Book Short – A Smattering of Good Ideas that further my Reboot path
Ram Charan’s The Attacker’s Advantage was not his best work, but it was worth the read. It had a cohesive thesis and a smattering of good ideas in it, but it felt much more like the work of a management consultant than some of his better books like Know How (review, buy), Confronting Reality (review, buy), Execution (review, buy), What the CEO Wants You to Know ( buy), and my favorite of his that I refer people to all the time, The Leadership Pipeline (review, buy).
Charan’s framework for success in a crazy world full of digital and other disruption is this:
Perceptual acuity (I am still not 100% sure what this means)
- A mindset to see opportunity in uncertainty
- The ability to see a new path forward and commit to it
- Adeptness in managing the transition to the new path
- Skill in making the organization steerable and agile
The framework is basically about institutionalizing the ability to spot pending changes in the future landscape based on blips and early trends going on today and then about how to seize opportunity once you’ve spotted the future. I like that theme. It matches what I wrote about when I read Mark Penn’s Microtrends (review, buy) years ago.
Charan’s four points are important, but some of the suggestions for structuring an organization around them are very company-specific, and others are too generic (yes, you have to set clear priorities). His conception of something he calls a Joint Practice Session is a lot like the practices involved in Agile that contemporary startups are more likely to just do in their sleep but which are probably helpful for larger companies.
I read the book over a year ago, and am finally getting around to blogging about it. That time and distance were helpful in distilling my thinking about Charan’s words. Probably my biggest series of takeaways from the book – and they fit into my Reboot theme this quarter/year, is to spend a little more time “flying at higher altitude,” as Charan puts it: talking to people outside the company and asking them what they see and observe from the world around them; reading more and synthesizing takeaways and applicability to work more; expanding my information networks beyond industry and country; creating more routine mechanisms for my team to pool observations about the external landscape and potential impacts on the company; and developing a methodology for reviewing and improving predictions over time.
Bottom line: like many business books, great to skim and pause for a deep dive at interesting sections, but not the author’s best work.
Book Short: Unsung Heroes
If you like “entrepreneurship by analogy” books, you’ll like The Innovators: The Engineering Pioneers Who Made America Modern, by David Billington. I have to admit some bias here — Professor Billington was my favorite teacher and senior thesis advisor at Princeton (I almost majored in civil engineering because of him), and this book is one of a number he’s written that are outgrowths of his most popular courses at Princeton. And while there’s no substitute for the length or energy of his lectures, the book works.
The book is basically a person-focused engineering history of America from 1776-1883. Billington talks about four classes of engineering product: public structures (mostly bridges), machines that produced power, networks like the railroads and telegraphs, and processes like steel manufacturing.
His approach is to acknowledge that the Americans innovators couldn’t do much without the right context: learnings from their counterparts in Britain, a supportive government here at home, and abundant raw materials and capital. But with that backdrop in place, Billington tells the tale of a number of the inventions that built our modern society with a focus on the engineers who got things right. While some of them are familiar names (Morse, Edison), many are not (Thomas Telford, J. Edgar Thomson, Joseph Henry).
Sound familiar? It feels at many point in the book that you could insert some different names and dates and be reading a history of the Internet or information age. And as with the Industrial Revolution, while many of the innovators in our world today are known (Bezos, Yang, Brin/Page), there are probably an equal number who are unsung heroes — either software engineers or even buisness model pioneers who haven’t sought or won’t end up in the spotlight even though their contributions to society or to their companies are giant. I know there are a number of unsung heroes in our own engineering department at Return Path — people who aren’t market facing and who never get quoted in press releases, but who really make a difference in how the company works and how competitive we are. This book celebrates those people as much as it does the entrepreneurs you’ve heard of.
Warning, there are lots of pages which are full of mathematical formulas, which may or may not be interesting to you, but the book still holds together 100% if you skip over them.
