Entrepreneurial Leadership and Management . . . and Other Stuff

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15
Jan

Forecasting Sales in 2009

I’ve discussed how critical accurately forecasting sales is to a company’s success before.  In short, I think that companies that have the skill to accurately predict how much they will sell and from where those sales will come have a substantial advantage over those that don’t – they can grow faster and often without consuming as much capital in the process.  In my experience, too few companies value such expertise and of those that do, too many have a difficult time gaining it.

If it was hard before, forecasting in 2009 is significantly more difficult.  If your customer is a business, they are undoubtedly concerned with the stability of their customers and markets.  If your customers are consumers or end users, they are concerned about their paycheck and their savings.  The bottom line here is uncertainty and the conservatism and cautiousness that it results in.  No one knows what’s going to happen and while most people are bullish about the long term, the short term remains scary.

Most companies are struggling with budgets for the coming year and most individuals are stuffing whatever cash they have on hand into T-Bills at 0% interest to be safe.  It’s obvious, of course, that corporate budgets will be conservative and individuals will delay all spending decisions as long as possible.

So what’s a Sales VP and CEO supposed to do?  Ratchet down expectations to an absolute minimum level?  Just discount last year’s sales by some arbitrary percentage?  Come up with a number by gut feel?  Use Q4 2008 or December 2008 as a benchmark for 2009?  No, no, no and buy a lottery ticket instead (it is highly unlikely that Q4 or December numbers will have a strong correlation to 2009 numbers).

Difficult economic times simply require that forecasting be a more rigorous discipline than in good times.  To be accurate, more data is needed and each sales person needs to be closer to their customers.  In really good times, yearly forecasts are sometimes possible, in normal times, it drops to quarterly, in tough times, weekly forecasting with real data from customers is required.  It’s more work, of course, but the payoff can be very big.

So here are some specific ideas about how to develop better sales forecasts for 2009:

  • Find out what’s budgeted and when – does your customer have a budget?  If so, is your product/service category included at this point?  If so, when?  Pretty black and white.  If your product/service isn’t even budgeted, the sales process is all about getting it into the budget.  In the mean time, that customer isn’t on the forecast.
  • Find a champion with power – any sales person worth their salt finds someone on the inside (for business customers) that helps them make the sale.  It is more important than ever that this person also has some power.  Even better if they are the one who actually owns the budget.  The closer you are to the money, the more accurate your forecast can be.  Duh.
  • Build visibility – having a champion is great, but the more you know about the customer, the better.  Individuals are tough in this regard, but businesses are easier.  How is the target company’s market doing?  How well or badly do the service people in the company say that things are going?  Take a random sampling from all your contacts at the customer and ask them how the company is doing and how badly they need your product or service.
  • Talk with your customers and potential customers frequently – just because they told you everything was fine last week doesn’t mean that it remains cool this week.  Even if your champion is the company’s CEO, don’t assume that they have infinite visibility into what’s happening.
  • Be paranoid – deals are likely to be smaller and more competitive than ever.  Your competition is desperate and will be working their hardest to get the sale that you think is your birthright. 
  • Make no assumptions – uncertainty is just that – lack of certainty.  A customer should only make it onto the forecast when you believe you’ve captured as much information as possible and it all points to a sale happening for a certain amount within a certain time frame. 

Interestingly, none of these steps is any different from what a good sales person should be doing in the best of times.  The only difference is the frequency and perhaps, the level, at which they are done.  The more rigorous the process, the more accurate the forecast.

Forecasting is never perfect even in the best of times, but more data can make forecasting a relatively accurate process even in the worst of times.

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 January 15th, 2009  
 Will  
 Management, Selling  
   
 3 Comments
23
Jul

When Amateurs Show Up the Pros

[Update: Mr. Gullible once again ignored the old adage – when it’s too good to be true, it probably is.  Thanks to Ron and John who pointed out that this was, in fact, an ad for Gatorade that was never televised.  It’s still very cool.  I wonder why it never got airtime outside of the YouTube universe.]

 

I’m a big work ethic type guy.  Effort and hard work wins almost always.  Check out how this professional ball player gets totally shown up by someone who actually wants to make the Play.  Totally wild!

