Creating Generational Leadership

It’s the struggle of every start-up leader, across roles, – how to create multilayer, generational leadership to scale through the much longer journey of a start-up than many employees are able to stay around for.  Some of the most successful technology companies (witness Twitter most recently) have their founders return to the helm during perilous times.

Should startups care about generational leadership? Absolutely. Generational leadership is not about CEO succession – it is about ensuring that a business can thrive even when great people leave.

The paradox is this: Technology startups are built on the mythical “A-player,” someone who contributes at 10x the normal human being. Suppose you have the good fortune of recruiting such an individual. What happens when they leave? Won’t the business performance in that individual’s domain equally suffer by 90 percent?

Now, that doesn’t work. So what do you do?

  1. Try to create a business that doesn’t need 10x performers, then try to hire them anyway: Is the sales process unbelievably complex? Are the technical requirements extremely nuanced? Both would require 10x performers. A more scalable approach creates the kind of process or the kind of software that can be built by mere mortals.
  2. Make it the responsibility of every leader to have a succession plan in place: As a founder or CEO, you can’t step into every possible job – and in an employment environment as robust as Silicon Valley, people are going to leave. But great leaders think of themselves as owners first (because they are with the stock they earn) and worry about what happens to the value of their shares on the day they move on.  This applies to every level of the organization.  Of course, this assumes you’ve created an ownership culture.
  3. Actively promote the next “vintage” of leaders: There will come a moment when the people that helped you build the early stage business either move on voluntarily or involuntarily. The key is to create the next vintage – the ones who are not motivated by pure creation at the early stage but rather by the stage of business you are at.
  4. Hire versatile leaders: Versatile leaders are ones who can, in the worst case, do the jobs of the people who report to them.  They might not do it as well as the person they are replacing.  In fact, if they are empowering leaders, they will enable their team rather than micromanage it. But when they face an inevitable departure – they can step in.
  5. Put people in jobs that are tests: The clearest way to test if you have generational leadership is to challenge individuals to take on responsibilities that are beyond their current job function. Do they step up? The best promotions are absolutely obvious.
  6. Always be recruiting for key roles: Its the transition from key people that is most scary, but if you’re always recruiting, it gives you confidence that the business won’t skip a beat.

It’s important to work really hard to retain the best people. But there comes a time when it’s the right time to let great people go. You might have “saved” them multiple times, persuaded them to stay on with you, but their heart is elsewhere. Perhaps they have turned negative. Perhaps their demands have become unreasonable. To create generational leadership, you have to have the courage to test it. When the moment comes, trust in your grand plan.  Trust the next generation.

Image from 3 Generations of MacBride Men by Scott MacBride licensed under CC by 2.0

When the CEO Becomes a Soldier

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We think of the CEO as the corporate equivalent of a general – planning out the strategy, deciding which battles to fight, determining what resources to apply in the pursuit of which efforts, leading teams into battle and motivating the organization. The parallel between general and CEO is at best an incomplete one. In a startup, the CEO is as much soldier as general.

Superior execution is too important in a startup for the CEO to be only a leader. In its earliest stages, startups require everyone to contribute 200% and the CEO is no different.  Yet as the company grows in people, products, revenues and complexity – there is a tendency to assume that the CEO morphs into the order-barking general.  Nothing could be further from the truth.  Sure, as a company scales, the leadership traits of the CEO become increasingly important, but just as important is the CEO’s ability to step back into the role of individual contributor, and at times, just follow orders. I’ve learned that the assumption of most of the organization will be to always assume that the CEO is acting in a leadership capacity, so communicating that I’m playing one of the other roles proactively becomes extremely critical so that others can step up to the other roles. Here are some scenarios where I think about being an individual contributor even as BloomReach becomes a Company of 250 people:

