The Hard Thing About Hard Things, page 20
For instance, when Eric Schmidt stepped down as CEO of Google and founder Larry Page took over, much of the news coverage focused on Page’s ability to be the “face of Google” since Page is far more shy and introverted than the gregarious and articulate Schmidt. While an interesting issue, this analysis misses the main point. Schmidt was much more than Google’s front man; as Google’s peacetime chief executive, he led the greatest technology business expansion in the last ten years. Larry Page, in contrast, seems to have determined that Google is moving into war and he clearly intends to be a wartime CEO. This has been a profound change for Google and the entire high-tech industry.
DEFINITIONS AND EXAMPLES
Peacetime in business means those times when a company has a large advantage over the competition in its core market, and its market is growing. In times of peace, the company can focus on expanding the market and reinforcing the company’s strengths.
In wartime, a company is fending off an imminent existential threat. Such a threat can come from a wide range of sources, including competition, dramatic macroeconomic change, market change, supply chain change, and so forth. The great wartime CEO Andy Grove marvelously describes the forces that can take a company from peacetime to wartime in his book Only the Paranoid Survive.
A classic peacetime mission is Google’s effort to make the Internet faster. Google’s position in the search market is so dominant that they determined that anything that makes the Internet faster accrues to their benefit since it enables users to do more searches. As the clear market leader, they focus more on expanding the market than dealing with their search competitors. In contrast, a classic wartime mission was Andy Grove’s drive to get out of the memory business in the mid-1980s due to an irrepressible threat from the Japanese semiconductor companies. In this mission, the competitive threat—which could have bankrupted the company—was so great that Intel had to exit its core business, which employed 80 percent of its staff.
My greatest management discovery through the transition was that peacetime and wartime require radically different management styles. Interestingly, most management books describe peacetime CEO techniques and very few describe wartime. For example, a basic principle in most management books is that you should never embarrass an employee in a public setting. On the other hand, in a room filled with people, Andy Grove once said to an employee who entered the meeting late, “All I have in this world is time, and you are wasting my time.” Why such different approaches to management?
In peacetime, leaders must maximize and broaden the current opportunity. As a result, peacetime leaders employ techniques to encourage broad-based creativity and contribution across a diverse set of possible objectives. In wartime, by contrast, the company typically has a single bullet in the chamber and must, at all costs, hit the target. The company’s survival in wartime depends upon strict adherence and alignment to the mission.
When Steve Jobs returned to Apple, the company was weeks away from bankruptcy—a classic wartime scenario. He needed everyone to move with precision and follow his exact plan; there was no room for individual creativity outside the core mission. In stark contrast, as Google achieved dominance in the search market, Google’s management fostered peacetime innovation by enabling and even requiring every employee to spend 20 percent of their time on their own new projects.
Peacetime and wartime management techniques can both be highly effective when employed in the right situations, but they are very different. The peacetime CEO does not resemble the wartime CEO.
PEACETIME CEO/WARTIME CEO
Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.
Peacetime CEO focuses on the big picture and empowers her people to make detailed decisions. Wartime CEO cares about a speck of dust on a gnat’s ass if it interferes with the prime directive.
Peacetime CEO builds scalable, high-volume recruiting machines. Wartime CEO does that, but also builds HR organizations that can execute layoffs.
Peacetime CEO spends time defining the culture. Wartime CEO lets the war define the culture.
Peacetime CEO always has a contingency plan. Wartime CEO knows that sometimes you gotta roll a hard six.
Peacetime CEO knows what to do with a big advantage. Wartime CEO is paranoid.
Peacetime CEO strives not to use profanity. Wartime CEO sometimes uses profanity purposefully.
Peacetime CEO thinks of the competition as other ships in a big ocean that may never engage. Wartime CEO thinks the competition is sneaking into her house and trying to kidnap her children.
Peacetime CEO aims to expand the market. Wartime CEO aims to win the market.
Peacetime CEO strives to tolerate deviations from the plan when coupled with effort and creativity. Wartime CEO is completely intolerant.
Peacetime CEO does not raise her voice. Wartime CEO rarely speaks in a normal tone.
Peacetime CEO works to minimize conflict. Wartime CEO heightens the contradictions.
Peacetime CEO strives for broad-based buy-in. Wartime CEO neither indulges consensus building nor tolerates disagreements.
Peacetime CEO sets big, hairy, audacious goals. Wartime CEO is too busy fighting the enemy to read management books written by consultants who have never managed a fruit stand.
Peacetime CEO trains her employees to ensure satisfaction and career development. Wartime CEO trains her employees so they don’t get their asses shot off in the battle.
Peacetime CEO has rules like “We’re going to exit all businesses where we’re not number one or two.” Wartime CEO often has no businesses that are number one or two and therefore does not have the luxury of following that rule.
CAN A CEO BE BOTH?
Can a CEO build the skill sets to lead in both peacetime and wartime?