It’s fairly rare in a startup or scaleup that you, as a CEO or CXO (Chief [fill in the function] Officer) of any kind, will have significant one-on-one time with other members of the executive suite; instead, you’re most likely to spend time with the team in executive meetings, at offsites, or during all-company events. So, when you do get that one-on-one time it’s important to make sure that it’s not only productive, but that it builds a stronger relationship between you and the other person.
As a CEO I learned that the best way to help people grow and develop, and to further develop a better understanding of each other, is to engage with them in a mix of work and non-work settings. By that I mean, working together on some aspect of their part of the business. Since each role and each person performing that role are different, there aren’t any hard and fast rules, but I thought I would create a series of posts that provide some ideas on things I’ve done to develop a better relationship, better team, and better company for each CXO in a company.
I also have a whole series of posts related to each function on the executive team — CFO, CMO, CTO, etc. So each post is part of two series. This is the inaugural for both, and it’s quite fitting as Q4 is, for most companies, budgeting and planning season. So today’s topic is How I engage with the CFO.
When I get the chance to spend time with my CFO I’ve found that we both get the most value working on several “problems” together. For example, we do Mental Math together where we look at key metrics and test them, improve them, or decide to scrap them. We are always attuned to key metrics and from time to time, we project them forward in our minds. What will happen to a key metric if our business scales 10-fold or if it declines 10-fold, for example.
We are constantly checking to see that our financial and operating results mesh with our mental math. When looking at our cash balance, we’ll look back at the last financial statement’s cash number and mentally work our way to the current statement: operating profits or losses, big swings in AR or AP, CapEx, and other “below the line” items. Do they add up? Can we explain what we’re seeing in plain English to other leaders or directors? The same thing applies to operating metrics — the size of our database, our headcount, our sales commission rate, and so on.
I’ve found that by working on the mental math that we actually come to understand the dynamics of the business far better than merely looking at the numbers or comparing the numbers. The mental math approach forces both you and the CFO to engage with the results, question them, and anticipate how slight changes can impact the company going forward. And once you get to that point, you have the ability to creatively think about how you want to go forward. Here’s a simple example from the early days of Return Path. One day, my long-time business partner and CFO Jack and I were doing mental math around how many clients each of our Customer Success team members was handling. We had an instinct that it wasn’t enough — and we did a quick “how many of those reps would we need if we were doing $100mm in revenue” check and blanched at the number we came up with. That led to a major series of investments in automation and support systems for our CS team.
Another way that the CFO and I work together is in a game called “spotting the number that seems off.” In any spreadsheet or financial analysis there is bound to be something that doesn’t seem quite right and for some uncanny reason, I am really good at finding the off number. I’m sure this has driven CFOs crazy over my career, but for whatever reason I have some kind of weird knack for looking at a wall of numbers and finding the one that’s wrong. It’s some combination of instincts about the business, math skills, and looking at numbers with fresh eyes. It’s not an indictment on the CFO’s results and it’s not a “gotcha” moment but it’s part of the partnership I have with my CFO that improves the quality of our work and quantitative reasoning. My hunch is that looking at something with fresh eyes, as opposed to being the person who produces the numbers in the first place, makes it easier to spot something that’s not quite right. Kind of like an editor working with you on an article or book—they always seem to pick up and point out something that you didn’t see even though you spent hours creating it and hours more reading and re-reading something.
A third way to work with the CFO is to create stories with numbers. The best CFOs are the ones who are also good communicators — but that only partly means they are good at public speaking. Being able to tell a story with numbers and visuals is an incredibly important skill that not all CFOs possess. Whether the communication piece is an email to leaders, a slide at an all-hands meeting, or a Board call, partnering with a CFO on identifying the top three points to be made and coming up with the relevant set of data to back the number up — and then making sure the visual display of that information is also easy to read and intellectually honest, can be the difference between helping others make good decisions or bad ones.
