Nov 212013

Debunking the Myth of Hiring for Domain Expertise vs. Functional Expertise

Debunking the Myth of Hiring for Domain Expertise vs. Functional Expertise

As a CEO scaling your business, you’ll invariably want to hire in new senior people from the outside.  Even if you promote aggressively from within, if you’re growing quickly enough, you’ll just need more bodies.  And if you’re growing really fast, you will be missing experience from your employee base that you’ll need to augment.

For years, I’ve thought and heard that there’s a basic tradeoff in hiring senior people — you can hire someone with great domain expertise, or you can hire someone with great functional expertise, but it’s almost impossible to find both in the same person, so you need to figure out which is more important to you.  Would I rather hire someone who knows the X business, or someone who is a great Head of X?  Over the course of the last year, I’ve added four new senior executives to the team at Return Path, and to some extent, I’ve hired people with deep functional expertise but limited domain expertise.  Part of that has been driven by the fact that we are now one of the larger companies in the email space, so finding people who have “been there, done that” in email is challenging.

But the amount of senior hiring I’ve done recently has mostly shown me that the “domain vs. functional” framework, while probably accurate, is misleading if you think of it as the most important thing you have to consider when hiring in senior people from the outside.

What’s more important is finding people who have experience working at multiple growth stages in their prior jobs, ideally the scaling stage that you’re at as a business.  It makes sense if you stop and think about it.  If your challenge is SCALING YOUR BUSINESS, then find someone who has DONE THAT before, or at least find someone who has worked at both small companies and larger companies before.  I suppose that means you care more about functional expertise than domain expertise, but it’s an important distinction.

Looking for a new industrial-strength CFO for your suddenly large business?  Sure, you can hire someone from a Fortune 500 company.  But if that person has never worked in a startup or growth stage company, you may get someone fluent in Greek when you speak Latin.  He or she will show up on the first day expecting certain processes to be in place, certain spreadsheets to be perfect, certain roles to be filled.  And some of them won’t be.  The big company executive may freeze like a deer caught in the headlights, whereas the stage-versatile executive will invariably roll up his or her sleeves and fix the spreadsheet, rewrite the process, hire the new person.  That’s what scaling needs to feel like.

Oct 032013

Book Short: Alignment Well Defined, Part II

Book Short:  Alignment Well Defined, Part II

Getting the Right Things Done:  A Leader’s Guide to Planning and Execution, by Pascal Dennis, is an excellent and extraordinarily practical book to read if you’re trying to create or reengineer your company’s planning, goal setting, and accountability processes. It’s very similar to the framework that we have generally adapted our planning and goals process off of at Return Path for the last few years, Patrick Lencioni’s The Advantage (book, post/Part I of this series).  My guess is that we will borrow from this and adapt our process even further for 2014.

The book’s history is in Toyota’s Lean Manufacturing system, and given the Lean meme floating around the land of tech startups these days, my guess is that its concepts will resonate with most of the readers of this blog.  The book’s language — True North and Mother Strategies and A3s and Baby A3s — is a little funky, but the principles of simplicity, having a clear target, building a few major initiatives to drive to the target, linking all the plans, and measuring progress are universal.  The “Plan-Do-Check-Adjust” cycle is smart and one of those things that is, to quote an old friend of mine, “common sense that turns out is not so common.”

One interesting thing that the book touches on a bit is the connection between planning/goals and performance management/reviews.  This is something we’ve done fairly well but somewhat piecemeal over the years that we’re increasingly trying to link together more formally.

All in, this is a good read.  It’s not a great fable like Lencioni’s books or Goldratt’s classic The Goal (reminiscent since its example is a manufacturing company).  But it’s approachable, and it comes with a slew of sample processes and reports that make the theory come to life.  If you’re in plan-to-plan mode, I’d recommend Getting the Right Things Done as well as The Advantage.

Sep 192013

The Boomerang Club, or How to Quit Your Job, Part II

The Boomerang Club, or How to Quit Your Job, Part II

My post last week on How to Quit Your Job has generated about two dozen comments as well as a really lengthy thread on Y Combinator’s Hacker News.  My various replies to comments are worth summarizing here – this is a reprint of my comment on Hacker News:

First, my post was not intended to be general advice to employees of all companies on how to handle a situation where they’re starting to look for jobs.  Of course, many environments would not respond well to that approach.  My point was just that that’s how we encourage employees to handle the situation at Return Path, and we have created a safe environment to do so.  By the way, it doesn’t happen here 100% of the time either, by any stretch of the imagination.  But I wish it did.  When it happens, it’s better for everyone — the company as well as the employee, who either (a) ends up staying because we resolve some issue we weren’t aware of, or (b) has a less stressful and more graceful transition out.