  •  Selling a big deal: The customer always wants to talk to the CEO and well-placed involvement in driving a big deal could shorten a sales cycle by months or even create a deal where none existed. At the scale we’ve achieved, I’m not likely to be close enough to the details to drive the strategy around closing the deal. I’m more focused on taking orders from the sales rep or the broader account team.
  •  Closing a key employee: The recruiting team has likely laid a lot of the foundation for the discussions and the interview process is probably nearly complete. My job now is to help close the deal. There are certain questions from a candidate (value of the equity, vision of the company) that a CEO is best placed to answer. Being involved in closing a hire can make a big difference.
  •  Tackling a difficult conversation with a customer or an employee: Maybe our system has failed a customer. Maybe we have not delivered on an employee’s expectations.  By the time the CEO has been one of these situations,he or she is playing the role of firefighter. In situations of this kind, while I may not have been directly involved in the problem build-up, it becomes my job to calm the situation and identify a fruitful next step (which at times can be to part ways).
  • Building consensus around a key product decision: In this role, the CEO has become product manager. Often, in the murky world of product strategy, key stakeholders can have different perspectives on direction.  Ideally, the product managers and product marketers drive the decision.  But sometimes, that just doesn’t happen.   It then becomes the CEO’s role to gather the data, drive to a decision and then enroll those stakeholders in the decision.
  • Being a thought-partner to key executives and leaders: There are plenty of cases where the CEO is advisor, not decision-maker. Maybe a team is thinking about restructuring and considering alternatives. Maybe an investment decision is being made. There are plenty of decisions that shouldn’t be made by the CEO, but the CEO can serve as a counselor – provided he or she is comfortable knowing that the counsel may or may not be taken.  The culture of the organization needs to permit dissent – otherwise advice can easily be misinterpreted as orders.

The cases of CEO as soldier are often ones where the leverage gained from being an individual contributor can create outsized outcomes for the company and where the CEO is uniquely placed to deliver those outsized outcomes (i.e. it’s unlikely someone else can be found to play that role as effectively).  I’ve tried to be extremely deliberate about when I’m playing the role of leader, when I’m playing the role of advisor, and when I’m playing the role of soldier.   It’s important that the soldier role not be the dominant one, otherwise the CEO will crowd out others and ignore critical leadership duties.

Nonetheless, getting back to being a situational soldier can be extremely empowering for leaders as the team grows. While management can be fun, it can also be wearisome and the subset of days when one gets to own a product decision, own a sale or own a hire, can very much feel like a return to one’s roots, in the trenches.


Image from Army Ten-Miler Salute by The U.S. Army licensed under CC by 2.0

Do You Have Practical Courage?

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Nobody makes Hollywood movies about characters that don’t have courage.  The warrior who goes to great lengths to put himself or herself on the line for his or her brother-in-arms.  The sports star who dared to take the game winning shot. The executive who bet the business on a new direction when the forces at play suggested otherwise. The doctor who is prepared to try an experimental treatment.  The investor who bets against market forces and wins. These are the stories of legend and heroism.  The trouble is – plenty of sports stars miss the last second shot, execs throw their companies into turbulent times with moon shots that don’t work, investors can get fired for countercyclical decisions and doctors can get sued for excessive risk-taking. How should you think about approaching your own work-life?  How should you evaluate the level of “courage” you should have when making a decision that affects your career and your business?

The answer is to have “practical courage.”  Practical courage involves making courageous decisions that lead to non-linear outcomes for yourself and your business but in a way that is inherently practical.

You can apply practical courage to a whole range of situations.  Making practically courageous choices is really hard. The temptations are on one extreme or the other. You will have a large number of people in your life telling you that the path ahead on the courageous decision is really hard, and that one should take the easier road. You will have others who prey purely on emotion. You will hear people say “greatness comes from taking a big bet blindly, believing in yourself and just doing it.”  Neither is practical courage and fighting the two polarizing forces is what practical courage involves.  Ask yourself a few questions to help you make a practically courageous choice:

  • Do you have the unfair advantage of knowledge or facts that others don’t have?  Peter Thiel calls it “the secret” in his book Zero to One.  When Mark Zuckerberg turned down a $1 billion offer from Yahoo!, he likely did not do it because he simply didn’t want to be acquired. He had knowledge about the potential impact of a social network that Yahoo! (and likely many Facebook stakeholders) just did not have.  When Andy Grove bet Intel on the microprocessor business and away from the memory business, he knew that one was a path to commoditization and the other was a path to real growth. They could make the courageous choice because they had information that the market did not.
  • Can you be practical in the short term but right in the long term?  Practically courageous choices often involve short-term – long-term tradeoffs.  If you make a big bet on a new, more risky choice that is likely to be right in the long term in a way that can be practically pulled off in the short term you have found the zone of practical courage.  The lean startup methodology that Eric Ries has talked about is inherently about practical courage. It involves rapid innovation in a clear direction, but it limits investment until early market feedback is positive.  Promoting someone with high potential can be courageous.  Promoting someone with high potential, but with a backup plan in case they fail is practically courageous.
  • Have you considered the true downside case?  I thought a lot about downside when I decided to be an entrepreneur. It can be a tough decision to leave a good job and great career prospect, until you consider the downside case. I started to think of my education and my previous work experience as an “insurance policy.” I had the good fortune of enough qualifications to get a job anytime, so what’s the real downside case of taking a bit of risk?

