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!

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.

Secrets to Yawn-Free Board Meetings

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

The objective of board meetings should always be to have great conversations that help you and your executive team think clearly about the issues in front of you, as well as making sure your directors have a clear and transparent view of the state of the business. These conversations come from a team dynamic that encourages productive conflict. There’s no sure-fire formula for achieving this level of engagement, but here are three few guidelines you can follow to increase your chances.

Schedule board meetings in advance, and forge a schedule that works. Nothing is more disruptive – or more likely to drive low turnout – than last minute scheduling. Make sure you, or your executive assistant, knows board members’ general schedules and travel requirements, and whether they manage their own calendar or have their own executive assistant. Set your board meeting schedule for the year in the early fall, which is typically when people are mapping out most of their year’s major activities. If you know that one of your board members has to travel for your meetings, work with the CEOs of the other companies to coordinate meeting dates. Vary the location of meetings if you have directors in multiple geographies so travel is a shared sacrifice.

In the startup stage of our business at Return Path, we ran monthly meetings for an hour, mostly call-in. In the revenue stage, we moved to six to eight meetings per year, two hours in length, perhaps supplemented with two longer-form and in-person meetings. As a growth stage company, we run quarterly meetings. They’re all in-person, meaning every director is expected to travel to every meeting. We probably lose one director each time to a call-in or a no-show for some unavoidable conflict, but, for the most part, everyone is present. We leave four hours for every meeting (it’s almost impossible to get everything done in less time than that) and sometimes we need longer.

Many years, we also hold a board offsite, which is a meeting that runs across 24 hours, usually an afternoon, a dinner, and a morning, and is geared to recapping the prior year and planning out the next year together. It’s especially exhausting to do these meetings, and I’m sure it’s especially exhausting to attend them, but they’re well worth it. The intensity of the sessions, discussion, and even social time in between meetings is great for everyone to get on the same page and remember what’s working, what’s not, and what the world around us looks like as we dive into the deep end for another year.

Build a forward-looking agenda. The second step in having great board meetings is to set an agenda that will prompt the discussion that you want to have. With our current four-hour meetings, our time allocation is the following:

I. Welcomes and framing (5 minutes)

II. Official Business (no more than 15 minutes unless something big is going on)

III. Retrospective (45 minutes)

a. Target a short discussion on highlighted issues

b. Leave some time for Q&A

IV. On My Mind (2 hours)

a. You can spend this entire time on one topic, more than one, or all, as needed.

b. Format for discussions can vary—this is a good opportunity for breakout sessions, for example.

V. Executive Session (30 minutes)

This is your time with directors only, no observers or members of the management team (even if they are board members).

VI. Closed Session (30 minutes)

This is director-only time, without you or anyone else from the management team.

This agenda format focuses your meeting on the future, not the past. In the early years of the business, our board meetings were probably 75 percent “looking backwards” and 25 percent “looking forwards.” They were reporting meetings—reports which were largely in the hands of board members before the meetings anyway. They were dull as anything, and they were redundant: all of our board members were capable of processing historical information on their own. Today, our meetings are probably ten percent “looking backwards” and 90 percent “looking forwards”—and much more interesting as a result.

Separate background reading and presentation materials. Finally, focus on creating a more engaging dialogue during the meeting by separating background reading from presentation materials. In our early days, we created a huge Powerpoint deck as both a handout the week before the meeting and as the in-meeting deck. That didn’t create an engaging meeting.

There’s nothing more mind-numbing than a board meeting where the advance reading materials are lengthy Powerpoint presentations, than when the meeting itself is a series of team members standing up and going through the same slides, bullet by excruciating bullet—that attendees could read on their own.

When we separated the background and presentation materials, people were engaged by the Powerpoint—because it delivered fresh content. We started making the decks fun and engaging and colorful, as opposed to simple text and bullet slides. That was a step in the right direction, but the preparation consumed twice as much time for the management team, and we certainly didn’t get twice the value from it.