Second, the way we run our business is around a bit of a social contract — that is to say, a two-way street.  And just as we ask employees to start a dialog with us when they are thinking of leaving, we absolutely, 100% of the time, are open and transparent with employees when they are in danger of being fired (other than the occasional urgent “for cause” situation).  We give people ample opportunity to correct performance and even fit issues.  In terms of someone’s question below about lay-offs, we fortunately haven’t had to do those since 2001, but if I recall, even then, we were extremely transparent about our financial position and that we might need to cut jobs in 30 days.

But I wanted to take this post to emphasize a related, second point.  If it’s a given that you are going to quit your job, then HOW you quit your job becomes super important.  And this is general advice, not something specific to Return Path.  Even if you’re unhappy – even if you feel totally wronged or burned in some way – there is never a good reason to burn bridges on the way out the door.  In fact, the opposite is what I would consider best practice:  make the transition as easy as possible for your company.

Document your job really well, including specifics of all open projects.  Work with your manager and teammates to hand off all responsibilities.  Be frank and constructive in your exit interview.  Make the extra effort to leave things in good working order.

We have a long history of hiring back former employees here.  We proudly call it The Boomerang Club, and there have been a dozen or so members over the years.  We try to make it easy to come back if you leave.  First, we celebrate the return of a former employee pretty widely, and we obviously modify our usual extensive interview process.  If you come back in less than a year, we pretend that you never left in terms of giving you credit for continuous service.  If your gap is more than a year, we don’t give you credit for the time you were gone, but we do give you full credit for the time you’d been here before you left.

But you can’t really be a member of The Boomerang Club if you leave your job in the wrong way.  HOW you do that says a lot about you, and everyone at your company will take note and remember it.

Sep 132013

How to Quit Your Job

How to Quit Your Job

I sent an email out to ALL at Return Path a few years ago with that as the subject line.  A couple people suggested it would make a good blog post in and of itself.  So here’s the full text of it:

ALL –

This may be one of the weirdest emails you’ll see me (or any CEO write)…but it’s an important message that I want to make sure everyone hears consistently.  If nothing else, the subject line will probably generate a high open rate.  :-)

First off, I hope no one here wants to leave Return Path.  I am realistic enough to know that’s not possible, but as you know, employee engagement, retention, and growth & development are incredibly important to us.

But alas, there will be times when for whatever reason, some of you may decide it’s time to move on.  I have always maintained that there’s more than a Right Way and a Wrong Way to leave a job.  For me, there’s a Return Path Way.

I suppose the Right Way is the standard out there in the world of two weeks’ notice and an orderly documentation and transition of responsibilities.  The Wrong Way is anything less.

So what’s the Return Path Way?

It starts with open dialog.  If you are contemplating looking around for something else, you should let someone know at the thinking stage.  Ideally that would be your manager, but if you’re not comfortable starting the conversation there, find someone else — your department head, someone in HR, me.  Let someone who is in a position to do something about it know that you’re considering other options and why.  The worst thing that will happen is that the company isn’t able to come up with a solution to whatever issues you have.  I PROMISE you that no one here in any management position will ever think less of you or treat you differently or serve up any kind of retribution for this kind of conversation.

After the open dialog and any next steps that come out of it, if you are still convinced that leaving is the right thing for you, tell your manager and whoever you spoke to at the beginning of your search process, not at the end of it.  That hopefully gives the company enough lead time to find a replacement and provide for enough overlap between you and the new hire so that you can train your replacement and hand things off.

Why do we feel so strongly about this?

We invest heavily in our people.  I know we’re not perfect — no company is — but we do our best to take good care with everyone who works here.  Hopefully you know that.  And hiring great people is difficult, as you also know.  Losing a well trained employee is VERY PAINFUL for the company.  It slows our momentum and causes at least a minor level of chaos in the system.  And as shareholders or future shareholders (even if you leave – you can exercise your vested stock options), I’d hope that’s something none of you want to do.

