Memo: What Growth Demands – An essay to a management team in turmoil
This essay is a modified version of an essay sent to a management team that we advised during a difficult period. The lessons in the letter apply to most companies that face dysfunction and propose simple steps the management team can take to enhance collaboration and present a lesson for managers.
Section 1: The Good – Introduction and & Overview
Your company is at perhaps the greatest inflection point in its history.
What management does over the next 12 to 24 months will have profound and long-lasting implications and allow the company to be the market maker or simply a product in the market. Success for the firm, indeed for everyone reading this letter, investors, the employees, and the customers you serve (ultimately the customer) will all be impacted by your choices. To fully capture opportunities that lie before you as a team you must be prepared to meet the demands of growth.
A company at this stage demands growth and growth has its own set of demands. The ‘demands’ are all decisions made by leadership, not management (the distinction is discussed later in this memo). Demands ignored, avoided, or mismanaged as a result of their inconvenience, lack of preparation, and conflict will result in certain failure, sometimes suddenly and in other ways imperceptibly slowly. Failure will also come from avoiding action on things that are true but inconvenient, unpleasant, or never put into practice.
Growth demands that you all look carefully, understand yourself, your capabilities and the capabilities within the organization to meet and exceed company objectives. But, before exploring these concepts in detail, let’s take a moment to examine where you are as a firm.
The company has a unique or at least rare opportunity in the market. The product is a paradigm shift in how it delivers services to its customers and solves an obvious but as of yet unsolved market wide problem.
The firm has the ability to not only be the market leader, but to define the overall category and positively shape and guide it for years if not decades to come.
By present definition, the company can sail into what is commonly referred to as a Blue Ocean and create a virtual monopoly for itself in the market. Zero to One is a feat often described in entrepreneurship where a company creates a new market all to its own and as a result captures the lions share of that market without serious threat of competition for an extended period. Think for a moment about what well-known monopolies you admire.
Everyone reading this should understand what personal value can be created in a scenario where the company is the market leader in its category. The personal financial rewards will be tremendous, and the ability to deliver the value you know is possible for your customers and their end customers will become easy to demonstrate.
In the near term, the company can create serious momentum towards this market paradigm by winning two of the largest systems in the country.
Your market is well defined, as are your target customers. Are you close to pulling it off?
Before everyone is willing to assume victory is assured, ask yourself the following questions, then read the summary feedback from employees conversations across the entire organization that have been collected over the last 6 months:
- Based on this feedback, is the organization likely to achieve its goals?
- Are these problems also problems faced by management and leadership?
- How can I contribute to resolving this challenge?
- Would my feedback mirror employee feedback and why?
Section 2: Employee Feedback – Feedback from Employees consolidated over the last 6 months:
Responses to feedback apply to specific meetings designed to gather feedback where the same sets of questions were posed to every single employee in a uniform way regarding the needs of the organization.
24 Points of feedback:
- Need for improved communication (mentioned by 7 employees)
- Need for clearer goals/objectives (mentioned by 6 employees)
- Need for better processes/procedures (mentioned by 6 employees)
- Need for more resources/staff (mentioned by 5 employees)
- Need for more training/development opportunities (mentioned by 5 employees)
- Need for more accountability/responsibility (mentioned by 4 employees)
- Need for better software/tools (mentioned by 4 employees)
- Need for more feedback/evaluation (mentioned by 3 employees)
- Need for better time management/prioritization (mentioned by 2 employees)
- Need for more creativity/innovation (mentioned by 2 employees)
- Need for more leadership/management support (mentioned by 2 employees)
- Need for more customer focus (mentioned by 2 employees)
- Need for more delegation (mentioned by 2 employees)
- Need for more team collaboration (mentioned by 2 employees)
- Need for more standardization/consistency (mentioned by 2 employees)
- Need for better compensation/benefits (mentioned by 2 employees)
- Need for more data analysis (mentioned by 1 employee)
- Need for more social responsibility (mentioned by 1 employee)
- Need for more strategic planning (mentioned by 1 employee)
- Need for better conflict resolution (mentioned by 1 employee)
- Need for more customer engagement (mentioned by 1 employee)
- Need for more proactive problem-solving (mentioned by 1 employee)
- Need for more streamlined processes (mentioned by 1 employee)
Majority of Responses to the question “How is your performance measured for your team?” included:
- Meeting targets and deadlines. (when asked if these are clear they said they were not)
- Quality of work and customer satisfaction. (when asked if this was measured they said it was not)
- Collaboration and teamwork with colleagues. (no clear measurement)
Follow up questions clarifying what could improve in communication – Here is what they requested:
- Clearer communication about project goals and timelines
- More frequent communication with management and between departments/teams
- Standardized communication channels and protocols
- More transparency and openness in communication from leadership
- Increased opportunities for collaboration and sharing of information between teams/departments
- Improved communication about changes in company policies and procedures
- Need for more effective and timely feedback on performance and projects
- Improved communication about the impact of company-wide changes on individual roles and responsibilities
Goals – When asked to clarify goals/objectives mentioned by employees, stated the following:
- Clearer understanding of company-wide objectives
- Clearer understanding of team-level objectives and how they align with company objectives
- More specific and measurable objectives
- Regular check-ins on progress towards objectives
- Greater clarity on expectations and responsibilities for achieving objectives
- Greater transparency around decision-making and how it relates to objectives
Section 3: The Bad and the Ugly – What this means.
