The Great CEO Within: The Tactical Guide to Company Building. [Part-2]

Harsh Batra
Harsh Batra

This week’s insights come from the book The Great CEO Within: The Tactical Guide to Company Building. This is Part-2.

Total Reading Time: 30 Minutes
Reading Only Highlights: 5 minutes

21 MORE INSIGHTS

YOU NEED COMPANY VALUES DEFINED TO GUIDE YOUR HIRING AND FIRING
One misconception CEOs sometimes have is thinking they get to choose the values. By the time you have thirty or so employees, your company has a set of values whether you like it or not. It’s now your job to codify what’s already there. While it is possible to change a value, it will take a lot of work.

Agreeing on what your values are is the kind of statement that needs maximum buy-in, so it should involve your whole company. Send out a survey, and gather contributions from everyone. Ask your team to suggest both a value and the name of an employee who exemplifies it. Then arrange all the suggestions into common themes, and have your leadership team vote on the final cut.

Once you have agreed on your values, use them to guide your hiring and firing. Bring in people who want to live by these principles, and let go of people who don’t. Otherwise, your values will have no meaning.

Every week at the all-hands meeting, highlight a value and a person whose actions best exemplify that value that week.

Your litmus test is whether your team members are hanging out with you and one another outside of work. If yes, you are likely creating good culture. If not, increase your efforts to practice conscious leadership (chapter 15) and keep working to create buy-in for your values.

INSPIRE FOR OUTPUT NOT WORKING HOURS
Remember, the key metric is output, not hours. If you impose hours, people often will simply put in the required hours but without effort or enthusiasm, and you’ll make little progress.

The key is to inspire and motivate your team so that long, hardworking hours are not an imposition but a choice.

The same goes for working at home—it’s really all about the output rather than the location or time spent working.

LEAD BY EXAMPLE
Remember to always lead by example. Be the first one to show up each day. Be the last one to leave. Once you have department heads, they should also set this example for their departments. Do not hire department heads who are unwilling to do so.

Whatever your teams’ working hours end up being, make sure there is a core period of the day when everybody is available (whether online or in the office). Set a regular meeting (a short stand-up meeting) at the beginning of this core set of hours.

EAT TOGETHER TO CREATE A BOND
Mealtimes together allow team members to bond organically and with a wide range of people.

Offering lunch thus creates a more bonded overall team. Offering breakfast and dinner allows people to easefully extend their workday. Thus, there are benefits to offering meals beyond simply the pretax calculus.

Encourage team members to be present at meals so that they interact with one another. This means no electronics (phones or laptops) at the meal table.

Encourage the team to meet at the same time each day by creating a shared calendar event. All this will improve team bonding and trust.

One solution that I’ve seen work is to randomly assign team members every week to meet, get a coffee, or hang out virtually. There are tools like Donut (donut.com) to facilitate this.

