Category Archives: management

Twelve Things Good Bosses Believe

I found this post by Stanford evidence-based management professor Robert Sutton and tweeted about it earlier today.  But since it’s so good, I decided to do a post about it along with some commentary.  First, here are the twelve things:

  1. I have a flawed and incomplete understanding of what it feels like to work for me.
  2. My success — and that of my people — depends largely on being the master of obvious and mundane things, not on magical, obscure, or breakthrough ideas or methods.
  3. Having ambitious and well-defined goals is important, but it is useless to think about them much. My job is to focus on the small wins that enable my people to make a little progress every day.
  4. One of the most important, and most difficult, parts of my job is to strike the delicate balance between being too assertive and not assertive enough.
  5. My job is to serve as a human shield, to protect my people from external intrusions, distractions, and idiocy of every stripe — and to avoid imposing my own idiocy on them as well.
  6. I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.
  7. I aim to fight as if I am right, and listen as if I am wrong — and to teach my people to do the same thing.
  8. One of the best tests of my leadership — and my organization — is “what happens after people make a mistake?”
  9. Innovation is crucial to every team and organization. So my job is to encourage my people to generate and test all kinds of new ideas. But it is also my job to help them kill off all the bad ideas we generate, and most of the good ideas, too.
  10. Bad is stronger than good. It is more important to eliminate the negative than to accentuate the positive.
  11. How I do things is as important as what I do.
  12. Because I wield power over others, I am at great risk of acting like an insensitive jerk — and not realizing it.

And here are some thoughts on them:

  1. While 360 degree feedback studies can help managers understand themselves better, I agree that, by definition, managers will always have a flawed and incomplete understanding of what it’s like to work for them.  By the way, in general, I think managers always need to assume they are missing information, regardless of the topic.
  2. I agree strongly with this one; I think the media puts too much emphasis on the big, breakthrough idea and virtually none on the mundane business of clarifying operational goals, getting people to agree them, and then holding people accountable for delivering them.
  3. I semi-agree with this one.  I think quarterly operational goals are critical, annual goals are important, and some general sense of “where we’re headed” is important as well.  But I do agree that a big part of a manager’s job is getting those small, everyday wins that my colleague Martin Cooke refers to as “1% changes.”
  4. I totally agree with this one and struggle with it every day.  On one hand you have experience and opinions and want to show leadership.  On the other you don’t want to run over your people.
  5. I’ve seen myself in this way only when it came to certain constituencies (e.g., the board, bankers, analysts) and not in general.  Perhaps I should.  I’ll mull on this one.
  6. Yes.  See 4.
  7. I am a big believer in understanding both sides of an argument before deciding.
  8. I think this is a very important point and every manager, including me, surely believes:  “it’s OK to make a mistake, just don’t make the same one twice.”  The question is does our behavior actually reinforce that view?  People listen to words, they watch behavior, and they weigh the behavior about 10x relative to the words.
  9. I agree that innovation is important, and not only in large things.  I think the business media tends to equate innovation with “the next big thing.”  To me, innovation matters in all things, both large and small.  And if you agree with Sutton’s point 3, it matters perhaps more in small matters than in large ones.
  10. While I’d never consciously thought about this issue that way, I do have an innate tendency to worry more about driving out the negative than collecting the positive.  Some of my philosophies (e.g., mediocrity intolerance) reflect that.
  11. Yes, and it’s easy to miss this one.  As a CEO you can get so results oriented that you can forget the how whilst focusing on the what.
  12. Indeed.

Seeing Both Sides of an Issue

The ability to see both sides of an issue is a critical executive skill.  Yet, in typical corporate America culture, that skill is all too often lost.  Why?

  • Things get partisan:  sales wants X, marketing wants Y, finance wants Z.
  • Discussions turn blame-oriented.  Instead of working to solve problems, people work to avoid blame.
  • Managers lose interest in understanding the alternative positions.
  • People don’t listen to each other, often because they’re too busy thinking of what they’re going to say next.  (Resulting in what one friend calls “parallel independent conversations.”)

The solution is to force managers to articulate both sides of important issues.  If a person is advocating thing X instead of thing Y, I want them to be able to clearly and convincing explain the advantages of both.  The best decisions come, in my opinion, when you hold two opposing ideas in your mind at once, and then choose.

When done correctly, you will see:

  • A focus on solutions, not blame.  Example:  “help me understand how you want to solve the problem.”
  • Managers looking forward, not back.  This flows naturally from the prior point.
  • Managers practicing active listening, a great technique for trying to understand the other person’s point of view.  Example:  “so, Ted, you’re telling me that you think we’re doing too many tradeshows that result in poor quality leads — is that correct?”

