In Defense of Email, Part 9,732

I commented today on our partner Blue Sky Factory’s CEO, Greg Cangialosi’s excellent posting in defense of email as a marketing channel called Email’s Role and Future Thoughts.  Since the comment grew longer than I anticipated, I thought I’d re-run parts of it here.

A couple quick stats from Forrester’s recent 5-year US Interactive forecast back up Greg’s points con gusto:

– 94% of consumers use email; 16% use social networking sites (and I assume they mean USE them – not just get solicitations from their friends to join).  That doesn’t mean that social networking sites aren’t growing rapidly in popularity, at least in some segments of the population, and it doesn’t mean that email marketing may not be the best way to reach certain people at certain times.  But it does mean that email remains the most ubiquitous online channel, not to mention the most “pull-oriented” and “on demand.”

– Spend on email marketing is $2.7b this year, growing to $4.2b in 2012.  Sure, email by 2012 is the smallest “category” by dollars spent, but first of all, one of the categories is “emerging channels,” which looks like it includes “everything else” in the world other than search, video, email, and display.  So it includes mobile as well as social media, and who knows what else.  Plus, if you really understand how email marketing works, you understand that dollars don’t add up in the same way as other forms of media since so much of the work can be done in-house. 

What really amazes me is how all these “web 2.0” people keep talking about how email is dying (when in fact it’s growing, albeit at a slower rate than other forms of online media) and don’t focus on how things like classifieds and yellow pages are truly DYING, and what that means for those industries.

I think a more interesting point is that in Forrester’s forecast, US Interactive Marketing spend by 2012 in aggregate reached $61b, more than triple where it is today — and that the percent of total US advertising going to interactive grows from 8 to 18 over the five years in the forecast. 

The bigger question that leaves me with is what that means for the overall efficiency of ad spend in the US.  It must be the case that online advertising in general is more efficient than offline — does that mean the total US advertising spend can shrink over time?  Or just that as it gets more efficient,
marketers will use their same budgets to try to reach more and more prospects?

Book Short:  Alignment Well Defined, Part II

Getting the Right Things Done:  A Leader’s Guide to Planning and Execution, by Pascal Dennis, is an excellent and extraordinarily practical book to read if you’re trying to create or reengineer your company’s planning, goal setting, and accountability processes. It’s very similar to the framework that we have generally adapted our planning and goals process off of at Return Path for the last few years, Patrick Lencioni’s The Advantage (book, post/Part I of this series).  My guess is that we will borrow from this and adapt our process even further for 2014.

The book’s history is in Toyota’s Lean Manufacturing system, and given the Lean meme floating around the land of tech startups these days, my guess is that its concepts will resonate with most of the readers of this blog.  The book’s language — True North and Mother Strategies and A3s and Baby A3s — is a little funky, but the principles of simplicity, having a clear target, building a few major initiatives to drive to the target, linking all the plans, and measuring progress are universal.  The “Plan-Do-Check-Adjust” cycle is smart and one of those things that is, to quote an old friend of mine, “common sense that turns out is not so common.”

One interesting thing that the book touches on a bit is the connection between planning/goals and performance management/reviews.  This is something we’ve done fairly well but somewhat piecemeal over the years that we’re increasingly trying to link together more formally.

All in, this is a good read.  It’s not a great fable like Lencioni’s books or Goldratt’s classic The Goal (reminiscent since its example is a manufacturing company).  But it’s approachable, and it comes with a slew of sample processes and reports that make the theory come to life.  If you’re in plan-to-plan mode, I’d recommend Getting the Right Things Done as well as The Advantage.

Book Short:  Continuing to make “sustainability” a mainstream business topic

The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World, by my friend Andrew Winston, is a great book.  It just got awarded one of the Top 10 business books of 2014 by Strategy+Business, which is a great honor.

Andrew builds nicely on his first book, Green to Gold:  How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage (post, book link) (and second book, which I didn’t review, Green Recovery), as I said in my review of Green to Gold, to bring:

the theoretical and scientific to the practical and treat sustainability as the corporate world must treat it in order to adopt it as a mainstream practice — as a driver of capitalistic profit and competitive advantage.

