Aug 252011

The Limits of Perseverance

The Limits of Perseverance

My Dad has a great saying, which is that

It’s ok to chip away at a brick wall, but not if you’re using a toothpick

Entrepreneurs are famous for persevering in the face of adversity, a trait more commonly known as stubbornness.  And generally, that’s a good thing.  Breakthrough ideas aren’t easy to come by, nor is leading the market.  If those things were common, they wouldn’t be breakthrough.

But perseverance doesn’t go anywhere without amassing the proper resources to do the job at hand.  Just as you’d never chip away at a brick wall with a toothpick, you’d never willingly go up against a fierce competitor without a great product or sales effort, or you’d never hire an entry level person to do the job of an executive.

The key word here is “willingly,” and I think the business lesson you can derive from this great saying is that while you can easily identify the resources you’re WILLING to put against a particular problem, it’s much harder to correctly estimate the size of the problem, or the resources REQUIRED to get the job done well.  And even harder than that is recognizing when the resources you’re putting against a particular problem are INSUFFICIENT to get the job done.

The ancillary problem, once you’ve determined that you’re bailing out a cruise ship with a thimble (another colorful metaphor for the same issue), is to figure out whether the right next action is to beef up the resources, redefine the problem, or abandon ship altogether.  That can be an agonizing call to make, and maybe not a clear-cut one either, but at least it advances the cause in a more productive way.

In my mind, being able to slog your way through a problem like this is one of the many hallmarks of a great entrepreneurial leader.

Filed under: Business, Entrepreneurship, Leadership

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Aug 182011

People First

People First

I do not think it’s telling that my fourth post in this series of posts on Return Path’s core values (kickoff post, tag cloud) is something called People First.  Ok, it probably should have been the first post in the series.  To be fair, it is the first value on our list, but for whatever reason, the value about Ownership was top of mind when I decided to create this series.

Anyway, at Return Path,

We believe that people come first

And we aren’t shy about saying it publicly, either.  This came up in a lengthy interview I did with Inc. Magazine last year when we were profiled for winning an award as one of the top 20 small- and mid-sized businesses to work for in America.  After re-reading that article, I went back and tried to find the slide from our investor presentations that I referred to.  I have a few versions of this slide from different points in time, including one that’s simpler (it only has employees, clients, and shareholder on it) but here’s a sample of it:

That pretty much says it all.  We believe that if we have the best and most engaged workforce, we will do the best job at solving our clients’ problems, and if we do that well, our shareholders will win, too.

How does this “people first” mentality influence my/our day-to-day activities?  Here are a few examples:

  • We treat all employees well, regardless of level or department.  All employees are important to us achieving our mission – otherwise, they wouldn’t be here.  So we don’t do a lot of things that other companies do like send our top performing sales reps on a boondogle together while the engineers and accountants slave away in the office as second-class citizens.  That would be something you might see in a “sales first” or “customer first” culture
  • We fiercely defend the human capital of our organization.  There are two examples I can think of around this point.  First, we do not tolerate abusive clients. Fortunately, they are rare, but more than once over the years either I or a member of my senior team has had to get on the phone with a client and reprimand them, or even terminate their contract with us, for treating one of our employees poorly and unprofessionally. And along the same lines, when all economic hell broke loose in the fall of 2008, we immediately told employees that while we’d be in for a rough ride, our three top priorities were to keep everyone’s job, keep everyone’s compensation, and keep everyone’s health benefits. Fortunately, our business withstood the financial challenges and we were able to get through the financial crisis with those three things intact.
  • We walk the walk with regard to employee feedback.  Everyone does employee satisfaction surveys, but we are very rigorous about understanding what areas are making people relatively unhappy (for us, even our poor ratings are pretty good, but they’re poor relative to other ratings), and where in the employee population (office, department, level) those issues lie.  We highlight them in an all-hands meeting or communication, we develop specific action plans around them, and we measure those same questions and responses the next time we do a survey to see how we’ve improved
  • We invest in our people.  We pay them fairly well, but that’s not what I’m talking about.  We invest in their learning and growth, which is the lifeblood of knowledge workers.  We do an enormous amount of internal training.  We encourage, support, and pay for outside training and education.  We are very generous with the things that allow our employees to be happy and healthy, from food to fitness to insurance to time off to a flexible environment to allowing them to work from another office, or even remotely, if their lives require them to move somewhere else
  • I spend as little time as I possibly can managing my shareholders and as much time as I can with employees and prospective employees.  That doesn’t mean I don’t interact with my Board members – I do that quite a bit.  But it does mean that when I do interact with them, it’s more about what they can do for Return Path and less about reporting information to them.  I do send them a lot of information, but the information flow works well for them and simultaneously minimizes my time commitment to the process:  (1) reporting comes in a very consistent format so that investors know WHAT to expect and what they’re looking at, (2) reporting comes out with a consistently long lead time prior to a meeting so investors know WHEN to expect the information, (3) the format of the information is co-developed with investors so they are getting the material they WANT, and (4) we automate as much of the information production as possible and delegate it out across the organization as much as possible so there’s not a heavy burden on any one employee to produce it
  • When we do spend time with customers (which is hopefully a lot as well), we try to spread that time out across a broad base of employees, not just salespeople and account managers, so that as many of our employees can develop a deep enough understanding of what our customers’ lives are like and how we impact them

There are plenty of companies out there who have a “shareholder first” or “customer first” philosophy.  I’m not saying those are necessarily wrong – but at least in our industry, I’ll bet companies like that end up with significantly higher recruiting costs (we source almost half our new hires from existing employee referrals), higher employee churn, and therefore lower revenue and profit per employee metrics at a minimum.  Those things must lead to less happy customers, especially in this day and age of transparency.  And all of those things probably degrade shareholder value, at least over the long haul.