YouTube Video

 July 23rd, 2008  
 Will  
 Management, Sports  
   
 4 Comments
14
Jul

Software Management Guides from an Expert

Long time friend and cohort, Lorne Cooper, has two new posts up on the AccuRev blog that are must reads if you’re in the software development business.  Aside from his role as CEO of AccuRev (I am a board member and investor), which develops and sells software for software developers, Lorne has a long history of running software companies and projects.  In these posts, he shares some of the wisdom he has gained over the years.

Check ’em out.

 July 14th, 2008  
 Will  
 Leadership, Management, Software  
   
 Comments Off on Software Management Guides from an Expert
25
Sep

Hiring and Firing the George Steinbrenner Way

For all sports-o-phobics out there, this is really an article about management . . . it’s likely to be a controversial one at that.

Even as a die-hard Red Sox fan, I can’t deny the fact that the New York Yankees are likely the greatest sports franchise of all time, at least as measured by success on the field.  George Steinbrenner (the owner of the team for those of you who live in a cave), doesn’t get all the credit for that, of course, but he can take much of the credit for their tremendous success over the last 30+ years.  A period that includes 10 trips to the World Series with 6 World Series Championships.

A key part of what Steinbrenner does to build championship-winning teams is to hire the best people, with the cost of those people being, at the most, a secondary factor.  The results of such a strategy can be clearly seen in the 2007 Yankees.  This year, Steinbrenner recruited Roger Clemens back to the Yankees with a $28M contract, making him the highest paid player in baseball . . . ever.  Clemens got that kind of money even though he was going to miss the first two months of the season and, as a pitcher, was only going to play every 5th game.  Since coming on board, Clemens is only 6-6 with an ERA of 4.18 (read: not very good).  So, you might ask, why does that make Steinbrenner smart?  Look at the team’s success before and after Clemens started: before Clemens, 48-44 (.522) and after, 42-22 (.656).  The money wasn’t only paid for his pitching arm, but also for his leadership, experience and the message about the importance of winning signing him sent to the rest of the team.

Clemens isn’t the only example, of course, the second and third highest paid players in baseball are also on Steinbrenner’s payroll.  Alex Rodriguez ($26M/year) is having one of the all time great years for any baseball player, ever.  Derek Jeter ($23M), is another one of baseball’s great players and, like Clemens and Rodriguez, is an easy pick for the future Hall of Fame.  Jeter consistently plays outstanding ball and is a fabulous team leader.

As you’d expect, however, it’s not just about spending all the money in the world to bring on the best individual performers.  Recruiting and retaining the best management is probably even more critical.  And, while Steinbrenner has had very public fallouts with his management team, he has always had some of the premier managers – both on the field and in the back office – of any team in baseball.  As you would expect, he pays them a lot, too.

I’m not suggesting that it’s as simple as just offering more money than anyone else to pick up the cream of the crop.  In fact, the Yankees carefully foster the culture they have of being the best; the historical significance of playing in pinstripes (the Yankee’s uniforms); and the psychological advantage of playing for a perennial winner.  These things and more attract players and management to the team.  But, if you look at how free agents move around the sport, you’ll see that the Yankee’s tend to retain their best players and this is greatly because of the money.

Steinbrenner isn’t shy about broadcasting that he pays the best and expects the best.  Thus, he has no qualms about firing anyone who isn’t an elite performer.  In his first 23 seasons, Steinbrenner fired 20 managers (including one, Billy Martin, five times).  There’s a well-known Seinfeld episode in which the character George Costanza, who works for the Yankees says, referring to Steinbrenner:

He fires people like it’s a bodily function.”

Personally, I can’t condone Steinbrenner’s antics nor his public airing of his displeasure with his team or its players, but he has a long track record with proof that his hiring and firing methodology works within the culture of his team.  Foster a winning environment and legacy that naturally attracts the best; pay whatever it takes to make them a member of the team; and cut poor performers as quickly as possible.  It’s hard to argue with the results.

Yeah, OK, that sounds pretty ruthless (insert your favorite Babe Ruth play on words here), but after years of watching good business teams turning lead into gold and poor teams failing with great products or markets, I can’t help but feel very strongly about the value of having a good team, especially a good management team.  And, when you look at things that way, what’s the real cost of paying (the total comp package – base + variable + equity) what it takes to get the best people.  I believe that, in most instances, the incremental compensation cost is virtually nothing compared with the opportunity cost of not doing it.  A great top-level manager is highly-leveraged and can make an organization much better.  If he/she increases the productivity of each of the members of a team by just 10%, does that not make the extra cost worthwhile?