One could easily argue that I failed as a peacetime CEO but succeeded as a wartime one. John Chambers had a great run as peacetime CEO of Cisco but has struggled as Cisco has moved into war with Juniper, HP, and a range of new competitors. Steve Jobs, who employed a classical wartime management style, removed himself as CEO of Apple in the 1980s during their longest period of peace before coming back to Apple for a spectacular run more than a decade later, during their most intense war period.
I believe that the answer is yes, but it’s hard. Mastering both wartime and peacetime skill sets means understanding the many rules of management and knowing when to follow them and when to violate them.
Be aware that management books tend to be written by management consultants who study successful companies during their times of peace. As a result, the resulting books describe the methods of peacetime CEOs. In fact, other than the books written by Andy Grove, I don’t know of any management books that teach you how to manage in wartime like Steve Jobs or Andy Grove.
BACK TO THE BEGINNING
It turned out that a little wartime was just what the doctor ordered for Google. Page’s precise and exacting leadership has led to brilliant execution in integrating identity across Google’s broad product line, from the rise of Android to brilliant new products like Google Glass. Sometimes you need to go to war.
MAKING YOURSELF A CEO
The other day, a friend of mine asked me whether CEOs were born or made. I said, “That’s kind of like asking if Jolly Ranchers are grown or made. CEO is an unnatural job.” The surprised look on his face made me realize that perhaps it wasn’t as obvious as I’d originally thought.
Most people actually assume the opposite—CEOs are born, not made. I often listen as other venture capitalists and board members rapidly evaluate a founder and conclude that she’s not “CEO material.” I am not sure how they figure these things out so fast. It generally takes years for a founder to develop the CEO skill set and it is usually extremely difficult for me to tell whether she will make it.
In athletics, some things, like becoming a sprinter, can be learned relatively quickly because they start with a natural motion and refine it. Others, like boxing, take much longer to master because they require lots of unnatural motions and lots of specific technique. For example, as I mentioned earlier, when going backward in boxing it’s critically important to pick up your back foot first, because if you get hit while walking backward the natural way—picking up your front foot first—it often leads to getting knocked cold. Learning to make this unnatural motion feel natural takes a great deal of practice. If you do what feels most natural as a CEO, you may also get knocked cold.
Being CEO requires lots of unnatural motion. From an evolutionary standpoint, it is natural to do things that make people like you. It enhances your chances for survival. Yet to be a good CEO, in order to be liked in the long run, you must do many things that will upset people in the short run. Unnatural things.
Even the most basic CEO building blocks will feel unnatural at first. If your buddy tells you a funny story, it would feel quite weird to evaluate her performance. It would be totally unnatural to say, “Gee, I thought that story really sucked. It had potential, but you were underwhelming on the buildup and then you totally flubbed the punch line. I suggest that you go back, rework it, and present it to me again tomorrow.”
Doing so would be quite bizarre, but evaluating people’s performances and constantly giving feedback is precisely what a CEO must do. If she doesn’t, the more complex motions such as writing reviews, taking away territory, handling politics, setting compensation, and firing people will be either impossible or handled rather poorly.
Giving feedback turns out to be the unnatural atomic building block atop which the unnatural skill set of management gets built. But how does one master the unnatural?
THE SHIT SANDWICH
A popular and sometimes effective technique for feedback beginners is something that experienced managers call the Shit Sandwich. The technique is marvelously described in the classic management text The One Minute Manager. The basic idea is that people open up to feedback far more if you start by complimenting them (slice of bread number one), then you give them the difficult message (the shit), then wrap up by reminding them how much you value their strengths (slice of bread number two). The shit sandwich also has the positive side effect of focusing the feedback on the behavior rather than the person, because you establish up front that you really value the person. This is a key concept in giving feedback.
The shit sandwich can work well with junior employees but has the following challenges:
It tends to be overly formal. Because you have to preplan and script the sandwich to make it come out correctly, the process can feel formal and judgmental to the employee.
After you do it a couple of times, it will lack authenticity. The employee will think, “Oh boy, she’s complimenting me again. I know what’s coming next, the shit.”
More senior executives will recognize the shit sandwich immediately and it will have an instant negative effect.
Early in my career, I attempted to deliver a carefully crafted shit sandwich to a senior employee and she looked at me like I was a little kid and said, “Spare me the compliment, Ben, and just tell me what I did wrong.” At that point, I thought that I was definitely not born to be a CEO.
THE KEYS
To become elite at giving feedback, you must elevate yourself beyond a basic technique like the shit sandwich. You must develop a style that matches your own personality and values. Here are the keys to being effective:
Be authentic. It’s extremely important that you believe in the feedback that you give and not say anything to manipulate the recipient’s feelings. You can’t fake the funk.
Come from the right place. It’s important that you give people feedback because you want them to succeed and not because you want them to fail. If you really want someone to succeed, then make her feel it. Make her feel you. If she feels you and you are in her corner, then she will listen to you.
