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Leadership

I recently had the pleasure of interviewing eBay CEO John Donahoe before a crowd of military veterans at a16z. Below is an abridged version of our discussion, which focused on the type of leader John has become as he led the turnaround at eBay.

Peter Levine: You describe your management style as “servant leadership.” Where does that come from?

John Donahoe: It started with Tom Tierney who was a mentor of mine. He was my boss at Bain & Company, and is on the board of eBay. He’s one of those leaders that care enough to always give constructive feedback.

To give you a sense of what Tom’s like, after the last eBay board meeting he calls me and asks, “How do you think it went?” And I go, “How do you think it went?.” And he says, “You know John, that conversation around X, Y, and Z. If what you were trying to get across is that you felt fairly emotional about the issue, you’d already decided what you wanted to do, and you didn’t want to hear anybody else’s opinion, you did a good job. If on the other hand, what you were trying to demonstrate is that you are seasoned and sophisticated CEO, that you are open-minded and wanted to hear other’s opinions, that you knew you could make a decision but you were actually engaging in an authentic discussion with them, eh, not so good.”

That’s something I’ve taken away, which is, I think a good leader cares enough to give his or her best people feedback. But Tom early on captured the phrase for me – servant leadership. And that’s how I’d describe my leadership: servant leadership. In most companies it’s a classic hierarchy, the person on top is the CEO, in the military it’s the general, whomever is in charge. That’s never really worked for me. I’ve always been trained with the inverted pyramid, where the customer is on top. They’re why we’re here. They are the people who give us a sense of purpose of why we’re here.

And inside our organization, the people I talk about on top of our org chart are the people who deal with customers every day ­– they’re our customer teammates, our sales team, and our support teams. And everybody inside the company exists to help them serve the customers better. And I’m at the bottom of that pyramid, and ultimately my job is to clear channels to serve our customers as well. It’s to serve. If you want to have the absolute most talented people working for you, they can’t feel like they are working for you.

The one other person that had more impact than he realizes is General Colin Powell, talking about followership. The focus is not about me, the leader, the focus is on how do I create followership. We’ve all had leaders we want to follow and usually that leader empowers us, has our back, and treats us better than they are.

PL: Is that philosophy something that you can go to a class and learn about? Or is it experiential? And are other leadership styles acceptable as well?

JD: I think each of us has to discover what our leadership style is. You can’t copy another person’s. If I think about the leaders I respect the most, they can have different styles, but what they all are, they are authentic in understanding who they are and who they want to lead. They are transparent and consistent about that. I think that’s the job of any leader. I wouldn’t try to copy someone else’s personality. I followed Meg Whitman, I had big shoes to fill. But I couldn’t be Meg Whitman. I had to be me. The leaders that create followership, if there’s one common quality it is that they are authentic. Having good values, and then being authentic and transparent.

PL: What has been the origin of your own mistakes?

JDonahoe: I’ve made a lot of mistakes. The truth is, my biggest mistakes have been not taking enough risk. It’s not been what I’ve done, it’s been what I’ve not done. There have been times where I haven’t moved fast enough or taken enough risk. When I was running the Marketplace before becoming CEO, I was scared of taking the risk of labeling what was going on. We had stopped innovating, we weren’t delivering good experiences for our customers, and we were taking them for granted. We were living a narrative that was no longer true.

It was only when it got so bad that I spoke up and spoke the truth and took on the risk. It was hard, it hurt, and everyone hated me. By the time I became CEO it became clear to me that I was going to be presiding over this ­– I’m going to catch a falling knife. I was named on a Wednesday. On Monday, we had a seller meeting in Washington, DC where we announced the biggest set of changes in eBay’s history, and I labeled it as a turnaround, a word that everyone hated. We stood up told the truth, it felt so good. And we finally labeled what everyone knew what was true. It felt good for 24 hours, and then all hell broke loose.

PL: What are the cultural and character ingredients about building a great and enduring business?

