January 30, 2006

Are You Building an Army of Evangelists?

Posted in culture, customer service, marketing at 8:33 am by scottmaxwell

While large companies have had a growing trend toward hiring “technology evangelists,” it is becoming clearer to me that institutionalizaing the approach (i.e., setting goals, formally staffing the roles, responsibilities, processes, metrics) has increasing benefit in emerging growth technology companies.

What is “Evangelism”?

James Pethokoukis has a good U.S. News overview article, Spreading the Word, on the approach used by several companies (you have to sit through an annoyingly long 10 second ad to see it, but the article is worth it).

In my view, the key issue is all about how the emerging growth company organizes to leverage available communication channels and external influencers to both “get the word out” and, possibly more importantly, “get the word in!

Why Now?

This probably does not take a lot of explanation, but the increased number of impressions formed by online activity (forums, blogging, domain-specific directories, etc.) makes the benefit associated with evangelism much higher for all companies, and the positive ROI now extends down to extremely small companies.

Some Viewpoints…

Guy Kawasaki, the first technical evangelist when he worked for Apple, has a recent post The Art of Evangelism. Declan Elliott has some good thoughts and links on the topic. Guy’s approach is a little too “religious” for my taste, but it works for him as well as the causes he evangelizes (you can, of course, tune the message to your customers’ taste).

Robert Scoble is probably the best known current Evangelist, working for Microsoft. He has a follow-up to Guy’s note with his point of view. The comments are also a great read (note the different viewpoints on the use of the “evangelism title vs. other possible titles for the activity). Another must-read is Robert Scoble and Shel Israel’s new book, Naked Conversations (reviewed here), which gives a great overview on the use of blogging for creating conversations with the people that make up your market (not sure about the title however…the image of Robert Scoble naked is not appealing to me).
Church of the Customer Blog has some of their thoughts on customer evangelism vs. corporate evangelism (Ben and Jackie also offer up their books and other material on making your customers evangelists. I have read them and found them to be full of great practical ideas for building customer evangelists…their blog is well done and on my reading list too…

How to get started…

Ben and Jackie have some practical ideas on getting started in their post How to become a Customer Evangelism Evangelist The key here is just to get started in some capacity…even by just opening your eyes to the opportunity. See this view from a emerging growth company from 2% Creativity Blog.

January 4, 2006

Compensating the Team- Thoughts From Ed Sim

Posted in culture, management, recruiting at 12:49 pm by scottmaxwell

Ed Sim has some good thoughts on compensation design on his recent post. He also links to an earlier post on how hiring key A-players has a great effect on building an A-magnet for your company.

January 3, 2006

Sales is Humming!

Posted in CEO, culture, Execution, Sales at 10:08 pm by scottmaxwell

In my last post, I described how the CEO, like the drummer, sets the overall beat of the organization. This post is meant to show how the sales group taps with the CEOs beat.
The chart below shows how a VP Sales manages within the context of the overall beat. Again, the horizonal axis is the day of the year (the full chart is one year) and the vertical axis is time horizon of the VP Sales focus (i.e., a 10 day time horizon means the VP of sales is focused up to 10 days out on that day of the year).
CEOSales

Some thoughts:

  • As with the CEO beat, the VP Sales graph has the distinguishing characteristics of the strategic review in the August timeframe, the annual planning session in mid-November, and the quarterly meetings that review progress from the prior quarter and make adjustments for the remainder of the year.
  • Somewhat smaller on the chart above (see the close-up of the first two weeks of each quarter on the chart below for this point), the VP sales starts every week looking out over the remainder of the quarter (roughtly 90 days the first day of the quarter and 83 days one week out) and then focuses in on the executing near-term for the rest of the week (note that the time horizon of focus is 4-days on Tuesday, 3-days on Wednesday, 2-days on Thursday, and 1-day on Friday).

closeup
Finally, I superimposed the CEO chart from my prior post so that you can see how the CEO focal points fits well with the VP Sales focal points (the two are in rhythm!). There are two key differences with the graphs. First, the VP Sales focuses on very tactical accomplishments each week (gets the work done) and only steps back to examine the rest of the quarter once a week. Second, the VP Sales spends some extra time before and after the CEOs quarterly, annual, and strategic sessions to both prepare and to incorporate feedback into the plans.

CEOVPSales
The point here is not to debate exactly what the focus is at any point of the year (every company will be different), but to point out that there is a regular rhythm set by the CEO that the rest of the organization fits into, in this case sales. Also, it is meant to show that most of the time the VP of sales should be extremely tactical, but also step back at different points to take a longer term view and make adjustments to the plan (similar to the way I swim…I swim for a while and then need to poke my head out of the water and make corrections to my path).

As with the CEO, the two mistakes that VP Sales seem to make is either tactically executing all the time (thereby missing the larger context and opportunities for adjustment) OR spend too much time on the longer-term plans and waste time that they could be executing. It is difficult to get it exactly right, but perhaps thinking in terms of a rhythm helps.

My next post is on the marketing rhythm…

January 2, 2006

Is That You Humming?

Posted in BOD, CEO, culture, management at 3:23 pm by scottmaxwell

I spend a lot of time trying to help my portfolio companies develop management approaches that help the management stay focused on important activities. The core issue with every company is that there are too many things to do and never enough time to do it.

For example, how does management focus on its short-term execution targets while also focus on building for the long-term? Because it is incredibly difficult to think long-term while you are executing short-term and equally difficult to execute short-term while you are thinking long-term, some companies only focus on short-term issues at the expense of longer-term strategy and other companies focus too much on longer-term strategy at the expense of getting things done in the short-term. What is the right balance between the two and how do you manage the balance?