I realize the Return Path Way that I am outlining here is unconventional (and potentially uncomfortable).  But Return Path is an unconventional place to work in a lot of ways.

As I said up front, I hope none of you wants to leave…but if you do, please take this request and advice to heart.

Thank you!

-Matt

Now…I sent this out when the company was a lot smaller, when losing a single employee was losing a real percentage of our workforce!  But I stand by every word in the email, even at a larger size.  This kind of dialog is, as I note in the email, both unconventional and uncomfortable.  But just as one of my management mantras here is “no one should ever be surprised to be fired,” another is “we should never be surprised when someone resigns.”  Ultimately, it’s up to each individual manager to set the right tone with his or her team, and also be in tune enough with each of his or her team members, to foster this.

Aug 222013

Unknown Unknowns

Unknown Unknowns

There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”   –Donald Rumsfeld

Say what you will about Rumsfeld or the Iraq war, but this is actually a great and extensible quote.  And more to the point, I’d say that one of the main informal jobs of a CEO, sort of like Connecting the Dots in that it’s not one of the three main roles of a CEO) is to understand and navigate known unknowns and unknown unknowns for your organization (hopefully you already understand and navigate the known knowns!).  Here’s what I mean:

  • An example of a known unknown is that a new competitor could pop up and disrupt your business from below (e.g., the low end) at any minute.  Or let’s say your biggest partner buys one of your competitors.  These are the kinds of things you and your team should be cognizant of as possibilities and always thinking about how to defeat
  • While I suppose unknown unknowns are by definition hard to pin down, an example of an unknown unknown is something like a foreign leader deciding to nationalize the industry you’re in including your local subsidiary, or a young and healthy leader in your organization dying unexpectedly, or September 11.  I suppose these are “black swan” events that Nassim Nicholas Taleb made famous in his book.

Helping your team identify potential known unknowns and think three steps ahead is critical.  But helping your team turn unknown unknowns into known unknowns is, while much harder, probably one of the best things you can do as CEO of your organization.  And there are probably two ways you can do this, noting that by definition, you’ll never be able to know all the unknowns.  As you might expect, the way to do that comes down to increasing your pool of close-at-hand knowledge.

First, you and your executive team can have as broad a view of your industry and corporate ecosystem, and of the economy at large, as possible.  It’s critical for business leaders to read diverse publications, to share insights with teammates, and to network with experts both inside and outside your space.
Second, you can design a culture so that information flows freely up, down, and sideways — so that people in your organization want to share information instead of hoard it.  That’s easier said than done, and there’s more than a blog post worth of what has to go into making that a reality.  But think about the CIA and all the flak they got about failure to connect the dots around September 11.  To close this post where I opened it, you can be the chief connector inside your organization…but you need to get your organization connecting the dots itself.

Aug 122013

Book Short: Is CX the new UX?

Book Short:  Is CX the new UX?

Outside In: The Power of Putting Customers at the Center of Your Business, by Harley Manning and Kerry Bodine from Forrester Research, was a good read that kept crossing back and forth between good on the subject at hand, and good business advice in general.  The Customer Experience (CX) movement is gaining more and more steam these days, especially in B2B companies like Return Path.  The authors define Customer Experience as “how your customers perceive their interactions with your company,” and who doesn’t care about that?

A few years ago, people started talking a lot more about User Experience (UX) as a new crossover discipline between design and engineering, and our experience at Return Path has been that UX is an incredibly powerful tool in our arsenal to build great technical products via lean/agile methods.  The recurring thought I had reading this book, especially for companies like ours, was “Is CX the new UX?”

In other words, should we just be taking the same kind of lean/agile approach to CX that we do with technical product development and UX — but basically do it more holistically across every customer touchpoint, from marketing to invoice?  It’s hard to see the answer being “no” to that question, although as with all things, the devil is in the implementation details.  And that’s true at the high level (the authors talk about making sure you align CX strategy with corporate strategy and brand attributes and values) as well as a more granular level (what metrics get tracked for CX, and how do those align with the rest of the companies KPIs).

The book’s framework for CX is six high-level disciplines: strategy, customer understanding, design, measurement, governance, and culture — but you really have to read the book to get at the specifics.