Being practical is a path to incremental improvements over the status quo.  Being courageous without practicality is like betting at the Casino.  But practical courage can give you a truly unfair advantage on a path to tremendous success. Developing an intuition for practical courage is not a science.  It is an art, and one that the best leaders have learned.  It involves collecting a lot of data and genuinely paying attention to it.  But it ultimately also involves having the inner strength to take a set of data points that are inherently grey and having the courage to trust your gut.

 

Image from by David Goehring licensed under CC by 2.0

Leaders should be Problems Solvers and Problem Creators

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The trajectory of most careers starts with problem solving.  Good engineers, faced with a well-defined problem, can usually do an effective job thinking through how to best solve the problem.  The best engineers find the 10x solution – 10x more scalable, 10x more maintainable in one-tenth the time. Good marketing people, armed with an adequate budget and clear goals, problem-solve around messaging or marketing program choices.  Good finance people take the characteristics of the business and think about the best deployment of capital to achieve the desired outcomes. Good salespeople are problem-solving around how to navigate obstacles to persuade decision-makers.  We all start our careers honing skills around being effective problem solvers.  I spent the early part of my career problem-solving as an engineer, problem solving as a financial analyst and problem solving as an early entrepreneur.  And some of the best individual contributors at BloomReach, and at every organization I’ve seen, are incredible problem solvers.  The CEO job involves a ton of problem solving.  And usually, by the time the problem reaches you, it’s a big hairball.  It’s a decision where the path is unclear and where the data is murky (a bet on a new market or new product). It’s a complex, people-oriented problem (a manager or team not performing or two leaders not getting along).  Or it is a problem that has inherent short-term vs. long-term trade-offs (losing a customer that might be very valuable vs retaining that customer at the cost of longer-term priorities).

 

Great problem solvers who continue to advance in their careers, are constantly broadening the scope of the problems they can take on.  At any startup, leadership opportunities often outpace the people that the startup has to take on tough, large-scope problems. As I look at the people who have advanced quickly at BloomReach we’ve seen them grow from task-oriented problem solvers to outcome-oriented problem solvers.  On the customer-success side, they move from “I can complete the analysis” to “I will own the customer’s success end-to-end.”  On our engineering team, they move from “I can build this component” to “I can lead this project.”  Being an outcome-oriented problem solver provides enormous benefit to one’s manager. There is nothing an oversubscribed manager appreciates more (or should) than someone on the team who says “I got this.”  And has the credibility to have earned that trust.

 

Being a great outcome-oriented problem solver is a necessary, but not sufficient, condition for true leadership.  Leadership means both being a problem solver and a problem creator.  The inherent nature of a well-executing team is that they are focused on solving a problem.  But what if the problem definition needs changing?  What if you have a team chasing a revenue goal when they should be chasing a customer satisfaction goal?  What if you are executing really effectively against a narrowing addressable market?  What if your organizational alignment inherently is misaligned with the goals of the company?  Those are all times to step in and create problems for the teams involved.

Problem creation has been important at BloomReach.  At times, we’ve created problems to  drive a change of direction – sometimes by hiring a new exec, sometimes by personally selling a customer who might be outside of the qualification criteria, sometimes by reorganizing a team, sometimes by radically changing the product goals and sometimes by materially changing budget allocations.  Many of these steps create more problems (at least in the near-term) than they solve.  Often, they materially disrupt the execution cadence of the organization.  They invite significant dissent among key team members.  But they are key to driving a team or an organization to raise the bar, think differently and adapt to a dynamic world.  I’ve seen cases of leaders going down the problem creation road too far.  They create so many problems that they set their teams up for failure.  They are unsympathetic when a team member asks for help.  They become unapproachable.