My observation is that the best managers set up and manage a daily, weekly, monthly, quarterly, and yearly rhythm that allows for both short- and long-term focus. (They get into a rhythm that requires short-term execution most of the time, but also requires longer-term thinking part of the time.) A second observation is that every company can improve its rhythm, as I have never seen a company get this perfectly right. In addition to balancing the short- and long-term issues, “getting into a rhythm” helps employees’ attention and activities stay aligned over time, and the regular, coordinated “change of pace” and change of focus helps to keep everyone in the organization fresh.

The CEO sets the beat…

Just as great marketers develop a marketing rhythm for their customers, great CEOs set the beat for the overall organization. I highlighted below an illustrative rhythmic beat that an expansion stage CEO could set for the overall organization. (looks something like a EKG measurement of a heart beating, doesn’t it? Perhaps this is why companies with a great rhythm seem to come alive?)

CEORhythm.gif
This particular chart has several characteristics:

  • The CEO sets the focus for a 3-month time horizon at the beginning of each quarter and then ramps down the time horizon focal point as the quarter continues (i.e., the organization is focused on this quarter, so as the quarter progresses the time horizon gets shorter), making sure that everyone is focused on nailing this quarter’s goals.
  • About 3-weeks into each quarter, the CEO has all the data to step back with the senior managers and Board of Directors (BOD) and review results for the prior quarter as well as make adjustments in plans for the rest of the year (the time horizon for these meetings is the rest of the year. Note the decline in time horizon as the year goes on. Each quarterly BOD discussion has a time horizon that ends at the end of the year, as the major focus needs to be to execute for this year!)
  • At some point during the year (I prefer the July/August timeframe, as it is generally a lighter period), the CEO, along with the senior managers and BOD, step back to think about adjustments to the longer term (2-3 year time horizon) plan in the context of the market environment and progress to date.
  • Later in the year (mid-November seems about right), the CEO, senior managers, and BOD can use the results from the strategic review and progress for the year to rough out the plan for the following year.

(Just so that it is clear, the point of this chart is not to show you the rhythm that you should have, but rather to give you an example of a solid rhythm to spark your thinking on your current situation and adjustments that you might want to make.)

Organizations with a rhythm have a real hum to them. Perhaps this is why people in high performing companies say “we are humming!”

Note1: I am really making two separate points in this post. One point is about the need to create rhythm and the other point is about the rhythm associated with short- vs. long-term focal points. There are clearly many dimensions of rhythm, but all the dimensions should follow the same general beat.
Note2: The chart illustrates a company that is focussed on quarterly numbers. Many companies are also focussed on daily, weekly, and/or monthly targets. The chart would clearly change depending on your time horizon at each point in the year.

December 28, 2005

Top 10 New Year’s Resolutions for CEOs

Posted in CEO, culture, Execution, management at 12:02 pm by scottmaxwell

As the year draws to a close, I thought that I would offer up my top 10 possible New Year’s Resolutions for Emerging Growth Company CEOs:

Choose the most appropriate (maximum of 3) from the list below:

  1. Customer Focus– Telephone or meet with at least 3 customers that you don’t already know each week, for 12 weeks. There is nothing like customer conversations to truly understand the perceptions of your organization (and perception is truly reality). Then, do something useful with the information!
  2. Product Focus– Choose the 1-3 most important areas of improvement to your product that you have known about for a long time (hint: ease of use is one of them), and spend the first 90 days of the year helping your product groups both building the improvements AND build the processes, organization, and staff to make ongoing improvements. Set and meet measurable progress goals by the end of Q1.
  3. Marketing Focus– Choose a (simple) message, and make sure that by the end of Q1, everyone inside your organization recites the message when prompted (this is not as easy as you think and should be measured by random prompts at the end of the quarter).
  4. Sales Focus– Put in place 1-2 new approaches that significantly improve the efficiency and/or effectiveness of your sales funnel, with noticeable improvement by the end of Q1. (for example, pure channel sales can improve their online channel partner support or improve training of the partners. E-commerce distribution could put in web analytics or use what you already have to improve page abandonment or put in a program to reduce shopping cart abandonment. Telesales distribution companies could put in place or improve e-commerce. Field sales distribution could put in place telesales or telemarketing.)
  5. Service Focus– Sit with your customer service staff answering incoming customer service requests for a half day each week for 4 weeks. Use the knowledge you gain to make 1-2 significant changes (e.g., product feature, product usability adjustments, building help into your product, customer self help tools, customer service process step, etc.)
  6. Employee Focus– Take one employee to a one-on-one breakfast or lunch each week for 12 weeks (or until you run out of employeess to take out). Use the knowledge that you gain to make 1-2 significant changes by the end of the quarter.
  7. Strategy Focus– Create 1-3 initiatives from this list, make considerable progress on implementing by the end of Q1 to help increase your competitive advantage.
  8. Financial Results Focus– Take your current plan for Q1 and figure out how to outperform it by 10-15% on the bottom line in the first quarter, by raising the bar on hiring, focussing on better cost management, or getting involved in closing more sales.
  9. Execution Focus– Make sure that each of your direct reports has 3-5 major goals for Q1 with objective measures for success. Make sure that your direct reports do the same thing with their employees. Ask for a regular (at least weekly) review of progress against the activities to nail the goals as well as the results relative to objective measures.
  10. Have Fun– While nailing your goals are important, waking up every day passionate about your work is at least as important. Implement 1-3 initiatives that will improve the amount of fun that you and your employees are having (do it right and your productivity will improve as well).

