Demand grew for more engineers at SparkLight Digital. The sales side CRM required further optimization. But it was also time to get to work on building the dealer’s service side CRM (the next big step in pursuit of your vision for an end-to-end, vehicle lifecycle CRM system). In the search for engineering talent, San Francisco proved too hot and too expensive. It was time to consider the possibility of a remote engineering office in India.
At first, you and Joe struggled with concerns about maintaining a cohesive culture, and whether the distance would impact your capacity to coordinate work effectively. On the positive side, an engineering team in India would deliver a significant cost advantage and draw from a strong, somewhat more available talent pool.
Joe brought Rajiv on board as senior director of engineering to lead the India team in Bengaluru. The decision proved to be spot-on. Rajiv jumped right in, lined up office space, and started recruiting. Soon, he populated the Bengaluru office with seven engineers cranking out code at a steady clip. It turned out that having engineers on Indian time enabled a more efficient workflow. During San Francisco hours, Product and QA review code from India and then ship updates to the engineers in India as they arrive at work in the morning. This 24-hour-a-day development cycle proved to be a productivity breakthrough.
. . .
A company survives and grows by work in five domains: product, revenue engine, systems, funding, and, most critically, people. The specifics are unique and evolve continuously, but from the earliest of startups to the largest of public companies, these are the domains that matter.
As CEO, to get a grip on what to do next in each of these domains, you must first understand current reality. Only then can you project your directional, executional, and moral voice with accurate aim.
Looking outward, this requires enough connectivity to the market to interpret signal strength and trend dynamics. Which segments and personas are most likely to buy from you? Does messaging resonate? How accurate is your understanding of existing customers’ product satisfaction? Which competitors are gaining strength, and why? Are potential channel partners emerging? Who would acquire you, and why? The signals that come in from the market inform the signals you send out to the market, which in turn impact the market itself, altering the signals you receive back. This ongoing dialogue evolves as you scale. In this vibrant continuous conversation, both speaking and listening skills are critical.
Inside your company, you need to know the health of your culture, the degree of cross-functional alignment and coordination, the competency of your leaders, the status of systems and workflows and the performance of work groups and teams. Based on outside-in, bottom-up, and cross-functional intelligence, what are the top strategic imperatives? How do they inform your strategic and tactical priorities? What projects must be resourced to attack these priorities? How do you get buy-in? To pursue critical priorities and to manage day-to-day work, every employee must understand what matters, what work is required, and his or her role in that work.
All of this requires a three-way communications flow:
A well-designed communications architecture ensures all three:
Inside-Out and Outside-In
Inside-out communications include all prospect and customer engagement, plus engagement with principal actors in the ecosystem.
The communications architecture to address external messaging comprises a brand identity document and messaging schema, both well researched. These are the documents that guide day-to-day actions across all of marketing and sales. If your company is a B2B company with SDRs (sales development representatives), AEs (account executives) and CSMs (customer success managers), then the messaging schema includes six playbooks: Brand Marketing, Product Marketing, Growth Marketing, Sales Development, Account Executive Sales, and Customer Success. If you are a B2C company, only the first three playbooks apply.
These playbooks define everything about inside-out communications, from the brand iconography to the SDR talk tracks to the thought leadership publishing calendar to the programs and plays for customer success — and much more. It is vital that your inside-out communications architecture be well-designed. For more on inside-out communications architecture, check out my book Scaling the Revenue Engine.
If you listen carefully enough, the market will speak to you.
As CEO, it pays to cultivate relationships with potential channel partners, top analysts, beat reporters, investors, and other key players in the ecosystem — even competitor CEOs. In each of these relationships, as you seek to shape their view of you and your company, you will also gain rich market insights. That competitor CEO you chat with at a trade show might soon be your acquisition target — or you theirs. That CEO from a Fortune 500 tech giant might be your channel partner or strategic investor. That robust conversation with a reporter over coffee might give you an insight into the perspectives of others while leading to a story in the Wall Street Journal. At the very least, these strategic conversations will influence how prominent market actors see you and will increase your understanding of your strategic market position.
Prospect conversion data and anecdotal feedback from SDRs and AEs are part of an outside-in communications architecture. Every prospect email you send, every digital ad campaign you run, every SDR conversation with a prospect presents an opportunity to listen. If your value proposition and competitive positioning statement resonate, they will result in healthy top of funnel conversion from impressions to leads. If your supporting claims and statements compel, you will see steady mid-funnel conversion. If your validation talk points, pricing, and terms align with market expectations, you’ll see substantial bottom funnel conversion. And if customers are happy, you will see active post-sale retention and spending expansion. The data will whisper truth to you.
Thought leaders, analysts, and media outlets provide another rich source of outside-in communications. If your company lands inside a Gartner Magic Quadrant, that positioning will speak loudly as to your current perceived place in the market. The number of mentions in media vs. competitors, head-to-head competitive rankings, and comparisons as published by analysts and trade media can all provide indicators of your market position.
