By the Lionesses of Africa Operations Dept
Marc Andreessen, cofounder of a16z with Ben Horowitz, likes to joke “…the best thing about startups is that you only ever experience two emotions: euphoria and terror. And I find that lack of sleep enhances them both.”
As we discussed last week (here), his partner Ben wrote in his book that he was always exasperated by management and self help books that for him miss the point of running a business and the huge responsibility that this in turn brings.
As he says: “Every time I read a management or self-help book, I find myself saying, “That’s fine, but that wasn’t really the hard thing about the situation.”
The hard thing isn’t setting a big, hairy, audacious goal.
The hard thing is laying people off when you miss the big goal….
The hard thing isn’t dreaming big.
The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.”
Top sportswomen say that ‘somedays you win, other days you learn’, which is a great view to have, except you have to learn well and learn fast, because otherwise the coach will be having a very short conversation with you as she shows you the door at the end of the next match. Your dream turns to a nightmare pretty fast. The same is true in business. We have to learn from the downtimes, mistakes, missed opportunities or ‘terror’ as Marc terms it, fast.
In last week’s letter, we also quoted the CEO of WAPA, Mark A. Gabriel from a brilliant podcast (here), where he has shown clearly through his actions over the years that he truly believes that ‘you’ll never do wrong by doing right’, but when things go wrong (as they often do), how do you drag the company back onto the right track? How do you show leadership when all around you is crumbling?
In both Ben’s book and also in the podcast with Mark there is one thing that sticks out. Both are huge believers in
Communication is far better (and easier) when there is trust…
As Ben pointed out: “…if I don’t trust you at all, then no amount of talking, explaining, or reasoning will have any effect on me, because I do not trust that you are telling me the truth.”
…and great culture…
“[the] CEO job [is] knowing what to do and getting the company to do what you want. Designing a proper company culture will help you get your company to do what you want in certain important areas for a very long time.”
If communication is done well it can create huge improvements, not only in the personality of the business, not only in the well-being of employees and the impact your business has on your customers and community but also in the results. The Boston Consulting Group worked with one giant energy utility to ‘overhaul its core business and culture, resulting in substantial gains in operating efficiency and overall business performance.’ The results were astounding (seen here), including “…an improvement in annual gross operating cash flow of approximately €25 million; an increase in the efficiency of end-to-end processes of 35%; and an improvement in workplace efficiency of 20%.”
If it works for them, it’ll surely work for us! So how do we create a great culture?
Mark says that ‘three things are essential in order to change [or create a great] culture:
Listen to what you are being told
Make sure you are being heard
Communicate and communicate again – you can never over communicate.’
Mark says that ‘Transparency is the key to success’. That is some statement. Surely as boss with all the responsibilities on your head, transparency simply cannot happen, but actually if as Mark says you ‘speak openly, show purpose, vision and belief’, then you will find that people will line up behind you for the difficult decisions that are to come. It goes without saying that transparency does not mean openly discussing company secrets and the stuff that only a few people should know in HR, but if the company is hitting the rocks the trust that you have built up during the good (or better) times will pay huge dividends.
Ben agrees: “As a company grows, communication becomes its biggest challenge. If the employees fundamentally trust the CEO, then communication will be vastly more efficient than if they don’t. Telling things as they are is a critical part of building this trust. A CEO’s ability to build this trust over time is often the difference between companies that execute well and companies that are chaotic.”
So where are the potential problem areas for communication?
A. As Ben says: “…The hard thing is laying people off when you miss the big goal.” Sacking or laying people off is high on the list of tough discussions and an area where many errors are made in communication. If the employee to be sacked leaves the meeting thinking ‘that went well’ and returns to their desk (and this does happen!), there’s obviously a problem with the way the news was delivered. If they run out of the meeting, slam the door and yell at all the other staff, this is worse.
If you follow Ben’s rules at these moments, a tough time can be eased for both parties. Remember it is going to be just as, if not more, horrible for the employee(s). But with good communication the employee can understand why, can also leave with their views of the company still high, and most importantly, will send a message to those left that although you are willing to make the tough decisions, you are ‘fair but firm.’ This just increases the level of trust.
So – Ben’s rules:
“1. Be clear on the reasons. You have thought about this long and hard; don’t equivocate or sugarcoat it. You owe it to them to be clear about what you think happened.
2. Use decisive language. Do not leave the discussion open-ended. This is not a performance review; it’s a firing. Use words and phrases like “I have decided” rather than “I think.”
3. Have the severance package approved and ready. Once the employee hears the news, they will stop caring about the company and its issues; and will be highly focused on themselves and their family.”
Finally, with the deed done, always discuss how they would like the news announced – this allows them to leave with respect.
B. What about the company’s office bully? Communication can be killed if every time someone makes a suggestion it is laughed down by the ‘Jerk’, to use Ben’s description. Yet allowing a safe space for people to voice thoughts, opinions, problems and solutions (even if only a rough idea at the time), can allow others to chip in to improve or better formulate the solution. The ‘Jerk’ has to be dealt with.
C. Ben is particularly scathing about the phrase: “Don’t bring me a problem without the solution!”. We have all heard it and maybe even used it a few times, but as he points out – engineering employees may have seen an issue in a way a product is being sold, or delivered, yet don’t have the expertise in that area to think of a solution. Someone in accounts may be worried about a potential safety issue, but again are out of their depth. Far, far better to hear of the problem.
D. One on one meetings. Essential, but remember these meetings are (as Ben says) “the employee’s chance to be heard, not yours”…and because of that, suggest that they set the agenda and send it to you in advance. A safe space for discussion, thoughts, problems and yes, if they have them, half formulated solutions – why not!
Ultimately all of this comes down to the credibility of the CEO. Credibility is the wrap around package that carries the culture, the core values, the trust of the Leader and through them, the company. The knowledge that they make decisions for the good of the company and through that the employees. As the Harvard Business Review states (here): “When you’re a leader — no matter how long you’ve been in your role or how hard the journey was to get there — you are merely [an] overhead unless you’re bringing out the best in your employees. Unfortunately, many leaders lose sight of this.”
It is actually worse than just being a cost. If you as a leader lose the credibility of your employees, your middle management, your senior management or board, you become a huge drag on the company and are lost. Unless you change this direction or bring someone else in more able to handle the company, then the companywill sink and it will feel like a death of a thousand cuts as all your dreams disappear.
However, if you have the credibility, then you will have the support to make the tough decisions, to make the bold bets, and turn the nightmare back into the dream you, your employees, your board and shareholders all once shared…
Start building now for that rainy day!