JD: The first thing is picking the right company. I was at Bain for 20 years. I loved it. And when Meg first called me to join eBay, it was the hottest company on earth at that stage. I said, Meg that’s not me. I’m not a Valley guy in that way. It doesn’t light my fire. There’s nothing wrong with it, it just doesn’t light my fire. And she said, “I want you to meet eBay’s founder, Pierre Omidyar.” I’ll never forget ­– it was a rainy day in November 2004 at this place where eBay was having a leadership meeting. I was curious. I had never met one of the most famous Internet entrepreneurs. I went in thinking I would meet somebody like Steve Jobs ­­– some larger-than-life personality, maybe a little and brash and arrogant. And I could not have been more surprised. Pierre is soft spoken, and one of the most humble, centered humans I’ve ever met. And I sit down and we’re talking and I say, “Pierre, how do you measure success for eBay?” And he didn’t say a thing about growth rate or revenue or stock price or reputation in the short term. He said, “John, what I care about is I want eBay to positively impact hundreds of millions of people’s lives all over the world and I want to do it over decades, I don’t just want it to be a flash-in-the-pan. If we have lasting impact and we’re going to help the world be a better place, we’ve got to last.” And I was like, you had me at ‘hello.’ I literally walked into that interview thinking I wasn’t going to leave Bain for eBay, and I walked out saying, “I want to follow this guy.”

PL: How should the rest of us think about picking the right company? Does “hot” matter?

JD: What I would suggest is, don’t listen to what everyone else says. Don’t join something because everyone else is. You need to ask yourself, can you personally relate to the purpose of the company that you’re joining? It’s interesting, because Silicon Valley has produced 98-percent of the greatest technology, innovation, startup companies, and entrepreneurs in the last 50 years. There’s no place that’s even close. But during that period of time – 50 years – Silicon Valley has produced five scale-enduring companies. And I’m defining scale as above $20 billion market cap, and I’m defining enduring as having been successful for a 20 year period or longer: HP, Intel, Apple, Oracle and Cisco. That’s it. Google’s not 20, eBay’s not 20, none of the Internet companies are. And the ethos around here is short-term, the hot. And you know when it stops being hot, I’m going to jump to the next one.

What it takes to commit to build a great, enduring company is a different mindset. What is true about Silicon Valley is that innovation is the lifeblood. Innovation drives competitive advantage, but what I think is not talked about is the timeless principles of management. To build a great enduring company you have to marry innovation with the timeless principles of management. How do you scale, how do you build a team, how you go global, how do you develop and retain people? A lot of what we’re trying to do at eBay is marry those timeless principles of management with the ability to innovate. The question is how do we try to do both? We’re right in the middle of that experiment.

I recently had the privilege of hosting Dick Costolo (@dickc), CEO of Twitter, at Andreessen Horowitz for a fireside chat. The event was the second in a series hosted by my firm aimed at strengthening the network of military veterans in Silicon Valley and expanding this network’s connection to the greater tech ecosystem. (As much as I’d love to claim that we precipitated the filing of Twitter’s S-1, this event and the S-1 occurring on the same day was purely coincidental.)

What is not a coincidence is how Dick’s leadership style and personality have transformed Twitter into one of the most successful technology companies of our time.  We had the opportunity to spend an hour together and here’s what I learned about leadership, culture and veterans at Twitter:

How has Twitter’s culture changed over your tenure as CEO?

Dick joked that when he came on board someone could have “thrown a hand grenade into the company at 5:30pm and only hit the cleaning people.” He started holding people accountable and rewarding projects where hard work was visible. He’d go into the office at 10pm, got to know the people who were around and then prioritized their projects. People quickly got the message.

Dick describes himself as a hands-on manager and expects the same from his team. He instituted a leadership class for all new managers, which covers topics like how to give transparent feedback (hint: don’t sugarcoat it) and how to deliver difficult news to your team, like your project getting axed (hint: don’t throw leadership under the bus). Of course, he also practices what he preaches, holding weekly 1:1 meetings with direct reports and remaining accessible to employees, regardless of rank.

Open communication is a nice objective, but how does Twitter do this given its size and scope?  

Dick admits open communication is difficult to maintain because of two opposing pressures: the first is the desire to limit communication to reduce the risk of leaks; the second is simply that everyone can’t know everything. Dick leans toward over-communicating and trusts management to synthesize relevant information, rather than publishing a transcript of every meeting. As the company continues to grow, synthesizing is increasingly important.

On leadership and veterans

Dick’s passion for good leadership is an anomaly in the tech industry. And I don’t think it’s a coincidence that Military Veterans are under-represented in a sector notorious for shunning authority.