 

Many of the best leaders are great problem creators, inspiring teams to achieve what they never thought possible and adapt in ways that can appear radical at first, but become second nature over time.  And they are also great problem solvers, taking ownership for the toughest problems around and helping teams navigate them. The problem-creation gene is a wholly different gene than the problem-solving gene.  Problem solvers want to get through the task list.  Problem creators want to create a new one.  The best leaders get both genes to co-exist in harmony, artfully drawing on each at just the right time.

Image from Troublemakers by THEJOKER licensed under CC by 2.0

Are you Ready to Start a Company?

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I had the good fortune of attending a dinner with John Chambers, CEO of Cisco. When he was asked why he takes the time to speak to small groups of startup CEOs and entrepreneurs, he recounted a story of having been mentored by the CEO of Hewlett Packard in his early days in the valley. And when he asked the HP exec how he could repay the favor, the HP CEO simply said that he should take the time to mentor the next generation so that the unique assets of the valley transcend generations. Few entrepreneurs have access to regular mentoring from leaders of multi-billion dollar companies. Fortunately, you do not need that mentoring to start a company. What you do need though, is virtual leadership experience. Virtual leadership experience is what MBA programs aim to leverage. They take individuals through a large number of case studies with the goal of building muscle memory to help those individuals confront future situations. The good news is, you don’t need a MBA program to build entrepreneurial muscle memory either.

Let’s step back. Wanting to start a company and being ready to start a company are two independent things. Of course, there are plenty of stories of successful entrepreneurs without work experience – Bill Gates and Mark Zuckerberg among them. But the overwhelming majority of successful founders have been ready to lead. Indeed, the most important experience you can have prior to starting a company is to work at a start-up. Why is that? Because larger companies don’t expose you to enough situations, frequently enough, that would parallel the type of situations that you would need to confront if you were to start your own company. But just because you have worked at a startup, doesn’t mean you are ready to start a company. Once you’ve checked the box on desire, commitment, passion, risk tolerance, family situation and all of the other “must-haves,” you can now ask yourself the key question – are you ready?

This is where virtual leadership experience comes in. Throughout your time at an early-stage or growth-stage company, you will see a lot of situations that go well beyond your job, regardless of whether you are an engineer, product manager, finance person or salesperson. You will see product decisions being made around you. You will see the way decision-making takes place. You will understand your company’s interview process. You will understand the way leaders communicate in the face of adversity. You will watch politics develop – and see whether it gets squashed or cultivated. You will see competitors emerge, and watch how your company responds. You will see financial pressures, and watch how your company handles it. You will see good quarters – and see whether your company gets ahead of itself. You will see bad quarters – and see whether your company gets down on itself. You will see good hires and bad fires. In a relatively short period of time, you will encounter a richer curriculum than your average MBA program offers. You can choose to ignore the things going on around you or you can treat every single thing going on around you as a course in virtual leadership. Let me be specific: If you want to test whether you are ready for a start-up, put yourself in the shoes of the leaders of your company and every time your company is confronted with a situation, ask yourself – what would I do in this situation if I were leading my company? You are living through a true experiment. When a product decision is being made, seek out the information relevant to the decision and force yourself to make a call on the decision (ideally share that thinking with product leaders). Then watch how that decision plays out and look back on your instincts to figure out whether they were wise or unwise. If a personnel decision is being made, think about how you might handle the situation. Then watch how things play out and grade yourself. Think about how your leaders prioritize and communicate and evaluate how you might have approached those tasks. You can take this approach to almost everything going on around you.

One of the benefits to putting yourself through virtual leadership training is that you will learn a very broad set of things about startup decision-making across a range of functions. That will serve you well downstream when you need to weigh in on decisions you don’t have much experience in. More importantly, it will hone your instincts. The difference between being responsible for some decisions and being responsible (ultimately) for all decisions is a very big one and it is the fundamental difference between working at a startup and leading one. Very often, early on in your mental training session (and if you work for a good company), you will find that your instincts aren’t actually all that good. You’ll find that you may not have come to the same conclusions as your leaders, and that very often your thought process was not sound. You’ll also feel pretty uncomfortable – fundamentally lacking in clarity around what the right answer is. But over time, like any muscle, you’ll hone those instincts. You’ll start to agree with your leaders on some things and differ on others. You’ll develop greater and greater confidence in your decision-making and approach to situations. Once you’ve navigated two years or so of virtual leadership training, and graded yourself an A consistently across a range of multi-functional situations – you’re ready to join the thousands who are feverishly building their own dreams.

