When companies grow, there are certain events that seem innocuous, but actually signal fundamental changes in how the company has to do business. Check out the details in my article, “Venture Moments of Truth.”
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Venture Moments of Truth
As ventures grow and develop, the challenges they present change. Often change is sudden rather than gradual. These sudden changes require a shift in the way the company and/or the top managers do business. These are times when coaching can be most valuable.
The one-room shop. In a one-room company, even if the room is a 60-person room, communication is informal and universal. Roles can be amorphous, with anyone pitching in to help with whatever needs doing.
The first hire. With your first employee, you become a manager. Decisions must now be made taking the employee into account. Confidentiality and access to information get raised as issues. Delegation, clear communication, evaluating, and motivating your employee become necessary skills.
The first firing. It happens. And it isn’t pleasant. It also sends a strong message to everyone who is left. With the first firing, everyone will realize—really realize—that you are the boss. Handling the dismissal, handling your reactions to the dismissal, and managing perceptions of the remaining employees become the challenges.
The first customer. The market is now aware of you. You have your first chance to collect real customer feedback. The length and cost of the sales cycle becomes apparent. Your cash flow requirements become more knowable, and the strategy/tactics need to respond. And for the first time, you have to deliver on your promises.
The first lost sale. You have to grapple with whether your product should be changed to meet the market, or whether you just had a bad fit between your product and that one prospect. You may find yourself dealing with how to react appropriately, and how not to take this personally.
The two-room shop. Communication that happened through proximity and casual conversation suddenly stops happening. For the first time, you must explicitly identify communication paths and determine how they will operate. Things that have always worked in the past may not work any longer. You’ll grapple with identifying solutions and separating accountability of the system from accountability of the people.
The first fight. There comes a time when, despite the best of intentions, the founders disagree. Really disagree. This is a time to examine the relationship, and make sure you have a structure for working through conflict.
Money runs out. When the money almost runs out, the venture capitalists and other funding sources may hold your feet to the fire, just because they can. You will encounter issues around negotiating, personal balance, and separating your identity from the business to create as objective an action plan as possible.
Cash flow positive. Survival no longer depends on every cash decision! You can invest surplus in longer term projects. Cultures which have been compromised to save money now have the option of improving their business practices. “Spend as little as possible” was your old imperative. Now, you need a way to decide how to use the surplus cash. Culturally, you have an opportunity to increase integrity in how business is conducted.
Once you have cash, how you pick and choose opportunities to pursue becomes less dependent on pleasing outsiders. You are self-funding and have the option of slowing growth to avoid the need for new outside capital.
The Chaos Point. When the company gets too big for one person to keep on top of everything, chaos can ensue. Organization structure becomes necessary, and managers must shift from getting things done to creating an organization in which others can get things done. Delegation, willingness to give up control, learning to guide and create culture, setting compensation systems, building meaningful feedback systems, and hiring all become critical capabilities.
Outside money. With outside money, you are truly accountable to others. Board meetings take preparation, and the outside money may bring restrictions and new constraints. The personal challenges include balancing your own vision and plans with those of the outsiders. Changes in strategic direction may become dependent on outside approval.
The second Chaos Point. Somewhere between 70 and 100 employees, real business systems become necessary. The numbers just get too big: too many job applicants in the pipeline, too many projects to track, too many purchasing requests, etc. Few employees have the business process analysis skills to put systems in place. Those few who have the skills become overwhelmed as everything important is given to them: “Just this once? You’re the only person who gets things done around here.” Building business systems and training underlings in building systems becomes imperative.
Multiple product lines. Once you move to multiple product lines, issues start to arise around your company’s identity: what do you stand for? Who do you serve? If one line is more profitable than the other, are the managers or salespeople paid differently? Are you a single brand? Multiple brands? Issues of focus, resource allocation, balancing the culture, and accountability become important.
Acquisition. When you’re acquired, the challenges revolve around keeping good people, merging your identity, culture, and product lines with your new parent, and defining roles and career paths that work in the new entity.
IPO: the finish line? As rumors of an IPO begin to spread, comparisons start. Who has how much? Whose options are worth what? Will we be as rich as our friends at e-commerce.com? Suddenly, you are legally required to keep a lot confidential from your employees. Issues of fairness, ethics, trust, and reporting requirements arise within the company. The issues are huge: six-figure tax planning, psychological preparations to become rich (it’s not as easy a transition as most people think), learning to make decisions from a large asset base, examining how priorities change, understanding how to manage friends and family, dealing with the public speaking and stress of a road show, and keeping the company together while all this is happening.
