Scaling the Team

(This post was requested by my long-time Board member Fred Wilson and is also running concurrently on his blog today.  I’ll be back with the third and fourth installments of “The Best Laid Plans” next Thursday and the following Thursday)

When Return Path reached 100 employees a few years back, I had a dinner with my Board one night at which they basically told me, “Management teams never scale intact as you grow the business.  Someone always breaks.”  I’m sure they were right based on their own experience; I, of course, took this as a challenge.  And ever since then, my senior management team and I have become obsessed with scaling ourselves as managers.  So far, so good.  We are over 300 employees now and rapidly headed to 400 in the coming year, and the core senior management team is still in place and doing well.  Below are five reasons why that’s the case.

1. We appreciate the criticality of excellent management and recognize that it is a completely different skill set from everything else we have learned in our careers.  This is like Step 1 in a typical “12-step program.”  First, admit you have a problem.  If you put together (a) management is important, (b) management is a different skill set, and (c) you might not be great at it, with the standard (d) you are an overachiever who likes to excel in everything, then you are setting the stage for yourself to learn and work hard at improving at management as a practice, which is the next item on the list.
2. We consistently work at improving our management skills.  We have a strong culture of 360 feedback, development plans, coaching, and post mortems on major incidents, both as individuals and as a senior team.  Most of us have engaged on and off over the years with an executive coach, for the most part Marc Maltz from Triad Consulting.  In fact, the team holds each other accountable for individual performance against our development plans at our quarterly offsites.  But learning on the inside is only part of the process.
3. We learn from the successes and failures of others whenever possible.  My team regularly engages as individuals in rigorous external benchmarking to understand how peers at other companies – preferably ones either like us or larger – operate.  We methodically pick benchmarking candidates.  We ask for their time and get on their calendars.  We share knowledge and best practices back with them.  We pay this forward to smaller companies when they ask us for help.  And we incorporate the relevant learnings back into our own day to day work.
4. We build the strongest possible second-level management bench we can to make sure we have a broad base of leadership and management in the company that complements our own skills.  A while back I wrote about the Peter Principle, Applied to Management that it’s quite easy to accumulate mediocre managers over the years because you feel like you have to promote your top performers into roles that are viewed as higher profile, are probably higher comp – and for which they may be completely unprepared and unsuited.  Angela Baldonero, my SVP People, and I have done a lot here to ensure that we are preparing people for management and leadership roles, and pushing them as much as we push ourselves.  We have developed and executed comprehensive Management Training and Leadership Development programs in conjunction with Mark Frein at Refinery Leadership Partners.  Make no mistake about it – this is a huge investment of time and money.  But it’s well worth it.  Training someone who knows your business well and knows his job well how to be a great manager is worth 100x the expense of the training relative to having an employee blow up and needing to replace them from the outside.
5. We are hawkish about hiring in from the outside.  Sometimes you have to bolster your team, or your second-level team.  Expanding companies require more executives and managers, even if everyone on the team is scaling well.  But there are significant perils with hiring in from the outside, which I’ve written about twice with the same metaphor (sometimes I forget what I have posted in the past) – Like an Organ Transplant and Rejected by the Body.  You get the idea.  Your culture is important.  Your people are important.  New managers at any level instantly become stewards of both.  If they are failing as managers, then they need to leave.  Now.

I’m sure there are other things we do to scale ourselves as a management team – and more than that, I’m sure there are many things we could and should be doing but aren’t.  But so far, these things have been the mainstays of happily (they would agree) proving our Board wrong and remaining intact as a team as the business grows.

Powerpointless

We tried an experiment last week at a Return Path Board meeting — and not just a regular Board meeting, but our once-a-year, full-day (~9 hour) annual planning session attended in person by all Board members, observers, and executives.  First, a little background.

We have been driving two important trends over the years at our Board meetings:

1. Focusing on the future, not the past.  In the early years of the business, our Board meetings were probably 75% “looking backwards” and 25% “looking forwards.”  They were reporting meetings — reports which were largely in the hands of Board members before the meetings anyway.  They were dull as all get out.  This past meeting was probably 10% “looking backwards” and 90% “looking forwards” and much more interesting as a result.