Image from Ready… by Amanda Tipton licensed under CC by 2.0

Don’t Waste your 20s at Google or McKinsey

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What should you be looking to get out of your career in your 20s? Should you be looking to make a lot of money? Should you be looking to get a brand name on your resume? The most important thing you should be looking to do – is to find your true professional calling. As the famous rags-to-riches entrepreneur Jim Rohn said:

“Time is our most valuable asset, yet we tend to waste it, kill it, and spend it rather than invest it.”

Investing your time in your 20s wisely enables you to spend the rest of your life doing what you love, not searching for what you might love. So the real question you should be asking yourself is: How do I learn the most (about myself and the things I’m interested in), in the shortest time period possible, so I know what I want to be when I grow up?

Lets start with what not to do – go work at a big tech company. Unfortunately, that’s not the easiest choice to make. Google and all the big tech companies recruit on campus. The perks seem attractive (free food and occasional visits by Hillary Clinton or Bono). The brand feels impressive. The pay is good. A lot of your friends likely work there so there is a certain social comfort level. It feels like a stepping-stone to other things. The trouble is that your learning curve is unbelievably slow. If you are an engineer, you likely work on a large project whose contribution is likely irrelevant to the outcome of the business. You’re going to have high variance in the quality of people you work with (because in a company of 50,000 people that is almost certainly going to be true). You’re going to ship production code relatively infrequently. If you are a product manager – you are not facing the most important challenge of a real product manager (building such a product so great that even a lack of distribution capability doesn’t inhibit its success). If you are a salesperson – it’s hard to know if you are being successful because of you or because of the brand you represent. Fundamentally, you’re in the slow-lane as far as learning curves go. The skills you do cultivate, navigating large organizations or dealing with politics, are ones that don’t push you to the intellectual or emotional edge. Ask yourself the question: will the prospects of the big tech company I join change if I join? The answer will be no. And therefore neither your impact nor your learning can be significant. As a result, you might leave a little richer but you really don’t know a whole lot more about yourself and you’re likely much further behind your friends at start-ups or growth companies.

Big service businesses like McKinsey or Goldman Sachs also seem like super interesting opportunities. They pay well. They offer you the opportunity to flit between different projects (Consulting) or different deals (Investment Banking). You get to travel the country or the world and you’re told that you will be interacting with senior executives at clients. Some of that is true. The trouble is, for 90+% of people who work at big services businesses – they are routes to other careers, not careers in and of themselves. That would be fine if the skills you learn there enable to you to learn a lot about yourself. But most of the ex-consultants and ex-bankers I know are about as uncertain about what they want to do in life as they were on the day they joined the big service company. Rather than clarity, the diversity of projects just creates confusion. While there may be some good critical thinking skills that you cultivate – remember that the fundamental job of a Consultant or Banker is to put together PowerPoint presentations and excel spreadsheets that give advice – rarely to implement anything. Your learning will be so concentrated in strategy (5% of life) that you will lose out on learning skills in the more important part (execution).

I spent two years at a big service company in my 20s (Investment Banking @Lazard) and three years of my 20s at a big tech company (Cisco). But I learned 10x more about myself and the path I wanted in life at a start-up named FirstMark Communications where I was a founding member of the team and spent 3+ years at between the ages of 23 and 26. FirstMark was insane – we built a broadband network to provide high-speed Internet access across Europe in the late 1990s. It was a classic telecom bubble story that involved raising $1bn of capital, hiring 600+ people, dealing with government regulators in 10 countries, interacting with Henry Kissinger, building out optical networks and going after a big mission to go wire the planet. There were a ton of things we screwed up at FirstMark and a bunch we got right. But it was a life changing experience for me.

I had accepted admission to business school before I got involved in starting FirstMark and having been both an engineer and an investment banker, I was pretty uncertain about what I wanted to do in life. I would have likely been even more confused after the Business School experience. Instead, I got involved in starting FirstMark and it was the defining experience of my 20s. It told me I wanted to be an entrepreneur and more importantly, it gave me the confidence to do it. I learned more about business and myself in the first month at FirstMark than at 2 years at Lazard or 3 years at Cisco. And while it was intense, stressful, volatile and crazy – I loved it. I had clarity – the rest of my life was going to be about entrepreneurial pursuits. Interestingly, many of my friends and colleagues at FirstMark did not. Some went back to Wall Street. Some went to go work at big technology or telecom businesses. Some went back to school. But they all found themselves and the professional path they wanted in life.