Happy New Year!

December 22, 2005

How David Can Beat Goliath- Summary of Strategies

Posted in culture, customer service, David vs. Goliath, Economic Model, finance, management, marketing, Metrics, Product Development, Sales at 11:50 am by scottmaxwell

This post is an overall summary of the David vs. Goliath Series and meant to act as a pointer to all of the posts in the series. There are three overarching points for the series:

  1. Emerging growth companies have several natural advantages over larger companies that they can amplify,
  2. Large companies have several advantages that emerging growth companies can minimize, and
  3. Emerging growth companies can (and should) take a series of specific short-term actions that over time will accumulate into a long-term defensible competitive advantage (by amplifying their advantages and minimizing the large company advantages)

I can’t emphasize enough how important it is for emerging growth companies to think through these issues and develop a clear point of view on what they are trying to achieve. Regardless of the long-term goal (a sale of the company or remaining independent), building a defensible advantage will make life much better for you (easier time in the product markets, better growth, better bottom line, higher valuation, etc.). Of course, once you know what you want to achieve, you need to execute against it!

The Nine Major Themes:

  1. Create an Information Advantage. The emerging growth company has the natural advantage of being closer to the customer that the large company. You can truly capitalize on this advantage by taking steps to increase the information flow into your company even more.
  2. Create the Time Advantage. The large company has a disadvantage as it grows, as solid communication between employees gets much much more difficult as companies grow. This communication difficulty turns into a time advantage for emerging growth companies, as larger companies have difficulty doing anything quickly, while emerging growth companies, with their smaller staffs, can turn on a dime. The emerging growth company can take several steps to capitalize on this natural advantage.
  3. Create the Scope Advantage. The emerging growth company has the ability to focus on one product market. The larger companies naturally need to increase their scope in order to sustain growth. The emerging growth company can exploit this natural advantage by staying focused and continuously improving “ownership? of its product market.
  4. Create the Scale Advantage. Large companies have difficulty seeing and/or addressing small markets, even if they are very high growth. This gives the emerging growth company time to establish a foothold in the market as well as create some level of defensibility before the large company enters the market.
  5. Create the Innovation Advantage. Large companies have difficulty executing against certain types of innovation (for example, innovations that cross department boundaries, such as new products with new channels of distribution and new customer service approaches). If emerging growth companies innovate against these natural advantages, they can create an edge against the large companies.
  6. Set Your Operating Point Closer to the Funnel Singularity. This is the strategy of allocating your resources against nailing the customer experience at low price points to the customer instead of allocating significant resources against sales and marketing activities. If you do this well in the right markets, you can create a large, profitable business that is very difficult for the large companies to compete against. This is a classic strategy, but the internet-based sales and marketing approaches now allows the strategy to be executed more aggressively.
  7. Attenuate Goliath’s Strengths. The large company does have some natural advantages itself. The posts below address each of the large company advantages as well as what the emerging growth company can do to minimize the large company strengths (and in many of the cases, create an edge):
  8. Defend Against Goliath’s Attack. No matter what you do, if you are successful then Goliath will eventually attack. These posts address the nature of Goliath’s attacks as well as how the emerging growth company can set up in advance to defend against the attack. I point out that the results of the attack will be determined well in advance of the attack! The two posts are:
  9. Execute Against Execution. All of the prior posts are about what the emerging growth company can do to create a strategic advantage. This post is about how to maximize the pace of your company toward the series of goals that you have set for your company. The higher your pace toward your goals, the faster your company will develop into a large profitable company with a defensible competitive advantage.

I am going to take a breather from this series for now, but I do intend to put together the implications for each department so that some of the more esoteric points will be made more tangible for each functional group. When I post each of the functional implications, I will place a link on this post below so that this post will act as the index of the major strategies in addition to the specific implications for each function.

December 21, 2005

How Can David Beat Goliath?- Strategy #9: Execute against Execution!

Posted in culture, David vs. Goliath, Execution, management, Metrics at 6:01 pm by scottmaxwell

Up until now I have focused on how the emerging growth company can gain strategic advantages and minimize the large company advantages. If you have taken the best of the ideas, distilled them to their essence, and applied them to your emerging growth business, then you should have a very clear idea of what you are trying to achieve (a.k.a. your vision) at this point.

This post is about how you best execute toward your vision, which I think of as punching the fast forward button (like you do on your DVD player) so that your organization moves rapidly toward nailing a series of short-term goals and, ultimately, your longer-term vision.

Quite a bit has been written on execution (I list my favorite books on the subject at the end of this post). If you have been studying the topic, you have found there are many possible inter-personal and inter-group issues, many different types of people and situations, and lots of advice on leadership methodology for approaching each situation.

What I have done with this post is to boil away all of the tactical details and present what I believe are the most important skeletal components for execution (you will find these components in all companies that have been high achieving for a long period of time). If you get the skeleton right, you should be 80% of your way toward optimal execution. Get these wrong, and your results will be significantly lower that they could be (you still might get lucky with a unique product or a unique product market for some period of time, but you will regress toward the mean over a longer period of time).