2. Focusing on creating a more engaging dialog during the meeting by separating out “background reading” vs. “presentation materials.”  We used to do a huge Powerpoint deck as both a handout the week before the meeting and as the in-meeting deck.  Then we separated the two things so people weren’t bored by the Powerpoint.  Then we started making the decks more fun and engaging and “zen.”  This meeting took the trend to its logical conclusion, which was that we sent out a great set of comprehensive reading materials and reports ahead of the meeting, and then…

…we didn’t have a single Powerpoint slide to run the meeting.  We thought that the best way to foster two-way dialog in the meeting was to change the paradigm away from a presentation — the whole concept of “management presenting to the Board” was what we were trying to change, not just what was on the wall.  The result was fantastic.  We had a very long meeting, but one where everyone — management and Board alike — was highly engaged.  No blackberries or iPhones.  Not too many yawns or walkabouts.  It was literally the best Board meeting we’ve had in almost 10 years of existence, out of probably 75 or 80 total.

I’m not sure this would work for all companies at all stages at all times, and we had a handful of graphics “ready to go” in case we wanted to shoot something up on the wall, as we likely will always have.  But I can’t say enough about how this evolution in meeting setup and execution changed the dynamic.

Good Meeting Behavior

I've been in meetings with large groups of people at big companies where they're all on laptops the whole meeting, no one makes any eye contact with the speaker/facilitator, and it's hard to get a pulse out of the group as a result.

I almost entirely stopped bringing laptops and smartphones into business meetings a few years back.  There's nothing I find more irritating than when other people are using them when it's my meeting.  Even if they're taking notes, I never know if they're really taking notes or sneaking a peek at email.  And in my experience, people who are on laptops and phones in meetings, whatever they're doing on those devices and however good they are at multi-tasking, aren't paying as close attention to the meeting as the other people in the room. 

What I do instead is take notes on paper and spend 2 minutes after the meeting handling whatever data entry I need to handle on my computer.

I was very excited to see Brad's post about how he is now going to take paper notes in Board meetings rather than use his smartphone and be tempted to check email (and otherwise be distracted).  Everyone should do this for every meeting.  Board meetings are important examples, but they're not alone.  It's just good meeting behavior.  If you have other things to do, step out of the meeting and do them.

Book Short:  Be Less Clever

In Search of the Obvious: The Antidote for Today’s Marketing Mess, by Jack Trout, is probably deserving of a read by most CEOs.  Trout at this point is a bit old school and curmudgeonly, the book has some sections which are a bit repetitive of other books he and his former partner Al Reis have written over the years, he does go off on some irrelevant rants, and his examples are a bit too focused on TV advertising, BUT his premise is great, and it’s universally applicable.  So much so that my colleagues Leah, Anita, and I had “book club” about it one night last week and had a very productive debate about our own positioning and marketing statements and how obvious they were (they need work!).

The premise in short is that, in advertising:

Logical, direct, obvious = relevant, and

Entertaining, emotional = irrelevant

And he’s got data to back it up, including a great case study from TiVo on which ads are skipped and not skipped – the ones that aren’t skipped are from companies like Bowflex, Hooters, and the Dominican Republic, where the presentation of the ad is very direct, explanatory of the product, and clear.  His reasons why advertising have drifted away from the obvious are probably right, ranging from the egos of marketing people, to CEOs being to disconnected from marketing, to the rise in importance of advertising awards, and his solution, of course is to refocus on your core positioning/competitive positioning.

It is true that when the only tool in your box is a hammer, everything starts to look a bit like a nail, but Trout is probably right in this case.  He does remind us in this book that “Marketing is not a battle of products. It is a battle of perceptions”– words to live by.

And some of his examples of great obvious advertising statements, either real or ones he thinks should have been used, are very revealing:

• Kerry should have turned charges that he was a flip-flopper in 2004 around on Bush with the simple line that Bush was “strong but wrong”
• New Zealand: “the world’s most beautiful two islands”
• The brilliance of the VW Beetle in a big-car era and “thinking small”
• Johnny Cochrane’s winning (over)simplification of the OJ case — “If the glove doesn’t fit, you must acquit”
• BMW is still, 30 years later, The Ultimate Driving Machine
• “Every day, the Kremlin gets 12 copies of the Wall Street Journal. Maybe they know something you don’t know.”

If you are looking for a good marketing book to read as a refresher this year, this one could be it.  And if you’re not a very market-focused CEO, this kind of thinking is a must.

