Nov 132014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nov 062014

Sources of Urgency

Sources of Urgency

Sometimes I wish we were in the hardware business.  Why?  It’s not the margins, that’s for sure.  It’s because hardware businesses usually have externally-imposed deadlines that create urgency in an organization around deliverables.

If you are making a chip that Dell is putting in all of its boxes, and your contract with Dell stipulates that the chip will be ready for testing on X Date and for shipping on Y Date, you darn well better hit the deadline.  If you are making software that gets installed or pre-loaded on all Samsung TVs, same thing.  Maybe it’s not the hardware business per se, but you certainly don’t see this kind of mentality in SaaS businesses very often, either because of the lack of true OEM and ship dates, or because of the now fluid nature of agile software development.

Without that kind of externally-imposed deadline, instilling true urgency gets a lot harder for a leader.  Sure, you can stick an arbitrary deadline out there and rally people to work towards it, but it’s much harder to define the consequences of missing the deadline.  Since there are in many cases no tangible and immediate business consequences, it feels a little more hollow for a leader to say “Why?  Because I said so.”  Yes, you have firing as the ultimate accountability tool in your toolkit, but again, it’s hard to feel good about using that tool when the deadline is arbitrary.

Probably the default method most companies like ours have settled on over the years is around quarterly goals.  That kind of cadence removes the arbitrary part of the problem, but it doesn’t remove the tangible business consequences part of the problem – and often, it doesn’t align with actual project deadlines.  Public companies probably can use quarterly financial results as something more tangible, but those often don’t align with deliverables quarter for quarter.  Customer conferences or marketing events can be other deadlines as well, which are less arbitrary.

I realize my blog is usually more about sharing stories than asking questions, but in this case, I’d love to hear from any reader who has a good answer to this very important management challenge.  If I get a great response, I will reblog it!

Filed under: Business

Tags:

Oct 232014

Does size matter?

Does size matter?

It is the age-old question — are you a more important person at your company if you have more people reporting into you?  Most people, unfortunately, say yes.

I’m going to assume the origins of this are political and military. The kingdom with more subjects takes over the smaller kingdom. The general has more stars on his lapel than the colonel. And it may be true for some of those same reasons in more traditional companies. If you have a large team or department, you have control over more of the business and potentially more of the opportunities. The CEO will want to hear from you, maybe even the Board.

In smaller organizations, and in more contemporary organization structures that are flatter (either structurally or culturally) or more dynamic/fluid, I’m not sure this rule holds any more. Yes, sure, a 50-person team is going to get some attention, and the ability to lead that team effectively is incredibly important and not easy to come by. But that doesn’t mean that in order to be important, or get recognized, or be well-compensated, you must lead that large team.

Consider the superstar enterprise sales rep or BD person. This person is likely an individual contributor. But this person might well be the most highly paid person in the company. And becoming a sales manager might be a mistake — the qualities that make for a great rep are quite different from those that make a great sales manager. We have lost a few great sales reps over the years for this very reason. They begged for the promotion to manager, we couldn’t say no (or we would lose them), then they bombed as sales managers and refused as a matter of pride to go back to being a sales rep.

Or consider a superstar engineer, also often an individual contributor. This person may be able to write code at 10x the rate and quality of the rest of the engineering organization and can create a massive amount of value that way. But everything I wrote above about sales reps moving into management holds for engineers as well.  The main difference we’ve seen over the years is that on average, successful engineers don’t want to move into management roles at the same rate as successful sales reps.

It’s certainly true that you can’t build a company consisting of only individual contributors. But that isn’t my point. My point is that you can add as much value to your organization, and have as much financial or psychic reward, by being a rock star individual contributor as you can by being the leader of a large team.

Filed under: Business, Management

Sep 252014

PTJD

Post Traumatic Job Disorder.

As we have been scaling up Return Path, we have been increasingly hiring senior people in from the outside. We believe in promoting from within and do it all the time, but sometimes you need an experienced leader who has operated at or ahead of the scale you’re at.  Someone with deep functional expertise and a “been there, done that” playbook. When you get a hire like this right, it’s amazing how much that kind of person gets done, how quickly.

