDO could be doing. When a deal shows up, it’s a mountain of work because there are countless meetings and conversations both internal and external to the company and with your board; there’s a ton of due diligence that needs to be done, and there’s always thinking about the strategic roadmap moving forward. The problem is that you can’t control when a deal shows up but once it does, a series of processes and tasks that are time-dependent kick in and it can consume all of your bandwidth. It’s worth it to hire a CBDO if you think you’re only going to do one deal just to take all that effort off your plate.

Another sign that you should hire a CBDO is if your board asks you for your M&A roadmap, and you don’t have a great answer and aren’t sure how to get to one. For a startup the stratetgic roadmap might just be to grow the company any way they can, but for a scaleup you’ll have to be much more thoughtful about strategic growth, you’ll need to have metrics, benchmarks, and timelines, you’ll need to know whether you can hit those milestones organically or whether you need to partner, acquire, or sell off parts of the business. A CBDO not only thinks about all the nuances of a stratetgic roadmap, but has done the work to make it easy to pull the trigger when the opportunity arises.

A more practical solution for many startups is to consider a fractional CBDO. A fractional CBDO may be the way to go if you need help defining your partnership or M&A strategy, or you need help creating a market map and you don’t want to rely on an external advisor or banker for those. A fractional CBDO can also help execute a couple of M&A transactions that are too small for a banker so if you’re not sure about whether or not a full-time CBDO makes sense for you, you can experiment with smaller deals first. A fractional CBDO could also help define a major new strategic building block like “creating an indirect sales channel” or “international expansion,” and work with you and your whole leadership team together to create that, especially if no one at your company has experience in doing that. 

You can find this post on the Bolster Blog here.

Book Short:  a Corporate Team of Rivals

One of the many things I have come to love about the Christmas holiday every year is that I get to go running in Washington DC.  Running the Monuments is one of the best runs in America.  Today, at my mother-in-law’s suggestion, I stopped i8n at the Lincoln Memorial mid-run and read his second inaugural address again (along with the Gettysburg Address).  I had just last week finished Doris Kearns Goodwin’s Team of Rivals:  The Political Genius of Abraham Lincoln, and while I wasn’t going to blog about it as it’s not a business book, it’s certainly a book about leadership from which any senior executive or CEO can derive lessons.

Derided by his political opponents as a “second-rate Illinois lawyer,” Lincoln, who arrived somewhat rapidly and unexpectedly on the national scene at a time of supreme crisis, obviously more than rose to the occasion and not only saved the nation and freed the slaves but also became one of the greatest political leaders of all time.  He clearly had his faults — probably at the top of the list not firing people soon enough like many of his incompetent Union Army generals — but the theme of the book is that he had as one of his greatest strengths the ability to co-opt most of his political rivals and get them to join his cabinet, effectively neutering them politically as well as showing a unity government to the people.

This stands in subtle but important contrast to George Washington, who filled his cabinet with men who were rivals to each other (Hamilton, Jefferson) but who never overtly challenged Washington himself.

Does that Team of Rivals concept — in either the Lincoln form or the Washington form — have a place in your business?  I’d say rarely in the Lincoln sense and more often in the Washington sense.

Lincoln, in order to be effective, didn’t have much of a choice.  Needing regional and philosophical representation on his cabinet at a time of national crisis, bringing Seward, Chase, and Bates on board was a smart move, however much a pain in the ass Chase ended up being.  There certainly could be times when corporate leadership calls for a representative executive team or even Board, for example in a massive merger with uncertain integration or in a scary turnaround.  But other than extreme circumstances like that, the Lincoln model is probably a recipe for weak, undermined leadership and heartache for the boss.

The Washington model is different and can be quite effective if managed closely.  One could argue that Washington didn’t manage the seething Hamilton and frothy Jefferson closely enough, but the reality is that the debates between the two of them in the founding days of our government, when well moderated by Washington, forged better national unity and just plain better results than had Washington had a cabinet made up of like-minded individuals.  As a CEO, I love hearing divergent opinion on my executive team.  That kind of discussion is challenging to manage — at least in our case we don’t have people at each other’s throats — but as long as you view your job as NOT to create compromises to appease all factions but instead to have the luxury of hearing multiple well articulated points of view as inputs to a decision you have to make, then you and your company end up with a far, far better result.