And for the record, the library of books by Trout and/or Reis (sometimes including Reis’ daughter Laura as well) that I’ve read, all of which are quite good, is:

• Positioning: The Battle for Your Mind – the original – a brilliant, short, classic
• The New Positioning (link, post) – good refresher on the original, gets into repositioning
• Marketing Warfare –
• The Fall of Advertising and the Rise of PR – excellent but pre-social media
• The 22 Immutable Laws of Branding –
• The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk! –
• Bottom-up Marketing –
• Differentiate or Die: Survival in Our Era of Killer Competition –
• In Search of the Obvious: The Antidote for Today’s Marketing Mess – the current book

Thanks to my friend and long-time former Board member Jeff Epstein, I recently downed a new book, You’re in Charge – Now What?, by Thomas Neff and James Citrin.  I’m glad I read it.  But it was one of those business books that probably should have just been a Harvard Business Review article.  It’s best skimmed, with helpful short summaries at the end of every chapter that you could blow through quickly instead of hanging on every word. 

The authors’ 8-step plan is laid out as:

1. Prepare yourself during the countdown
2. Align expectations
3. Shape your management team
4. Craft your strategic agenda
5. Start transforming culture
6. Manage your board/boss
7. Communicate
8. Avoid common pitfalls

Ok fine, those make sense on the surface. Here are three things that really stood out for me from the book:

First, “working” before you’re officially working – the countdown period. I tried hard NOT to do this when I was between things, but I’m glad I did the things I did, and now, I wish I had done more. The most poignant phrase in the book is “scarce time available during your first hundred days.” That is an understatement. As my “to read” pile grows and grows and grows with no end in sight…I wish I had done more pre-work.

Second, remember that in every interaction, you are being evaluated as much as you are evaluating. And note that for many people, they will be thinking very critically, things like “do I want to work with this person…is he/she showing signs that he/she wants to work with me?” Yes, we all know as leaders, we live in a fishbowl. But I think that may be even more true during the first couple months on the job.

Finally, this phrase stood out for me: “Acknowledging and in some cases embracing your predecessor can sustain a sense of continuity within the organization and instill a sense of connectivity with employees’ shared past.” There is frequently a temptation to focus on things that need change, which invariably there are…and which invariably you will hear from people who are happy to find a willing new ear to listen to them. But this posture of acknowledge/embrace is especially true in my case, where my predecessor is the founder and 25-year CEO who continues on as our active chairman.

I know there are a ton of books like this on the market, and while I’ve only read this one, I’d say that if you’re starting a new CEO or executive-level job, this is a good one to at least skim to get some ideas.

I haven’t done short book summaries in a LONG time, but I’ll try to start adding that back into the mix as I read interesting and relevant books. Here’s one to add to your list: One Life to Lead, by Russell Benaroya. I was recently connected to Russell by a mutual friend, TA McCann at Pioneer Square Labs. TA had a sense Russell and I would hit it off, and we did. Russell is a multi-time founder/CEO, a Coach, and an author, so we have a lot in common.

One Life to Lead is an excellent book. First, it is short and easy to get through. Unlike a lot of business books, it doesn’t go on too long or contain anything extraneous. It’s to the point!

Second, the book is a business book that’s not really about business. It’s about life and what Russell calls Life Design, which is a great framing of how to be intentional about leading your life. While I have become less and less of a life planner as I’ve gotten older under the headline of “man plans, God laughs,” I am a huge believer in being intentional about everything, which I talk about in Startup CEO quite a bit in the nuts and bolts context of building your business.

Finally, Russell’s framework is easy to understand and full of concrete exercises you can to. Here are his five steps, but you’ll have to read the book to get the details:

• Ground stories with facts. This reminds me a lot of the principles we have taught team members over the years in our Action/Design (and related) trainings. First, start with absolute concrete facts that everyone will agree are facts.
• Establish your principles. This is brilliant. Your company has documented values or operating principles. Why don’t you?
• Harness energy from the environment. Figuring out what makes you tick, and what drains your energy, is so important.
• Get in and stay in your genius zone. Shouldn’t we all focus our time on the things we do best and love the most?
• Take action. How to put it together and make it all happen.