As with the Yankees, to make a strategy of hiring the best regardless of cost work, you need to assume that you’re going to make mistakes.  When this happens, you have to be willing to fire the employee, especially if he/she is a manager, as soon as possible.  That same leverage that helps a great manager create great teams can also work negatively, running good teams into the ground before you realize it.  Finally, it can never be all and only about the money.  You have to build a culture that people are interested in working in and in which they are motivated to do there best.

Some of you are saying that paying more is unnecessary because you run a terrific company or group and people want to work with you.  Others may be saying that there’s no point in paying for the best because at some point you reach diminishing returns.  You may be right.  In fact, if you’re running a raw startup, the intangible recruiting factors often overcome the tangible ones.  Once your organization begins to mature, though, you’ll start to value wisdom and experience over pure determination and hard work.  You’ll always want to be bringing people with varying levels of experience and knowledge on board, especially at the individual contributor level, but keep in mind, you generally get what you pay for.  This fact is even more important at the managerial level.

Paying more is obviously no guarantee of getting more.  You still need to do all the due diligence you can in order to make sure that a candidate for a position is the right one – on a cost-independent basis.  If you find that the best candidate is also the most expensive, don’t be shy about selected him/her.  The best people are often known to be the best and are heavily recruited.  It’s all about supply and demand, good people will often cost more.  They also produce more.  Isn’t that worth the incremental cost?  George Steinbrenner and the winningest sports franchise in history think so.

 September 25th, 2007  
 Will  
 Management  
 ,   
 14 Comments
18
Sep

Prune and Upgrade as You Go

An investor and board member of one of my early companies used to say:

any day, any time, you can fire a canon through the company’s building and not miss the employees taken out in the blast.” 

I wish I could definitively say that he phrased it that way just to emphasize the point that a company can almost always trim or upgrade its workforce, but knowing the guy, I’m not entirely sure he wasn’t recommending that his suggestion be followed exactly.

I never did follow that board member’s precise instructions and, perhaps because his point was so blunt, I never really got a handle on the meaning behind his controversial statement.  The fact is, though, that his point is an important one that very few managers understand until it’s too late.

It’s easy for any manager, in the throes of intense deadlines, seemingly insurmountable stacks of work, problems everywhere he/she looks and a boss that doesn’t let up to do anything other than grab for as many resources as possible to help them get things done.  In the frenzy, hiring standards are often lowered and the management and training of junior people is sometimes ignored.  Inevitably, and yes, it happens to all managers no matter what they think, organizations get bloated – sometimes they become larger than they need to be and at other times they get staffed with the wrong people, that is, people that don’t have the right skill-set, are not organizationally aligned or are too junior.

Because this situation develops slowly, over time, it’s generally not recognized until it’s too late.  And, since the workload never seems to subside, very few managers have the fortitude to step back and fix the problem once it’s recognized by cutting or changing staff.  In fact, the knee-jerk reaction is to continue to add more resources.  It’s like the boiling frog story – as it’s told, if a frog is placed in boiling water, it’ll jump right out.  But, if it’s placed in cold water that is slowly heated, the frog will remain in the water until it meets its demise in the bubbling cauldron.  Gradually, the organization gets bloated and sometimes significantly larger than it needs to be.

So, how does a manager avoid the problem?  By recognizing that it’s almost inevitable from the beginning and by consciously remaining lean and focused at all times.  An organization should have as few people in it as possible – just enough to get the job done right.  In order for that to happen, all the people need to be the right people – those that are as qualified for their roles as possible.

Even groups and companies that have achieved such organization nirvana need to be constantly evaluated.  Goals and strategies change and it’s unlikely that everyone who was perfect for the roles required earlier will still all be the best candidates for what is needed moving forward.  I’m not suggesting heartless slashing and burning here, just a thoughtful and constant evaluation of what is needed to get the job done most efficiently.  It may seem painful to make cuts and changes along the way, but it’ll be way less painful than making emergency, large-scale cuts later when expenses get out of control.

Here are some guidelines that might help to implement a process of dynamic pruning and upgrading of your organization.