To achieve the goal of sailing into a Blue Ocean — which many signs point to as attainable— you need to plan and act as a team in pursuit of a unified goal.
Too many on the team are distracted by loyalty to factions within the group and narrow self-interest.
This is a mistake; you all know it is a mistake. One that has proven fatal for many companies before yours.
Self-interest well understood involves moving the entire team toward the end goal, market dominance, and succeeding as a team. There is no win for engineering that means taking away from sales; executives do not succeed if there is no coordinated marketing effort. The financial and accounting numbers do not lie. All groups within the team need to act in concert. Decisions need to be made in the context of putting the company first and with data.
At the moment, you are struggling with significant internal dysfunction including:
- Frequent miscommunications
- Internal politics
- Management instead of leadership
- Unoptimized human capital spend
- Failure to execute on opportunities and investment initiatives
The outward sign of the dysfunction is (A) slow growth (B) time and capital invested are not reflected in the current result (C) negative discussion of fellow executives and employees.
Dysfunction is slowing your growth and invites competition.
You have created a fundamental opportunity, and you need to ensure that you scale instead of handing an opportunity to competition.
These topics do not require depth of explanation, it is readily apparent to most if not all. And rather than spend time dwelling on the past, you should focus on how to fix problems and solve new ones that develop.
These issues are symptoms of three problems:
A) A lack of unified goals in the near and long term
B) No formal managerial decision-making process standardized and agreed to by all parties
C) A need for leadership fortitude
These problems are resolved with:
- Unified strategy and strategic language around that strategy
- Transitioning the executive team (yourselves) from managers to leadership
What would a highly functioning team do?
- Would a highly functioning team have historical and concrete measures of the performance of its employees, sales, operations, engineering and marketing activities?
- Would a high performing company be unwilling to make personnel decisions regarding removing talent that is materially underperforming against those measures of performance?
- Would a high performing company have the strategy structure talent rewards of the firm set up in a way to maximize the probability that it becomes the dominant player in the market ?
- Are you being objective about what needs to change to achieve these ends?
- What does your mindset need to be to achieve these changes? As an individual, as a leadership team, as a firm?
- Would a high performing company have an agreed to way to deal with conflict in a constructive and productive manner that still moves the ball forward?
Section 4: The Ecstasy of Gold
To be clear, the challenges outlined above are both solvable and well within reach.
Being the team that growth demands requires having a growth mindset. Individually and as a team, you need to be able to analyze strengths and weaknesses and seek to implement the best strategies and practices based on concrete data. That also enables the best player with the strongest skillset for that job summary in that position for that horizon to be successful.
What are the strongest indicators of the company’s potential? Your largest potential distributor of the product is more engaged than they have ever been, and your current customers are more active and interested than ever before.
Addressing the internal conflict at the company begins with individual growth and, more importantly, a growth mindset. What is a growth mindset? The certain belief that positive changes and improvement are possible. The more you stay focused on current friction and personality conflict in the group, the more entrenched those patterns become. Beginning with an individual belief in your ability to grow and change fundamentally transforms the clay you are working with.
What are the elective qualities required for success? By elective, I mean that you can choose to adopt new patterns of communication and personal comportment. In order to move beyond the status quo, you can’t keep personal score; you should let the numbers do the talking. And, you need to cultivate a team of people who are the most effective at working with others. This begins with your own ability to work cooperatively.