Andrew’s central thesis, with plenty of proof points in the book for our planet of 7 Billion people, rapidly heading to 9-10 Billion, is this:

Whether you take a purely fiscal view of these challenges or look through a human-focused lens, one thing is clear: we’ve passed the economic tipping point. A weakening of the pillars of our planetary infrastructure— a stable climate, clean air and water, healthy biodiversity, and abundant resources— is costing business real money. It’s not some futuristic scenario and model to debate, but reality now, and it threatens our ability to sustain an expanding global economy… If this hotter, scarcer, more transparent, and unpredictable world is the new normal, then how must companies act to ensure a prosperous future for all, including themselves?

Andrew’s writing is accessible and colorful.  The book is full of useful analogies and metaphors like this one:

Climate can also seem easy to write off because the warming numbers don’t sound scary. A couple degrees warmer may sound pleasant, but we’re not really talking about going from 75 to 77 degrees Fahrenheit on a nice spring day. As many others have pointed out, the right metaphor is a fever. Take your core body temperature up one degree, and you don’t feel so great. Five degrees, and you’re sick as a dog. Ten degrees, and you’re dead.

The book also does a really nice job of looking at the externalities of climate change in a different way.  Not the usual “I can pollute, because there’s no cost to me to doing so,” but more along the lines of “If I had to pay for all the natural resources my business consumes, I would treat them differently.”

Some of Andrew’s points are good but general and maybe better made elsewhere (like the problems of short-termism on Wall Street), but overall, this book is a great think piece for all business leaders, especially in businesses that consume a lot of natural resources, around how to make the challenge of climate change work for your business, not against it.

Two things occurred to me during my read of The Big Pivot that I think are worth sharing for the people in my life who still don’t believe climate change is real or threatening.  The first is Y2K.  Remember the potentially cataclysmic circumstance where mission critical systems all around the world were going to go haywire at midnight at the turn of the millennium?  The conventional wisdom on why nothing major went wrong is that society did enough work ahead of time to prevent it, even though the outcomes weren’t clear and no one system problem alone would have been an issue.  I was thinking about this during the book…and then Andrew mentioned it explicitly towards the end.

The second is something I read several years ago in my personal news bible, The Economist.  I couldn’t find the exact quote online just now, but it was something to the effect of “Even if you don’t believe man created climate change, or that climate change is real and imperiling to humanity and can be fixed by man, the risks of climate change are so great, the potential consequences so dire, and the path to solve the problem so lengthy and complex and global…it’s worth investing in that solution now.”

Let’s all pivot towards that, shall we?  If you want to download the introduction to the book for free, you can find it on Andrew’s web site.  Or for a three-minute version of the story, you can watch this whiteboard animation on YouTube.

Why Publishing Will Never Be the Same, Part I

As you may know, we published a book earlier this year at Return Path called Sign Me Up! Sales are going quite well, in case you’re wondering, and we also launched the book’s official web site, where you can subscribe to our “email best practices” newsletter.

The process of publishing the book was fascinating and convinced me that publishing will never be the same.  Even in two parts, this will be a long post, so apologies in advance. Front to back, the process went something like this:

– We wrote the content and selected and prepared the graphics

– We hired iUniverse to publish the book for a rough total cost of $1,500

– iUniverse provided copy editing, layout, and cover design services

– Within 8 weeks, iUniverse put the book on Amazon.com and BN.com for us (in addition to their site) and properly indexed it for search, and poof — we were in business

– Any time someone places an order on any of those three sites, iUniverse prints a copy on demand, binds it, and ships it off. No fuss, no muss, no inventory, but a slightly higher unit cost than you’d get from a traditional publisher who mass prints. We receive approximately 20% of the revenue from the book sale, and iUniverse receives 80%.  I’m not sure what cut they give Amazon, but it’s hard to imagine it’s more than 10-20% of the gross

Other than the writing part (not to be minimized), how easy is that?  So of course, that made me think about the poor, poor publishing industry. It seems to me that, like many other industries, technology is revolutionizing publishing.  Here’s how:

– Publishers handle printing and inventory.  iUniverse and its competitors can do it for you in a significantly more economic way.  Print on Demand will soon be de rigeur.