Dick certainly made a strong statement traveling from Twitter’s HQ in San Francisco to our office in Menlo Park, in the middle of rush hour, to participate in our event for local veterans on the same day that Twitter filed its S-1. He clearly understands and appreciates the value that military talent can bring to the table (case in point: Russ Laraway, a rising star at Twitter, oversees their SMB unit and is a former Marine).

As for hiring vets, I couldn’t agree more with Dick when he said there are lots of roles in the technology industry for which the job requirements are a load of hogwash. For example, I can’t understand why engineering skills are part of the criteria for project management roles. Good communication skills and adherence to strict deadlines are not strengths for many engineers. But I can think of more than a few vets who would really shine with this responsibility.

On behalf of everyone at Andreessen Horowitz, I want to thank Dick and our veteran community for making this event the absolute highlight of my week!

I recently had the privilege of hosting a fireside chat with Lieutenant General John Vines, who is regarded as one of the most influential U.S. military leaders of the past twenty years. You can see the talk here:

At the time, he was the only military general to lead combat operations in both Iraq and Afghanistan in the post 9-11 era, overseeing an organization of more than 160,000 troops.

For a man of his stature, he’s refreshingly humble. He jokes that he was the only guy to cause Defense Secretary Donald Rumsfeld to lose his voice from screaming at him in two separate wars. The General is one of those people with whom you want to hang out after spending only a few minutes with him. No wonder he is such an extraordinary leader.

During our conversation there were many leadership lessons from his experience that are highly relevant to entrepreneurs and CEOs. Here are a few of my favorites:

1. Leadership is different from management.

“In the end those who follow you willingly do it because they trust you and are inspired by you. They are counting on you to have their backs and to be right.” Great leaders rely on relationships and intuition. In a challenging situation, a good leader knows what their reports will do and what the outcome will be.

Vines underscored that management and leadership, while related, have very different characteristics. Management is the science that undergirds leadership. Leadership is the art. “Where leaders earn their pay is applying their judgment, skill and wisdom to all the data. Because if we were purely a data driven organization, then we could plug it all into some algorithm and it could tell us what the answer is.”

It follows then that not all great managers become great leaders. This concept has always resonated with me and I have seen this first-hand. A great leader gets the team to follow her into battle and does it with purpose and conviction. Great leaders also understand how to instinctively use resources to the best possible outcome.

2. Leadership awareness

“It is almost impossible to really see yourself as an organization and as an individual.”

Vines relayed the story of a complex combat operation that required the deployment of several infantry units. Vines ordered a large quantity of heavy equipment to support the mission, which his reporting system indicated was available. Problem was, it had already been provided to another unit and Iraqi counterparts.

Instead, Vines devised something he dubbed a “Delta Report”, which reconciled for a 30-day period all the things that were supposed to be available but weren’t; the equipment that was supposed to be repaired but was still in the shop; the gear that had arrived that no one even knew about.

In his words: “That 30-day Delta came out to be $11 billion of end-items, things like tanks and trucks, that we had been ordering from the States because we thought we needed them, but they were already there. We couldn’t see ourselves.”

Vines admitted his team spent a lot of time understanding their threat (you might call it the competition), but couldn’t see his operations in real-time. As a result, he made some large, painful changes, but ultimately made sure the right processes were in place for he and his team to see themselves in real-time.

I’ve always believed that self-awareness and company awareness are key attributes to being a great leader. I’ve seen all too many examples of companies and CEOs who are breathing their own exhaust. Leaders need self-awareness in order to have a complete and accurate picture of themselves and their company.

3. Identifying catastrophic risk helps to prepare for the unknown, but you can’t see all the “Black Swans” that lie in wait.

Vines relayed an example of a massive air operation he was preparing that required the use of hundreds of helicopters in Afghanistan. “It was massive, the number of planes used in the operation would have made it one of the largest air forces in the world. And that was just helicopters.”

At the moment of execution of the military mission, the key guy on the ground responsible for checking the purity of the helicopter became ill. There was nobody who could fulfill his job. Mission aborted.

“We spent hundreds, even thousands of hours assessing risk, but what we didn’t understand is that there were points of failure in this enterprise that we hadn’t even considered. We certainly hadn’t looked around corners.”

