Complex Collaborations

I just read a new book entitled Business Without Boundaries:  An Action Framework for Collaborating Across Time, Distance, Organization, and Culture.  I happen to know one of the authors, Don Mankin, who was on our trip to Antarctica last year.  The book is a good, quick read for anyone running an organization that requires any degree of complex collaboration, whether in the form of multiple offices with a single company, close relationships with suppliers or customers or channel partners, or even a joint venture.

Mankin and his co-author Susan Cohen present three case studies:  John Deere, Radica, and Solectron.  They then tie their learnings together into a solid framework that’s almost a how-to checklist for organization leaders to follow.  While the writers take an academic approach, the learnings and framework steps presented are anything but academic — they place a huge premium, for example, on relationship building and communication patterns.  These are all things we’ve worked through over the years at Return Path, whether managing employees across multiple offices  or in working with some of our reseller partners or clients.

All in, it’s a good read — and not just because I hung out with this guy in an igloo for two weeks!

Book Short: Beyond 10,000 Hours

In Outliers: The Story of Success, by Malcolm Gladwell (post, buy), we are taught, among other things, that it takes 10,000 hours of practice to become an expert at something, as well as a dash of luck and timing, as opposed to huge amounts of innate and unique talent.  In Talent is Overrated, by Geoff Colvin, this theory comes to life, with a very clear differentiating point – it’s not just logging the 10,000 hours, it’s HOW the hours are spent.

Colvin’s main point is that the hours need to be spent in what he calls “deliberate practice.”  The elements of deliberate practice are best explained with his example of Jerry Rice, although you can apply these to any discipline:

• He spent very little time playing football (e.g., most of his practice was building specific skills, not playing the game)
• He designed his practice to work on specific needs
• While supported by others, he did much of the work on his own (e.g., it can be repeated a lot, and there are built-in feedback loops)
• It wasn’t fun
• He defied the conventional limits of age

If you’re the kind of person who cares deeply about your own performance, let alone the performance of people around you, it doesn’t take long to be completely riveted by Colvin’s points.  They ring true, and his examples are great and cross a lot of disciplines (though not a ton about business in particular).  I wasn’t 50% done with the book before I had made my list of three key things that I need to Deliberately Practice.

There are some other great aspects to the book as well — including a section on Making Organizations Innovative, from creating a culture of innovation to allowing people the freedom to think, to a section on where passion and drive come from, but hopefully this post conveys the gist of it all.  Want to be a better CEO?  Or a better anything?  This is a good place to start the process.

Thanks to Greg Sands for sending me this excellent book.  I’m going to work it into my rotation for Return Path anniversary presents.

The Value of Ownership

We believe in ownership at Return Path.  One of our 13 core values, as I noted in my prior post, which kicks off a series of 13 posts, is:

We are all owners in the business and think of our employment at the company as a two-way street

We give stock options to every employee, and we regularly give additional grants to employees as well, as their initial grants vest, as they get promoted into more senior roles, and as they earn them through outstanding performance.  But beyond giving those grants out, we regularly remind people that they are part owners of the business, and we encourage them to act that way.  Among other mechanisms for this is an award we allow employees to give out to one another (through a regular mechanism we have for this, which I’ve written about in the past here), the Think Like an Owner award.

One great example of how this value appears in the workplace is that, more often than not, our people think about how to invest money rather than how to spend it.  I wish this happened 100% of the time, and we’re working towards that, but for the most part, people here don’t talk about things like “budget,” “headcount,” and “spend” the way they do at other companies.

Another example is around the “two-way street” concept written into the value statement.  We trust our employees to make every effort to do right by the company, and we make every effort to right by employees in return.  Among other things, we don’t have a formal vacation policy. People are encouraged to take as much vacation as they can, at least 3-4 weeks per year.  We track the days just to make sure people are in fact taking time off, but we don’t have a limit, and we also don’t let people accumulate compensation if they don’t take the time off.  We decided at some point – we don’t count how many hours people work, why should we count the hours they don’t?  We trust that people will get their jobs done, and if they don’t, they will suffer other consequences.  The result of this policy is that people are basically taking the same amount of vacation time they took before, maybe slightly more, but they are liberated from fretting over their time if they want or need extra days or half days here or there.

Two other examples are things we started more recently.  One is called OTB Day, which stands for “On The Business.”  Having a full day set aside each month that is meeting-free and travel-free is a way of carving time out for people to take a step back from their day-to-day jobs of working IN the business so every single employee can spend a relatively distraction-free day being thoughtful about working ON the business and figuring out how we can reinvent and reimagine things as opposed to just doing them.  The other is the concept of a Hack-a-thon.  A lot has been written about this topic on lots of other blogs, but fundamentally, this is about trusting that our whole employee population (these are open to everyone, not just engineers) can figure out how to spend two days’ time wisely working on “outside” projects.

The dividends just keep accumulating as we get larger and as the culture of ownership becomes more and more ingrained.  How owner-like do your employees feel about your company?

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.

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.