Life goes on…publicly. Whoops. The company iPod and you just realized an IPO is just the beginning, not the end. Early employees, who hold much of the company’s intelligence in their heads, become rich enough to leave. The motivation of “someday we’ll be public” is no longer available. Outside pressure to “manage for quarterly results” begins. Preserving the knowledge and skill base of the company while achieving the forecast numbers become two of the biggest challenges. On a personal level, growth opportunities include learning to manage increased analyst scrutiny and formulating your next set of goals and aspirations.
An executive coach can help during many of the “moments of truth.” When growth is happening so quickly, employees (including founders!) may not have the time to grow into their roles; their roles are changing too fast, and they’re too busy building the business. When roles shift, or unquestioned assumptions and rules suddenly stop working, an executive or advisor can help you through what’s needed structurally, motivationally, or personally-to bring things back on track.
Use your Smartphone to be More Productive
How to use your web-enabled smartphone to be productive. Or not. I’m quoted today in this 
How do you find real community in a wired world?
I really enjoyed Marina Keegan’s article “The Opposite of Loneliness.” The word I’d use as the opposite of loneliness is “community.” Community has been shown to be an important part of a happy, fulfilling life. Of course, there’s no economic model attached to community, so not only do we not manage it, we disregard it in our calculations and decisions.
It’s something I’ve thought a lot about the last 5-10 years, as it’s become apparent to me that the grown-up world we’ve created doesn’t provide much opportunity for it. Any sense of “we’re in this together” that may have existed in America seems to be long gone. The prevailing question seems to have become “How can I get mine and avoid giving any of it to anyone else?” Of course, if you feel like you’re in a community, getting yours becomes much less important, since you feel like someone’s there to help if you really need it.
The very things that we call “progress” are, I believe, a big part of the problem. Easy transportation and telecomm have made it easier ad easier for us to isolate ourselves in suburbs, with our work lives being played out far away, with people who don’t share our interests, who don’t like us, and who don’t live near us. Seeing someone once a month at a planned dinner out for two hours becomes the new definition of “friendship” (second only to the definition of friendship that involves reading someone’s status updates on social media).
If you have hobbies or interests that naturally lend themselves to seeing others (e.g. team sports), that can be a source of connection. But even there, it’s not clear to me that it’s the kind of connection Keegan is talking about in her article. I recall the feeling she’s discussing, and indeed, college is the last time I felt it.
For all you post-college folk out there, please share! How do YOU find community in your life?
Perfectionism. Sucks.
How much of your life is controlled by perfectionism? Every time I think I have finally reached a balance, I manage to put myself in a situation where nothing less than perfect will satisfy me.
Last week and this I have been holding myself to impossibly high standards for a client engagement, 2 shows, a TEDx talk, and an audition for a summer musical theater program. I worked my butt off for the client engagement and believe it went well (awaiting evaluations still). But for the others, I have no standard for “good enough,” so I’m holding myself to impossibly high standards. The resulting stress is wasting mental resources that could be going into preparing as best I can for everything.
The problem isn’t the perfectionism. The problem is the stress caused when I don’t reach my standards. The stress doesn’t come from the activities themselves–I’ve done well in shows before, and I’ve given great speeches before—but from the beliefs that are surfacing around them: “I have to do it perfectly.” “Everyone’s counting on me.” “I should be able to do better than this.” and “This is the most important presentation ever.”
These are just thoughts, however. They may or may not be true. When I don’t think them, in lower-stakes situations, I’m fine. I step up, perform to the best of my ability, and learn to do even better next time. When I get wrapped up in the thinking, though, it becomes a stress-fest. Even if the thoughts are true, the stress does nothing but get in the way of doing my best.
My solution is to stop working on my performance for the next half hour and instead work on reducing the intensity of my beliefs. When my mental landscape is calm and clear, I can apply myself fully to doing the best possible job at my current skill level.
I’ll let you know how it goes.
(And any of your ideas on how to deal with perfectionism and perfectionist-thinking would be greatly appreciated!)
Our Intuitive Knowledge Isn’t Always Right!