When:

  • Now.  It’s the best time to start.  Immediate action may be required if you’re already in some financial trouble, but if you’re ahead of the game, a thoughtful analysis now will set you up for making changes at the end of your current project, fiscal period, employee review or other time you get to catch your breath (if even for a second) in your business.
  • Then, re-evaluate at each chance you get.  Employee reviews are always a good time because they force you to think through the performance of an individual – are they the one you want in their role moving forward?
  • When you’re doing planning for the next fiscal period, especially when that includes staffing plans.  Is your organization as productive as it should be?  Instead of thinking about size, think about productivity.  How much more will you get by adding another employee at the same productivity level?

Who:

  • First evaluate the managers that work for you.  They’re the most highly  leveraged people in the organization and must be the best fit for their future roles.  A non-ideal manager will hurt productivity more than non-ideal individual contributor.
  • How is the group performing?  Is it cohesive?  Are there people who disrupt the group internally?  Disruptive individuals hurt the productivity and effectiveness of others and, therefore, put a drag on the whole group.
  • The person with the right skills might not be the person who knows the most or even works the hardest – it might be the person that learns the best or adapts the easiest.
  • The kind of people you hire and retain sends a strong signal to the entire organization about what you value in your employees.  What message are you trying to send?  What do you value?

How:

  • Never reduce your standards when hiring in the first place.  It’s just not worth it.  The cost of waiting for the right employee is almost always less than the opportunity costs associated with hiring someone and investing in them for six months before discovering it’s not going to work.  You’ll make hiring mistakes for sure, but fight the urge to ignore the stuff you already know is important.
  • Look at the organization as a whole as well as the individuals in it.  Is the organization producing as much as it should?  Is it producing the quality of product or service it should?  Sometimes the conclusion is self-explanatory – “why aren’t we moving further/faster with all the people we have?”  Sometimes the organization is doing too much.  Sometimes, too little.
  • It’s almost never a good idea to fire someone out of the blue, without trying to work with them on their issues or train them to be better at what they need to do (although there are certainly times when immediate firing is necessary).  If you hired right, you can usually bring people around.  Your desire to shape the people in the organization will also been seen by other employees who will get the message about how you are dedicated to those that are there.
  • If, after working with an employee – including training them on any new job responsibilities, your gut tells you that you can upgrade – do it.

As I mentioned earlier, this type of problem happens all the time and, while it’s difficult to avoid entirely, it’s possible to stay on top of it and make sure that bigger problems don’t occur later.  Like most self-help programs, the first step is recognizing that you have a problem or, at least, a potential problem.  You then have a shot at managing it in a thoughtful, proactive manner.

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 September 18th, 2007  
 Will  
 Management  
   
 1 Comment
22
Jul

Bugs . . . They Eat Product Sales for Lunch

Sure, it’s theoretically possible to create bug-free high-tech products.  That is, products that seem “bug-free” to the user when they:

  • are used exactly as intended by their creator
  • are used by users who are only looking for a common and strict subset of the product’s prescribed functionality
  • are always used in the same, well-known environment
  • are intuitive or their use is completely understood by the user

But is it commercially feasible to make them bug-free?  Can you keep up with the market when differentiation is virtually unsustainable, if even achievable, while trying to discover and repair 100% of the potential failures in a complex product?  I can’t imagine how this would work.

A guy who came to work for me once had just come out of a software development gig at NASA.  At the time, NASA believed that an experienced engineer could produce only 3 lines of fully-debugged code per day.  It’d be difficult to find commercial success without thousands of developers at that rate.  Even that didn’t prevent NASA from plowing the 1999 Mars Climate Orbiter deep into the surface of the Red Planet as a result of a screw up that had one team working in English units and another working in metric ones.

Of course, the discussion of whether or not the creation of bug-free products can or should happen is a big one.  One which I neither have the capability no inclination to address in this post.  What I want to talk about, though, is the sales impact of bugs.  Bugs found by customers during key evaluation and decision-making moments create the biggest barrier to effective selling there is.  When the customer finds problems with your product while making a decision to purchase, renew, upgrade or simply add more to what they’ve purchased preciously, the sales person not only loses their ability to hold the line on sales terms, but they may get caught in a quagmire of having to deal with the bugs instead of closing up the deal and moving on to a new customer, virtually killing sales productivity.

So, even if we accept the fact that most high-tech products are bound to have some bugs, it’s critical for any company doing development to at least make the product appear bug free and limit the chances of the user finding bugs at critical times or in critical places – the most important of those being during the sales cycle.