Now we send out a great set of comprehensive reading materials and reports ahead of the meeting, and then we have a completely Powerpoint-free meeting. No slides on the wall. This changes the paradigm away from a presentation—the whole concept of “management presenting to the board”—to an actual discussion. No checking email. No yawns. Nobody nodding off. Everyone—management and board—is highly engaged

Half the Benefit is in the Preparation

This past week, we had what has become an annual tradition for us – a two-day Board meeting that’s Board and senior management (usually offsite, not this year to keep costs down) and geared to recapping the prior year and planning out 2009 together.  Since we are now two companies, we did two of them back-to-back, one for Authentic Response and the other for Return Path.

It’s a little exhausting to do these meetings, and it’s exhausting to attend them, but they’re well worth it.  The intensity of the sessions, discussion, and even social time in between meetings is great for everyone to get on the same page and remember what’s working, what’s not, and what the world around us looks like as we dive off the high dive for another year.

The most exhausting part is probably the preparation for the meetings.  We probably send out over 400 pages of material in advance – binders, tabs, the works.  It’s the only eco-unfriendly Board packet of the year.  It feels like the old days in management consulting.  It takes days of intense preparation — meetings, spreadsheets, powerpoints, occasionally even some soul searching — to get the books right.  And then, once those are out (the week before the meeting), we spend almost as much time getting the presentations down for the actual meeting, since presenting 400 pages of material that people have already read is completely useless.

By the end of the meetings, we’re in good shape for the next year.  But before the meetings have even started, we’ve gotten a huge percentage of the benefit out of the process.  Pulling materials together is one thing, but figuring out how to craft the overall story (then each piece of it in 10-15 minutes or less) for a semi-external audience is something entirely different.  That’s where the rubber meets the road and where good executives are able to step back; remember what the core drivers and critical success factors are; separate the laundry list of tactics from the kernel that includes strategy, development of competitive advantage, and value creation; and then articulate it quickly, crisply, and convincingly. 

I’m incredibly proud of how both management teams drove the process this year – and I’m charged up for a great 2009 (economy be damned!).

The Gift of Feedback, Part IV

I wrote a few weeks ago about my live 360 – the first time I’ve ever been in the room for my own review discussion.  I now have a development plan drafted coming out of the session, and having cycled it through the contributors to the review, I’m ready to go with it.  As I did in 2008, 2009, and 2011, I’m posting it here publicly.  This time around, there are three development items:

1. Continue to spend enough time in-market.  In particular, look for opportunities to spend more time with direct clients.  There was a lot of discussion about this at my review.  One director suggested I should spend at least 20% of my time in-market, thinking I was spending less than that.  We track my time to the minute each quarter, and I spend roughly 1/3 of my time in-market.  The problem is the definition of in-market.  We have a lot of large partners (ESPs, ISPs, etc.) with whom I spend a lot of time at senior levels.  Where I spend very little time is with direct clients, either as prospects or as existing clients.  Even though, given our ASP, there isn’t as much leverage in any individual client relationship, I will work harder to engage with both our sales team and a couple of larger accounts to more deeply understand our individual client experience.
2. Strengthen the Executive Committee as a team as well as using the EC as the primary platform for driving accountability throughout the organization.  On the surface, this sounds like “duh,” isn’t that the CEO’s job in the first place?  But there are some important tactical items underneath this, especially given that we’ve changed over half of our executive team in the last 12 months.  I need to keep my foot on the accelerator in a few specific ways:  using our new goals and metrics process and our system of record (7Geese) rigorously with each team member every week or two; being more authoritative about the goals that end up in the system in the first place to make sure my top priorities for the organization are being met; finishing our new team development plan, which will have an emphasis on organizational accountability; and finding the next opportiunity for our EC to go through a management training program as a team.
3. Help stakeholders connect with the inherent complexity of the business.  This is an interesting one.  It started out as “make the business less complex,” until I realized that much of the competitive advantage and inherent value from our business comes fom the fact that we’ve built a series of overlapping, complex, data machines that drive unique insights for clients.  So reducing complexity may not make sense.  But helping everyone in and around the business connect with, and understand the complexity, is key.  To execute this item, there are specifics for each major stakeholder.  For the Board, I am going to experiment with a radically simpler format of our Board Book.  For Investors, Customers, and Partners, we are hard at work revising our corporate positioning and messaging.  Internally, there are few things to work on — speaking at more team/department meetings, looking for other opportunities to streamline the organization, and contemplating a single theme or priority for 2015 instead of our usual 3-5 major priorities.