Aug 112011

Peter Principle, Applied to Management

Peter Principle, Applied to Management

My Management by Chameleon Post from a couple weeks ago generated more comments than usual, and an entertaining email thread among my friends and former staff from MovieFone.  One comment that came off-blog is worth summarizing and addressing:

There are those of us who should not manage, whose personalities don’t work in a management context, and there is nothing wrong with not managing.  Also, there promotion to management by merit has always been a curiosity to me. If I am good at my job, why does it mean that I would be good at managing people who do my job? In other words, a good ‘line worker’ doth not a good manager make. I’d prefer to see people adept at being team leads be hired in, to manage, then promotion of someone ill-fitted for such a position be appointed from within. This latter happens far to often, to the detriment of many teams and companies.

For those of you not familiar with the Peter Principle, the Wikipedia definition is useful, but the short of it is that “people are promoted to their level of incompetence, when they stop getting promoted…so in time, every post tends to be occupied by an employee who is incompetent to carry out their duties.”

Back when I worked in management consulting, I always used to wonder how it was that all the senior people spent all their time selling business.  They hadn’t been trained to sell business.  And a lot of the people great at executing complex analysis and client cases hated selling. Or look at the challenge the other way around:  should a company take its best sales people and turn them into sales managers?

We’ve had numerous examples over the years at Return Path of people who are great at their jobs but make terrible, or at least less great, managers.  The problem with promoting someone into a management role mistakenly isn’t only that you’re taking one of your best producers off “the line.”  The problem is that those roles are coveted because they almost always come with higher comp and more status; and if a promotion backfires, it generally (though not always) dooms the employment relationship.  People don’t like admitting failure, people don’t like “moving backward,” and comp is almost always an issue.

What can be done about this?  We have tried over the years to create a culture where being a senior individual contributor can be just as challenging, fun, rewarding, impactful, and well compensated as being a manager, including getting promotions of a different sort.  But there are limits to this.  One obvious one is at the highest levels of an organization, there can only be one or two people like this (at most) by definition.  A CEO can only have so many direct reports.  But another limit is societal. Most OTHER companies define success as span of control.  You get a funny look if you apply for a job with 15 years of experience and a $100k+ salary yet have never managed anyone before.  After all, the conventional wisdom mistakenly goes, how can you have a big impact on the business if all you do is your own work?

The fact is that management is a different skill.  It needs to be learned, studied, practiced, and reviewed as much as any other line of work.  In most ways, it’s even more critical to have competent and superstar managers, since they impact others all day long.  Obviously, people can be grown or trained into being managers, but the principle of my commenter – and “Peter” – is spot on:  just because you are good at one job doesn’t mean you should be promoted to the next one.

I’m not sure there’s a good answer to this challenge, but I welcome any thoughts on it here.

Aug 042011

Keeping Commitments

Keeping Commitments

Today’s post is another in the series about our 13 core values at Return Path, about making commitments.  The language of our value specifically is:

We believe in keeping the commitments we make, and we communicate obsessively when we can’t

Making and keeping commitments is not a new value – it’s one of Covey’s core principles if nothing else.  I’m sure it has deeper roots throughout the history of mankind.  But for us, this is one of those things that is hard wired into the social contract of working here.  The value is more complicated than some of the other ones we have, and although it is short, it has three components that worth breaking down:

  • Making commitments:  Goal setting, whether big company-wide goals, or smaller “I’ll have it to you by Tuesday” goals, is the foundation for a well-run, aligned, and fast-paced organization
  • Keeping commitments:  If you can’t keep the overwhelming majority of your commitments, you erode the trust of your clients or colleagues and ultimately are unable to succeed
  • Communicating when commitments can’t be met:  Nobody is perfect.  Sometimes circumstances change, and sometimes external dependencies prevent meeting a goal.  The prior two parts of this value statement are, in my mind, pay to play.  What separates the good from the great is this third piece — owning up loud and clear when you’re in danger of blowing a goal so that those who are counting on you know how to reset their own work and expectations accordingly

It’s worth noting on this one that the goal is as relevant EXTERNALLY as it is INTERNALLY.  Internal commitments are key around building an organization that knows how to collaborate and hand work off from group to group.  External commitments — from meeting investor expectations to client deliverables — keep the wheels of commerce flowing.

I’m enjoying articulating these values and hope they’re helpful for both my Return Path audience and my much larger non-Return Path audience.  More to come over time.

Wasde believe in keeping the commitments we make, and communicate obsessively when we can’t
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