The essence of execution is fourfold:

  1. Genetically engineer your organization. You need the right people doing the right activities in each position. Recruiting, training, motivation, reward, and separation systems that are 100% aligned with performance are key.
  2. Create challenging focal points. Every group and individual in your organization needs 2-4 short-term, challenging focal points that are aligned with the company milestones and interdependencies.
  3. Measure progress and make adjustments to close gaps frequently. Every individual and workgroup needs to review progress, understand gaps, and get help closing the gaps on a regular basis. Weekly, monthly, and quarterly reviews are a necessity.
  4. Be flexible. Adjust your longer-term goals based on short-term results. The world rarely turns out the way you expect.

These skeletal ingredients are very similar to agile software development principles applied to the entire organization (although I have tried to make the key ingredients more black and white for the purposes of clarity). If you have just these ingredients, you will execute at least 80% well against your game plan. Each of these four ingredients is discussed in more detail below.

Genetically engineer your organization…

Genetically engineering your organization means getting the right people doing the right activities, with a management approach that is merit based (a.k.a., the meritocracy). Each of these is outlined below:

  • Right people. I have already posted on the topic of recruiting best practices for hiring “A” caliber people. There are two additional thoughts that I would like to make here. First, if you want to get something done quickly, you need to hire a person that both knows how to do it AND has done it before successfully. Additionally he or she needs to be passionate to do it again (not people who have read a book or watched someone else do it, but rather people that have managed the activities that you are trying to set up). Even better, if you can find people who have both set up and managed the activities before, you will have much better execution as the skill to set up the group in the first place is much different than the skill to manage a group once it has been set up! For example, if you are developing a database application on SQL server in C++, getting a person that has been developing successfully in SQL server and C++ makes sense. Likewise, if you want to start a telesales group, getting a manager that has been highly successful setting up and managing a telesales group makes sense (rather than hiring a field sales manager to manage telesales). This is a simple point, but not followed as closely as I would expect. Second, you need to hire people that fit with the culture that you are trying to set. Either you need to hire experienced people that have the culture, or you should hire entry level people (“A” caliber!) directly out of schools and train them into your culture (this is the best long-term approach in my view, especially if you supplement the entry level people with the managers that have the direct experience. However, it will be less effective in the short-term, so you need to determine the trade-off you are willing to make).
  • Right activities. Just to reinforce my point above, you need to hire people that know how to do the right activities into the leadership positions of your company. If you supplement the leaders with entry level “A” caliber people, then you will form a team that should generally be doing the right activities. The major point is that the right people should know the right activities and naturally set them up and proper oversight will make the activities even more “right.” You need to be EXTREMELY careful that you are sure your hires know exactly what they are doing, however, as good people will do a good job executing what they think is right. If they do not know exactly what they are doing, you will end up with the wrong activities and it will be much more difficult to changeover to the right activities!
  • Meritocracy-based management system. If you want a management system to maximize execution, you need to set up a culture that makes it so that top performers that want to win will love working for your company (and lower performers won’t like working for your company). Generally this means compensation and advancement goes to those that perform and separation goes to those that can’t or won’t perform. The trick here is to start at the point of recruiting and let the recruits know that you have a performance-based culture that rewards top performance and does not have time for underperformance (this will both set expectations and help to attract the top performers and reduce the attraction from the underperformers). Once people are hired, set up goals (more on this point below), and then reward the performers in various ways (rewards can include the obvious compensation and advancement, but other rewards are in many cases more valued, such as publicly thanking people, giving them awards of various kinds, and giving them challenging new opportunities and leadership roles). For the non-performers, moving them into less critical positions and/or helping them find jobs outside of your company will help you maximize your execution while doing the right thing for your underperforming employees.
  • Prevent “bad behavior.” Finally, you must make sure that “favorites,” “sacred cows,” “politics” and other management approaches that are not merit-based do not creep in your organization. These approaches not only hurt execution short-term, but also dramatically impede your ability to build a long-term sustainable execution advantage. Merit-based approaches get high-performers focused on results, non-merit-based approaches disengage high performers and get everyone else focused on issues other than results. Managing for high performance will significantly reduce the energy focused on “bad behavior”, but you will also need to manage away these behaviors (and potentially the people exhibiting these behaviors!) before they breed in your organization (this is particularly difficult as you grow into a large organization, as their are more places for these behaviors to breed).

Create challenging focal points…

Given your staff is in place, you need to disaggregate your longer-term vision into a series of goals for each department, group, and person in your company. Overall, this gives everyone in your organization a focal point to think about and act on when they come into work every day. Generally, the more they focus on the goal, the more their activities and actions will be aligned with the goal. The goals need to be:

  • Specific. It is very important that the goals are very specific. For example, “have the best product” is not at all specific and very difficult to take actions against. However, product download speed, installation time, alignment with specific use cases, and user satisfaction are all much more specific.
  • Measurable. Measurability goes hand-in-hand with specificity. If you can measure your performance against your goals, you can determine that pace of improvement. For example, product download time from a broadband connection, number of “clicks? to install, install time, number of clicks to complete a given action, wait time for a given action, and user survey results are all measurable and repeatable so that you can both benchmark yourselves and measure your progress against your goals.
  • Short-term. Having the goals be short-term is highly important, as an immediate goal creates a sense of urgency in the business. Forget goals that are one year out, and set goals that need to be accomplished this month, this week, or today. This is probably the most important factor in execution!
  • Stretch. The goals need to take real work to meet, as goals that are too easy to accomplish will create a sense that “this can wait until tomorrow.” You want your staff to be working toward the goal every day!
  • Achievable. Ultimately you want everyone to build excitement around achieving the goals AND you want everyone to know that you are serious about everyone meeting their goals. The only way to do this is to set goals that can be achieved if people work hard (if you truly work on this, then you will get better at setting your goals over time so that they are both stretch goals and achievable goals). The more people think that the goal is not possible, the less they will work toward achieving it (why work hard if they are going to miss nailing the goal anyway?)