THE KEY TO A SOLID COMPANY INFRASTRUCTURE ARE
The key components to a solid company infrastructure are: 
  1. a company folder system
    1. It may seem obvious, but every company should have a structured folder system for storing documents, such as Google Drive.
    2. Each department should have its own folder, and all team members should have access (at least for viewing, if not editing) to all folders except for the one containing compensation, performance reviews, and performance improvement plans.
  2. wikI
    1. You should also create a wiki page, which need be nothing more complicated than a document containing links to all the other important company documents. Make sure that reading the relevant parts of this wiki is part of every employee onboarding. As of this writing, Notion.so is my favorite template for a wiki.
    2. A well-run company documents every aspect of its operations so that its team members can quickly step into a new role when needed.
    3. Here’s an easy way to do this: Whenever you find yourself doing something twice, write down exactly what it is that you did.
  3. goal-tracking tools
    1. Task-tracking systems are excellent at transforming issues to next actions and tracking progress from meeting to meeting.
    2. Goal-tracking systems are much better at showing the team their progress over many weeks and months, therefore boosting morale.
  4. areas of responsibility
    1. Never assign someone an action without them agreeing to it verbally or in writing.
    2. “Tragedy of the commons.” When several people share responsibility for an action or process, often that action doesn’t get done well or at all.
    3. To prevent this from happening, group tasks into functions and assign each function to one—and only one—person. These are your areas of responsibility. Apple pioneered AORs in Silicon Valley, but now most successful tech companies use this method.
    4. Create a document that lists all of the company’s functions and, for each, the directly responsible individual. This is the AOR list.
    5. Notice how each department’s tasks are grouped together, the task is succinctly described, and there are both a main person responsible for the task and a backup person. This infrastructure ensures no task falls through the cracks because people thought it was another person’s responsibility.
  5. no single point of failure
    1. A well-run company has no single point of failure. To create a team with no single points of failure, do two things: Write down all processes. As soon as you or your team members find yourselves doing something for the second time, you should write down the steps of that process exactly. Place these written processes in a company-wide wiki.
    2. Cross-train a second person for each role.
    3. Map each function in the company (from the AORs) to a backup person. Have the backup person co-work with the primary until the backup knows how to perform the role.
  6. key performance indicators
    1. KPIs are the one or two significant metrics for each major function that show the entire team in an instant how the company is doing and where the issues are.
    2. Here are some examples:
    3. Determine the company’s five or six most significant KPIs, then track them religiously and make them available for the entire company to easily see on a daily basis. Post the metrics on a TV screen in a central place in the office, using a tool such as Geckoboard.
GOOGLE CALLS IT OKRS
Every successful large technology company uses this system. It has no single name—Google, for example, calls theirs Objectives and Key Results, or OKRs—but the systems are essentially the same from company to company. They share the following key functions:
  • Setting vision and goals for the company, each department, and each individual on a regular basis (usually quarterly) 
  • Communicating that vision and those goals to every team member 
  • Tracking and reporting progress toward those goals on a regular timetable (usually weekly) 
  • Eliciting feedback from all team members on what is going right and (much more important) what is not going right and needs to be changed

HERE IS HOW YOU SHOULD STRUCTURE YOUR ORGANIZATION
Once you have achieved product-market fit, that is the right time to blitzscale and win the race to market share. You’re going to need to diversify your skills and grow your team.

To do this, you will need to create massive awareness (marketing), walk many customers through the sales process (sales), hold those customers’ hands as they set up and use your product or service (customer success), harden your infrastructure to withstand many users at once (DevOps), get rid of technical debt and add all the features promised in your roadmap (engineering), update the product roadmap to meet the most urgent needs of your customers (product), and all the nontechnical operations (people [recruiting, training, and HR], finance, legal, office).

The good news is that the same system that allows your company to operate well with twenty-five people will also allow it to work well with twenty-five thousand.

The leadership team typically consists of the following people: 
  • CEO 
  • Head of product 
  • Head of engineering 
  • Head of sales 
  • Head of marketing 
  • Head of customer success 
  • Head of operations (people [recruiting, training, and HR], finance, legal, and office)
Each of these department heads then has a team that they manage. Once you adopt an organizational structure, write it down and make it public to the company. There should be no confusion about who reports to whom and what team meeting each person attends.

WHAT IS ACCOUNTABILITY?
Accountability is declaring a destination (vision, OKRs, KPIs); the action steps to get there (actions); and whether those actions steps were taken (and eventually the destination achieved).

BATCH YOUR DAYS
The schedule that works best for a five-day workweek is as follows: One day of internal meetings One day of external meetings (e.g., interviewing candidates) Three days of no meetings

If one of your managers can’t fit all the necessary meetings into a single day, they have too many people reporting directly to them and you need to reorganize, or they need to run more efficient meetings.

TEMPLATE FOR RUNNING MEETINGS
Team Member 
1. Accountability (goals and actions) 
a. Last week 
i. For each of your stated actions from last week, did you get them done—yes or no? a.) If no, what blocked you? b.) What habit can you adopt so that you don’t encounter that obstacle again? 
b. Next week 
i. For each of your OKRs, what one action can you take to advance toward each of them?