Don’t get personal. If you decide to fire somebody, fire her. Don’t prepare her to get fired. Prepare her to succeed. If she doesn’t take the feedback, that’s a different conversation.
Don’t clown people in front of their peers. While it’s okay to give certain kinds of feedback in a group setting, you should strive never to embarrass someone in front of their peers. If you do so, then your feedback will have little impact other than to cause the employee to be horribly ashamed and to hate your guts.
Feedback is not one-size-fits-all. Everybody is different. Some employees are extremely sensitive to feedback while others have particularly thick skin and often thick skulls. Stylistically, your tone should match the employee’s personality, not your mood.
Be direct, but not mean. Don’t be obtuse. If you think somebody’s presentation sucks, don’t say, “It’s really good, but could use one more pass to tighten up the conclusion.” While it may seem harsh, it’s much better to say, “I couldn’t follow it and I didn’t understand your point and here are the reasons why.” Watered-down feedback can be worse than no feedback at all because it’s deceptive and confusing to the recipient. But don’t beat them up or attempt to show your superiority. Doing so will defeat your purpose because when done properly, feedback is a dialogue, not a monologue.
FEEDBACK IS A DIALOGUE, NOT A MONOLOGUE
You may be the CEO and you may be telling somebody about something that you don’t like or disagree with, but that doesn’t mean you’re right. Your employee should know more about her function than you. She should have more data than you. You may be wrong.
As a result, your goal should be for your feedback to open up rather than close down discussion. Encourage people to challenge your judgment and argue the point to conclusion. Culturally, you want high standards thoroughly discussed. You want to apply tremendous pressure to get the highest-quality thinking yet be open enough to find out when you are wrong.
HIGH-FREQUENCY FEEDBACK
Once you’ve mastered the keys, you should practice what you’ve mastered all the time. As CEO, you should have an opinion on absolutely everything. You should have an opinion on every forecast, every product plan, every presentation, and even every comment. Let people know what you think. If you like someone’s comment, give her the feedback. If you disagree, give her the feedback. Say what you think. Express yourself.
This will have two critically important positive effects:
Feedback won’t be personal in your company. If the CEO constantly gives feedback, then everyone she interacts with will just get used to it. Nobody will think, “Gee, what did she really mean by that comment? Does she not like me?” Everybody will naturally focus on the issues, not an implicit random performance evaluation.
People will become comfortable discussing bad news. If people get comfortable talking about what each other are doing wrong, then it will be very easy to talk about what the company is doing wrong. High-quality company cultures get their cue from data networking routing protocols: Bad news travels fast and good news travels slowly. Low-quality company cultures take on the personality of the Wicked Witch of the West in The Wiz: “Don’t nobody bring me no bad news.”
MAKING THE CEO
Being CEO also requires a broad set of more advanced skills, but the key to reaching the advanced level and feeling like you were born to be CEO is mastering the unnatural.
If you are a founder CEO and you feel awkward or incompetent when doing some of these things and believe there is no way that you’ll be able to do it when your company is one hundred or one thousand people, welcome to the club. That’s exactly how I felt. So did every CEO I’ve ever met. This is the process. This is how you get made.
HOW TO EVALUATE CEOs
No position in a company is more important than the CEO and, as a result, no job gets more scrutiny. The job is so poorly defined that you can end up doing all kinds of nutty things (especially if you listen to some people who say things like “the CEO should be the number-one salesperson”).
Sadly, little of this analysis that’s been done benefits CEOs, since most of the discussions happen behind their backs. Here I want to take a step in the opposite direction. By describing how I evaluate CEOs, I am at the same time describing what I think the job of the CEO is. Here are the key questions we ask:
1. Does the CEO know what to do?
2. Can the CEO get the company to do what she knows?
3. Did the CEO achieve the desired results against an appropriate set of objectives?
1. DOES THE CEO KNOW WHAT TO DO?
One should interpret this question as broadly as possible. Does the CEO know what to do in all matters all the time? This includes matters of personnel, financing, product strategy, goal sizing, and marketing. At a macro level, does the CEO set the right strategy for the company and know its implications in every detail of the company?
I evaluate two distinct facets of knowing what to do:
Strategy In good companies, the story and the strategy are the same thing. As a result, the proper output of all the strategic work is the story.
Decision making At the detailed level, the output of knowing what to do is the speed and quality of the CEO’s decisions.
The strategy and the story
The CEO must set the context within which every employee operates. The context gives meaning to the specific work that people do, aligns interests, enables decision making, and provides motivation. Well-structured goals and objectives contribute to the context, but they do not provide the whole story. More to the point, they are not the story. The story of the company goes beyond quarterly or annual goals and gets to the hard-core question of why. Why should I join this company? Why should I be excited to work here? Why should I buy its product? Why should I invest in the company? Why is the world better off as a result of this company’s existence?
