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Management

3 Words to Describe You

3 Words to Describe You

Two guys grabbing dinner in San Francisco

I recently had the pleasure of catching up with one of my old teammates from Optimizely. He's doing well: director-level position, managing a growing team, and meanwhile hyper-focusing on how he can take it to the next level as a leader.

So I asked him a question:

"If I were to meet with your team over drinks, and I asked each of them to describe you in three words, what would you want them to say?"

Simple question. Long, thoughtful answer.

His final answer: 

  • "Caring, consistent, and challenging." [Three C's FTW]

While the answer was revealing, the true value was in talking through the various tradeoffs one makes as a leader:

  • Friend vs. boss

  • Lenient vs. stern

  • Strategic vs. tactical

  • Inspirational vs. directive

  • Spontaneous vs. predictable

And while none of the above are mutually exclusive, a leader has limited time. Very limited. So you have to explore: what is your management philosophy? How do you want to be perceived? Even. . . remembered?

So I challenge you:

What are the 3 words you would want your team to describe you?

If you're still staring instead of thinking, below is a insightful list of questions your team is likely asking themselves right now.

Credit due to Fred Kofman’s book, Conscious Business, in which he crafted these questions about communication clarity, mission, shared values, respect and teamwork.

  1. Do I know what is expected of me at work?

  2. Do I have the materials and equipment I need to do my work right?

  3. At work, do I have the opportunity to do what I do best every day?

  4. In the last seven days, have I received recognition or praise for doing good work?

  5. Does my supervisor, or someone at work, seem to care about me as a person?

  6. Is there someone at work who encourages my development?

  7. At work, do my opinions seem to count?

  8. Does the mission/purpose of my company make me feel my job is important?

  9. Are my co-workers committed to doing high-quality work?

  10. Do I have a best friend at work?

  11. In the last six months, has someone at work talked to me about my progress?

  12. This last year, have I had opportunities at work to learn and grow?

The DBT Ventures team hopes this article has been helpful in urging you to proactively control what 3 words describe you as an executive.

Wisdom from the Grove - Part 2

This is Part II of a series inspired by Andy Grove's monumental business book, High Output Management. This series is designed for busy leaders seeking an edge on their day. Based on your feedback, we'll be breaking down Groves's 227 power-packed pages into 50-page summaries presented in actionable note format. But first, Dilbert.

If you're just joining us, be sure to read Wisdom from the Grove - Part I, the prelude to this post. 

Notes from pp. 51-100 of High Output Management

Before we jump in, its worth noting the structure of this book: 16 oddly-named chapters spanning four parts.

Part I: The Breakfast Factory

  • The basics of production: Delivering a Breakfast (or a College Graduate, or a Compiler, or a Convicted Criminal. . .)

  • Managing the breakfast factory

Part II: Management is a Team Game

  • Managerial leverage

  • Meetings—the medium of managerial work

  • Decisions, decisions

  • Planning: today's actions for tomorrow's output

Part III: Team of Teams

  • The breakfast factory goes national

  • Hybrid organizations

  • Dual reporting

  • Modes of control

Part IV: The Players

  • The sports analogy

  • Task-relevant maturity

  • Performance appraisal: manager as judge and jury

  • Two difficult task

  • Compensations as task-relevant feedback

  • Why training is the boss' job

The reason I've laid out the whole TOC is to 1) provide a lay of the land, and 2) share that this post will cover the last 3 bullet points of Part II which will put us about 50% through the book.

We'll start with a few quotes which highly Grove's prescient perspective:

  • "Beyond communicating facts, a manager must relay his objectives, preferences, and priorities". . .  [these are] "extremely important and a key part of delegation."

  • "How you handle your own time is the singly most important aspect of being a role model and leader."

  • "Because it is easier to monitor something with which you are familiar, you should delegate activities you know best."

  • "If people are spending more than 25% of their time in ad-hoc, mission-oriented meetings, you're likely facing malorganization [disfunction]."—which Grove attributes primarily to the ineffectiveness (or lack of) process-oriented meetings

  • "A meeting to make a decision should have at most 6-7 people, ideally less."

The premise of Part II is management is a team game. Andy supports this with best practices for getting shit done, i.e. humans working effectively with one another.

Wisdom from the Grove - Part 1

This is Part 1 of a series inspired by Andy Grove's monumental business book, High Output Management. This series is designed for busy leaders seeking an edge on their day. Based on your feedback, we'll be breaking down Groves's 227 power-packed pages into 50-page summaries presented in actionable note format.