One of the pitfalls of those hires, though, is cultural fit. Many of the larger organizations in the world don’t have the kind of supportive, employee-centric cultures that we have here, or that startups tend to have in general. They tend to be much more hierarchical, political, command-and-control. There is a real risk that hiring a senior person who has been trained in environments like that will blow up on you — that, as I’ve written before, the body will reject the organ transplant.

I’ve taken to calling the problem PTJD, or Post-Traumatic Job Disorder. Some of the stories I’ve heard from senior people about their experiences with their bosses or even CEOs at prior companies include such things as:  being screamed at regularly, having had a gun pulled on you, having had a knife pulled on you, having been ignored and only spoken to once or twice a year, being the victim of sexual harassment. Nice.

Just like PTSD, many people can recover from PTJD by being placed in a different environment with some up-front reprogramming and ongoing coaching. But also like PTSD, there are times where people can’t recover from PTJD. The bad habits are too engrained. They are (virtually) shell shocked.

Assuming you do the same reprogramming and coaching work on any PTJD employee, the difference between an employee who recovers and one who does not recover is really hard to smoke out in an interview process. Almost all candidates like this (a) are very polished and now how to interview well, and (b) genuinely think they want to work in a more relaxed, contemporary environment.

Here are five things I’ve learned over the years that can help identify a PTJD candidate who is unlikely to recover, before you make the hire:

  1. Look for candidates who have bigger company experience, but who also have startup and growth/scaling experience.  As I’ve written before, stage experience is important because the person is more likely to really understand what he or she is getting into — and what their playbook of action is.
  2. Try to understand, if a candidate has been in a workplace that breeds PTJD, whether that person was just in the machine, or if the person actually ran the machine. In other words, a senior manager might be a better fit to recover from PTJD than a senior executive.
  3. Note that not all big companies are dysfunctional or lead to PTJD, so try to understand the reputation of the person’s employer. For example, in New York, it’s a pretty safe bet that someone coming from American Express has not only been well trained, but well cared for.
  4. Do reference checks differently. Do them yourself. Do them as if you were doing a 360 on the person (manager, peer, subordinate, even a junior person from another department). Do reference checks on the references (seriously – ask the references about each other) so you understand the biases each of them brings to the conversation with you.
  5. Focus on the first 90 days. Be relentless about how you onboard a potential PTJD victim. Give them more care, structure, praise, guidance, and criticism than you might otherwise give. Use an outside coach to augment your work, and assign a good executive buddy internally. And listen carefully to the feedback from the organization about the person, doing a deep 360 after a few months to see if the person is recovering, can recover, or can’t recover. If the latter, time to cut your losses early.

Thanks to some of my new executive colleagues here for inspiring this post, and I hope none of my friends who have served in the military take offense at this post. I am drawing an analogy, but I’m not truly suggesting that PTJD compares in any way, shape, or form to the horrors of war.

Sep 112014

The 2×4

The 2×4

I took a Freshman Seminar in my first semester at Princeton in 1988 with a world-renowned professor of classical literature, Bob Hollander.  My good friend and next-door neighbor Peggy was in the seminar with me.  It was a small group — maybe a dozen of us — meeting for three hours each week for a roundtable with Professor Hollander, and then writing the occasional paper.  Peggy and I both thought we were pretty smart.  We had both been high school salutatorians from good private schools and had both gotten into Princeton, right?

Then the first paper came due, and we were both a bit cavalier about it.  We wrote them in full and delivered them on time, but we probably could have taken the exercise more seriously and upped our game.  This became evident when we got our grades back.  One of us got a C-, and the other got either a D or an F.  I can’t remember exactly, and I can’t remember which was which.  All I remember is that we were both stunned and furious.  So we dropped by to see Professor Hollander during his office hours, and he said the same thing to each of us:  “Matt, sometimes you need a 2×4 between the eyes.  This paper is adequate, but I can tell it’s not your best work, it’s decent for high school but not for college, and almost all the others in the class were much more thoughtful.”