This story was particularly interesting to me in that, even with all the planning, something caused the mission to go sideways. I’ve seen this in companies. They plan and plan, yet something always comes up forcing a real-time change. In my experience, planning is a great tool but leaders always need to be prepared for solving the unknown as issues arise. You can never plan for all contingencies all the time.

4. The higher up the organization, the more time leaders should be spending with people in the organization as opposed to doing “tasks”.

As his organization got larger, Vines could no longer spend time with every person. However, he spent most of his time away from headquarters talking with his lieutenants, making sure everyone developed a “shared consciousness”, a shared vision.

“I believe leadership should be eyes on, hands off.” So Vines deployed wide-scale use of video conferencing to discuss high-level thinking and strategy with the troops. “Once an organization understands the objectives, a mid-level person can figure out the strategy.” Once they knew the thinking and the strategy behind what they were about to do ”the orders almost follow themselves.”

As an entrepreneur, your natural instinct as your company grows may be to spend more time doing tasks you are good at. If you are an engineer by training, this may mean spending time with the engineering group. My advice as your company grows is to spend time with all groups and help to create a deep bench of executives who each do a better job than you in their given areas. Spend lots of time with them; spend lots of time with your employees. The organization will see you as a great leader as opposed to a micro-manager.

Veteran talent

My time with General Vines gave me a much deeper appreciation for the similarities between military leadership and leadership in companies. Over 120 folks working in high-tech attended our fireside chat from the Bay Area. The vast majority were veterans.

One of my other takeaways: Veterans can bring really important leadership qualities to your organization. These folks are truly amazing.

As Vines put it, “Sometimes the scale is different. Sometimes the cost is different in blood and treasure. But there are more similarities than differences in business and warfare.

“Every person that we asked to go forth to do something at extreme risk—at risk of their life—we owed it to them to do everything we could to create conditions that would allow them to do that, and come back alive and intact to their families.

“If you could look in the mirror and say, ‘I have done everything humanly possible to create an environment of mitigated risk,’ I think you can live with yourself. If something goes wrong because you are lazy, or because you didn’t devote the proper rigor to it, then you have to live with those consequences too.”

The views expressed by LTG (ret.) Vines in this article are his own and do not represent the views of the U.S. Military or Government. “Warlord 6” was LTG Vines’ call sign in Iraq.

The CEO as the cultural epicenter
As a former CEO and senior executive, there was a time when I did not quite understand the profound impact a CEO has on the culture of a company, even though I always knew culture was important.

The organization reflects the behavior and characteristics of the CEO and that establishes the culture. Foster an environment of open communication and the organization inherits a culture of open communication. Operationally detailed? The organization becomes operationally detailed. Political? The organization becomes political. Curse a lot? The organization curses. Angry? The organization gets angry. Have a big office? Everyone wants a big office. It doesn’t matter what’s written on a coffee mug or on a “culture” slide, what you do as a CEO, day in and day out, and how you behave will define your company’s culture.

Dysfunction
Despite the best intentions, companies often become culturally dysfunctional. This occurs when leadership has a perception about the culture that conflicts with reality, or leadership behaves differently than what might be written down. 

One of the most studied examples of cultural dysfunction occurred at Enron, the former energy-trading giant. The CEO (Ken Skilling) and several top executives were arrested for a pattern of deceit, dishonesty and illegal financial practices. They promoted a culture of dishonesty, self-dealing and self-enrichment that destroyed the company. Ironically, the Enron code of ethics outlined four key principles: communication, respect, integrity and excellence… So, yes, culture matters and the CEO defines it.

Cultural dysfunction is not limited to large companies. When I arrived at XenSource, which was a 50-person company, the culture was dysfunctional, despite the fact that the founding team believed the culture to be awesome and supportive of innovation and collaborative thinking. There were two telltale signs: 1. Employees painted a very different cultural view from the founders and 2. The responses were inconsistent with each other, indicating that the culture was a free-for-all with very little leadership. One clear example of the inconsistency resulted in the organization having two engineering efforts that competed with each other. Here was a company with a supposedly “collaborative, non-political” culture that had engineering teams pitted against each other to see who would win. The competitive activity turned out to be corrosive and undermined the intended culture of the company.

Stemming dysfunction
I often talk about CEO self-awareness as one of the key attributes of corporate success. In the case of XenSource, the leadership espoused and verbalized cultural “intent”, but practiced and allowed something very different in the company. The company almost failed due to a highly dysfunctional culture. Make sure what you believe is what is truly happening in the company. 