Yeah, yeah, yeah, you purists out there don’t like thinking about it this way, although from a corporate standpoint, it may the biggest issue.  You’re saying that it’s about the technology, the product, the elegance of the solution.  That’s all nice, but if you plan on making money with your product, it better have great curb appeal.  And, there’s nothing quite like your baby failing miserably during an eval to get your customer to search for a competing solution quickly.

Think about a spreadsheet that shows off one, single math flaw in testing.  Will the customer ever trust it again?  What about the blood pressure monitor that reads 50 points too low once in a while or a GPS receiver that loses it’s satellite connection intermittently (perhaps while guiding a cruise missile?).  These bugs create unrecoverable sales issues.  Pack it up and head back to the office because that customer will never write you a check.

I’m not saying here that your product can be crap once the user has paid for it.  When the user encounters problems, which they inevitably will do after purchase, you need to support the hell out of them and get the bugs addressed as quickly as possible.  My point is simply that in terms of priorities, eliminating bugs that are likely to be found during the sales process is a higher priority.

Thus, it’s critical that after making sure that your product does all the important stuff you claim it does, you wring out sales prevention issues as a top priority before delivering it to customers.  It’s not hard to do, but it does take extra effort in terms of preparation and fortitude to prevent the knee-jerk reaction of shipping a product as soon as it meets the most basic quality criteria.  Here are the minimum steps required to make sure that the product helps sales, not hinders them.

  • First, eat your own dog food.  Use the “completed” product exactly like the customer will use it during the evaluation.  Think about the mistakes they’ll make along the way and how they will deviate from the prescribed route and flow of how the product is supposed to be used.  Build an environment in which your product can be regression tested the way the user will try to break it and pound it to death.
  • Then, if you have customer support or field engineering people, use them to route out problems.  These people are the closest to the customer, so they usually have a better sense for how the product will be used than the engineering team.  The idea is not complete and thorough testing, the idea is to find all the problems that new user will likely hit as they ramp up quickly.  Key areas to test are not only functional errors, but speed and capacity.  During this period, these employees should rule – don’t let anxious engineering or marketing people wave them off.  If they say it’s a problem, it likely is one.
  • Then and only then, beta test it at your most friendly existing customers (if there are no existing customers, have your employees on site when the prospective customer is trying it out).  Ask them to involve novices who don’t have a preconceived notion for how the product should be used.  Love them and care for them.  Make their effort worth their while – give them free product or another gift of some real, perceived value in return for the efforts.
  • Don’t forget to use Sales 101.  Understand what’s important to the customer and how they plan on testing the product.  If there are known issues that are in the process of being resolved, disclose them and ask the customer to test these areas at a later date.  Set clear expectations about what the new product is supposed to do and how it’s supposed to do it.  If the customer expects something that they don’t get, there will be a problem.
  • Finally, as new customers run into problems, jump all over them fast.  If the problems aren’t too severe, you can blow them away with your support.  Sometimes, great support will overcome some of the issues that occur when bugs are encountered.

Remember, there are always bugs.  There are the ones you find and the ones you don’t (some of these being later discovered by your customers).  The more effort you put into loading up the first category, the easier it will be to sell your product (duh).  Once a customer has adopted your product, it’s much easier to make them happy and to work around issues they encounter.  You’ll never get the opportunity to to this, though, if they haven’t become a customer in the first place.

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 July 22nd, 2007  
 Will  
 Management, Selling  
   
 2 Comments
18
Jul

How to Manage a Layoff

All companies, yup that includes the successful ones, eventually have some form of layoff.  Before you go ballistic on me, let’s first define a layoff.  According to Wikipedia, a layoff is:

the termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary. Originally the term “layoff” referred specifically to a temporary interruption in work, as when factory work cyclically falls off. However, the term has long been applied also to the permanent elimination of positions as a cost-cutting measure (or for other reasons).”

So, a number of employees (one or more) that are terminated for larger business decisions as opposed to for poor individual performance is a layoff.  Even successful companies at times make decisions to get out of a business or change a focus that results in the laying off of some employees.  Similarly, an acquisition of another company with some degree of overlap of people can necessitate a layoff of redundant people after the merger.

More likely, of course, are layoffs that are the result of a downturn in business.  Here again, terminations are not related to individual performance (other than, perhaps, the decision to lay off one person instead of another), but are a result of a business restructuring required to help the company deal with its financial difficulties or other current crappy situation.