Again, I want to thank everyone who participated in my 360 this year – my board, my team, a few “lucky” skip-levels, and my coach Marc Maltz.  The feedback was rich, the experience of observing the conversation was very powerful, and I hope you like where the development plan came out!

A Culture of Appreciation

As I mentioned in my last post in the Collaboration is Hard series, we’ve tried to create a culture of appreciation at Return Path that lowers barriers to collaboration and rewards mutual successes.  We developed a system that’s modeled somewhat after a couple of those short Ken Blanchard books, Whale Done and Gung Ho! It may seem a little hokey, and it doesn’t work 100% of the time, but in general, it’s a great way to make it easy for people to say a public “thanks” to a colleague for a job well done.

The idea is simple.  We have an “award request” form on our company Intranet that any employee can use to request one of five awards for one or more of their colleagues, and the list evolves over time.  The awards are:

ABCD – for going Above and Beyond the Call of Duty

Double E – for “everyday excellence”

Crowbar – for helping someone in sales “pry our way in” to a new customer

Damn, I Wish I’d Thought of That – for coming up with a great insight for the business (credit for the name of course goes to our former colleague Andy Sernovitz)

WOOT – for Working Out Of Title and helping a colleague

Our HR coordinator Lisa does a quick review of award submissions to make sure they are true to their definitions and make sure that people aren’t abusing the system, and the awards are announced and posted on the home page of the Intranet every week and via RSS feed in near-real time.

Each award carries a token monetary value of $25-$200 paid with American Express gift checks, which are basically like cash.  We send out the checks with mini-statements to employees every quarter.

It’s not a perfect system.  The biggest shortcoming is that it’s not used evenly by different people or different groups.  But it’s the best thing we’ve come up with so far to allow everyone in the company to give a colleague a virtual pat on the back, which encourages great teamwork!

Solving Problems Together

Last week, I started a series of new posts about our core values (a new tag in the tag cloud for this series) at Return Path.  Read the first one on Ownership here.

Another one of our core values is around problem solving, and ownership is intrinsically related.  We believe that all employees are responsible for owning solutions, not just surfacing problems.  The second core value I’ll write about in this series is written specifically as:

We solve problems together and always present problems with potential solutions or paths to solutions

In terms of how this value manifests itself in our daily existence, for one thing, I see people working across teams and departments regularly, at their own initiative, to solve problems here.  It happens in a very natural way.  Things don’t have to get escalated up and down management chains.  People at all levels seem to be very focused on solving problems, not just pointing them out, and they have good instincts for where, when, and how they can help on critical (and non-critical) items.

Another example, again relative to other workplaces I’ve either been at or seen, is that people complain a lot less here.  If they see something they don’t like, they do something about it, solve the problem themselves, or escalate quickly and professionally. The amount of finger pointing tends to be very low, and quite frankly, when fingers are pointed, they’re usually pointed inward to ask the question, “what could I have done differently?”

The danger of a highly collaborative culture like ours is teams getting stuck in consensus-seeking.  Beware!  The key is to balance collaboration on high value projects with authoritative leadership & direction.

A steady flow of problems are inherent in any business.  I’m thankful that my colleagues are generally quite strong at solving them!

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.

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Getting Good Inc., Part II

It was a nice honor to be noted as one of America’s fastest growing companies as an Inc. 500 company two years in a row in 2006 and 2007 (one of them here), but it is an even nicer honor to be noted as one of the Top 20 small/medium sized businesses to work for in America by Winning Workplaces and Inc. Magazine.  In addition to the award, we were featured in this month’s issue of Inc. with a specific article about transparency, and important element of our corporate culture, on p72 and online here.