I was recently listening to a lecturer discuss how risk-taking is an integral part of “the entrepreneurial mindset.” He was very inspirational. Unfortunately, he was also flat-out wrong. There has been a lot of research into the psychological qualities of entrepreneurs. What has it concluded? There is no “entrepreneurial mindset”–entrepreneurs are a very diverse group. But especially among lifelong entrepreneurs who have experienced multiple successes, there is no evidence that they are any more risk-taking than anyone else. In fact, they do everything they can to mitigate risk.
My point, however, has nothing to do with entrepreneurs. It has to do with conventional wisdom. We intuitively (or culturally) want to believe that entrepreneurs are a special breed of person. That way, we have an excuse to be an entrepreneur if we deem ourselves “that breed.” Or we have an excuse *not* to be an entrepreneur if we aren’t “that breed.” Either way, we get to shift the responsibility for the decision to our personality type, rather than our decisions and efforts. That makes the very notion of an “entrepreneurial mindset” attractive, as a flexible rationale we can use for all kinds of stuff.
A lot of conventional wisdom is similar. The American myth that CEOs are somehow to credit for the entire performance of their companies, for example, is unsupported by any data whatsoever. W. Edwards Deming, the statistician who created the Total Quality movement, said that no more than 10% of a company’s performance could be attributed statistically to the CEO, and then only in highly unusual cases.
The problem is that our minds aren’t very good at understanding complex things. For 100,000 years, our minds weren’t able to do much beyond farm. Then we invented the scientific method, which was the first time we had a rigorous way to separate our intuitive-but-wrong ideas from the nonintuitive-but-accurate ways the world really works.
There is a lot of poorly-done science in the works. There is also a lot of excellent science, which is why we live 2x as long as our ancestors, in comfort, with electric lights and polar fleece.
Especially in the human potential fields–self-help, business leadership, etc.–there is a substantial body of research about how people and human systems actually work. Much of that research has even been popularized and published in books accessible to everyday people.
Before jumping on the pleasant, inspirational stories propagated in our cultural myths, take the time to read some of the research-based books on the topics. You can even go further and read the studies the books are based on. Some of the science (or the way it is being interpreted) may be ‘iffy,’ but some may be solid. And you may learn how the world *really* works, which will only make it easier for you to create the life you want.
(*) this is what I did for the Get-It-Done Guy episodes on visualizing for results. “The Secret” doesn’t work. They’ve done controlled experiments to find out. But some slight tweaks in the visualization technique *has* been shown to boost results. Not because of a deep spiritual principle, but because the right visualization gets people motivated and moving to make their dreams come true.
Meritocracy: A Fine, But Mythological, Idea
I love the idea of a meritocracy! It’s a glorious myth that makes a wonderful story. But if you look at how resources, wealth, prestige, etc. get distributed, it’s very hard to make a case for meritocracy.
It’s no surprise we believe in meritocracy. We spend our entire first 18-25 conscious years in school. School is a true meritocracy. The more you work at mastering the material, the more you earn good grades. I don’t know about you, but school was the last meritocracy I had the privilege to enjoy.
At my very first job out of college, I was told, “You do the best job of anyone here, but you’re too young to be making any more money.” Sadly, I persisted in thinking that doing a good job was the way to get what I wanted out of life. I still think that way in my gut, even though I continue to see little evidence of it.
Many very successful people talk a lot about meritocracy and how they just worked hard to succeed. That’s all fine and good, but they’re looking at only their own story. They’re not looking at the vast majority of people in the world who work very, very hard, and don’t get rewarded nearly as well. I’ve also noticed that the people who are highly successful/rewarded/prestigious have a tremendously powerful psychological vested interest in believing in and trumpeting the idea of meritocracy. Otherwise they would have to confront the idea that maybe they don’t deserve all that money/power/fame, and it simply came to them because they were born to the right parents, or were in the right place at the right time.
In capitalism, we give the bulk of the value created by an enterprise to the owners. It’s far better to own 50% of the equity in a successful company that you left 6 months after founding it than to work your ass off for 12 years making that same company a success, but working on salary. What matters as far as material reward isn’t the work/merit, but the capital and ownership structure. (That’s a true story, by the way. The company founder never worked again. The employees, while doing reasonably well, are still working at the same or other companies to earn their daily bread.)