– Publishers handle marketing and distribution.  iUniverse gets you on Amazon.com and BN.com for free.  Amazon.com and BN.com now represent something like 12% of all book sales (cobbled together stats from iMedia Connection saying the annual online book sale run rate is now about $3 billion and the Association of American Publishers saying that the total size of the industry is $24 billion).  Google and Overture take credit cards and about 5 minutes to drive people to buy your book online.  Buzz and viral and email marketing techniques are easy and cheap.

– Publishers pay you.  Ok, this is compelling, but they only pay you (especially advances) if you’re really, really good, or a recognized author or expert. iUniverse pays as well, just in a pay-for-performance model.  Bonus points for setting yourself up as an affiliate on Amazon and BN to make even more money on the sale.  iUniverse actually pays a higher royalty (20% vs. 7.5-15% in the traditional model), so you’re probably always a fixed amount “behind” in the self-publish model, but you don’t have an agent to pay.

Unless you are dying to be accepted into literary or academic circles that require Someone & Sons to annoint you…why bother with a traditional publisher? As long as you have the up-front money and the belief that you’ll sell enough books to cover your expenses and then some, do it yourself.

In Part II, I will talk about how iUniverse pitches a “traditional publishing model” and why it only reinforces the point that the traditional model doesn’t make a lot of sense any more in many cases.

A Path Forward in California!

Back in March I was proud to announce the launch of Path Forward, a nonprofit on a mission to get people back to work after they’ve taken time off to care for a loved one.  I’m even more thrilled today to announce the launch of a Path Forward program in California with six top tech companies — Go Daddy, Demandbase, CloudFlare, Coursera, Instacart and Zendesk. They are all accepting applications now for October start dates. Click on the links above to see all their opportunities.

As a CEO I know how hard it is to find great talent. The Center for Talent Innovation estimates that nearly 30% of college-educated women have taken away from their careers to serve as caregivers to children or aging family members. They have also found that while 90% of them try to return to work, only 40% are able to land full-time jobs. As an industry, we simply can’t afford to lose thousands of talented women who become frustrated by attempts to restart their professional careers.

Please join me in supporting this organization in fulfilling its mission. If you know people in California who might be looking for opportunities to restart their careers, send them to Your Path Forward in California where they can access all the job postings for the fall program.

And if you think Path Forward would be a great program for your company, email the fine folks at [email protected] to learn more.

Book Short:  Best Book Ever

The Hard Thing About Hard Things, by Ben Horowitz, is the best business book I’ve ever read.  Or at least the best book on management and leadership that I’ve ever read.  Period.

It’s certainly the best CEO book on the market.  It’s about 1000 times better than my book although my book is intended to be different in several ways.  I suppose they’re complementary, but if you only had time left on this planet for one book, read Ben’s first.

I’m not even going to get into specifics on it, other than that Ben does a great job of telling the LoudCloud/Opsware story in a way that shows the grit, psychology, and pain of being an entrepreneur in a way that, for me, has previously only existed in my head.

Just go buy and read the book.

Book Short:  Choose Voice!

I took a couple days off last week and decided to re-read two old favorites.  One –Ayn Rand’s The Fountainhead — my fourth reading — will take me a little longer to process and figure out if there’s a good intersection with the blog.  One would think so with entrepreneurship as the topic, but my head still hurts from all the objectivism.  The second — Exit, Voice, and Loyalty, by Albert O. Hirschman — is today’s topic.

I can’t remember when I first read Exit, Voice, and Loyalty.  It was either in senior year of high school Economics or Government; or in freshman year of college Political Philosophy.  Either way, it was a long time ago, and for some reason, some of the core messages of this quirkly little 125 page political/economic philosophy book have stayed with me over the years.  I remembered the book incorrectly as a book about political systems, and I think it was born consciously in the wake of Eugene McCarthy’s somewhat revolutionary challenge to a sitting President Johnson for the Democratic Party nomination in 1968.  But the book is actually about business; it’s just about businesses and their customers, not corporations as social structures (the latter being more of an interest to me).  Written by an academic economist (I think), the book has its share of gratuitous demonstrative graphs, 2×2 matrices, and SAT words.  But its central premise is a gem for anyone who runs an organization of any size.