Stemming dysfunction requires leadership and taking some simple but important actions: proactively define cultural attributes important to the organization—write them down and let people know what they are, and “walk the talk”. You must practice and exemplify your culture, and have a mechanism to review culture deep within the organization. Ask the following questions:

  • Is the organization’s culture consistent with the defined attributes?
  • Where are the differences?
  • What are we doing right or wrong to keep a strong and consistent cultural backbone in the company?

The Cultural Paradox: I can’t change the culture because that’s not part of our culture
Culture is formed—whether intentionally or not—in the early days of a company’s life. Activities and behaviors are repeated and these become the elements that shape the culture of the company.  Examples of such early practices might be: 1) The founding team always interviews all new people applying to the company; or 2) a product-oriented focus in everything the company does. The accepted and repeated practices become the culture and define how the company operates.

However, what has worked in the early days might not be as effective as the company grows up. As a result, you might be forced to choose between two conflicting cultural attributes.

Take the attribute “the founding team must always interview new people”—a great cultural practice intended to ensure new employees are a perfect fit. Is there a point where growth is hampered because the company can’t interview fast enough and candidates go elsewhere? What part of the culture do you change? Limit growth or change your hiring practice? Changing either impacts culture.

One of the most difficult aspects for technical founders is hiring outside the comfort zone of the founding team. This is evident when hiring sales, marketing and finance people. A good example of this is how a technical founder might apply engineering hiring techniques to a sales organization, which my partner Ben Horowitz recently blogged about here. The fear here is that bringing on non-technical people will destroy the company culture. Do you put engineers in all the non-engineering functions and continue to only hire technical people, or do you augment the culture and integrate new and different organizations into the company? Here again, sticking to the past practice/culture of only hiring technical people might be counter to building a great finance or sales organization.

Steering change
Existing culture can get in the way of future growth and company leadership must steer the transition. Changes to practices and culture should be done by first asking why something is done a certain way and what’s the intended outcome. Preserving the intended outcome should trump the practice. 

Let’s go back to the example, “the founding team shall interview all new applicants”. The intended outcome is to make sure that all new employees are of the acceptable caliber and intelligence, and understand the culture and origins of the organization. The problem is the system does not scale, particularly as candidates are hired around the world and at a pace that far outstrips the capacity for the founders to handle.

A change to the practice might be to empower key employee “ambassadors” who act as a proxy for the founding team. Alternatively, maybe just one of the founders meets all new candidates as opposed to all founders meeting all candidates. If part of the intended outcome is for a candidate to meet the founders and get a feel for the company, then have all new employees meet the founders at a lunch or dinner after they join the company. Developing a strong and scalable interview process and on-boarding/mentoring system will ensure that the intended culture is preserved while steering change from an operational perspective.

Managing culture
The concept of managing culture may seem a bit heavy-handed, particularly in tech companies that pride themselves on being free from overbearing rules and bureaucracy. However, not managing culture can be likened to not managing growth, or not managing expenses, or simply not managing and certainly not leading…

Remember:

  1. Self-awareness. If you can’t accept self-awareness, you should not be CEO.
  2. What are you trying to accomplish? What’s the end game?
  3. Translate energy to the areas you are least comfortable understanding.

A strong culture is the backbone of any organization and the CEO is the standard bearer and the agent of change. In a recent Fast Company article, GitHub Co-founder and CEO Tom Preston-Werner shares his perspective on how he and his cofounders have thought about and managed the company culture from 10 people to 160. Regardless of age, background and experience, culture is something that evolves with the CEO and the process of creating a great culture requires leadership to routinely and consistently assess and exemplify the core values of the organization.

You’ve been CEO of SpiderNet for the past two years and have embraced a very trusting culture among your team.  For the most part, you and your team discuss future vision and the team goes off and executes against that vision.  You’ve never needed to really manage objectives or goals, simply because the team has generally delivered on the stated direction.

However, as the company has gotten larger, you’ve noticed that some organizations are not delivering on tasks that you believe need to get done.  You’ve chatted with members of your executive team and they believe that they are making great progress.  They point to all the things they’ve accomplished over the past three months.  When you look at the accomplishments, you wonder how they decided to prioritize certain items.  In your opinion, many of the items they have accomplished have little to do with the ultimate success of the company or vision.