A layoff has nothing to do with firing employees, though.  I frequently talk to CEOs or other high-level managers who say that they are laying off people when they are really firing them.  In my opinion, these people are less confused about the terms than they are in hiding behind the softer term, layoff.  They think it sounds better to the people being fired as well as those who remain.  When somebody isn’t cutting it and you’ve done your best to make it work, you’re firing them.  Period.  Call it what it is.  Everyone is happier with clean, honest straightforward messages in the end.  ’nuff said.

If layoffs are inevitable, then it’s critical that strong leaders and managers know how to do them.  As with firings, in the broad business scope, it’s critical that you optimize the management of any layoff so that your business or organization is set up to be successful moving forward.  That means thinking about the people and the organizational situation left after the layoff as much as, if not more, than the people being laid off.

With that in mind, here are my 9 guidelines on how to manage a layoff, in no particular order:

  • Do it quickly – nothing will drain the life out of an organization faster than mass fear of job loss.  Rumors are uncontrollable and people pick up on small signals incredibly well.  While it’s very important to make sure you spend the time to get a good action plan in place, don’t let the time between a decision to do a layoff and the execution of it extend longer than it absolutely has to.  As a corollary to this one, avoid sending up red flags before you’re ready.  The rumor mill is powerful, there’s no need to help it along.
  • Do it once – this is a mistake I see made all the time.  A layoff is done in stages because management: is afraid that they’re cutting too deep; know they’ll need some folks to complete their current tasks before they’re laid off; miscalculate the savings they’ll get from the layoff; or, is just wimpy.  Not completing a layoff in one pass will kill the productivity of those who remain.  They’ll wonder if they’ll be in some subsequent round, even if none is planned.  They won’t believe it’s really over until loads of time has passed without incident or they’ve left the company.
  • Cut deep – you may think that you’re a spreadsheet wizard who can run detailed sensitivity analyses indicating the precise range of the financial impact of your layoff.  Trust me, you can’t.  People who you thought would stay will quit; you’ll have legal fees that you didn’t expect; there will be a severance issue that you didn’t even consider; or, one of 10,000 other unpredictable things will happen.  Leave yourself some room, cut more people than you think you need to.  You’ll be happy that you did when it’s all said and done.
  • Plan ahead – Decide how you’re going to handle the termination details – have any severance, benefits, insurance, outplacement service offerings or reference policy well documented ahead of time (can you afford any of these?).  Plan for and know exactly how long each employee should stay around before they are laid off (generally speaking, people should be walked out the door the day the layoff is announced).  Have the complete package (written) ready to hand to the employee when they are told they are being laid off.  Have a script ready if more than one manager is laying people off.  Consistency is important.
  • Cover your ass legally – while tight cash may be the issue that led to your layoff, getting some legal advice if the layoff is in any way extensive might be a good idea.  As you likely already know, there are no bounds to the legal problems that employee matters can bring about.  Run your plans by your lawyer at least for a sanity check.  It’s money well spent.
  • Do it in person – as absurd as this sounds, you’d be surprised at how often people are laid off by email or on the phone.  The manager of each person being laid off should take the employee aside, explain what is happening and what benefits are part of the layoff.  If a manager is laying off multiple employees, they need to balance the need to spend time with each one, with the fact that everyone else in the group is waiting to see if they’re next.  So, be kind, but be clear and to the point.  Don’t beat around the bush.  You don’t have time.
  • Communicate – Make it clear to everyone (those being laid off and those remaining) why it happened and what has been done or is being done to make sure it doesn’t happen again.  Emphasize that the layoff as just witnessed is OVER and that no one else will be laid off because of the current situation (new situations may, of course, come up).  Stand up and take responsibility if poor decision-making or a specific strategic choice led to the current situation.  Be clear – nothing complex.  Explain why those being laid off were selected for the layoff instead of those remaining.  Be respectful of those departing and thank them for their efforts, they are not being laid off as a result of anything they did, after all.  Be ready to meet with each person you manage one-on-one in order to allay any fears or address any concerns.
  • Learn from it – it’s unlikely that you planned for the situation to come about.   Was it a business issue you should have predicted?  A change in the marketplace that you should have flagged?  Had you grown too fat?  Costs gone out of control?  Change in strategy or focus?  Whatever.  Understand it now so that you can avoid the situation in the future.
  • Keep communicating – don’t stop communicating with employees left after the layoff just because the layoff is over.  They need to know why they won’t be subject to similar mistakes or problems in the future.  Everyone wants to work for a winner.  You need to tell them why they are going to be successful right where they are.  Don’t give false reassurances, though, tell it like it is.  This doesn’t mean you shouldn’t sell the positive future prospects for the company.  Just don’t candy-coat the current situation.