Notes from the first 50 pages of High Output Management

We'll start with a few quotes to get the motor running:

  • "Let chaos reign, then rein in chaos." I don't even know what this quote means, but it somehow imparts a zen-like acceptance of business craziness with calm control.

  • "The output of a manager is the output of the organizational units under his or her supervision or influence." — Andy highlights this as the most important sentence in the book

  • "Activity is what we actually do and often seems trivial. Output is what we achieve and is significant and worthwhile."

  • "In the softer professions it becomes very hard to distinguish between activity and output. Aim to maximize output. Optimizing for activity can actually decrease productivity.

  • "Output and activity are by no means the same thing."

Andy is a big proponent of increasing managerial "leverage", i.e. focusing on activities with a multiplicative impact on your team's output. Andy later challenges the reader (the former President of Intel challenges YOU) with 13 opportunities to take action on increasing their managerial leverage.

Here are the best five:

  1. Define the three most important objectives for your organization for the next three months. Support them with key results. (For tech readers: yes, this is where OKRs originated from)

  2. Look at your calendar for the last two weeks. Classify your activities as LOW, MEDIUM or HIGH leverage. Generate a plan of action to do more of the HIGH-leverage category. Identify two activities you will commit to reduce.

  3. Define your output. What are the output elements of the organization you manage and influence? List them in order of importance.

  4. Conduct work simplification (reduction of steps) on your most tedious, time-consuming task. Eliminate at least 30 percent of the total number of steps involved.

  5. Walk around more. Andy was a big believer in taking "tours" of other teams and facilities to absorb their process, habits  and challenges. Similar to Steve Jobs, Andy seems to value serendipitous encounters which help encourage the flow of information.

Other select notes:

  • p. 14 - think of your work as production measured by throughput / output. What is your "limiting step" [dependency]? What is your "in-process check" [QA]?

  • p. 17 - for each indicator try to have a "pairing indicator" to measure both effect and counter effect, especially for administrative work, e.g. quantity AND quality

  • p. 24 - "the most valuable indicator of business trends that I've ever seen is a month-over-month 4-month stagger chart forecast [pictured below]

  • p. 28 - don't forget Parkinson's famous law that "work expands so as to fill the time available for its completion

  • p. 35 - "work simplification" entails reducing the number of steps in a given process, usually by 30-50% based on Andy's experience

  • p. 48 - writing reports may seem mundane, but are often an exercise—or medium—of self-discipline; the process enforces discipline, and the writing is often more important than reading them

  • p.49 - Grove advocates ad hoc in-person meetings as the most effective method to conduct managerial business

  • p. 50 - beyond communicating facts, a manager must relay his objectives, preferences, and priorities which is an extremely important and key part of delegation

Here's that 4-month stagger forecast that was mentioned on page 24:

In closing, its worth mentioning that Andy Grove applied many of Abraham Maslow's psychological concepts within the work environment. For that reason we've included the now-famous hierarchy of needs applied to employee engagement.

How would you evaluate your team?

Say it with me: "Trust and Commit"

The awkwardness was palpable. As the meeting droned on, the evidence began to mount: no agenda, lack of focus, petty side arguments, no meeting owner at the helm. . . not even a god-damn notetaker to capture the stream of insanity. It was going from bad, to worse: meeting hell.

Sound familiar?

Welcome to my weekly leadership meeting circa Q3 2015. Yeah, it was that bad, maybe worse.

How is this relevant? In a word: trust, the lack of which manifests itself in many ways much like the meeting I described.

Let's take a step back: great leaders have the ability to run effective meetings and channel energy towards healthy debate and ultimately group decisions. Great leaders are able to stitch together a tapestry of diverse perspectives at the seam of their similarities (or differences) and MOVE FORWARD with decisiveness and clarity. But what could get in the way?

Lack of trust.

And here's the catch: most meetings suck, and most leaders are too frazzled from the last meeting/offsite/marathon to really deliver their best 100% of the time.

Allow me to hit the pause button for a dose of positivity: Big things are accomplished only through the perfection of minor details. Why this quote? Because little improvements to say, meeting structure, can go a LONG way. For example, basic meeting etiquette suggests an agenda with time allocated to each topic, a meeting owner/organizer, and a notetaker. If decisions are to be made based on information, a meeting pre-read should be included. This is basic stuff and helps establish TRUST across meeting attendees.