2. Coaching (issues and solutions) 
a. Show your OKRs in traffic-light fashion (green, yellow, red). i. Green = on track ii. Yellow = slightly off track iii. Red = far off track 

b. Show your KPIs in traffic-light fashion. 

c. Show any pipelines that are relevant (recruiting, sales, customer success, engineering roadmap, etc.). 

d. If I were to dig into these updates, what would I discover in your department that is: i. Good? ii. Not good? a.) Please describe the issue in detail, as well as your proposed solution. This proposed solution should include: i.) What you can do to solve the issue ii.) What I (your manager) can do to help unblock you 

e. Please list any other issues that you see in the company, with peers, with the product, in your own life, etc. i. For each, please list your proposed solution. Even if you are unsure of what the right course of action is, take a stab at a definitive roadmap. It will help advance the conversation.

3. Transparency (feedback) 
a. What did you like that I did as manager? 
b. What do you wish that I would do differently as manager? i. Please think of the feedback that you are afraid to give me because you think that it will hurt my feelings. Please give me that feedback.

Each meeting should have clear notes of all updates given and all decisions made (other than those around an individual’s compensation or performance improvement).

Those notes should be freely published to the company so that everyone can know what happened in a meeting without actually attending.

I posit that the leadership team should be, and remain at, about eight people (six to ten is fine). The VPs meeting, by contrast, should grow as the company scales. At a company of one thousand employees, the VPs meeting often has fifteen attendees. At Microsoft, this same meeting is over 150 attendees, or so I’ve been told.

LOOK BACK FROM 10-YEARS OUT
VISION - To create the ten-year company vision, imagine it is ten years from now. You are the dominant company in the industry. Ask yourself: 
  • What industry do you dominate? 
  • Who is your customer? (This should be a real live human being, not a corporate entity.)
  • What pain are you solving for the customer?
  • What is unique about your solution that causes the customer to choose you over the competition?
  • What asset (human or physical) do you control that makes it difficult for any competitor to copy your solution? In other words, what is your moat?
VALUES - There are many ways to define your company’s values. A simple one is to complete the following sentence: “The rest of you in the company can make all of the decisions from now on, as long as you…” This is appropriate when the company is small and values are entirely aspirational.

WHERE DO WE WANT TO GO AND HOW DO WE KNOW WE ARE GETTING THERE?
For your quarterly goals, or OKRs (objectives and key results), the target is three and three: three objectives, with three key results for each objective.

Create these OKRs for the company, then for each department (based on the company OKRs), then for each team (based on the department OKRs), and then for each individual (based on the team OKRs).

The objective (O) answers the question, “Where do we want to go?” This objective should tell a compelling story, akin to the tagline of a Hollywood movie. It does not need to be measurable (ironically, it can be subjective). But it should be inspiring.

Key results (KRs) answer the question, “How do we know that we’re getting there?” KRs should be objectively measurable.

Here are examples: 
  • Objective: Massively grow revenues 
  • Key results: Reach $500,000 in monthly recurring revenue. Hire ten additional sales development reps. Hire a sales operations person to project manage the sales team.

Here are some examples of typical company-level OKRs: 
  • Profits: Massively grow revenues while minimizing expenses. 
  • Product: Delight our customers. 
  • People: Create a positive and transparent environment where we are all inspired to do our best work.
Keep in mind it is much better for people to come up with their own OKRs (that align with the company’s) than to just hand them down. That way they feel personally invested and have buy-in.

For all OKRs that are far off track, require that the DRI create a written description of the issue and solution to get back on track.

IF YOU WERE CEO, WHAT WOULD YOU CHANGE?
When asking for feedback on the company in general, it is useful to ask, “If you were CEO, what would you change?” You can do this in person or through an anonymous survey.

When asking for feedback about himself as a manager, Lachy Groom of Stripe asks, “What feedback are you afraid to give because you think it might hurt my feelings? Please tell me that.”

HOW TO CREATE A BOND WITH SOMEONE
The four keys are as follows: 
  • Ask them about their lives. 
  • Prove that you heard them by saying, “I think I heard you say…” 
  • Prove that you remember by saying at the next meeting, “The last time we talked you said…” 
  • Let them know what you appreciate about them.
If you do all four of these things, you will have created a bond, and you then have a willing investor.

The following tip comes from Andy Bromberg, founding CEO of CoinList, who takes it a step further: “At the risk of giving up my secrets, I’d suggest handwritten thank-you notes. The response I get to my handwritten notes is incredible. People are floored. And often remember me as ‘the handwritten note guy.’”