But seeing both sides of an issue only gets you halfway to your goal.   In many big companies, the unintended dysfunctional consequence of doing so is passivity and fence sitting:

  • Well,we could do A or we could do B.  Frankly, I’m open.
  • The consensus in the meeting was that both A and B were good options.  (This hits my “launch” button!)
  • Well, there are certainly advantages and disadvantages to both options.
  • We should pick the option that keeps the most other options option.  (Also known as The MBA Credo).

Somewhere along the way in corporate America, managers forgot that they are paid to make decisions.  The point of seeing both sides isn’t to avoid decision making.  The point is to make better decisions.

To ensure a focus on decisions, I usually run a line of questioning that starts with the decision and backs up from there.

  • What do you think we should do?  (And push for a single answer)
  • Why do you think we should do it?
  • Why should we do the alternative?

If you’re already performing these techniques, great.  If you’re not, give them a try and let me know how it works.

Veterans vs. Up-and-Comers in Startups

The conventional Silicon Valley /  venture capital (VC) wisdom is that startups should not bet on first-time managers in just about any position, but particularly at the executive team level.  It’s best captured by the statement:  a high-growth startup is not the place to learn how to do your job.

This is the conventional wisdom because, while counter-intuitive to some, VCs are not actually risk-takers, they are risk-isolators.  A typical VC is trying to isolate risk down to one thing:  the unique value proposition behind the startup.  Those value propositions can vary considerably:

  • Sometimes, it’s about the technology.  Mark Logic, for example, is a technology disruptor.
  • More in vogue these days, it’s about the business model.  Salesforce disrupted the on-premises, perpetual license business model with SaaSMySQL disrupted the traditional license model with open source.
  • Sometimes, it’s about both.  My friends at Clearwell will rent you an appliance that includes an innovative e-discovery application.

But the point is that VCs are trying to isolate risk down to the one key value proposition.  They do that by setting every other lever in the business to standard.  For example, per the conventional wisdom, a SaaS BI business model disruptor should:

  • Hire standard managers with experience in big BI companies, and use equity to lure them from their cozy jobs.
  • Develop a standard BI application/product that contains the features users expect.
  • Build a standard enterprise sales force, hiring salespeople from the established BI vendors
  • Implement a standard BI partnering strategy, with the usual suspect technology and systems integration partners
  • Devise a standard marketing strategy, typical of those used by other BI companies but with a key emphasis on the unique value proposition.

Like most VC wisdom, at the first order the approach makes a lot of sense.  At the second order, however, it presents some problems.

  • It encourages cronyism, where the first such experienced manager knows a whole clan of other folks who also are looking for jobs, often for the same reason he or she was (e.g., recent of acquisition by Oracle, a new CEO, a strategy shift).  While one of the benefits of hiring experienced managers is undoubtedly their networks, I’ve seen this work out both quite well and spectacularly badly.    The key issue boils down to whether you are hiring drivers or passengers.  Was the company from which you’re hiring successful because of these people, regardless of these people, or indeed in spite of them?  Are you hiring real results drivers or people who, Fooled by Randomness, have great resumes and think very highly of themselves, but who are incapable of solving your company’s problems?
  • This cronyism often creates a divisive environment that drives out your top existing talent.  As the “Company X” mafia takes over, they typically show insufficient respect for those who got the company where it is, ridicule some past practices, and talk boisterously how easy it’s going to be to fix all this.  While problems in operational practices are easy to spot and fix, this approach overlooks the startup’s need for process maturity (e.g., size relative to Company X) and the startup’s strategic position in its market.  I remember when the experienced (manufacturing-oriented) managers from ASK took over Ingres (then a ~$200M company) and decided that implementing a heavyweight quality process was the answer to our problems.  In reality, our problem was strategic:  in a land-grab market we’d made some poor technology choices (e.g., Quel vs. SQL) that hampered sales and we had been too conservative about grabbing land.  Just as the Ingres executive team’s only hammer was technology, the ASK executive team’s only hammer was process.  Neither, unfortunately, was called for given the company’s situation.
  • It limits career growth for talented up-and-comers within the company:  either individuals with management potential or existing managers with executive staff potential.  If every new management job will be filled by an experienced outsider, then insiders quickly feel trapped and unable to advance in their careers, making them — particularly the more ambitious ones — more likely to leave the company.

The answer to managing all this is, of course, balance.  Both the CEO and the executive team need to take some calculated risks in betting on up-and-comers in a number of posts.  This generally will cost the CEO some political capital (debited at promotion time and never credited back, even if the up-and-comer is highly successful), but will help him or her retain both institutional memory and some key people for the future of the company.

Having a stronger-than-usual preference for up-and-comers, I’ve developed a few rules for managing this process.