I wish I could say that I never had any substantial layoffs in companies that I’ve run, but truth be told, I’ve had to do it more than once.  I’ve also made most of the mistakes above.  It’s certainly not easy and there are almost an infinite number of ways that the situation can get out of hand quickly.  If you use the guidelines above, though, you have a better shot of avoiding the case where the situation gets totally beyond control.

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 July 18th, 2007  
 Will  
 Management  
   
 14 Comments
23
Jun

Who’s In Charge?

Sure, almost any management structure can work, depending on the people, the environment and how lucky you are.  Those structures in which there are multiple people responsible for the same team or deliverables, though, almost always fail.  When there isn’t a single person who is the final arbiter and decision-maker, decisions and, therefore, execution, can drag out for extended periods, at best, and can potentially even lead to organizational paralysis.  Furthermore, employees of fast-moving organizations need to have a go-to person to address problems and answer questions.  If they have to address a committee, even a two person one, inefficiency and confusion will likely reign, creating a situation where decisions come slowly and making the employee question whether he/she should seek similar guidance the next time.  No organization can afford this.

I see this happening in startups all the time.  Two founders can’t decide or, more likely, choose not to decide who will be in charge.  “We’ll be equals.”  While it’s fine for two or more to share equal ownership in a budding enterprise (although there can even be problems with that when big decisions need to be made that require a vote of some sort), sharing corporate management responsibility is a mistake.  Ultimately, there will be difficult decisions that need to be made when a consensus cannot be formed.  What does a founding team of equals do then?

Aside from the decision-making issues, it’s easy to see how in some organizations employees may also use the fact that they have two bosses to get the answer they want.  Like a child manipulating parents, the employee can play one manager off another or simply seek out the the right one for every decision.  Yeah, adults do that too.

Obviously, this situation is not solely found in startups.  Even if it’s not a co-CEO situation, sometimes co-VPs, directors or group managers can be found inside struggling companies.  The same things happen at any level where management responsibility is shared – things slow down and get confused.  The genesis of these situations is the same as the one for co-founders, above – people don’t see the need or, more likely, choose not to make the tough call in choosing the single person for a managerial role.  Co-managers may also be assigned in situations where a particular single manager doesn’t have all the capabilities necessary for the role with the excuse that their knowledge and/or capabilities augment each other’s. 

In any case, the situation should be avoided.  Almost always, a management role with two people filling it shouldn’t even be created and if a single person doesn’t have what it takes to fill the role, they shouldn’t be hired for or promoted into it.  This management snafu is pretty black-n-white and is, therefore, easy to avoid.  Don’t let yourself slip into the easy solution in order to keep everyone happy or even to fill a temporary need.  Management moves like this are like a crutch.  Make the tough (smart) decision at the start and fill all managerial roles with individuals.  A little pain now will result in better company performance later.

 June 23rd, 2007  
 Will  
 Management  
   
 11 Comments
16
May

Communicating with Your Board: The Summary

This is the fourth and final post (for now) in my series on communicating with your board.  You can find the previous posts here, here and here.

As a corporate director, I wince when I get a board package that opens up with a stack of detailed group-level reports and loads of spreadsheets containing every piece of financial data possible about the company’s past, current and future state.  To be sure, such information is a necessary part of running a successful business and should be included in the board package, but when information about the company is only presented this way, it’s difficult for anyone to absorb the key facts and figures about the company so that they can perform a relatively informed advisory role as a board member. 

It’s even more difficult when the audience for the information – think the VCs on your board – get such a package from a large number of companies prior to each of their board meetings.  It’s just not possible to, 1. spend the time to decipher what is going on and, 2. recall how the data presented is related to many of the programs, goals and initiatives that were previously agreed to.  For these reasons, and the fact that it’s easy to get data from various companies confused, such a comprehensive report will often be ignored.

To quote Winston Churchill,

This report, by its very length, defends itself against being read.”