The central premise is that there are really two paths by which one can express dissatisfaction with a temporary, curable lapse in an organization:  exit (bailing), or voice (trying to fix what’s wrong from within).  The third key element, Loyalty, is less a path in and of itself but more an agent that “holds exit at bay and activates voice.”

You need to read the book and apply it to your own circumstances to really get into it, but for me, it’s all about breeding loyalty as a means of making voice the path of least resistance, even when exit is a freely available option (few of us run totalitarian states or monopolies, after all).  That to me is the definition of a successful enterprise, both internally and externally.

With your customers:  make your product so irresistible, and make your customer service so deep, that your customers feel an obligation to help you fix what they perceive to be wrong with your product first, rather than simply complain about price or flee to a competitor.

With your employees:  make your company the best possible place you can think of to work so that even in as ridiculously fluid a job market as we live in, your employees will come to their manager, their department head, the head of HR, or you as leader to tell you when they’re unhappy instead of just leaving, or worse, sulking.

With your company (you as employee):  make yourself indispensible to the organization and do such a great job that if things go wrong with your performance or with your role, your manager’s loyalty to you leads him or her to give you open feedback and coach you to success rather than unceremoniously show you the door.

Ok, this wasn’t such a short book short — probably the longest I’ve ever written in this blog, and certainly the highest ratio of short:actual book.  But if you’re up for a serious academic framework (quasi-business but not exclusively) to apply to your management techniques, this short 1970 book is as valid today as when it was written.  Thanks to David Ramert (I am pretty sure I read it in high school) for introducing it to me way back when!

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.

Book Short:  Multiplying Your Team’s Productivity

No matter how frustrated a kids’ soccer coach gets, he never, ever runs onto the field in the middle of a game to step in and play.  It’s not just against the rules, it isn’t his or her role.

Multipliers: How the Best Leaders Make Everyone Smarter by Liz Wiseman and Greg McKeown (book, Kindle) takes this concept and drives it home.  The book was a great read, one of the better business books I’ve read in a long time.  I read a preview of it via an article in a recent Harvard Business Review (walled garden alert – you can only get the first page of the article without buying it), then my colleague George Bilbrey got the book and suggested I read it.  George also has a good post up on his blog about it.

One of the things I love about the book is that unlike a lot of business books, it applies to big companies and small companies with equal relevance.  The book echoes a lot of other contemporary literature on leadership (Collins, Charan, Welch) but pulls it into a more accessible framework based on a more direct form of impact:  not long-term shareholder value, but staff productivity and intelligence.  The book’s thesis is that the best managers get more than 2x out of their people than the average – some of that comes from having people more motivated and stretching, but some comes from literally making people more intelligent by challenging them, investing in them, and leaving them room to grow and learn.

The thesis has similar roots to many successful sales philosophies – that asking value-based questions is more effective than presenting features and benefits (that’s probably a good subject for a whole other post sometime).  The method of selling we use at Return Path which I’ve written about before, SPIN Selling, based on the book by Neil Rackham, gets into that in good detail.  One colorful quote in the book around this came from someone who met two famous 19th century British Prime Ministers and noted that when he came back from a meeting with Gladstone, he was convinced that Gladstone was the smartest person in the world, but when he came back from a meeting with Disraeli, he was convinced that he (not Disraeli) was the smartest person in the world.

Anyway, the book creates archetypal good and bad leaders, called Multipliers and Diminishers, and discusses five traits of both:

• Talent Magnet vs. Empire Builder (find people’s native genius and amplify it)
• Liberator vs. Tyrant (create space, demand the best work, delineate your “hard opinions” from your “soft opinions”)
• Challenger vs. Know-It-All (lay down challenges, ask hard questions)
• Debate Maker vs. Decision Maker (ask for data, ask each person, limit your own participation in debates)
• Investor vs. Micromanager (delegate, teach and coach, practice public accountability)

This was a great read.  Any manager who is trying to get more done with less (and who isn’t these days) can benefit from figuring out how to multiply the performance of his or her team by more than 2x.

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.

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)