Ouch.

Ever since then, Peggy and I have talked about the 2×4, and how it helped us snap out of our own reality and into a new one with a significantly higher bar for quality.  That phrase made it into Return Path‘s lexicon years ago, and it means an equivalent thing — sometimes we have to have hard conversations with employees about performance issues.  The hardest ones are with people who think they are doing really well, when in reality they’re failing or in danger of failing.  That disconnect requires a big wakeup call — the 2×4 between the eyes — before things spiral into a performance plan or a termination.

Delivering a 2×4 between the eyes to an employee can feel horrible.  But it’s the best gift you can give that employee if you want to shake them back onto a successful trajectory.

Aug 142014

How to Manage Your Career

I gave a presentation to a few hundred Return Path employees in January at an all-hands conference we did called “How to Manager Your Career.”

The presentation has three sections — The Three Phases of a Career, How to Get Promoted, and How to Wow Your Manager.

While it’s not as good without the voiceover and interactivity, I thought I’d post it here…see the presentation on Slideshare.

As I said to my audience, if there’s one thing to take away from the topic, it’s this:

Managing your career is up to one, and only one person – you. 

It doesn’t matter how great a corporate culture you have, or how supportive your manager is.  You’re the only person who cares 100% of the time about your career, and you’re the only person with a longitudinal view of what you love, what you’re great at, where you’ve been, and where you want to go.

May 222014

The 90-Day Reverse Review

The 90-Day Reverse Review

Like a lot of companies, Return Path does a 90-day review on all new employees to make sure they’re performing well, on track, and a good fit.  Sometimes those reviews are one-way from the manager, sometimes they are 360s.

But we have also done something for years now called the 90-Day Reverse Review, which is equally valuable.  Around the same 90-day mark, and unrelated to the regular review process, every new employee gets 30 minutes with a member of the Executive Committee (my direct reports, or me if the person is reporting to someone on my team) where the employee has a chance to give US feedback on how WE are doing.

These meetings are meant to be pretty informal, though the exec running the meeting takes notes and circulates them afterwards.  We have a series of questions we typically ask, and we send them out ahead of time so the employee can prepare.  They are things like:

-Was this a good career move?  Are you happy you’re here?

-How was your onboarding experience?

-How do you explain your job to people outside the company?

-What is the company’s mission, and how does your role contribute to it?

-How do you like your manager?  Your team?

-Do you feel connected to the company?  How is the company’s information flow?

-What has been your proudest moment/accomplishment so far?

-What do you like best about the company?

-If you could wave a wand and change something here, what would it be?

We do these for a few reasons:

-At the 90-day mark, new employees know enough about the company to give good input, and they are still fresh enough to see the company through the lens of other places they’ve worked

-These are a great opportunity for executives to have a “Moment of Truth” with new employees

-They give employees a chance to productively reflect on their time so far and potentially learn something or make some course correction coming out of it

-We always learn things, large or small, that are helpful for us as a management team, whether something needs to be modified with our Onboarding program, or whether we have a problem with a manager or a team or a process, or whether there’s something great we can steal from an employee’s past experiences

This is a great part of our Operating System at Return Path!

Apr 102014

Understanding the Drivers of Success

Understanding the Drivers of Success

Although generally business is great at Return Path  and by almost any standard in the world has been consistently strong over the years, as everyone internally knows, the second part of 2012 and most of 2013 were not our finest years/quarters.  We had a number of challenges scaling our business, many of which have since been addressed and improved significantly.

When I step back and reflect on “what went wrong” in the quarters where we came up short of our own expectations, I can come up with lots of specific answers around finer points of execution, and even a few abstracted ones around our industry, solutions, team, and processes.  But one interesting answer I came up with recently was that the reason we faltered a bit was that we didn’t clearly understand the drivers of success in our business in the 1-2 years prior to things getting tough.  And when I reflect back on our entire 14+ year history, I think that pattern has repeated itself a few times, so I’m going to conclude there’s something to it.