Dealing with this is simple, of course.  Just summarize the information, relating it to previous discussions, goals and objectives and put that document at the beginning of your board package.  It shouldn’t need to be said, but what I mean by summarize is to make it concise and short.  Again, quoting Winston Churchill:

Please be good enough to put your conclusions and recommendations on one sheet of paper in the very beginning of your report, so I can even consider reading it”

Sometimes, it will be the only part of the board package read by some of your board members prior to the meeting.  Sad but true, I’m afraid.

So, the summary should be the first thing in the board package and should contain:

  • High-level sales statistics, including major or important deals
  • Rollouts of products or services
  • Changes in key customer, partner or channel relationships
  • Important legal or accounting issues facing the company
  • Changes from the staffing plan – major hires and unexpected departures that will impact the business
  • Unexpected changes to the financial position of the company
  • Unusual market or competitive moves
  • Status of major initiatives within the company

You get the idea.  Additionally, any item that was reported on before should also include a note making it clear if there has been a change.  This is especially important for items that have specific, timed deliverables.  The key is, again, that if it takes more than one page, you’re not focused enough. 

I’d bet you’ll find that summarizing your board material in this way will not only make the board package more convenient for your audience, but it will also help you discern and focus on the important parts of your business.  There’s nothing quite like trying to make things short and complete when explaining things to others in helping one understand the material for themselves.

 May 16th, 2007  
 Will  
 Boards, Management, Startups  
   
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11
May

Never Miss the Opportunity to Communicate

Matt over at his OnlyOnce blog has a great post up titled, It Never Goes Without Saying.  Matt makes the case for why leaders and managers should take advantage of every opportunity to communicate messages, feedback, direction and vision.  What constitutes an opportunity?  Any event or “moment” as Matt calls them.  The post discusses creating such moments,

We human beings live for ‘moments.’  We mark time by observing regular occasions like birthdays, anniversaries, and holidays . . .

There’s no reason the workplace should be any different.  Think about these few examples where it could ‘go without saying,’ but where you’re so much better off creating that ‘moment’ . . . “

I think Matt makes a terrific point here, although I don’t think of such moments or events as needing creation; they already exist.  It’s the recognition of them that breaks down in most cases.  Matt concludes his post with the thought,

Clear, simple communication is the cheapest and easiest way to create a fun, rewarding, accountable, and focused work environment.”

So true.  Funny thing is, it’s the fact that it’s so cheap and easy that it tends to be ignored as a great tool.  Many leaders and managers think that there’s always time to do it, so they put it off.  Or, they’re afraid that they’ll dilute their message if they communicate it too often so they hold back waiting for the really big event to make a bigger showcase of it.

As a leader and manager, I’m afraid that I often missed opportunities to recognize events – usually because of the reasons above, but sometimes, I’m afraid, because I was so entirely focused on the big picture.  That singular focus resulted in my missing the fact that on a day-to-day basis, my big picture sometimes wasn’t the only thing on the minds of the people who worked for me.  Any journey is made up of loads of smaller journeys.  Some successful and others less so.  With my blinders on, I frequently missed the fact that the organization was succeeding and failing in small ways all along the path.  Duh.

This all became clear to me when I hired a new VP of Marketing whose first observation once inside the company was that there were few celebrations of anything.  He taught me the value of recognizing key events and as it turns out the even greater value of the way they were recognized.  I had always been on top of private recognition, but I was weak on public recognition.  Even within public recognition, it was always a few beers, pizza, a cake or two and maybe some entertainment.  Boooorrrring.

After finally getting it (yup, I’m slow and dense), I took the next opportunity to recognize a team that had just released a new product by riding my motorcycle into a meeting in our cafeteria and handing the team leader a plaque.  It was a bit difficult getting my bike up to the fifth floor of the building we were in, but that made it even cooler.  It was simple, but had a huge impact on people.  There was a noticeable impact on the energy in the organization.  We acknowledged an event, got to send the message that it was important and publicly recognized a successful team – all in about 2.5 minutes.  It was a great learning experience for me and had a hugely positive impact on the organization.

I can’t say that I got good at this event thing immediately, but I came to understand the value of doing such things and doing them relatively frequently.  Constant communication has tremendous value in organizations.  Using the recognition of events as opportunities to communicate is a powerful tool for making it happen.

 May 11th, 2007  
 Will  
 Leadership, Management  
   
 Comments Off on Never Miss the Opportunity to Communicate