If you don’t get out in front of life, it will happen to you, and Russell’s framework is about how to make sure you are in the driver’s seat of your own life. Here’s to that.

Book Short:  Required Reading, Part II

Every once in a while, a business book nails it from all levels.  Well written, practical, broadly applicable to any size or type of organization, full of good examples, full of practical tables and checklists.   The Leadership Pipeline, which I wrote about here over six years ago, is one of those books — it lays out in great and clear detail a framework for understanding the transition from one level to another in an organization and how work behaviors must change in order for a person to succeed during and on the other side of that transition.  In an organization like Return Path‘s which is rapidly expanding and promoting people regularly, this is critical.  We liked the book so much that we have adopted a lot of its language and have built training courses around it.

The book’s sequel, The Performance Pipeline (book, Kindle), also by Stephen Drotter but without the co-authors of the original book, is now out — and it’s just as fantastic.  The book looks at the same six level types in an organization (Enterprise Manager, Group Manager, Business Manager, Functional Manager, Manager of Managers, Manager of Others, and Self Managers/Individual Contributors) and focuses on what competencies people at each level must have in order to do their jobs at maximum effectiveness — and more important, in order to enable the levels below them to operate in an optimal way.

This book is as close to a handbook as I’ve ever seen for “how to be a CEO” or “how to be a manager.”  Coupled with its prequel, it covers the transition into the role as well as the role itself, so “how to become a CEO and be a great one.”  As with the prequel, the author also takes good care to note how to apply the book to a smaller organization (from the below list, usually the top three levels are combined in the CEO, and often the next two are combined as well).  No synopsis can do justice to this book, but here’s a bit of a sense of what the book is about:

• Enterprise Manager:  role is to Perpetuate the Enterprise and develop an Enterprise-wide strategic framework – what should we look like in 15-20 years, and how will we get the resources we need to get there?
• Group Manager:  role is to manage a portfolio of businesses and develop people to run them
• Business Manager:  role is to optimize short- and long-term profit and develop business-specific strategies around creating customer and stakeholder value
• Functional Manager:  role is to drive competitive advantage and functional excellence
• Manager of Managers:  role is to drive productivity across a multi-year horizon, and focus
• Manager of Others:  role is to enable delivery through motivation, context setting, and talent acquisition
• Self Managers/Individual Contributors:  role is to deliver and to be a good corporate citizen

I could write more, but there’s too much good stuff in this book to make excerpts particularly useful.  The Performance Pipeline is another one of those rare – “run, don’t walk, to buy” books.  Enjoy.  For many of my colleagues at RP – look out – this one is coming!

Book Short:  Long on Platitudes, Short on Value

I approached Success Built to Last:  Creating a Life That Matters, by Jerry Porras, Stewart Emery, and Mark Thompson, with great enthusiasm, as Porras was co-author, along with Jim Collins, of two of my favorite business books of all time, Built to Last and Good to Great. I was very disappointed in the end.  This wasn’t really a business book, despite its marketing and hype.  At best, it was a poor attempt at doing what Malcolm Gladwell just did in Outliers in attempting to zero in on the innate, learned, and environmental qualities that drive success.

The book had some reasonably good points to make and definitely some great quotes, but it was very rambly and hard to follow.  Its attempt at creating an overall framework like the one used in Built to Last and Good to Great just plain didn’t work, as two of the three legs of the stool were almost incomprehensible, or to put it more charitably, didn’t hang together well.

This isn’t a terrible book to have on your shelf, and it might be good to skim, but remember that “skim” is only one letter away from “skip.”

Book Short (and great concept): Moments of Truth

TouchPoints:  Creating Powerdul Leadership Connections in the Smallest of Moments, by Douglas Conant, former CEO of Campbell’s Soup Corporation, and Mette Norgaard (book, kindle), is a very good nugget of an idea wrapped in lots of other good, though only loosely connected management advice around self awareness and communication — something I’m increasingly finding in business books these days.

It’s a very short book. I read it on the Kindle, so I don’t know how many pages it is or the size of the font, but it was only 2900 kindles (or whatever you call a unit on the device) and only took a few Metro North train rides to finish.  It’s probably worth a read just to get your head around the core concept a bit more, though it’s far from a great business book.