Some examples (note that these may or may not apply to your business):

For Product Development, make the next build by Friday, release the next version of the product to customers by next month, work toward builds every other day by the end of the quarter, work toward customer releases every 6 weeks by the end of the quarter. Build specific use cases into the product by a certain date, improve download time to 1 minute by a certain date, etc.
For Marketing, create 100 qualified leads (with a specific, measurable definition for “qualified”) a day by the end of the quarter with an average cost of $10; generate at least one featured article in a trade magazine this month. Generate at least 30 customer referral leads per week by the end of the quarter, etc.
For Sales, Make 50 new customer contacts each day, create $1 million in bookings this month and build a $20 million of qualified pipeline by the end of the quarter, etc.
For Customer Service, pick up the phone by the second ring 95% of the time and don’t leave anyone for more than 2 minutes. Resolve 95% of customer issues while they are on the phone and the remaining 5% within 3 business days. (Of course, you would expand this into e-mail support, self-help tools, VRU approaches, etc.)
For Finance, reduce days receivable down to 50 days by the end of the quarter (and many other possibilities depending on your current situation).
For Business Development, create and propose at least 3 partnership proposals to the 3 our of the list of targets by the end of the quarter, close on one deal that generates a specific revenue stream in a specific time period.
For (insert the right department) increase pageviews per visitor by 10% within 30 days, reduce customer churn by 15 percent by the end of the quarter, increase.

These are just meant to be thought starters. The more your goals disaggregate to specific people across your organization, the more the people know the dependencies with other parts of the organization, and the more your people help each other to meet their goals, the more setting these focal points will drive execution.

Measure progress and make adjustments to close gaps frequently…

The focal points are only words on paper (or e-mail?) until you put the proper management model in place that reviews progress against goals and make adjustments as you determine gaps in progress against the goals. Your management model should give everyone the opportunity to review their results vs. their goals and also has the opportunity to hear the ideas of others to help them improve on their goals both during the review meetings and in between the review meetings. Everyone should have review sessions at least weekly (more likely daily or intra-day for some of your work groups), and less frequent, more in depth meetings as well (I think about weekly reviews that are short and to the point unless there are gaps emerging, monthly in-depth reviews for everyone to get a detailed understanding of what is going on and to offer their ideas and assistance, and quarterly meetings to have even more in depth reviews and to set up the next set of goals. These time periods are rough, but the nature of the work week/weekend cadence requires at leas one checkpoint each week).

As a separate point, these review sessions are better when they are not meant to put people on the spot or to create unhealthy stress, but rather to be collaborative sessions to truly understand progress and to help people nail their goals. If they are set up in the right way, the combination of individual and group accountability, problem solving/idea generation, and resource adjustments based on results, will make the sessions an extremely important part of your execution program and something that people will look forward to (would you rather feel like you are being judged in a session or feel that you are going into an environment where people are going to acknowledge your hard work and help you achieve your goals?)

Be flexible…

Most emerging growth companies are working in extremely dynamic markets and their companies are extremely dynamic as well. The nature of the business is such that sketching out the long-term and then focusing on the short-term is a necessity. But sticking to the longer-term when market opportunities change or execution challenges become apparent is not a good idea.

This brings up the issue of annual budgeting and planning sessions. My view is that thinking through an entire year and sketching out a plan and budget are very important to making sure that you are rethinking the big picture at least once a year. However, the annual planning cycle in my view is more of a starting plan rather than the last plan for emerging growth companies each year. Each day, month, and quarter will bring its own surprises, and reviewing and adjusting your plan each quarter is totally appropriate (you will have plenty of time for long-term planning when you are a large public company that must implement these approaches as control systems!)

Wake Up to Your Current Situation
The four skeletal ingredients for execution are pretty obvious, perhaps too obvious. I can’t tell you how many companies and mangers think that these points are obvious, unnecessary or think that they are doing these things well, but actually are quite average at execution (roughly half the companies are actually below average!!). Every once in a while, however, I meet a senior manager or a team that has implemented these principals and the results are truly phenomenal.

When I was a young McKinsey & Company Consultant, I had an assignment working with a senior manager at a client that was extremely capable at execution. He had just given a similar framework to one of his junior staff members and the junior staff member said “any monkey could do this!” The senior manager’s response was “yes, any monkey could do this, but no monkey does do this!” It takes a capable leader to manage execution, even though the steps are very basic.

How do you determine where you stand with respect to execution right now? Start by taking a baseline audit of your current approach. The best approach that I have found is to ask a cross section of employees several questions:

  1. What are the short-term goals of our company? What are the measurements? Are they easy for you to measure? Are the measures objective?
  2. How does your group (or team or department) contribute to those goals? What are the measurements? Are they easy for you to measure? Are the measures objective?
  3. How do you contribute to your group, thereby contributing to those goals? What is the deliverable that you are currently working on? When is it due?
  4. How does your supervisor, team members and/or other groups review progress and assist you in achieving your goals? Do they know this? Do they have measurable goals against this? Are they easy to measure?
  5. What are the rewards for nailing your goals? What happens if you don’t nail your goals?
  6. Do you think that everyone in the company understands their goals and is working hard to achieve them?