  • Always do a external search.  You can turn the dial on how hard — from a check-the-network or calling a few contingency recruiters all the way up to a retained search — but you should always expend energy to see “who’s out there” so you have a sense of the market in making the veteran vs. up-and-comer decision.  You owe this to yourself, your board, and your shareholders.
  • Run up-and-comers through the same process as the external candidates.  The only exception here is when you are restructuring in which case many people may be changing roles without following an interview process.
  • Keep a mental balance of how many up-and-comer chits you have used and how many you think you have left.  You need to view them as a scare resource, because they are.
  • Ensure the up-and-comer is “all in.”  If you are going to bet political capital on someone they can’t either be [1] telling you what you think you want to hear or [2] be unsure of whether they can do the job.  You should only bet on up-and-comers who are certain they can be successful, and so certain that they will probably quit in the not-too-distant future if not offered opportunities.
  • Limit up-and-comers’ ability to bet on other up-and-comers.  Force them to prove they merit their posts by demonstrating how they can bring in veterans.  This is a both a solid practice and a great test.  The worst outcome is that your up-and-comer hires no veterans for his team and you end up with a whole multi-level hierarchy of inexperienced people.  (I’ve seen this happen, too, though happily not in my department and it’s one heck of a mess because there is typically no organizational awareness that anything’s even wrong! )

The Great Dysfunctional Corporate Budgeting Process

A former colleague hit an old nerve the other day, sending me the following message about budgets and budgeting.

Dear Dave, 

A question for you — I just saw a typical idiotic internal email about budgets yesterday, and to my recollection [at our last company], you tried to make the system less dysfunctional, but didn’t really make much headway, and almost earned yourself some finance team enemies [in the process].

Now that you’re CEO, do you still have those feelings about budgets, or have you now seen the other side of the coin? Do you have any tips for somebody who still gasps at how bad it seems to be, but wants to understand?

I still find it incredibly hard to imagine that this is the best system possible for using money strategically.

Best,
Joe

Since it’s currently planning and budgeting season for most corporations — including mine — I thought I’d share a few thoughts as a former budget rebel turned CEO.

First, let’s review my problems with the classical corporate budgeting process.

  • It rewards negotiation not performance. The division manager who negotiates a 30% growth plan and who delivers 33% is a hero, while the one who negotiates 75% growth and delivers 60% is a zero.
  • It ends up a trending exercise. Budgets end up tweaked extrapolations of prior years. Well-intentioned zero-based budgeting exercises end up expensive re-creations and re-justifications of the status quo.
  • It ends up a budgeting, not a planning, exercise. What’s supposed to be a planning process that includes generating a budget as one part ends up a budgeting-only exercise. In marketing, I call this the “buckets of money” problem. Which tradeshows have we decided to do based on what strategic criteria? Dunno, but I have $500K allocated to tradeshows next year. Which analysts? Dunno, but I have $250K allocated. What are our key themes? Dunno, but we can figure that out later. All those questions should be answered in the marketing planning process, but they get lost in budget-myopia.
  • It encourages convergence to the norm, ironically in the name of “best practice.” CFOs and boards benchmark the company against competitors with keeping up with the Joneses logic. This drives everyone’s P&L to look the same. For example, at Business Objects, we consistently decided that we were underspending in R&D and overspending in sales and marketing (S&M) relative to industry averages. So every year, we’d cut S&M and increment R&D expense by a few points. I’d argue that we were good at S&M and bad at R&D and ergo we should reinforce our strengths and perhaps acquire (not develop) technology to dump into our excellent S&M engine. This argument repeatedly lost to the normalcy one, reminding me of the Vonnegut story where ballerinas have sash-weights and bird-shot tied to them so they can’t jump and geniuses have noises blasted into their ears so they can’t think. One person’s best practice is another one’s sash-weights and bird-shot.
  • It is, ultimately, not strategic. Somehow benchmarks, trends, negotiations, averages, and politics end up trumping strategy. Instead of strategically deciding what the organization needs to accomplish and then building a budget to accomplish that, the process gets hijacked by these forces along the way.

The problem is, of course, there’s only one thing worse than having a budget; that’s not having a budget.

Much as the marketing VP should be automatically fired if the company ever launches a new product without an updated website, so should the CEO (and CFO) be fired if the company ever enters a time period without a board-approved operating plan. I remember when I was a first-line marketing manager at (the original) Ingres and we went into June of a year without an approved budget. It was a study in how not to run a company.

So what can we do to improve things? Well, it’s not easy. If you’re really interested in this area, you can read the book Beyond Budgeting. It goes into great depth on the sorts of problems I’ve described and how to solve them. One key concept is to reward absolute performance (e.g., growth or growth in relative market share), as opposed to plan performance which is more gameable. The problem is that getting good data (e.g., relative market share for an emerging category for every country in Europe) can be very hard to come by — particularly in enterprise software.

I will tell you — and Joe — what I’ve done at Mark Logic to try and avoid and/or mitigate these problems.