I won’t spend a lot of time on the book itself, but the concept echoes something I’ve been referring to a while here at Return Path as “Moments of Truth.”  Moments of Truth are very short interactions between you and an employee that are high impact and, once you get the hang of them, low effort.  At least, they’re low effort relative to long form meetings.

Here are a few thoughts about Moments of Truth:

• They are critical opportunities to get things both very right and very wrong with an employee
• They are more powerful than meets the eye – both for what they are and because they get amplified as employees mention them to other employees
• They can come to you (people popping into your office and the like), you can seek them out (management by walking around), and you can institutionalize them (for example, one of the things I do is call every employee on their Return Path anniversary to congratulate them on the milestone)
• They are no different than any other kind of interaction you have, just a lot shorter and therefore can be more intense (and numerous)
• Their use cases are as broad as any management interaction — coaching, positive or negative feedback, input, support, etc.

What can you as a manager or leader do to perfect your handling of Moments of Truth?

First, learn how to spot them when they come to you, and think about a typical employee’s day/week/month/year to think about when you can find opportunities to seek them out.  Their first day on the job.  When they get a promotion.  When they get a great performance review, or new stock options.  Maybe when they get a poor performance review or denied a promotion they were seeking.

Second, learn to appreciate them and leave space for them.  If you have zero free minutes in every single day, you not only won’t have time to create or seek out Moments of Truth, you’ll be rushed or blow them off when they come to you.

Finally, like everything else, you have to develop a formula for handling them and then practice that formula.  The book does talk about a formula of “head, heart, hand” (e.g., being logical, authentic, and competent) that’s not bad.  Although I’d never thought about it systematically before writing this post, I have a few different kinds of Moments of Truth, and each one has its own rhythm to it, and its own regular ending.

But regardless of how you handle them, once you think about your day through this lens, you’ll start seeing them all over the place.  Recognize their power, and dive in!

Book Short:  You’d Never Run Your Business This Way…

I am an unabashed conservative, so you might wonder what I was doing reading  A Country That Works, by union chief Andy Stern, the President of SEIU (Service Workers International Union) this weekend.  Well, part of it is that my mother-in-law Carmen works for him.  Part was that he was quite inspiring during his recent appearance on the Colbert Report a week or two ago.  And part was that I always like reading about different points of view, especially with the current, somewhat dismal state of the Republican leadership in Washington.

The book was very short and a worthwhile read.  I may not agree with Stern on some of his illustrations of the problems — his statistical presentations were a bit apples-to-oranges at times — and some of his solutions, which were a bit high on the big-government-tax-and-spend side for me, but the book was very plain-speak, apolitical, and solution-oriented, all of which I found refreshing.

He certainly had at least one underlying premise about “labor as electricity ” (compete on something else other than forcing wages to go lower) that is making me think hard about my long-standing philosophical opposition to federally-mandated minimum wages.  His notion of the importance of a global labor movement to act as a check/balance on corporate globalization both make sense.  Actually, now that I think about it, those two things put together start working well as one plank in a solution to global poverty.

But the best part of the book was the fact that Stern is clear that, like his ideas or hate them,  he is at least proposing that we DEAL with them.  America is missing serious debate about some critical issues facing our society.  Anyone who doesn’t think we have serious problems facing our future around retirement savings, education, and health care is not facing reality.  The debate happening in Washington today is weak at best, and over-politicized.

The bottom line is that I think we’re in danger as a country of boiling the frog when it comes to some major structural issues in our society, and, most important to me, You’d Never Run Your Business This Way.  Any good entrepreneur knows that when danger lurks around the corner, you have to reinvent yourself, and we as a country aren’t doing that at this moment when we’d benefit from it greatly for the long term.  Stern displays that mix of optimism for the future and serious reality check today known as the Stockdale Paradox and revered by Jim Collins in his two books on corporate leadership, Good to Great and Built to Last.

My biggest criticism of the book was that it was too short.  It was basically 1/3 Andy’s story, 1/3 SEIU’s story, and 1/3 labor’s story — and it could have been at least twice as long and gone into more detail on Stern’s points, especially in the last chapter where he starts spelling out his plan to get America back on track.  But presumably when Stern runs for national office or gets a cabinet appointment someday (no inside knowledge here, but the book certainly reads that way), he’ll flesh things out a bit!

Book Short: Chip Off the Old Block

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

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

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

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

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