Of course, a CFO could create stories on their own but like much of storytelling (like screenwriters for movies, plays, or sitcoms, for example), the creative storytelling usually happens with a team. In presenting financial data to others so that it makes an impact, so that it motivates them to take an action or change a behavior, a team approach is best and the CEO-CFO team can be much more effective than either one of them alone.
You won’t have a lot of time to spend 1:1 with any given CXO on your team, including the CFO, but you can make the time you spend together work to your favor in developing a stronger relationship between you and the CFO, and help you build a stronger company that can scale quickly. Without a deep understanding and strong relationship with others on your leadership team, your decision-making, speed, and risk-taking can suffer. Make sure every minute you spend with the CFO is productive. That’s why working on things together like mental math, spotting the off number, and storytelling, can be powerful ways to help you build a better company.
(Also posted to the Bolster Blog).
Book Short: Culture is King
Tony Hsieh’s story, Delivering Happiness (book, Kindle), is more than just the story of his life or the story of Zappos. It’s a great window into the soul of a very successful company and one that in many ways has become a model for great culture and a great customer service model. It’s a relatively quick and breezy read, and it contains a handful of legendary anecdotes from Zappos’ history to demonstrate those two things — culture and customer service — in action.
As Hsieh himself says in the book, you can’t copy this stuff and believe it will work in your company’s environment as it does in Zappos’. You have to come up with these things on your own, or better yet, you have to create an environment where the company develops its own culture and operating system along the broad lines you lay out. I think Return Path has many similarities with Zappos in how we seek out WOW experiences and in our Core Values, as well as the evolutionary path we took to get to those places. But as much as I enjoyed reading about a like-minded company, I also recognized the specific things that were different and had a good visceral understanding as to WHY the differences exist.
It is the rare company that gets to $1 billion in revenue ever – let alone within a decade. For that reason alone, this is a worthwhile read. But if you are a student of organizational culture and believe in the power of values-driven organizations, this is good affirmation and full of good examples. And if you’re a doubter of the power of those things, this might just convince you to think twice about that!
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: Wither the Team
I keep expecting one of his books to be repetitive or boring, but Patrick Lencioni’s The Five Dysfunctions of a Team held my interest all the way through, as did his others. It builds nicely on the last one I read, Death by Meeting (post, link).
I’d say that over the 9 1/2 years we’ve been in business at Return Path, we’ve systematically improved the quality of our management team. Sometimes that’s because we’ve added or changed people, but mostly it’s because we’ve been deliberate about improving the way in which we work together. This particular book has a nice framework for spotting troubles on a team, and it both reassured me that we have done a nice job stamping out at least three of the dysfunctions in the model and fired me up that we still have some work to do to completely stamp out the final two (we’ve identified them and made progress, but we’re not quite there yet.
The dysfunctions make much more sense in context, but they are (in descending order of importance):
- Absence of trust
- Fear of conflict (everyone plays politically nice)
- Lack of commitment (decisions don’t stick)
- Avoidance of accountability
- Inattention to results (individual ego vs. team success)
For those who are wondering, the two we’re still working on at the exec team level here are conflict and commitment. And the two are related. If you don’t produce engaged discussion about an issue and allow everyone to air their opinions, they will invariably be less bought into a decision (especially one they don’t agree with). But we’re getting there and will continue to work aggressively on it until we’ve rooted it out.
There’s one other interesting takeaway from the book that’s not part of the framework directly, which is that an executive has to be first and foremost a member of his/her team of peers, not the head of his/her department. That’s how successful teams get built. AND (this is key) this must trickle down in the organization as well. Everyone who manages a team of group heads or managers needs to make those people function well as a team first, then as managers of their own groups second.
At any rate, another quick gem of a book. I’m kind of sorry there’s only one left in the series.
So far the series includes:
I have one or two more to go, which I’ll tackle in due course and am looking forward to.
Book Short: I Wish This Existed 12 Years Ago
Brad Feld has been on my board for over a decade now, and when he and his partner Jason Mendelson told me about a new book they were writing a bunch of months ago called Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, I took note. I thought, “Hmmm. I’d like to be smarter than my lawyer or venture capitalist.”