You are now concerned that many in the organization seem to think they are doing great things, despite your frustration with the output.  Everyone claims to be working hard and you don’t disagree with that.  Given how you have managed in the past, how do you change to ensure everyone is on the same page?  Do you leave things as they are and try to be clearer?  Do you create objectives for people to follow?  If you do the latter, don’t you risk turning SpiderNet into a bureaucratic mess?

What now?

Peter Drucker, the famous management consultant, is noted for saying, “You can’t manage what you can’t measure.”  While I very often despise all management consulting advice and quotes, this is one that I happen to agree with.  I have lived through and seen the sloppy execution mistakes made when a company does not have a framework of measureable objectives to guide their path.  Furthermore, it is very possible to balance the flexibility and creativity of an entrepreneurial environment with a lightweight, highly-effective process for managing with key objectives.

Here’s a way to go about doing this:

One of my first pieces of advice to any entrepreneur (including many that come in for funding) is to articulate what they’d like the company to accomplish in the next 12 to 18 months, based on their strategic vision.  This may be what a company wants to accomplish with a given funding round or what they want to accomplish over a given period of time.  Pick a timeframe that is far enough out (two years max) and write down five measureable objectives that you believe will define success.  Make the objectives measureable as opposed to qualitative.  It is not as easy as you think.  In fact, try it right now and make sure that the goal can be measured.

The important aspect of being able to measure the goal (i.e., have 50 paying customers) is that you will absolutely know whether you have achieved the objective.  I have very often seen companies create a set of non-measurable goals (i.e., maximize adoption with paying customers) that are pretty useless.  At the end of the time period, you and your team will often forget what you were trying to accomplish and what exactly the goal meant.  This results in everyone thinking that the goal was mostly met.

Once you develop a small set of 12- to 18-month company objectives, share those with your team.  Ask your functional leads (sales, marketing, engineering, G&A) to come up with their five goals, based on the higher level objectives that you’ve outlined for the company.  You now have the start of a framework.

From there, you can start to manage on a quarterly basis, using the same framework.  Start with the 12- to 18-month goals and back those down to what needs to be done in the next quarter.  I often think about this process like climbing a mountain on an expedition: You have the grand objective to get to the summit, but have many daily objectives along the way (e.g., get to the next campsite, etc).

For quarterly objectives, I would use the same process as the longer-term thinking.  As CEO, you should come up with the three to five items you need the company to accomplish in the next quarter.  Ask your team to come up with their own three to five items.  You now have a baseline from which to manage.  Each week at your staff meeting, you can get a status update on where folks are relative to their quarterly goals.  This becomes your status report and everyone knows where things stand.  If something changes along the way and a quarterly goal is no longer important, the team can change it.  However, changes only get made by proactive discussion and not by arbitrary omission.

At the end of each quarter, set aside time to do a complete goal review with your team and clearly specify the goals met and the ones missed.  You will get a clear view of why something was not done and what needs to be done about it.  At that meeting, you can create the next set of objectives for the following quarter.

If you really want to be transparent, I would recommend sharing all goals and all results with the entire company.  This gets everyone on the same page and creates a framework in everyone’s mind as to where the company is going and how each individual can help to achieve a given goal.

This process can be used all the way down into the organization and can be used upward for the board.  Keeps things incredibly simple.  One set of objectives and one set of status.

SpiderNet

I would encourage SpiderNet to adopt a simple framework for managing to key objectives.  As the company gets larger, there is the tendency for tasks to become less clear in employees’ minds.  Keep the key objectives front and center and have everyone work towards these goals.  Celebrate success when goals are met and take action when they are not.

SpiderNet has been around for a few years and you’ve held many board meetings over this time period.  The board meetings have become routine reporting events and you are often forced to spend additional time with each board member after a board meeting to “tell the real story”.  You kind of feel that your board meetings are pretty much bullshit and a waste of time.

Most of your executive team has gotten used to providing you with a few slides that you can take into the meeting and they rarely have been requested to attend.  It has always been you, your finance person and the board at all the meetings.

Given that much of your quality time with the board has been 1:1 meetings outside the board session, and your team has not had to interact much with the board and deal with associated time commitments, this model has not been horrible for the company.  In fact, the company has done very well to date, though the product is just now coming to market.