Some other thoughts and quotes from the book:

  • the book contains some good advice on how to handle management of cross-functional project teams in general (which is always difficult), including a good discussion of various governance models
  • “to achieve the full potential of customer experience as a business strategy, you have to change the way you run your business. You must manage from the perspective of your customers, and you must do it in a systematic, repeatable, and disciplined way.”
  • one suggestion the book had for weaving the customer experience into your culture (if it’s not there already) is to invite customers to speak all-hands meetings
  • another suggestion the book had for weaving the customer experience into everyone’s objectives was one company’s tactic of linking compensation (in this case, 401k match) to customer experience metrics
  • “Customer Experience is a journey, not a project. It has a beginning but it doesn’t have an end.”

Thanks to my colleague Jeremy Goldsmith for recommending this book.

May 302013

Connecting the Dots

Connecting the Dots

Although I still maintain that the three primary roles of a CEO are to set Strategy and communicate it, develop Talent, and ensure that the business has proper Resources to run (see post here), I am increasingly finding that I play a fourth role in the organization that’s probably somewhat important, which is Connecting the Dots.

What do I mean by Connecting the Dots?  I mean helping others network internally, or helping others connect their work to the work of others, or helping others connect their work to the mission of the company, or even to the outside world.

Here are a few examples of how I’ve done this kind of work recently:

 -          I joined an Engineering all-hands and stood up after each segment to talk about the business impact of that team’s work during the prior quarter

-          I met with a new senior employee and connected him to someone internally that he wouldn’t have otherwise met with…but with whom he had a common outside interest

-          I helped a team that’s a classic “support team” understand why their work was directly, but not obviously, contributing to one of the company’s strategic initiatives

-          I connected someone in one of our international offices who had expressed an interest to me in a new role with an operational leader in the US who was thinking of adding someone to his team outside the US

-          I talked to our professional services team about a customer visit I’d recently done where we got really good feedback on the next release of a product but which also pointed out some needs for services that we hadn’t focused on yet

As a business leader, you are in a really good position to help Connect the Dots in a growing organization because you have a pretty unique view across the organization – and you tend to spend time with people internally across different functions and teams and offices.

I am not going to change my position that there are three primary roles, because I’m not sure that a CEO is required to Connect the Dots – hopefully that role can be delegated and replicated.  It’s something to think about, for sure.  But in the meantime, I like doing that and find it useful for me as well as the organization.

Filed under: Leadership, Management, Return Path

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Apr 252013

The People Who Go to the Trainer the Most Are the Ones Who Were in the Best Shape to Begin With

The People Who Go the the Trainer the Most Are the Onese Who Were int eh Best Shape to Begin With

Have you ever noticed this?  That the people working out with trainers in the gym are usually in great shape?  So why do they keep working with the trainer?  So they maintain their awesome level of fitness, of course!

The lesson for business is the same.  Just because you have a strong suit doesn’t mean you can afford to ignore it and rest on your laurels (at least not for very long).  This is true in good times, and in bad times. 

When things are going well, it can feel like it’s the right time to turn your focus to new things, or to fixing broken things.  And that is true to some extent, but it can’t come at the expense of continuing to develop what’s working.

And the temptation to “cut and coast” in the areas of the business that are working well is especially strong when times get tough and resources are stretched.  In fact, the situation is the opposite.  When times get tough and resources are stretched, it’s even more important to double down on the parts of the business that work well. 

Why is all of this true? 

-Your strong suits have a disproportionate impact on business results.  Are you a product-first organization?  Then great product is what makes your organization successful.  Keep producing more of it.  Are you a sales-dominant organization?  Sell more.   Are you a people-first organization?  Your people don’t become less important over time.  Why would you – in any business environment – do less of what makes you successful?

Your strong suits are bellwethers for employee insight into the organization.  The things that your company does that are best in class are the things that employees take their cues from, and that employees have the most pride in.  Let those things go – and you risk alienating your most enthusiastic employees.  This isn’t to say that companies should have “third rails,” things that are the equivalent of Social Security or the Pentagon, where the minute someone talks about a budget cut, hysteria ensues.  And it’s not about silly perks (you can be a people-first organization whether or not you have “bring your pet to work day”).  But whatever is important to you one day can’t suddenly be unimportant the next day without risking a high degree of employee whiplash.