Why a nicer honor?  Simply put, because we pride ourselves on being a great place to work — and we work hard at it.  My colleague Angela Baldonero, our SVP People, talks about this in more depth here. Congratulations to all of our employees, past and present, for this award, and a special thanks to Angela and the rest of the exec team for being such awesome stewards of our culture!

Book (Not So) Short:  Raise Your Hand If You’re Sure

I couldn’t get the catchy jingle from the 80’s commercial for Sure deodorant (you remember, the one with the Statue of Liberty at the end of it – thanks, YouTube) out of my head while I was reading the relatively new book, Confidence: How Winning Streaks and Losing Streaks Begin and End.  Written by HBS professor Rosabeth Moss Kantor, Confidence is one of the few business books I’ve read that’s both long and worth reading in full.

The book has scores of examples of both winning and losing streaks, from sports, business, politics, and other walks of life, and it does a great job of breaking down the core elements that go into creating a winning streak or turnaround (Accountability, Collaboration, Innovation).  Kantor also puts a very fine point on the “doom loop” of losing streaks and just how hard it is to turn them around.  The book also has a good crisp definition of why winning streaks end — arrogange, anyone? — and has consistent, but not preachy recipes for avoiding pitfalls and driving success.  All in all, very inspirational, even if many of the roots of success lie in well-documented leadership qualities like those expressed in Jim Collins’ Built to Last and Good to Great.  The book is good enough that Kantor can even be forgiven for lauding Verizon, probably the most consistently awful customer service company I’ve ever dealt with.

But even more of the roots of success and disappointment around streaks are psychological, and these examples really rang true for me as I reflected back on our acquisition of the troubled NetCreations in 2004.  That company was in the midst of a serious slump, a losing streak dating back to 2000, at the peak of the original Internet boom.  Year over year, the company had lost revenues, profits, customers, and key personnel.  Its parent company saw poor results and set it into the doom loop of starving it for resources and alternating between ignoring it and micromanaging it, and when we acquired the business, we found great assets and some fantastic people (many of whom I’m proud to say are still with us today), but a dispirited, blame-oriented, passive culture that was poised to continue wallowing in decline.

I can hardly claim that we’ve turned the business around in full, or that I personally made happen whatever turnaround there has been, but I do think we did a few things right as far as Kantor and Confidence would see it.  Her formula for a turnaround (Espouse the new message, Exemplify it with leadership actions, Establish programs to systematically drive it home throughout the organization) is right in line with our philosophy here at Return Path.

First, we accelerated the separation and autonomy of a fledgeling NetCreations spin-off unit, now our Authentic Response market research group, and let a culture of collaboration and innovation flourish under an exceptionally talented leader, Jeff Mattes.

But that was the easy part (for me anyway), because that part of the business was actually working well, and we just let it do its thing, with more support from HQ.  The turnaround of the core list rental and lead generation business of NetCreations, the original Postmaster Direct, was much tougher and is still a work in progress.  In the last six months, we’ve finally turned the corner, but it hasn’t been easy.  Even though we knew lots of what had to be done early on, actually doing it is much harder than b-school platitudes or even the best-written books make it seem.

The one thing that Kantor probably gives short shrift to, although she does mention it in passing a couple times, is that frequently turnarounds require massive major amounts of purging of personnel (not just management) to take hold.  As one of my former colleagues from Mercer Management Consulting used to say, “sometimes the only way to effect Change Management is to change management.”  Sometimes even very talented people are just bogged down with baggage — the “ghost of quarters past” — and nothing you do or say can break that psychological barrier.

Boy, have we learned that lesson here at Return Path the hard way.  I’m extremely grateful to our team at Return Path, from the old RP people who’ve seen it all happen, to the old NetCreations people who are thriving in the new environment, to the new blood we’ve brought in to help effect the turnaround, for playing such important roles in our own Confidence-building exercises here.  And I’m super Confident that 2007 will be the year that we officially turn the old NetCreations/Postmaster losing streak into a big, multi-year winning streak.

Anyway, I realize this may redefine the “short” in book short, but Confidence is without question a good general management and leadership read.