The most powerful force in creating a unified and cohesive team is not coercion or manipulation; it is service. You have to recognize the strengths of the people you work with in order to love them and guide the team toward a positive goal through service and attitude of care for the other.
There are circumstances in which mutually-assured-destruction, fear, and paranoia are helpful, but those situations are rare. There are very few cultures that survive in business that are Machiavellian. The enduring cultures are the ones that are based on principles of growth, cooperation, and integrity.
Verne Harnish in his book “Scaling Up” writes, “Research finds that if you ignite and capture employees’ hearts, not just their heads, they will give you 40% more discretionary effort.” By engaging employees and each other beyond narrow self-interest you can forge a team that is more effective, more engaged, and more capable.
Company challenges should ALWAYS be framed as company failure and never personal defects. For example, when an employee needs to be separated from the organization, it should be viewed as a failure of the company to (A) hire well (B) train the employee (C) integrate the employee to operations – it should never be about the individual person’s faults or failings. This framework for thinking about what the company needs should guide decisions. Leadership should speak of problems in the same manner.
In order to succeed, you also need to transition from managing to a team of leaders. While the company’s much work to date has been managing —people who direct day-to-day operations— at the present time, need to exhibit more leadership. Leaders are concerned not just with the daily operations of a group but with the unified vision and the engagement of individual members and the overall accountability of those members with objective measures.
Marcus Buckingham in “The One Thing You Need to Know…About Great Managing, Great Leading, and Sustained Individual Success,” explains: “Managing is about difference. Great Managers discover what is different about people and capitalize on it. Great leaders discover what is universal, build a common vision for a better future around it, and rally around it.” [And are] ‘Objective with data about the results of that performance’.
Without leadership, a team can be well managed but unable to unlock any real goal. It is a leader who can identify where it is possible to go and steer the daily operations beyond short-term focus, make goals of a larger vision actionable and attainable. The data shows the employees are seeking leadership support more than managerial support.
Scaling up a business requires visionary leadership and great managing. In particular, scaling the team to the level of effectiveness for growth requires five activities:
- Make fewer hires, make them strategically, and pay competitively.
- Recognize and appreciate individual effort.
- Set clear goalposts, missions, and value creation objectives: KPIs, priorities/value creation objectives, and mission, measured over the course of a year.
- Give positive guidance instead of creating conflict. The organization won’t survive people who generate negative interactions and perpetuate petty conflict.
- Know your people and help them play to their strengths.
Which of the above 5 categories falls short in the company? Why?
What follows are concrete proposals for what change demands. Consider them carefully and at the end of the section write down a few proposals you feel would be helpful and prepare to share them with the group.
Section 5: Proposal and Workshop Items
This section includes several proposed changes and items that need to be workshopped and likely finalized after today.
I propose the following to address the current dysfunction hampering the company’s leadership:
- You work as a group to revisit the company Values – define 5-8 corrective values you need to exhibit but have not yet defined that are explicitly focused on service
- You all agree to put the mission above personal opinions inside the firm.
- The company adopt the lexicon for strategic employment decisions in the context of the H1 to H3 frameworks presented previously and with reference to job summaries.
- You adopt a “The best idea always wins” philosophy that best idea should win, always, not the person.
- Proposals should be presented in a simple memo-format and read by the team at exec ops and examined for adoption with a time-bound decision point. Economic justification should be provided along with at least three supporting facts.
- Any open decision or proposal should be made in a clear time bound manner of no longer than one week unless otherwise agreed to by the group. Under both scenarios time and date to review decisions should be made on the calendar.
- Job summaries and tasks inside the company should be undertaken by the employee with the zone of maximum competence. Preference should be based solely on capability, not personal loyalties.
- Start all meetings with goals, state the why at the start of the meeting. If there is no identifiable goal, you don’t have the meeting.
- Every functional area should track and report on KPIs & Exec ops should weekly report on data tied to execution of strategy. The leadership team should drive responses to proposals and Scrutinize real KPI and delivery data vs making conjecture-based decision.
- Come up with a fun punishment for catching other managers and leadership saying disparaging comments about one another or any other team member (swear jar).
With the conclusion of this memo please take a moment to reflect and take notes.
- What proposed changes would solve some of the challenges articulated?
- What other changes will be necessary to achieve what growth demands?
Once everyone has had a chance to complete the memo and reflect for 5-10 minutes, please share your thoughts and ideas with the group.