So make it a practice to regularly go through your contact list and send out messages of appreciation. You will be shocked by the massive goodwill that it generates. Andy suggests making this a formal process. He says, “Every day I review all my interactions and send (or schedule) thank-yous as appropriate. It ensures I don’t miss anyone and am prompt. And it takes literally a few minutes.”

SELL YOURSELF, NOT YOUR COMPANY
Through countless interviews with master storytellers, Tyler determined the ultimate structure for telling one’s story in a humble way: 
  • Credit: “It could not have happened without [name the others involved].” 
  • Hard work: “We had to put in so much to make it happen, for example, [describe the hard work].” 
  • Vulnerability: “It was most difficult for me when…” 
  • Duty: “We were driven by our dream to [noble motive].” 
  • Gratitude: “I am so proud and thankful that…”

WHEN TO RAISE MONEY?
The best time to raise money is just after you’ve hit an inflection point. This is because your company has just increased in value but will not increase further until it hits the next milestone, which could be months away.

THE BEST QUESTIONS WHEN HIRING
Of all the recruiting systems I have seen, the best is described in Who by Geoff Smart and Randy Street. Here’s a brief look at the main points of Who.

“Thank you for visiting us today. We are going to do a chronological interview and walk through each job you’ve had. For each job, I am going to ask you five core questions: 
  • What were you hired to do? 
  • What accomplishments are you most proud of? 
  • What were some low points during that job? 
  • Who were the people you worked with? 
  • Why did you leave that job?
At the end of the interview, we will discuss your career goals and aspirations, and you can ask me questions about us.

Ask about the three Ps. Use the three Ps (performance, plan, and peers) to clarify how valuable an accomplishment was in context. 
  • “How did your performance compare to the previous year’s performance?” 
  • “How did your performance compare to the plan?” 
  • “How did your performance compare to that of your peers?”
Only choose candidates whose skill (what they can do) and will (what they want to do) match the scorecard.

ASK THESE QUESTIONS TO UNDERSTAND THE CUSTOMERS PAIN
You ask a series of questions with the aim of understanding these three things:
  • What are their goals? 
  • What are the challenges preventing them from reaching those goals? 
  • What are their ideal solutions to overcoming those obstacles?
The pain point that you are solving may not be the only challenge that the customer faces, so it is your job to guide the conversation towards the specific pain you solve. It is also very helpful to ask open-ended questions, such as “Please tell me more.” This will give you additional context about how they see the specific situation. Finally, make sure to repeat the important things they say about their goals, challenges, and ideal solutions back to them to show them that you are listening and to build trust.

SELL RESULTS, NOT FEATURES
You don’t buy the new MacBook because of its new chip. No, you buy the new MacBook because it allows you to achieve more due to its increased speed.

The chip is the how; achieving more is the why. Focus on the why. Focus on painting the vision of a world where the customer’s desires are fulfilled with the help of your product.

Here’s a real-world example. In the early days of DocuSign, the company was struggling to close big enterprise deals. They were selling software that enabled their customers’ salespeople to send and sign contracts virtually. The problem was that nobody cared about signing contracts virtually. And why should they? There was no hint that signing contracts virtually had any impact on their bottom line. When DocuSign realized this, they changed their strategy. They changed their pitch to say that they can increase your revenue by getting your customers to sign their contracts in under half the time that they currently take to do so. What follows is history. In 2015, DocuSign raised $233 million at a $3 billion valuation.

So what results are you providing to your target customers?

EVERYTHING YOU NEED TO KNOW ABOUT GENERATING LEADS AND CLOSING DEALS
Generating leads and closing deals are distinct functions that must be split. Generating leads is a game of breadth: it requires emailing and talking to a lot of different leads to filter out the nonqualified ones as fast as possible. Closing deals is a game of depth: it requires building deep relationships and understanding with the qualified leads in order to close the deal.

Senior salespeople are expensive, so their time is best spent focusing on the most high-value activity: closing deals. If your salespeople are also generating leads, they are wasting valuable time and getting unnecessarily stressed by having to fulfill different functions in parallel.