If you are like most companies, the results will be awakening. You will probably find a complete lack of consistency in the answers, which is the key indicator that they ingredients described above are not in place (or if they are in place, they are not being executed against). If you are a high performing company with high performing teams and individuals, you will both see a consistency across answers and see a clear enthusiasm for the processes that have been established.

Summary
Execution is not rocket science. It is all about getting the right people, telling them what is expected in the short-term, reviewing progress, making adjustments, and making sure success is rewarded and the less successful processes and people are managed out of the organization.

The approach outlined here takes some level of management discipline. I find that a lot of people lack the discipline to either implement these items or to continuously executed against the items. You may want to make someone responsible for making sure that the processes are followed and/or sit in on conversations periodically and give friendly reminders to all of the managers responsible for execution.

I left out mention of interpersonal behavior as an item above. There are several very good books on the subject if you need them. In my experience, if you take the steps outlined above, then people will not have a lot of time for bad behavior and that some combination of 360 degree reviews and one-on-one feedback will help you both determine the issues and help you address the issues. Ultimately, there is some level of interpersonal behavior that is acceptable and you will need to separate the people that tend toward extreme unacceptable behavior, even if they have high performance.

Reference Books
There are a lot of details beyond my outline above that will help bring you from 80% to 100% in terms of execution. The first three books below are some of my favorite books long-term that I keep as references. The fourth is a quick read and has some good ideas as well. My strong advice is to focus your attention on the outlined points above, as all companies can move the needle quite a lot by executing against these points. If you have the time and inclination, pick up one or more of these books:

  1. The Breakthrough Strategy by Robert Schaffer is my all time favorite book on execution. Robert does a great job of distilling execution down into what you need to do and what you need to look out for. Summarized here.
  2. The Wisdom of Teams by Jon Katzenbach and Doug Smith is getting to be a classic on building high performing teams. I was lucky enough to contribute to the book when I was a McKinsey & Company consultant, working with the authors. Summarized here.
  3. Double Your Profits in 6 Months or Less by Bob Fifer. While this book is not directly about execution, Bob has some great ideas that are completely aligned with getting things done in the short-term.
  4. Execution: The Discipline of Getting Things Done by Larry Bossidy and Ram Charan. This book also has some great ideas, although it is probably a bit too heavily weighted toward large companies (rather than emerging growth companies). PDF Summary here.

November 7, 2005

Recruiting Best Practices- Summary

Posted in culture, management, recruiting at 8:31 pm by scottmaxwell

I just completed three very long posts that describe what I believe are best practices to

  1. Determine what characteristics to recruit for if you are seeking “A” caliber employees,
  2. Manage the process of recruiting them, and
  3. Ensure that you are set up to attract, retain, and motivate them.

please send me comments if you have suggestions for improvement on any of them.

Recruiting Top Candidates- What Does “A” Caliber Mean?

Posted in culture, management, recruiting at 10:57 am by scottmaxwell

I received a question on a recent posting about what constitutes an “A” caliber person from a recruiting point of view. In my view, this is one of the toughest questions faced by management teams. I had been thinking about the issue when I read Friday’s New York Times article on Tiger Woods, “Tinkering With Success.” The basic theme of the article is that Tiger has been an excellent golfer for a very long period of time (winning eight major championships through 2002), but has spent the last 20 months changing his swing (and his coach). The results have been tremendous this year…he has won two major championships and six tournaments. Tiger is an “A” caliber person!

The problems with this observation in the context of recruiting into your company (besides the fact that it is obvious) are:

  1. It does not (by itself) help predict if other people will be “A” caliber at golf as it is describes the result rather than points out characteristics that help predict the result.
  2. Even if it did point out predictive characteristics, the predictive “algorithm” would only work for golf (i.e., While he is “A” caliber at golf, Tiger probably is not an “A” caliber engineer!).

My involvement on the issue of finding “A” caliber people over the years has led me to the following “best practice” approach:

  1. Focus your attention on only one or two positions at a time. This is extremely important, as the effort required to do the job right is considerable. If you do get it right, you will significantly improve your company (I continue to be amazed at how the addition of one key person to an emerging growth company has had such a significant effect on the companies that I am involved in). Given that you want to get the “biggest bang for the buck,” I would suggest that the possible focal points are:
    • a position that is currently a significant hole in the team,
    • senior level positions (C-level/VP level), or
    • a function that you intend to hire a large number of people into over the next year or two (probably a specific sales or service function if you are at the expansion stage).
  2. Determine what “A” caliber OUTPUT “looks” like. Some thoughts:
    • Output has an “efficiency” angle and an “effectiveness” angle. Efficiency is all about pure input/output productivity (how many sales calls per week does a salesperson make, how many lines of code does a developer make), while effectiveness is all about quality (how many sales per sales call does a salesperson make, how many errors per line of code does a developer make. I know, the examples that I give are really simple and not the only measure of output for the functions mentioned, but hopefully they serve to get the point across. Also, don’t confuse these simplistic examples with Taylorism. The intent is to get you thinking on the topic, not pulling out a stopwatch!)
    • It is relatively easy (at least conceptually) in an individual sport like golf to determine “A” level output. From an efficiency point of view, you can look at the number of tournaments/top tournaments that a player enters for a given season. From an effectiveness point of view, you can look at tournament wins or wins against top competitors as a couple of high-level metrics. You could also disaggregate the measures of the game into some components like length and accuracy of drive, pitch accuracy, putting accuracy, ability to recover from tough situations. You could also disaggregate each of these components further. For example, for the drive swing, you could look at club speed at impact, body speed, arm speed, form etc.). I have not read (or looked for) a book on disaggregating golf, a great read on the use of statistics in baseball is “MoneyBall: The Art of Winning an Unfair Game” by Michael Lewis.
    • When you move to a team sport, like basketball, the issue of determining “A” level output gets more complex for a few reasons. First, basketball involves specialist roles (e.g., Point Guard, Center, Forward), and you need to make sure that you have defined the “A” level output for each of the roles separately. Second, each basketball program has a somewhat different strategy (fast-break running game, outside shooting game, inside shooting game, pressure defense, etc.), and you need to make sure that you have defined the “A” level output in the context of this strategy (or planned new strategy!). Third, teamwork matters. The capabilities and style of the other players already on the team will help determine what “A” level output of the player/position in question. If the new player does not “fit in” with the rest of the team, the output of the entire team could suffer.
    • When you move the issue to an emerging growth business, determining “A” level output gets even more complex. You not only have the same role/position specification, strategy, and teamwork issues as the team sport example, but also have additional burdens of constantly changing need to move from generalists to specialists as the organization grows, as well as very dynamic changes in markets, competition, and regulatory issues as markets and companies evolve (think about changing the rules of basketball and adding new players on the other team WHILE the game is in progress). Finally, you do not have the benefit of transparency, where you can gather up all of the output data from all of the other companies that have similar functions…you only have your own data to work with!
    • So how do you determine the right “A” level output for a given position, given the dynamic nature of the business? This is part art, part science, but to the extent that you have people already in the position/role, you need to “tease out” the output from the best relative to the rest (assuming that you have one or more people performing at the “A” level). You should also reach out to your network and advisors to get as much information and as many viewpoints as you can from them, especially if this is a new position (if you have a good VC, this is easier, as you will generally have access to other companies in the VC’s portfolio as well as the experience of the VC. Also, really good professional recruiters can be helpful in all stages of the process, including this stage.). Take all of the data and ideas that you can, and distill it down to what output that you think constitutes the “A” for the role/position in question (and what is the priority for the output that you are looking for…conceptually similar to a “hierarchy of needs” for the position in question). This is important, as you may decide at some point to “back off” your original criteria (for now). If you do, you will want to know what you “must have” vs. what is “nice to have” for your current stage of development.
  3. Determine what “defining characteristics” help to predict that an individual will have the “A” caliber output. Some thoughts:
    • Try to make sure that the characteristics are “causal” in nature. This is the toughest step, in my view, as you need to separate correlation (things that move in similar ways) from causality (things moving that cause other things to move). An example of this (from my college statistics course) is that someone once figured out that as the number of Bishops in England went up, the number of fires in England went up. Cause for alarm if the Bishops CAUSED the fires! But it is only correlation (the two things moved in similar ways). The cause of both the Bishops increasing and the Fires increasing was that the population of England was increasing (the population increase led to an increasing need for Bishops and increasing accidental fires). More relevant to golf, (from Tiger Wood’s fun facts), the fact that Tiger wears red on the last day of a tournament is less causal in nature (at least in my view) than the fact that he first started swinging a golf club at 11 months (note: neither are probably the best criteria to use for predicting golf success, but the latter is probably more predictive!)
    • You need to determine the time scale for the predictive characteristics. For example, do you need someone to “hit the ground running” (in which case, you need characteristics that predict the person’s output today) or are you hiring less experienced people that you want to grow over time (in which case, you need characteristics that predict that a person will develop into having the “A” caliber output over time). For example, getting a “plug and play” salesperson to sell advertising may suggest characteristics such as “currently selling advertising to the same advertisers for the same type of media,” “sells a lot,” and “works well with others.” Getting a less experienced person right out of college for the same type of role might be characteristics such as “leadership,” “aggressive,” “outgoing/extroverted,” “team oriented,” and “passionate for this job.”
    • Make the characteristics comprehensive. You need to make sure that you encompass the role.
    • Keep it as simple as possible. No need to get overly complex here. Boil the characteristics down to the minimum necessary. (This point is not in conflict with the prior point.)
    • Turn the characteristics into useful screening criteria. For example, you can measure “sells a lot” by the salespersons W2 (that is, what (s)he got paid last year) and the written compensation plan for the position, “works well with others” through personal reference checks, the college graduate’s “leadership” through extra curricular activity leadership in college, etc. The key is that you can get the facts that help determine if the person has the characteristics that you want. (Btw, you need to do real work here when you are doing diligence!)
    • Once you start interviewing, revisit and refine these criteria. I find that the process of interviewing helps to both identify the “land of the possible” and is also quite useful at improving your thinking on ingoing criteria.
    • Note1: You can make these activities more comprehensive, and possibly more accurate, with activities like psychological and behavioral testing, but I have not seen it “up close and personal.” My sense is that it is probably better suited for large scale hiring efforts that can not put the time into a deep understanding of the candidates and may be better suited for finding “minimum competency” rather than “maximum competency” of hiring “A”s as I discuss here; therefore, I believe the activity is better suited for the large companies.
    • Note2: I have used an organizational psychologist to help with the defining characteristics and interviewing periodically. His high emotional IQ and different angle on the issues has been quite helpful.
    • Note3: When companies have the luxury of lots of data and resources to analyze the data, this approach can (an has) been taken to the extreme through regression modeling. I have not, however, been in a position with any of my emerging growth companies where we have done (or even considered) this. It is really more of a large company activity.
  4. Build diversity into your criteria…there are lots of ways to define the “A”. When you have the opportunity to hire multiple people into a function (like with a growing development group, sales group, or services group), make it as diverse as possible (education, experience, geographical location of childhood, gender, culture, language, socio-economic, life experiences, race, etc.) while still maintaining the bar of hiring “A” caliber people. It makes great business sense (doing this has a side effect of being politically correct, but it is the business result that I am interested in here). There are three major business reasons for creating diversity in your functional unit:
    • You will want to have a broad enough sample of different input characteristics so that over time you can tune the characteristics that make an “A” caliber person in the function. Since there are a lot of factors other than “population” that determine the “number of fires” in England, there are most likely a number of more idiosyncratic factors that define your optimal job candidates for a particular position.
    • Diversity will help you over time as your business and its needs change (think about Charles Darwin’s ideas!).
    • Diverse people also have diverse interests and motivations. With diversity, you essentially are allowing the business to run along its efficient frontier, which essentially means that it allows you to maximize your overall output (through increased “intelligence” and “network” of your company) while it averages out the hills and valleys in individual motivation and performance.