  • I try to derive budget from strategy. We start the budgeting process with a strategy meeting. We end the strategy meeting writing down 10 -12 goals for the coming year. As we make, review, and iterate the budget, I keep checking and revising the goals to keep them top of mind and synchronized with the budget.
  • I stay aware of the endemic budgeting problems and try to keep an eye out for them.
  • I tend to rate people, whether I want to work with them, and how I help them in their careers by whether I think they’re gaming me in the budget process. So either don’t game me or be very good at it. I prefer hard-working people who are all about the company to a group of all-about-me mercenaries flying in greed formation.
  • I track metrics and benchmarks but refuse to be enslaved by them. I never assume that because the average family has 2.5 kids that I should, too. I want to know how many kids the average family has, and I want to use that information as part of the equation for how deciding how many kids I want to have.
  • I drone on endlessly on the difference between planning and budgeting. I try to find buckets of money (or buckets of people) and blow them up, asking for supporting detail. So, we have $250K for tradeshows — which ones and why? So, we want to hire X sales people — what will their territories be? If you don’t know, you have a budget, not a plan. I want both.
  • I remind people that happily, as a company gets some size, some budget issues are purely emotional. Those few people I cut might amount to a rounding error in a manager’s quarterly budget. I advise them to go ahead and do what they think is right, just checking with me once with me and finance before doing it.
  • I also remind people during the year to closely track their spending on both the high and low side. I remember one career-defining moment at Business Objects when a VP pleaded, begged, and moaned for money, saying he was under-staffed, complaining that the company was myopic and refusing to invest in his area. The CEO responded: “you spent only 85% of your budget last quarter; do not ask me for more money when you are not spending the money you have.” Ouch. Oddly that VP disappeared not too many weeks later.
  • In same vein, I remind people that the plan’s a plan. While I am a big believer in planning, I also remember the famous Eisenhower’s quote: “in preparing for battle I have always found that plans are useless, but planning is indispensable.” What we actually do will be a function of how things go once the year starts and we are free to spend more or less than plan as we go along. Think: uncertainty. Think: empowerment.
  • I try to be pragmatic. Decisions need to be made. Targets need to get set. In the end, getting the budget done trumps getting the budget done perfectly.

In the end, I don’t claim to have solved all the problems with classical budgeting, but I hope these measures take some of the usual insanity out of the process.

If you have ideas to share on how to improve the corporate budgeting process, please share them.

Keeping Up With The Conversation

The older, grumpier, and less patient I get, the more I realize that keeping up with the conversation is probably the key skill for career success and executive development. I wonder why it’s taken me so long to realize this because, like the discovery of the non-existence of Santa Claus, once seen, it appears obvious. But it sure as heck wasn’t obvious to me during the last 20 years of my management career.

Let’s make this concrete. To assess whether someone keeps up, I increasingly ask myself one question: do I want to talk to person X about problem Y?

There are three primary reasons why I wouldn’t want to talk to person X about problem Y:

  • Person X doesn’t understand problem Y. It’s not interesting to talk to him/her* because all I do is educate him on the problem. It is not a stimulating two-way exchange of ideas.
  • Person X doesn’t say anything interesting about problem Y. Person X understands the problem, but doesn’t have anything new or interesting to say about solving it. Boring.

  • Person X doesn’t follow through. Person X says interesting things about problem Y, but never follows through on agreements made during the discussion. Big talker. Or, to use the Texas equivalent: big hat, no cattle.

I reflect on the now-immortal words of a Business Objects board member who I (and several other execs) watched argue with a United flight attendant many years ago on a flight from Paris: “I don’t want to talk to you any more.” At which point the pilot came out not in an escalation of authority, but more to provide an appropriate-level contact with whom to resume the conversation.

(This became a running joke as we subsequently imagined ourselves being fired in a similar dialog. “What went wrong with the marketing campaign?” “Well, we had some trouble with the mailing lists.” “The mailing lists?” “Yes, you know sometimes it’s hard to find good –” “I don’t want to talk to you any more.” “But, but, but …”)

I like the want part of the equation because it provides an emotional element in the decision process. Yes, I’m supposed to talk to person X about problem Y because it’s in his domain as defined by the current organization. Yes, I know that. But do I want to talk to him?

Wherever I find a supposed-to/want-to gap, there’s a potential need for an organization change.

It might be that person X is wrong for the company. Or it might be that person X is a bad fit with his role or certain parts of it. But when things are working well, I should not only want — but be eager – to talk to person X about problem Y.

Now I’m sure I’ve condemned myself to weeks of “Hi Dave, do you like talking to me about X” questioning from Mark Logic staff. But I think it’s probably worth it to have shared this reductionist nugget.

According to this theory, the secret to career success is then: getting your bosses to want to talk to you about the organization’s top problems. That means two things: you need to figure out the top problems and you need to figure out how to make them want to talk with you about them.


* Henceforth, take all him references as him/her and his references as his/her.