Comment on Political versus Corporate Leadership, Part II: Admitting Mistakes

My colleague Mike Mayor writes:

So you’e only asking for politicians to be honest Matt? Is that all? 🙂

Couldn’t agree more on the CEO side. A CEO who cannot admit to failure is doomed to be surrounded by “yes men” and, therefore, must go it alone, whereas the CEO who admits to having the odd bad idea every now and then is more likely to get truthful and accuruate information from those around him/her. Which scenario would you prefer to base your next decision on?

However, I look more to Hollywood for fostering the faux CEO/Board Room stereotypes, not politics. Look no further than the highest ranked show among 18 to 46 year olds: The Apprentice. Trump is just one contemporary example of successfully perpetuating the “kill or be killed” mentality of the ideal CEO. In his book, “How to Get Rich” one of his lessons is to “never take the blame for anything” (meanwhile Trump gets rich by being a caricature of a CEO).

The ideal CEO needs to set the example for the behavior of his employees, and creates opportunities by building relationships not “squashing the competition.” And like it or not, the ideal Board Room is actually a Think Tank of great minds working toward a common goal rather than a place to play mind games and mental poker.

Unfortunately, both of these things make for a horrible TV show but do contribute to building truly great companies! On the other hand, watch too many TV shows (or follow the politician’s lead) and you’ll likely become a CEO whose success is comparable to the CEOs of Enron and Tyco.

Political versus Corporate Leadership, Part III: The First Debate

Well, there you have it. Both of my first two postings on this subject — Realism vs. Idealism and Admitting Mistakes — came up in last night’s debate.

At one point, in response to Kerry’s attempted criticism of him for expressing two different views on the situation in Iraq, Bush responded that he thought he could — and had to — be simultaneously a realist and an optimist. And a few minutes later, Kerry admitted a mistake and brilliantly turned the tables on Bush by saying something to the effect of “I made a mistake in how I talked about Iraq, and he made a mistake by taking us to war with Iraq — you decide which is worse.”

So each candidate exhibited at least one of the traits of good corporate leadership, but on this front anyway, I think Kerry did a better job last night in turning one of his mistakes into a zinger against his opponent.

Book Short:  Internet Fiction

It’s been a long time since I read Tom Evslin’s Hackoff.com, which Tom called a “blook” since he released it serially as a blog, then when it was all done, as a bound book.  Mariquita and I read it together and loved every minute of it.  One post I wrote about it at the time was entitled Like Fingernails on a Chalkboard.

The essence of that post was “I liked it, but the truth of the parts of the Internet bubble that I lived through were painful to read,” applies to two “new” works of Internet fiction that I just plowed through this week, as well.

Uncommon Stock

Eliot Pepper’s brand new startup thriller, Uncommon Stock, was a breezy and quick read that I enjoyed tremendously. It’s got just the right mix of reality and fantasy in it. For anyone in the tech startup world, it’s a must read. But it would be equally fun and enjoyable for anyone who likes a good juicy thriller.

Like my memory of Hackoff, the book has all kinds of startup details in it, like co-founder struggles and a great presentation of the angel investor vs. VC dilemma. But it also has a great crime/murder intrigue that is interrupted with the book’s untimely ending.  I eagerly await the second installment, promised for early 2015.

The Circle

While not quite as new, The Circle  has been on my list since it came out a few months back and since Brad’s enticing review of it noted that:

The Circle  was brilliant. I went back and read a little of the tech criticism and all I could think was things like “wow – hubris” or “that person could benefit from a little reflection on the word irony”… We’ve taken Peter Drucker’s famous quote “‘If you can’t measure it, you can’t manage it” to an absurd extreme in the tech business. We believe we’ve mastered operant conditioning through the use of visible metrics associated with actions individual users take. We’ve somehow elevated social media metrics to the same level as money in the context of self-worth.

So here’s the scoop on this book.  Picture Google, Twitter, Facebook, and a few other companies all rolled up into a single company.  Then picture everything that could go wrong with that company in terms of how it measures things, dominates information flow, and promotes social transparency in the name of a new world order.  This is Internet dystopia at its best – and it’s not more than a couple steps removed from where we are.  So fiction…but hardly science fiction.

The Circle  is a lot longer than Uncommon Stock and quite different, but both are enticing reads if you’re up for some internet fiction.

Book Short:  Internet Fiction, part II

I hate to write a lame post, but here’s what I wrote earlier in the year about Eliot Peper’s first Internet thriller, Uncommon Stock:

Eliot Pepper’s brand new startup thriller, Uncommon Stock, was a breezy and quick read that I enjoyed tremendously. It’s got just the right mix of reality and fantasy in it. For anyone in the tech startup world, it’s a must read. But it would be equally fun and enjoyable for anyone who likes a good juicy thriller.