Then I read an advanced copy. I loved it. At first, I thought, I would really have benefited from this when I started Return Path way back when. Then as I finished reading it, I realized it’s just a great reference book even now, all these years and financings later. But as much as I enjoyed the early read, I felt like something was missing from the book, since its intended audience is entrepreneurs.
Brad and Jason took me up on my offer to participate in the book’s content a little bit, and they are including in the book a series of 50-75 sidebars called “The Entrepreneur’s Perspective” which I wrote and which they and others edited. For almost every topic and sub-topic in the book, I chime in, either building on, or disagreeing, with Brad and Jason’s view on the subject.
The book is now out. As Brad noted in his launch post, the book’s table of contents says a lot:
- The Players
- How to Raise Money
- Overview of the Term Sheet
- Economic Terms of the Term Sheet
- Control Terms of the Term Sheet
- Other Terms of the Term Sheet
- The Capitalization Table
- How Venture Capital Funds Work
- Negotiation Tactics
- Raising Money the Right Way
- Issues at Different Financing States
- Letters of Intent – The Other Term Sheet
- Legal Things Every Entrepreneur Should Know
Fred has posted his review of the book as well.
Bottom line: if you are an aspiring or actual entrepreneur, buy this book. Even if you’ve done a couple of financings, this is fantastic reference material, and Brad and Jason’s points of view on things are incredibly insightful beyond the facts. And I hope my small contributions to the book are useful for entrepreneurs as well.
Return Path Makes The List of “Best Places to Work” in Colorado
Long-time readers of this blog no doubt understand my central philosophy when it comes to management. I believe that people come first. When employees are happy they make our clients happy. Happy clients happily pay for our services, which tends to make our investors happy. When you start with the people, everyone wins.
At Return Path we invest a lot in our people. And we invest a lot in Team People – what we call “Human Resources” – to support those people.
So what a great honor to see all that hard work and investment pay off in the form of a “Best Places to Work” honor! The Society for Human Resources Management named us one of its “Best Places to Work in Colorado” at an awards banquet last Friday. You can read more about how we won this award on the Return Path blog.
Of course a CEO can set the agenda and make certain decisions to support a great work environment. But it is the 150 people who come to Return Path every day who make it the amazing place that it is. I could not be more thankful for each and every one of them – their passion, dedication, teamwork and kindness all come together to create a company that I would want to work for even if I wasn’t the CEO.
Book Short: Loving the Strengths Movement More Than the Book
I’m a big believer in the so-called Strengths Movement — that we would all be better served by playing to our strengths than agonizing over fixing our weaknesses. I think it’s true both in professional and personal settings.
The books written by Marcus Buckingham that come out of Gallup’s extensive research into corporate America, First, Break All the Rules (about management) and Now, Discover Your Strengths (self-management) are both quite good. Another book written by someone else off the same research corpus, 12: The Elements of Great Managing is ok, but not as good, as I wrote about here.
Buckingham’s newest, Go Put Your Strengths to Work: 6 Powerful Steps to Achieve Outstanding Performance, is fine and has some good points but is way too long, a little hokey, and has a lot of online companion material that is far more interesting sounding than it is actually useful.
The book does build nicely on Now, Discover Your Strengths by giving you inspiration and a framework for taking those signature themes from the prior book and translating them into action — stuff you actually do every day that plays to your strengths and draws out your weaknesses. And that’s helpful. Some of his suggestions for what you do with that information are ok but a bit common sense only and way too drawn out (“here’s how to talk to your boss…”).
To be fair, I am going to do some of the work that Buckingham recommended doing — so I guess that says something about the power of the book, or at least the movement underlying it. But not the best read in the world.
Book Short: Hire Great
It’s certainly not hiring season for most of America The World The Universe, but we are still making some limited hires here at Return Path, and I thought – what better time to retool our interviewing and hiring process than in a relatively slow period?