But trust is much deeper and greater than just meeting etiquette. Its about people. Relationships. And what you need to do to earn/build/foster trust. As Stephen M. R. Covey shares with us in The Speed of Trust:  "We judge ourselves by our intentions, and others by their behavior. Leadership is getting results in a way that inspires trust."

Their are specific behaviors that these leaders embrace:

Remember the scene in Inception where they have to actively increase their consciousness of the dream state in order to offset the skepticism the dream world is imparting? A good leader will call into consciousness the fact that the team lacks trust and get them to focus on it. Bring it front and center and have it about.

Then what?

I've since heard three powerful words that inspired me to write this article: "trust and commit". Say it with me: "trust and commit." One more time, "trust and commit." I can't HEAR YOU !!??

Okay, that's enough.

The point is, these three words reshaped our team's ability to collaborate, discuss, decide and execute. "Trust and commit" became our mantra and a pivotal threshold at which the group would decide to "trust and commit" or not. If trust and commit was achieved, that means the decision was fully-baked and all stakeholders had signed off. More importantly, all stakeholders would be ACCOUNTABLE to the "trust and commit"(ment) they had made.

By simply having a decision-making mantra, our team was able to review and discuss initiatives quicker, make decisions faster, and execute more consistently.

Okay, one more time: "TRUST and COMMIT!!"

[Editor note: Thank you to our readers for all your calls and emails since this post was published.]



If Chuck Berry was a CSM

[Chuck Berry's birthday was yesterday. The legendary rock and roll guitarist turned 89. Happy birthday Chuck!]

Assuming your Customer Success Manager team has avoided the pitfall of being subsumed by technical support (there should unequivocally be a separate function this), you typically have three schools of thought on how to comp CSMs:

  1. Revenue (broadly)

  2. Product usage & adoption

  3. Discretionary

Revenue: this is arguably the best way because 1) revenue matters, 2) CSMs can directly impact it and achieve upside, and 3) it creates a sense of ownership over their accounts.

Product usage & adoption: this is the second best option. Your customers won't derive value from your software/product without usage. Therefore usage is key to obtaining ROI, earning organizational adoption, and securing renewals and growth.

Discretionary: this option is easy in the sense it requires little overhead for the manager; however, it is highly subjective and doesn't clearly align CSMs with any tangible business impact. Therefore, it is the worst option (although it is quite common).

Side note: In terms of base/variable split, most CSMs we've encountered are on an 80/20 split, e.g. $80k base, $20k variable, $100k OTE. The $20k variable is often paid quarterly ($5k per quarter). Salaries range from $75k (entry level) to $180k (very senior).

Let's unpack the revenue method: CSMs typically own a "portfolio" of accounts. CSMs work with customers to understand their goals, and connect those goals with capabilities of your product the success of which will be increased usage, increased value and ultimately retained/expanded revenue.

Since Chuck Berry's birthday was yesterday, let's say a hypothetical CSM—named Chuck—starts Q4 with 80 accounts paying $5k MRR for a total of $400k MRR or $4.8MM ARR. In each month customers can churn, expand, or renew with no change (flat renewal). 

You can therefore calculate a net retention metric for Chuck:

Chuck Berry's hypothetical Q4 performance.

The formula for net retention = 1 + ((Expansion + Churn)/MRR managed). So in Oct-2015, we'd have: 1 + (($3,000 + (-$4,000))/$400,000)), or 99.75%. Sum it all up, take the average, and Chuck delivered an average monthly net retention of 100.04%, or 100.48% annualized (100.04^12).

Now the question becomes: Is that good or bad based on your business model?

Generally speaking, net retention below 100% is bad. That means you have a churn problem and customers are net leaving you. That is a separate conversation. Best in class net retention is 101-102% monthly, or 112.7%-126.8% annualized. Companies that DBT is advising are targeting 101.6% monthly net retention which equals the nice round number of 120% annualized.

A fair CSM comp model might look something like this: if Chuck achieves between 99-100% net retention, he gets his OTE quarterly bonus of $5k. BUT, if Chuck gets 100%, or 101% or 102% he can hit accelerators and earn $7k, $10k, or $15k respectively.

Some might gawk at paying a CSM $15k in a single quarter, but think about what Chuck has done for your business: he has net expanded his portfolio by 2% each month (102%) which is $8k MRR per month or $24k MRR for the quarter. $24k MRR is $288k in additional annual revenue for your business! $15k represents 5.2% of the gain, a modest price to pay for enviable net retention metrics.

Think about THAT next time you're listening to Johnny B. Goode.

Go Johnny go.