Like my memory of Hackoff, the book has all kinds of startup details in it, like co-founder struggles and a great presentation of the angel investor vs. VC dilemma. But it also has a great crime/murder intrigue that is interrupted with the book’s untimely ending.  I eagerly await the second installment, promised for early 2015.

Having just finished that second installment, called Uncommon Stock: Power Play, basically I want to say “ditto.”  Power Play was just as good as the first book, and now I can’t wait for the third. Where the first installment’s startup focus was around funding and founder dynamics, this one’s startup focus was around shipping product and customers. The thriller part was just as juicy.

It’s also kind of fun reading about the Boulder startup scene, especially from a writer who doesn’t and who has never spent a ton of time there. He gets some things remarkably accurate with crisp descriptions. I was kind of hoping for a cameo by Brad, at least in the form of a throw-away comment about the “long haired homeless-looking investor in the corner of Frasca.”

Book Short:  The Little Engine that Could

Authors Steven Woods and Alex Shootman would make Watty Piper proud.  Instead of bringing toys to the children on the other side of the mountain, though, this engine brings revenue into your company.  If you run a SaaS business, or really if you run any B2B business, Revenue Engine:  Why Revenue Performance Management is the Next Frontier of Competitive Advantage, will change the way you think about Sales and Marketing. The authors, who were CTO and CRO of Eloqua (the largest SaaS player in the demand management software space that recently got acquired by Oracle), are thought leaders in the field, and the wisdom of the book reflects that.

The book chronicles the contemporary corporate buying process and shows that it has become increasingly like the consumer buying process in recent years.  The Consumer Decision Journey, first published by McKinsey in 2009, chronicles this process and talks about how the traditional funnel has been transformed by the availability of information and social media on the Internet.  Revenue Engine moves this concept to a B2B setting and examines how Marketing and Sales are no longer two separate departments, but stewards of a combined process that requires holistic analysis, investment decisions, and management attention.

In particular, the book does a good job of highlighting new stages in the buying process and the imperatives and metrics associated with getting this “new funnel” right.  One that resonated particularly strongly with me was the importance of consistent and clean data, which is hard but critical!  As my colleague Matt Spielman pointed out when we were discussing the book, the one area of the consumer journey that Revenue Engine leaves is out is Advocacy, which is essential for influencing the purchase process in a B2B environment as well.

One thing I didn’t love about the book is that it’s a little more theoretical than practical. There aren’t nearly enough detailed examples.  In fact, the book itself says it’s “a framework, not an answer.”  So you’ll be left wanting a bit more and needing to do a bit more work on your own to translate the wisdom to your reality, but you’ll have a great jumping off point.

Book short:  Life Isn’t Just a Wiki

One of the best things I can say about Remote: Office Not Required,  by Jason Fried and David Heinemeier Hansson, is that it was short.  That sounds a little harsh – part of what I mean is that business books are usually WAY TOO LONG to make their point, and this one was blessedly short.  But the book was also a little bit of an angry rant against bad management wrapped inside some otherwise good points about remote management.

The book was a particularly interesting read juxtaposed against Simon Sinek’s Leaders Eat Last which I just finished recently and blogged about here, which stressed the importance of face-to-face and in-person contact in order for leaders to most effectively do their jobs and stay in touch with the needs of their organizations.

The authors of Remote, who run a relatively small (and really good) engineering-oriented company, have a bit of an extreme point of view that has worked really well for their company but which, at best, needs to be adapted for companies of other sizes, other employee types, and other cultures.  That said, the flip side of their views, which is the “everyone must be at their cubicle from 9 to 5 each day,” is even dumber for most businesses these days.  As usual with these things, the right answer is probably somewhere in between the extremes, and I was reminded of the African proverb, “If you want to go fast, go alone. If you want to go farm go together” when I read it.  Different target outcomes, different paths.

I totally agree with the authors around their comments about trusting employees and “the work is what matters.”  And we have a ton of flexibility in our work at Return Path.  With 400 people in the company, I personally spend six weeks over the summer working largely remote, and I value that time quite a bit.  But I couldn’t do it all the time.  We humans learn from each other better and treat each other better when we look at each other face to face.  That’s why, with the amount of remote work we do, we strongly encourage the use of any form of video conferencing at all times.  The importance of what the authors dismiss as “the last 1 or 2% of high fidelity” quality to the conversation is critical.  Being in person is not just about firing and hiring and occasional sync up, it’s about managing performance and building relationships.