That is it in a nutshell. This process should help you determine what constitutes an “A” caliber person for a given role in your company. One last thought on setting the “A” criteria. Tom Watson says, “Tiger has raised the bar to a level that only he can jump.” There is not another Tiger Woods, so if you set the bar at that level, you will not be successful. Set a bar that is realistic for your situation and gets you the top candidates that you can find. The key is to “raise the bar to a level that only a few can jump!”

Also, once you have the criteria for the ideal candidate, make sure that you are doing the work necessary to turn the paper candidate into the productive employee, including:

  • Put a Process in place that “screens” for the right characteristics. See my post on “Recruiting Best Practices” for some thoughts on the screening process.
  • Set up the “environment” so that the individual can thrive. (See my post on “attracting, motivating and retaining” for some thoughts on setting up the right environment.) If you do this right, you will get all your staff, not just the “A” caliber staff, working above their natural level.

This process works well, and it should work well for you.

October 31, 2005

Attracting, Retaining, and Motivating- What’s in it for them?

Posted in culture, management, recruiting at 1:33 am by scottmaxwell

Put this in the category of “getting it off my chest via a rant.” I got into a debate with a CEO recently, where he seems convinced that compensation is the only thing that matters. I tried several ways of explaining that compensation is not close to being enough (yes, important, but only one aspect). This posting adds nothing new on the topic, but at least I feel better getting it off my chest (and, perhaps, reminding myself of what it takes to set up the right environment).

There are several fundamental elements to setting up the emerging growth company to attract motivate and retain high caliber (“A” type) people (For what it is worth, I have never seen all of the elements in place at an emerging growth company, but I have seen one or two come close.):

  1. Once you find them you need to court them during the hiring process. The best candidates have many options and they want to understand that you really want them and are going to take the time to give them the rest of the items on this list. Ideally, they know that the CEO is going to take the time to do these things (note: this can’t just be lip service, or you are going to get them and then lose them). Some basic activities are taking them to dinner one-on-one, taking them to lunch with a group of managers, if they are moving for the role, invite them with their spouse out for dinner (better yet, over for dinner). The key is that they get to know you, you get to know them, and that you put the time into building the relationship that they (and you) will need once they start working for you.
  2. Give them a meaningful vision of what you are trying to accomplish (note: you better make progress against this vision over time, or they will be demotivated).
  3. Surround them with other “A” type people. The best people like to work with the best people, and they like to see meaningful progress!
  4. Give them meaningful work. Enough said.
  5. Set high goals with short-term deadlines. High caliber people need a high bar and need to know that you are counting on them to deliver. Short deadlines also tend to get people focused on the real work.
  6. Involve them in important conversations/planning sessions. People want to contribute and know what is going on at least a level or two above them! (note: do not overuse this theme with large, meaningless meetings.)
  7. Stretch them (without breaking them). Think of stretching a rubber band as far as you can without breaking it. This is the fastest way for top caliber people to develop…getting their goals met becomes difficult for them, which they like!
  8. Give them hard-hitting, constructive feedback. Everyone loves feedback, especially constructive feedback, and most managers shy away from giving it. Instead of hoping they will do the right thing and ignoring when they get off track, tell them what you observe and how you what you think (note: you can do this without being a micromanager by focusing on the themes rather than the details). High caliber people can and do want to do the right thing, so it is up to you to help define what that means (btw, you might be wrong, so giving them the feedback and being open to theirs is even better. It can get you aligned with you taking on their view of right quite often. It also clears the air really nicely).
  9. Reward them with compensation and other vehicles. The best people have 10x the productivity of average people. You can afford to pay them well relative to average (cash vs. option compensation is for a different posting). Also, a number of other rewards, such as being given a great new assignment, a larger territory, or a junior staff member, are highly appreciated and it gives your company even more productivity (for sales types, trophies or other things they can display also are great motivators).
  10. Advance them over time. If they already have the highest available title, you can advance them by giving them more responsibility. If they are truly top caliber, your business will benefit!
  11. Make all of them work as a team (A.K.A. play well with each other in the sandbox). To do this, you need to watch carefully and give feedback to those that are not playing well together (if you have kids, you will get the analogy). No one wants to play with the kid in the sandbox throwing sand or hitting the other kid in the back when he isn’t looking…

That is all I have. 10 elements that do not involve compensation, 1 that does.  If you hire “A”s and manage them all this way, you are going to have one hell of an extreme execution engine.

I feel better now. Rant over…