Going to work at a start-up or growth company in your 20s will put you on the fast-lane learning curve. It will be the best investment you can make because you’ll find yourself. The folks who have come into BloomReach in their 20s unclear about their passions, often emerge knowing who they are – becoming business development people or founders or product managers or people managers. They find their calling fast because the pace of the business requires it. You might be concerned about what happens if your start-up fails. Relax. You (probably) don’t have kids at home. You can always move into your friend’s crappy 1 bedroom apartment for a couple of months. And I promise you this – the most employable person in the tech industry is the highly motivated 25 year old (ideally with technical skills). So even if that start-up doesn’t work out, don’t worry – you’ll have plenty of other opportunities and a clear sense of yourself.

Image from The Takakura Trash Basket by Ikhlasul Amal licensed under CC by 2.0

Democratizing your Culture

“Democracy is the worst form of government.  Except for all of those other forms that have been tried from time to time.”

– Winston Churchill

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Culture is the center of the start-up.  It is the pulse.  It is the soul.  It is the binding that gets teams through hard times.  It is the intoxicant that enables teams to share the highs with each other – making them even higher.

At BloomReach we have our own core values, written in February 2009, before my cofounder Ashu or I had raised any money, figured out our product, determined what market we were going after or hired our first person.  That’s how important it was to us.

The most interesting question around culture is not, “What is your culture?”  It is, “How do you make your culture real?”  Thousands of enterprises have come before your start-up or growing business.  Most of them have terrific culture and values documents.  But they are not real.  They are not authentic to the team or to the business; and they don’t manifest in ways that are practical to the work lives of employees.  The pseudo-cultures think that the key to great culture is a lot of parties, free food or cool schwag.  It’s not.

The key to making your culture real is to democratize it.  The aspirational goal of your culture should be to make it genuinely co-owned by every member of your team.  That can be counter-intuitive because so much about companies is top down – the titles, the strategic direction, the planning, the compensation and the decision-making.  But culture needs to be built bottom-up.  It can’t be the responsibility of the HR team or even the CEO.

It has to be an organism that grows and shrinks with the ebb and flow of your business and the personalities of your team.  It has to be truly democratic.  So how do you democratize your culture?  A democratic culture draws from the pillars of a democratic society.  It starts with citizenship.

Here are 10 ways we do it:

  1. The BloomReach Citizenship Document:  We maintain a document of dozens of initiatives – broken up between “Fun” and “Company Building” in a Google doc spreadsheet.  Each initiative has an owner and a team.  Initiatives can be “improve remote office communication,” “organize fitness activities,” “organize peer awards” (more on that later) or “create volunteer events.”  No one approves these initiatives.  The only ask of a new BloomReacher is that he or she do something that goes beyond their job description to contribute back to the company.  Many of their contributions are memorialized in the BloomReach citizenship document.  It serves as a repository of our “democratic traditions.”
  2. Hackathons and Business Challenges:  We’ve had a tradition at BloomReach of either running hackathons (24-hour efforts to build and ship something cool) or running the BloomReach Challenge (where the entire company is divided into cross-functional teams to dream up business and product ideas). Hackathons and business challenges encourage people who never get to work together and often don’t know each other to get creative and get to know one another.  It also reinforces that just as the rewards belong to all of us, the challenges belong to all of us.  Eighty out of 170 people participated in our last hackathon and several new product features came out of it, promoting the energy and creativity that are “must-haves” in any start-up.
  3. The Open Floor Plan: Democratizing your culture starts with open communication among teams.  Just as in any democracy, there must be freedom of expression. The open floor plan creates energy, expression and sends a clear statement that the environment values everyone equally.  Yes, it can lead to some loss of individual productivity, but the cultural gain across the organization outweighs all of that.
  4. One Set of Rules:  Are you flying first class and expecting others to travel coach? Is an exec allowed to spend exorbitant amounts of money on a team dinner that a team itself would not be allowed to spend on its own?  All of these send clear signals – that the culture does not value the contributions of every member of the team equally.
  5. Peer Awards: Peer awards are fantastic.  They reinforce that the highest honor anyone can receive is an unsolicited award from a teammate.  For us, peer awards are a big deal.  Anyone can give them as a thank you to a colleague, along with a $150 gift certificate.  It comes with an Oscar-like thank you speech and creates the essential quality of a democratic culture –the willingness to go to great lengths to help a teammate in need.
  6. Bonuses on Company Performance:  A key to democratizing your culture is the idea that “we rise and fall as one company.”   And there is no credibility to that claim if the compensation of individuals is meaningfully at odds with how the company performs.  Of course, one should find mechanisms to recognize extraordinary performance but a democratic culture means democratic compensation features.  Because base compensation and equity are often variant on time of joining and role, a target bonus percent purely based on overall Company performance helps equalize the compensation mix.
  7. Independent Ownership of Decisions: A pillar of the democratic culture is the idea that each individual is an adult, capable of making good decisions as an owner of the business.  At BloomReach, we borrow from the Netflix model of limiting “policies” – no vacation policies, no expense policies and no over-legislation of behavior.
  8. Self-Scoring of OKRs (Outcomes and Key Results): Nothing is more typically top-down than individual performance.  On the other hand, self-scoring of team OKRs enables teams to (in a non compensation-impacting way) score themselves in public and share those scores openly.  It holds each team accountable to each other.
  9. 360 Feedback: We try to keep our performance-feedback process simple.  However, one of the key changes we’ve made is to incorporate 360 feedback (particularly, feedback from peers).  Top down feedback reinforces that the only thing that matters is pleasing your boss.  In truth, high-impact initiatives involve teams collaborating with each other fruitfully.
  10. Hanging out together:  You can’t force friendships.  But you can put people in a position to get to know each other genuinely.  We do that with a lot of company-sponsored initiatives like soccer teams, volunteer events and running relays.  I’m proud of the number of BloomReachers that hang out with each other.  Social relationships build camaraderie.  And camaraderie creates loyalties that go beyond loyalty to the company. (Ok, there are some parties involved.)

I believe that a democratic culture solves the single most difficult conundrum of growth: scaling while maintaining extraordinary commitment.  We have a long way to go to continue to evolve what being a BloomReacher means.  I am sure, however, that the answer to every impending decision lies somewhere in the historical tradition of the only system that has ever really worked: democracy.

Photo courtesy of “DEMOCRACY” by SUXSIEQ under CC BY 2.0

Hiring a Great Executive Team

team

One of a CEO’s hardest and most important jobs is building an executive team.  Have a great executive team? You can power through the darkest of hours. Have a dysfunctional, less-than competent or highly unbalanced executive team and you’re in for a world of hurt.

Don’t Rely on a Retained Search Firm: I’ve never been very successful in hiring execs through retained search firms. (We are 0-3 on searches done through retained search firms at BloomReach). That could be because our standards are insanely high. It could be because we are super-sensitive to “fit” – something that is very hard for a retained search firm to get right. Or it could be because retained search firms focus primarily on people in the market, who may by definition be lower quality candidates. I’m not saying you should not hire an outside firm but it is essential that you use your network to identify the absolute best candidates also– then sell them like hell independent of an outside firm. This will result in a smaller pipeline, but a much higher quality one.  Remember, it is your responsibility to find the best candidate.  Not the firm’s.

Know when to bet and when not to: The most common comparison point for CEOs evaluating candidates is between the “experienced hire” and the “up-and-comer.” Some companies believe in one philosophy or the other. I think the answer is situational. We have members of the BloomReach executive team for whom this is very analogous to what they’ve done before. We have members that were total bets that worked out. We have people we have promoted from within. We have people that we have added recently and those that have been with us for 4-plus years. A good rule of thumb for me is, if you believe that the job requirements are highly creative, unique to your business, an area you want to “invent” and spend meaningful founder-time on, then hire the up-and-comer or grow the person internally. They will be more open minded, have less baggage and will be more able to think out of the box.  If you believe you have more to learn from the best-in-class companies in your industry for that function, or if you as a CEO/founder want to spend a little less time on that function, hire for experience.

Hire for Raw Smarts and Intense Motivation: Most start-up journeys involve navigating uncharted waters. I have always made mistakes when I have hired based on resume. Every candidate is only as good as the situation they are placed in. And in most start-ups, that situation relies on versatility, intelligence and sheer (street) smarts. The ivory-tower candidates are better served working in larger corporations or universities than in your chaotic start-ups. Motivation counts as much as intelligence. The ideal candidate is one for whom their success at your company is a defining career moment; where their passion and commitment approximates your own.