Remote might have been better if the authors had stressed the value that they get out of their approach more than ranting against the approaches of others.  While there are serious benefits of remote work in terms of cost and individual productivity (particularly in maker roles), there are serious penalties to too much of it as well in terms of travel, communication burden, misunderstandings, and isolation.  It’s not for everyone.

Thanks to my colleague Hoon Park for recommending this to me.  When I asked Hoon what his main takeaway from the book was, he replied:

The importance of open communication that is archived (thus searchable), accessible (transparent and open to others) and asynchronous (doesn’t require people to be in the same place or even the same “timespace”).  I love the asynchronous communication that the teams in Austin have tried: chatrooms, email lists (that anyone can subscribe to or read the archives of), SaaS project management tools. Others I would love to try or take more advantage of include internal blogs (specifically the P2 and upcoming O2 WordPress themes; http://ma.tt/2009/05/how-p2-changed-automattic/), GitHub pull requests (even for non-code) and a simple wiki.

These are great points, and good examples of the kinds of systems and processes you need to have in place to facilitate high quality, high volume remote work.

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)

5 Ways to Get Your Staff on the Same Page

[This post first appeared as an article in Entrepreneur Magazine as part of a new series I’m publishing there in conjunction with my book, Startup CEO:  A Field Guide to Scaling Up Your Business]

When a major issue arises, is everybody at your company serving the same interests? Or is one person serving the engineering team, another person serving the sales team, one board member serving the VC fund, another serving the early-stage “angels” and another serving the CEO? If that’s the case, then your team is misaligned. No individual department’s interests are as important as the company’s.

To align everyone behind your company’s interests, you must first define and communicate those goals and needs. This requires five steps:

1. Define the mission. Be clear to everyone about where you’re going and how you’re going to get there (in keeping with your values).
2. Set annual priorities, goals, and targets. Turn the broader mission into something more concrete with prioritized goals and unambiguous success metrics.
3. Encourage bottom-up planning. You and your executive team need to set the major strategic goals for the company, but team members should design their own path to contribution. Just be sure that you or their managers check in with them to assure that they remain in synch with the company’s goals.
4. Facilitate the transparent flow of information and rigorous debate. To help people calibrate the success, or insufficiency, of their efforts, be transparent about how the organization is doing along the way. Your organization will make better decisions when everyone has what they need to have frank conversations and then make well-informed decisions.
5. Ensure that compensation supports alignment (or at least doesn’t fight it). As selfless as you want your employees to be, they’ll always prioritize their interests over the company’s. If those interests are aligned – especially when it comes to compensation – this reality of human nature simply won’t be a problem.

Taken in sequence, these steps are the formula for alignment. But if I had to single out one as the most important, it would be number 5: aligning individual incentives with companywide goals.

It’s always great to hear people say that they’d do their jobs even if they weren’t paid to, but the reality of post-lottery-jackpot job retention rates suggests otherwise. You, and every member of your team, “work” for pay. Whatever the details of your compensation plan, it’s crucial that it aligns your entire team behind the company’s best interests.

Don’t reward marketers for hitting marketing milestones while rewarding engineers to hit product milestones and back office personnel to keep the infrastructure humming. Reward everybody when the company hits its milestones.

The results of this system can be extraordinary:

• Department goals are in alignment with overall company goals. “Hitting product goals” shouldn’t matter unless those goals serve the overall health of your company. When every member of your executive team – including your CTO – is rewarded for the latter, it’s much easier to set goals as a company. There are no competing priorities: the only priority is serving the annual goals.
• Individual success metrics are in alignment with overall company success metrics. The one place where all companies probably have alignment between corporate and departmental goals is in sales. The success metrics that your sales team uses can’t be that far off from your overall goals for the company. With a unified incentive plan, you can bring every department into the same degree of alignment. Imagine your general counsel asking for less extraneous legal review in order to cut costs
• Resource allocation serves the company, rather than individual silos. If a department with its own compensation plan hits its (unique) metrics early, members of that team have no incentive to pitch in elsewhere; their bonuses are secure. But if everyone’s incentive depends on the entire company’s performance, get ready to watch product leads offering to share developers, unprompted.

This approach can only be taken so far: I can’t imagine an incentive system that doesn’t reward salespeople for individual performance. And while everyone benefits when things go well, if your company misses its goals, nobody should have occasion to celebrate. Everybody gets dinged if the company doesn’t meet its goals, no matter how well they or their departments performed. It’s a tough pill to swallow, but it also important preventive medicine.

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.