You begin to wonder whether you need to think through a better model for board meetings.  You have on your board some of the most experienced minds in the business and—along with your executive team—you’d really like to make the most of the talent around the table.  However, you don’t know where to begin or if you need to change anything.  Do you create a new model for your board meetings or proceed with business as usual?

What now?

Board meetings are probably one of the most important yet often overlooked aspects of running a company.  When structured properly, you will have a great group of VCs along with a talented team of executives, yet board meetings are often viewed as something to simply “get through”.  In addition, they are very often ill prepared and many times, depending on the structure and format of the meeting, little real discussion ever gets done.  In SpiderNet’s case, this is why the CEO must meet with each board member outside the board sessions.  What a waste of time!

To the extent you’d like to run a more effective and productive board meeting, here are some guidelines for success:

Set clear expectations early on:

  • Set charter and purpose for the BOD based on individual board member responsibilities
  • Establish and reinforce the connections among the board members
    • Have at least 1-2 “outings” with only board member to help foster the bond
    • Don’t focus on an hourglass structure where all interactions run through the CEO
  • Make sure that the board understands the ways in which they can be helpful outside of the meetings and where your blind spots are
  • Include key executives at the board meetings—direct reports should present their material on their areas of responsibility

Be prepared and establish ground rules:

  • Send a complete package to the BOD several days before the meeting
    • Set the expectation that the package will be read before the meeting
    • Any questions regarding the package should be brought up beforehand
      • Use email threads with all the members to ensure everyone is on the same page
  • Set an agenda and ensure everyone knows what the meeting will consist of
  • Take care of the nitty gritty up front (options grants, legal issues, minutes etc..)
  • Create an engaging environment that allows for discourse around the table
    • Build in time for discussion around the key themes/issues
    • Make sure time is spent on the biggest challenges and how you plan on addressing them
  • Save time for the CEO to bring to light what’s “been on his mind”

Focus on your goals:

  • The focus of the meeting should be to discuss key issues that the Company needs to solve
  • All the members should be on the same page regarding the five things that the Company has committed to achieving before the next round of funding
    • The goals and Key Performance Indicators (KPIs) should be focused on the Company stage and change over time with buy-in from the BOD
  • Don’t focus on the past or make meetings simply about “reporting” the state of the Company
    • 70% of the meetings should focus on the future and the issues at hand
    • What strategic decisions need to be made to get the Company to the next stage
  • Use Data to help guide the meetings
    • Data should be consistent and metrics/KPIs agreed upon by the members
  • Be sure to bring to light both the good and the bad—don’t hide the shortcomings, address them up front

SpiderNet

For SpiderNet, I would ask the CEO to reconstruct their board meetings to include all senior executives, focus on key issues and data, and make sure that most of the meeting is an open discussion designed to clarify and help solve key strategic issues. 

Board meetings are critically important and can be a great strategic asset to the growth of a company and the CEO.  Use them well.

In the previous vignette, you (as the CEO of SpiderNet) were trying to decide on how to organize the engineering organization.  Your decision was to hire a new VP of Engineering and your co-founder, who previously oversaw Engineering, agrees to become the CTO and chief architect.  Everything seemed to have worked out with the transition and your new VP has been on the job for a few months.  When he joined, you were certain you had a “rock star” on the team.  References from the recruiter came back great and the person had exactly the right profile against your hiring objectives.

A few weeks later, at a dinner meeting with a close business associate and CEO of another company, you mention that you’ve hired an incredible new engineering VP.  Your dinner friend tells you that he knows this person and you’ve made a big mistake.  “I know this person and he’s really lazy.  Little real domain knowledge despite the pedigree.  You should have called me.”  Crap.

Several months later, the laziness starts to show.  Your “rock star” now becomes a “project” and you have to manage his weekly performance and deliverables.  He is just not working very hard and does not have the strategic insight into the nuances of your business.  He also does not have the respect from the team.  They don’t think he is a total lost cause, but they also don’t pay much attention to him.  That said, he’s certainly ok and he’s better than nobody.  He puts together decent schedules, brings much needed process to the team and always says the right things when you have your 1:1s.  However, you don’t feel good about him and the engineering team is not delivering at the level you’d like.  You talk with your board and have a few options: find a different job for this person and re-hire the VP; put him on a plan and re-assess in three months; or fire and re-hire.

What now?

Up next: my answer.