Fit Matters: Most unsuccessful executive team members fail because they don’t share the culture or work collaboratively with others on the team. Ask yourself the following question: Would the new exec team member I’m hiring add to or detract from the harmony of the team. If that answer is not obvious, don’t hire them. Run the interview process through your executive team and take the feedback seriously, don’t pre-judge the outcomes.

Master of One Function, Jack of All Others: The standard for our executive team is a clear one. Team members must be masters of the function they are leading (engineering, product, sales, marketing etc.). They must be able to get down to the level of an individual contributor on their team (and answer your hard, detailed questions) and rise to scale it at the same time. Without that, they can’t do the job. They must also be able to add meaningful value to every (controversial) conversation around the exec table. That means Administrative/Finance people need to understand the business. Product people need to understand customers. Customer-oriented individuals need to understand technology. And everyone needs to understand the culture and the business drivers.

Perhaps as valuable are the qualities that don’t matter (except as they influence the above): You are not looking for your best friend; you are not looking for the best resumes; you are not looking for the “silver bullet” whose magical arrival fixes the business; you are not looking for the best financial deal on your hire; and you are not looking to have it be primarily the group of people that helped you get off the ground (i.e. your earliest employees) since the needs of the business will certainly evolve.

In the two years since we have assembled our core executive team, I can say clearly that this is the best senior team I have ever worked with. And I sleep a lot better at night knowing that.

Photo courtesy of “Dragon*Con 2013: JLA vs Avengers Shoot” by Pat Loika under CC BY 2.0

The Star Performer Hype Cycle

When it comes to building a team, venture capitalists and experienced leaders spout a classic refrain: “hire slow, fire fast.”  The logic makes sense at one level.  You only want to hire A players – in skills, cultural fit and motivation.  And often within the first 30 days, you find that new hires are exactly who they ultimately will be. Therefore, take your time finding the fit and if you determine that the person is not right – fire them.

But here’s why it often makes sense to hire fast:

  • The market for great talent is hot… as hot as it has been in the Valley in years.  Decisiveness counts for something in identifying the right candidate.
  • In many cases, more interviews just create confusion. Consensus on a candidate in a candid, aggressive culture almost never happens.
  • Interviews are fundamentally flawed.  The probability of a better hire with more data degrades fast when the macro issue is that interviews yield highly imperfect results.

Firing fast is the more dangerous decision.  Firing fast has cultural implications – it creates a lot of turnover, it sets initiatives back, it often creates politics and it creates a murmur of “why did Person X leave” (assuming one does not disclose publicly who leaves voluntarily and who doesn’t)?  If the hiring bar is really high (as it is at BloomReach) – firing fast creates a simple message for the team: “You are only as good as what you do in the first 90 days?”

Really?

We’ve had plenty of amazing people who were put in the wrong role, struggled to understand how decisions are made initially or were slower (but ultimately more productive) learners.  And culture isn’t something that someone gets overnight.  It takes time and osmosis to build relationships.  I have found that most hires operating in a high-performance organization go through their own version of the Gartner Hype Cycle. (Lets call it the Star Performer Hype Cycle.)  It looks a lot like this:

hire fire

 

In the Star Performer Hype Cycle – the trigger is the hire and often in the beginning the star is a breath of fresh air.  They bring in new ideas, new contacts and a new personality into the mix.  It often feels like they have the silver bullet to all of your problems.

Until they don’t. That’s when the peak of inflated expectations comes crashing down into the trough of disillusionment.  That’s when you feel like they don’t sell enough deals or get your technical architecture or even understand the most rudimentary concepts of the business.

For stars, at some point something clicks.  They know how to execute in your chaotic environment.  They sell one deal and that helps them sell the next.  Confidence breeds confidence.  And the virtuous cycle grows.  Extricating your new star from the trough of disillusionment can sometimes take an intervention from their manager: a refocus on priorities, a clarification of role, a therapist to listen to their struggles.  I’ve taken a lot of BloomReachers through this trough and out to the high performance category.

Fire fast and risk falling into the thrall of the “grass is greener syndrome” – betting you can replace him or her with instant greatness.  Remember, your star performer may be one quarter away from greatness.