Your strong suits compensate for your weaknesses.  The last two points are all about strong suits being out in front.  But I’d argue that your strong suits do more than that.  They protect you from your weaknesses.  Think about it metaphorically, and relating back to the title of this post, think about the body.  When you have a broken leg, your arms get stronger because you need to use them to crutch yourself around.  If you also broke your arms, you’d have a real problem!  In business, it’s the same.  Strong sales teams tend to compensate for weak marketing teams – invest less in sales, it actually hurts marketing, too.  Strong product can compensate for weak sales teams – so more stagnant product hits twice as hard.

All this may sound obvious.  There are other comparable axioms like “put your best people on your biggest opportunities,” and “manage to your strengths and compensate for your weaknesses.”  And yet, the temptations to coast are real.  So get going to that gym and see your trainer for your weekly appointment.  Even if you’re in great shape.

Filed under: Business, Leadership, Management

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Apr 042013

The Nachos Don’t Have Enough Beef in Them

The Nachos Don’t Have Enough Beef in Them

Short story, two powerful lessons.

Story:  I’m sitting at the bar of Sam Snead’s Tavern in Port St. Lucie, Florida, having dinner solo while I wait for my friend to arrive.  I ask the bartender where he’s from, since he has a slight accent.  Nice conversation about how life is rough in Belfast and thank goodness for the American dream.  I ask him what to order for dinner and tell him a couple menu items I’m contemplating.  He says, “I don’t know why they don’t listen to me.  I keep telling them that all the people here say that the nachos aren’t good because they don’t have enough beef in them.”  I order something else.  Five minutes later, someone else pounds his hand on the bar and barks out “Give me a Heineken and a plate of nachos.”  The bartender enters the order into the point-of-sale system.

Lesson 1:  Listen to your front-line employees – in fact, make them your customer research team.  I’ve seen and heard this time and again.  Employees deal with unhappy customers, then roll their eyes, knowing full well about all the problems the customers are encountering, and also believing that management either knows already or doesn’t care.  Or both.  There’s no reason for this!  At a minimum, you should always listen to your customer-facing employees, internalize the feedback, and act on it.  They hear and see it all.  Next best prize – ask them questions.  Better yet – get them to actively solicit customer feedback.

Lesson 2:  Always remember another person’s person-ness, especially if he or she is in a service role.  The old story about the waiter spitting and coughing in the obnoxious customer’s soup would dictate that self-preservation, if nothing else, should inspire civility towards people who are serving you, be it a B2B account manager or a waiter in a diner.  Next best prize – self-interest to get a higher level of service.  Better yet – engagement and kindness like you’d want people to show you.  Chances are, they’re trying to make your day a bit better.  Shouldn’t you try to do the same for theirs?

(Lesson 3:  Always listen to your bartender!)

Filed under: Business, Management, Sales

Feb 212013

Book Short: Plain Talk

Book Short: Plain Talk

An HR rock star I met with recently told me that “You can say anything you want to your people, as long as it’s true,” which of course is great advice.  Plain Talk: Lessons from a Business Maverick (book, kindle), by Ken Iverson, the long-time CEO of Nucor, pretty much embodies that.  If you’re not familiar with Nucor, it’s a steel company – right, steel – and the most successful one of the last 50-75 years, at that.  You may think an industrial company like this offers no lessons for you.  If so, you are wrong.

The reason Nucor has been so successful, if you believe their long time leader, is that they run the people side of their business differently than most companies like them.  Reading this book from the perspective of a knowledge worker business CEO was particularly interesting, since I had to transform my frame of reference a bit (and do a little mental time travel as well) in order to understand just how revolutionary Nucor’s practices were at the time.

But then I realized – they’re still revolutionary today.  How many companies – even the most progressive ones – don’t have performance reviews because they don’t need them in order to create a high performing environment?  Companies that spend a good percentage of their time and energies thinking about how to get their employees to do their best work, as opposed to focusing only on the goals of the business, do better than those who don’t.  It doesn’t matter what industry you’re in.  As Patrick Lencioni would say, you can outbehave the competition.

Plain Talk is a really short book, and a good, authentic read if you’re a leader who cares about your people and wants to learn a few nuggets here and there from one of the 20th century masters of that discipline.  Anyone that can link a high degree of delegation to authority has a story worth telling.

 

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