What does that mean?  Well, a rising tide — success in your company — papers over a lot of challenges in the business, things that probably aren’t working well that you ignore because the general trend, numbers, and success are there.  Similarly, a falling tide — when the going gets a little tough for you — quickly reveals the cracks in the foundation.

In our case, I think that while some of our success in 2010 and 2011 was due to our product, service, team, etc. — there were two other key drivers.  One was the massive growth in social media and daily deal sites (huge users of email), which led to more rapid customer acquisition and more rapid customer expansion coupled with less customer churn.  The second was the fact that the email filtering environment was undergoing a change, especially at Gmail and Yahoo, which caused more problems and disruption for our clients’ email programs than usual — the sweet spot of our solution.

While of course you always want to make hay while the sun shines, in both of these cases, a more careful analysis, even WHILE WE WERE MAKING HAY, would have led us to the conclusion that both of those trends were not only potentially short-term, but that the end of the trend could be a double negative — both the end of a specific positive (lots of new customers, lots more market need), and the beginning of a BROADER negative (more customer churn, reduced market need).

What are we going to do about this?  I am going to more consistently apply one of our learning principles, the Post-Mortem  -THE ART OF THE POST-MORTEM, to more general business performance issues instead of specific activities or incidents.  But more important, I am going to make sure we do that when things are going well…not just when the going gets tough.

What are the drivers of success in your business?  What would happen if they shifted tomorrow?

Filed under: Business, Return Path

Tags: ,

Mar 202014

Secrets to Yawn-Free Board Meetings

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

Mar 062014

Open Vacation

At Return Path, we’ve had an “open vacation” policy for years, meaning that we don’t regulate the amount of time off people take, and we don’t accrue for it or pay out “unused” vacation if someone leaves the company.  I get asked about this all the time, so I thought I’d post our policy here and also answer a couple follow-up questions I usually get about it.

First, here’s the language of our policy:

Paid Time Off

You’re encouraged to take as much time off as you can while maintaining high performance and achieving your goals. We don’t count the hours you work, so why should we count the hours you don’t? (Unless you’re a non-exempt employee, and only then because we have to!) Take what you need, when you can, and make sure to arrange coverage with your team. If you haven’t had a vacation in a while, you can expect to get a friendly nudge from your manager to get away from the office!

Use your Paid Time Off (PTO) for planned vacations, days off for appointments, religious, or personal holidays that are not offered in your country, community service days, or if you need an unanticipated, last-minute day off to care for a sick child or family member. Statutory or legally protected leaves of absence, such as medical leave, maternity/parental leave, family medical leave or unpaid leave, are governed by separate regulations that will not be affected by our PTO policy. See the Regional section for a list of statutory leaves of absence in your country.

Paid Time Off scheduling is subject to approval by your manager, who has sole discretion to approve or deny requests under this policy. Requests of greater than two consecutive weeks or more than two weeks in one three-month period require approval of your Executive Committee member.

The first question I always get is, “Wow – does that really work?  What issues have you had with it?  My response:

No issues with it at all, other than it’s a little weird to apply internationally, where we have 50 people across 7 countries, since most of those countries have significantly more generous vacation policies/customs than the US.  But we generally make it work.

The second question I get is whether people abuse it or not:

In all the years we’ve done it, we only ever had one person attempt to abuse the policy, one time.  People do still have to ask their managers if it’s ok to take time off, and they do still have to get their jobs done.

Finally, people ask me for general advice on implementing this kind of policy:

Continue to track days off and generate reports for managers every quarter so they at least know whether their people are taking not enough or too much – generally people will take not enough, and you will need to encourage them to take more.  Also, our managers were *really* worried about launching this, so we had to do some hand-holding along the way. 

The results of this policy for us have generally been great.  People take about the same amount of true vacation they used to take, maybe a little more.  They definitely take more half-days and quarter-days where they probably still get a full day worth of work done, without worrying about counting the hours.  Best of all, there’s a strong signal sent and received with this kind of policy that we trust our team members to do what they need to do in order to live their lives AND get their jobs done.

css.php