So I just read Who: The A Method for Hiring, by Geoff Smart and Randy Street. It’s a bit of a sequel, or I guess more of a successor book, to the best book I’ve ever read about hiring and interviewing, Topgrading, by Geoff Smart and his father Brad (post, link to buy). This one wasn’t bad, and it was much shorter and crisper.
I’m not sure I believe the oft-quoted stat that a bad hire costs a company $1.5mm. Maybe sometimes (say, if the person embezzles $1.4mm), but certainly the point that bad hires are a nightmare for an organization in any number of ways is well taken. The book does a good job of explaining the linkage from strategy and execution straight to recruiting, with good examples and tips for how to create the linkage. That alone makes it a worthwhile read.
The method they describe may seem like common sense, but I bet 95 out of 100 companies don’t come close. We are very good and quite deliberate about the hiring process and have a good success average, but even we have a lot of room to improve. The book is divided into four main sections:
- Scorecard: creating job descriptions that are linked to company strategy and that are outcome and competency based, not task based
- Sourcing: going beyond internal and external recruiters to make your entire company a talent seeker and magnet
- Selection: the meat of the book – good detail on how to conduct lots of different kinds of interviews, from screening to topgrading (a must) to focused to reference
- Sell: how to reel ’em in once they’re on the line (for us anyway, the least useful section as we rarely lose a candidate once we have an offer out)
One of the most poignant examples in the book centered around hiring someone who had been fired from his previous job. The hiring method in the book uncovered it (that’s hard enough to do sometimes) but then dug deep enough to understand the context and reasons why, and, matching up what they then knew about the candidate to their required competencies and outcomes for the job, decided the firing wasn’t a show-stopper and went ahead and made the hire.
I’d think of these two books the way I think about the Covey books. If you have never read The 7 Habits of Highly Effective People, you could just get away with reading Stephen Covey’s newer book, The 8th Habit: From Effectiveness to Greatness, though the original is much richer.
Book Short: Awesome Title, So-So Book
Strategy and the Fat Smoker (book, Kindle), by David Maister, was a book that had me completely riveted in the first few chapters, then completely lost me for the rest. That was a shame. It might be worth reading it just for the beginning, though I’m not sure I can wholeheartedly recommend the purchase just for that.
The concept (as well as the title) is fantastic. As the author says in the first words of the introduction:
We often (or even usually) know what we should be doing in both personal and professional life. We also know why we should be doing it and (often) how to do it. Figuring all that out is not too difficult. What is very hard is actually doing what you know to be good for you in the long-run, in spite of short-run temptations. The same is true for organizations.
The diagnosis is clear, which is as true for organizations as it is for fat people, smokers, fat smokers, etc. The hard work (pain) is near-term, and the rewards (gain) are off in the future, without an obvious or visible correlation. As someone who has had major up and down swings in weight for decades, I totally relate to this.
But the concept that
the necessary outcome of strategic planning is not analytical insight but resolve,
while accurate, is the equivalent of an entire book dedicated to the principle of “oh just shut up and do it already.” The closest the author comes to answering the critical question of how to get “it” done is when he says
A large part of really bringing about strategic change is designing some new action or new system that visibly, inescapably, and irreversibly commits top management to the strategy.
Right. That’s the same thing as saying that in order to lose weight, not only do you need to go on a diet and weigh yourself once in a while, but you need to make some major public declaration and have other people help hold you accountable, if by no other means than causing you to be embarrassed if you fail in your quest.
So all that is true, but unfortunately, the last 80% of the book, while peppered with moderately useful insights on management and leadership, felt largely divorced from the topic. It all just left me wanting inspirational stories of organizations doing the equivalent of losing weight and quitting smoking before their heart attacks, frameworks of how to get there, and the like. But those were almost nonexistent. Maybe Strategy and the Fat Smoker works really well for consulting firms – that’s where a lot of the examples came from. I find frequently that books written by consultants are fitting for that industry but harder to extrapolate from there to any business.
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