Here is the ideal structure of a sales team: Qualifiers (a.k.a. sales development reps): These people are focused on generating qualified leads and handing these off to the closers.

Qualifiers are usually compensated with a base plus a bonus for each qualified lead they generate. Generally they are split into two groups: 

Outbound reps: These are focused on proactively reaching out to leads and qualifying them. The most common channels used are email outreach and LinkedIn mining.

Inbound reps: These are focused on qualifying inbound leads that reach out to you by signing up to your site, signing up to your newsletter, or calling you directly.

The main focus of your qualifiers (outbound and inbound reps) is to qualify leads and pass those off to the AEs to close. The best practice here is to create a qualification checklist that your qualifiers will be responsible for checking off. Often this is done by scheduling a call with the prospect and going through the checklist.

Every company has their own specific qualification checklist. Generally, a qualified lead is one that feels the pain point that your product is solving, has the desire to solve that pain point, and has the power to purchase your product.

Once the qualifier has qualified the lead, they must pass it off to the AE. This is best done by introducing the AE in the email thread with the prospect or by having the AE join the next call with the prospect.

Qualifiers should be compensated either on a flat fee for each qualified lead they generate or on a percentage of the deals that they generate that are closed by the AE. For this reason, it is imperative that the AE be the one who decides if a lead is actually qualified. Generally the AE is the one who marks the lead as qualified in the CRM, not the qualifier.

Closers (a.k.a. account executives, or AEs): These people are focused on closing the qualified leads generated for them by the qualifiers. Closers are compensated with a base plus a commission.

Farmers (a.k.a. customer success): These people are focused on tending to existing customers, ensuring that these customers renew, and getting these customers to increase their spending. Farmers are compensated with a base plus a flat quarterly bonus based on retention rate or with a base plus a commission based on account growth.

THE BEST DEFINITION OF MARKETING EVER 
Marketing can be defined as understanding the problems of customers (strategic marketing) and what solutions are offered in the marketplace (competitive analysis), creating a solution that more effectively solves the customer problem (product management), and letting customers know that your solution exists (tactical marketing).

The essential goal of strategic marketing and competitive analysis is choosing your target beachhead. The essential goal of product management is achieving product-market fit. And the essential goal of tactical marketing is growing sales.

Your primary fear is that other competitors will see the same opportunity and move faster than you. But history tells a different story. The greatest risk of a startup is not that they moved too slowly in dominating the entire marketplace, but rather that they spread their scarce resources too thin and ended up securing few or no customers at all.

Every customer already has a legacy solution in place, and those legacy providers are far larger with more resources than you. They have deep and long-standing relationships with their customers. Even if your product or service is better, it needs to be 10x better than the current solution for a customer to switch. Therefore, rather than go after the entire market at once, the key is to find a small segment of the market (i.e., a set of customers with similar pain points) that has a particularly difficult problem for whom your solution is indeed ten times better than the broad, nonspecific legacy solution. This is your low-hanging fruit. Concentrate all your efforts on this type of customer to maximize your chance of getting your first few customers. Once you do, you will then have a track record to share, be able to raise more money, and be able to hire more engineers to create more features and more salespeople to develop more relationships. Continue focusing on this first type of customer until you have secured many (if not most) of them as your customers.

A good analogy is the Allied invasion of Europe during World War II. The Germans held the whole coastline. The Allies could have chosen to spread their invading force along the entire shore. If they had, they would have had one boat per beach. The Germans pillboxes would have slaughtered each and every allied soldier who landed on a French beach. That, of course, is not what the Allies did. Instead, they studied the coastline and found the beach that was the least well defended (Normandy). They concentrated all their forces on that one target beachhead and so were able to overwhelm the German defenses there and secure the toehold they needed. From there, the Allies were able to bring in more resources, expand out, and eventually spread throughout Europe.

Do the same. Study the marketplace. Segment it into different customer types. Determine which segment is the least satisfied with their current solution and for whom your solution is the best fit. Concentrate all your sales and engineering efforts toward this segment. Land a few of these customers. Continue to focus on this segment until you dominate it. Only then expand to other customer segments (or add other products). The best way to choose a target beachhead is to follow the steps outlined in the book Disciplined Entrepreneurship by Bill Aulet.