If you want to do a good job, by all means, do it. Personally, I like to be proud of my work, and I strive to do the very best. But don’t confuse that with getting what you want. When you’re designing your life, remember that producing good work may be something you do for the psychic and self-esteem rewards. When you’re going after other rewards, say, money, be as clear-headed as you can about what will help you reach that result. Hard work and skill may not have anything to do with living the kind of life you want.
Income Inquality
I just watched this TED talk on income inequality. It speaks for itself. Very powerful result. On a whole host of general measurements of social well-being, it is income inequality, not average levels of income that drive social problems. Wow. This has huge public policy implications, which I suspect will go largely unheeded in a society where many politicians are little more than hired representatives of anonymous rich people. (Thank you, Supreme Court, for ratifying the existence of the Super-PAC.)
Why I Like Paper
A reader wrote in:
I read your suggestion about the 3×5 pad and it sucks! That’s because I hate paper and pen note-taking. I want something that I can carry with me anywhere on my handheld and which will also prompt me, just like a personal assistant, not something which will load me with the extra work of transcribing to a master list! As if I am not burdened enough already! Look, I need something to help me gain lost time each day. Something to boost my productivity and tidily organise my intended activities in a manner that enables me to take action on them!
My reply:
The reason I like paper is that the transcribing *forces me* to confront whether or not a particular task is important enough to copy by hand. If it isn’t, that’s a sign that it probably isn’t important enough to keep on my list. The key to freeing up time, ultimately, is saying “No” to commitments and then vigorously protecting the time you’ve freed up.
If time is getting lost, you need to stop doing the things that you define as “losing” it. Smartphones are often big time losers. Yes, the phone is a fun toy, and yes it can do cool stuff, but measured *in terms of my getting my important work done* (as opposed to my unimportant, imagined work), it’s probably doesn’t make me that much more productive.
The problem is that it speeds up some things, but it slows down others. For example, I type about 1/3 the speed on my smartphone as I do on my desktop. I may find it convenient to respond to email on my smartphone, but it’s actually making me *less* productive. And even if I could answer email at the same rate, the moment I click on a link and spend 5 minutes web browsing or playing a game, any email productivity gains get lost as I waste time goofing off.
If you’re brave enough, try keeping a log for a couple of days. Note what you get done on your smartphone and what you get done at your desk, and how much time each takes. You may find your smartphone boosts your productivity. Or you may find it doesn’t. For looking up phone numbers and addresses, my smartphone is awesome. But does it really save time? I used to clip someone’s business card into my rolodex and I’d memorize it after 2-3 calls. Now I have to retype or scan-plus-double-check each card to get it into my address book (or pay someone to do it, which means earning the money to pay them). And then I *always* have to look them up, because I no longer memorize.
Assuming I make 5-6 calls a day, am I really more productive with an electronic address book when you take all that into account? I suspect yes, but I probably save a few minutes a month, *not* hours.
In short, I like paper because it forces me to think. I like technology because it’s fun and sometimes convenient. But I never assume that paper is automatically bad, nor do I assume technology is good. Like any tool, test it out and be careful that adopting a new, faster tool in one area doesn’t slow you down in another.
Use Social Media to Trumpet Your *Real* Awesomeness!
“Thousands of people just like you are sharing, right now!” says a social media site. Then, I suppose, my sharing would be utterly redundant. And my following their streams would be an exercise in narcissistic boredom. Is this *really* the pinnacle of human technological achievement?
I share a lot on social media because it’s part of my job. I have a very popular podcast that offers what I hope is a unique perspective with content that ranges from heard-it-a-thousand-time-before to novel and new. I work very hard to provoke thought, either by refuting some conventional wisdom I believe is wrong, or by asking provocative questions that stimulate a conversation.
If “thousands of people just like [me] are sharing,” then my sharing adds nothing, so why bother? A far better message is, “go get off social media and do something fascinating, intriguing, exciting, and wild! Then come back and share when you have something unique to share.”
Let me pose a challenge: if you spend time on social media sharing the book you’re reading, or which ice cream parlor you’ve stopped at for a cone, stop it. Use that same time to daydream a challenge to undertake, a mystery to solve, or an adventure to create. Then go do it. And then share that on social media. Not only will you attract a larger audience, but you’ll have a life worth broadcasting as a role model.