You can also conduct a formal market analysis. By survey, you can measure aided and unaided brand recall and brand reputation. Pricing studies, such as conjoint and forced-ranking analyses, can be conducted to produce powerful market insights.
Segmentation analysis is also part of outside-in communications architecture. Nothing is more important in building your revenue engine than to accurately and deeply understand the segments you serve. A use case scenarios exercise is an excellent first step in such an analysis. For more detail on this exercise, check out Chapter 4 — Segmentation in my book, Scaling the Revenue Engine.
Take time to construct sound inside-out and outside-in communications architecture. Build it to be robust, methodically executed, multi-dimensional (transaction data, survey data, media/analyst information, sales anecdotes, exec anecdotes), clearly analyzed and presented, regularly reviewed, and used in decision-making.
From the executive group on down, regular cross-functional engagement is critical. You can’t set direction effectively without it. The unique perspectives of executives who lead different functions are vital to the development of holistic and nuanced strategic decisions. The act of sharing different perspectives helps to create alignment. High-growth companies feature strong “power partnerships” between the heads of marketing and sales, product and engineering, product and marketing, sales and customer success, and sales and finance. In these partnerships, each functional lead learns to better understand the needs and constraints of the other as well as iron out workflow breakdowns efficiently. If all of these partnerships are strong, it is likely that the entire executive group is working in sync.
At the workflow level, cross-functional coordination is critical. Directors and managers must build strong, sustainable relationships with their functional counterparts. Frontline contributors who hand work off from one department to the next need to collaborate in cross-functional work groups to optimize quality and efficiency. These cross-functional connections build quality, efficiency, and resiliency.
Top-Down and Bottom-Up
There are three critical top-down objectives for any company:
- To set direction consistent with an accurate understanding of current reality and strategic imperatives
- To ensure stable execution of priorities and workflows
- To maintain a healthy culture
These three objectives advance when leaders project clear and aligned directional, executional, and moral voice, followed by consistent reinforcing actions. Through announcements, presentations, meetings, chat within online channels like Slack, and in-person conversations, leaders set direction and guide execution.
But it’s equally important for leaders to hear the voices of the front lines. In fact, these voices will influence the direction that leaders set and the executional priorities that they select. Individual contributors see things that managers don’t see. Their observations and experiences are key data points that proactive leaders use in decision-making. As CEO, you must build a communications architecture that integrates all voices, while ensuring your voice is also heard and followed.
Building the Communications Architecture
A strong communications architecture is necessary to ensure three-way interaction among outside-in, bottom-up, and cross-functional communication.
As previously discussed, inside-out communication occurs as you unfold your brand identity and execute your messaging schema. Outside-in communication is an exercise in data gathering and analysis. The CEO plays a vital role via interactions with relevant market actors. Other executives and individual contributors from marketing, sales, and product teams also contribute. For all, the mission is to glean an ongoing understanding of emerging market dynamics and to position your company for competitive advantage in the market. For this purpose, both numerical and anecdotal data are relevant.
Meetings and conversations inside the company are vehicles to address the remaining types of communications (top-down, bottom-up, and cross-functional). To execute well requires scaffolding comprised of standing meetings and sound information sharing methods.
The following comprise the internal face of communications architecture:
- Board meetings
- Executive group meetings
- One-on-ones (with executives, mid-managers, and individual contributors)
- Strategy retreats
- Operational planning retreats
- Quarterly business reviews
- Functional group meetings
- Workflow group meetings
- Management By Wandering Around (MBWA)/open door policies
- Employee surveys
- All Hands meetings
Let’s address each.
The board requires regular business updates to fulfill its governance role. As CEO, it’s on you to synthesize the most critical data impacting your company’s status and future — financials, operating metrics, relevant internal breakthroughs and issues, and emerging market dynamics — and share these with your board. You also must lay out your vision and priorities, as shown in your strategic plan, your product road map, your hiring plan, your use of cash and funding plan, and go-to-market plan.
A well-executed board meeting begins with the board deck, which should be sent to board members a week before the meeting itself. The board deck should lead off with key financials and operating metrics of the business in a standardized way from meeting to meeting, with trending shown. The board’s expectation is for a simple, consistent, transparent exposition of current state and trends. You then list the implications of the data, define strategic priorities, and share the status of work on each. Over time, board conversations should touch on all five key domains: product, revenue engine, systems, funding, and people.
Whenever events occur that materially impact your growth plan, you must alert your board. Investors expect full transparency from you regarding the things that matter most.
Your board’s job is to be a rich source of wisdom and activism. Active board members provide advice and counsel and do real work in support of the business. A good board member balances her fiduciary duty to the company, the common shareholder, and her personal financial interests. In a trusting CEO/board member relationship, the board member respects the sometimes blurry line that differentiates advice from micromanagement and supports the CEO’s responsibility and authority to lead the company. In fact, the best board members expect CEOs to drive the board — to set the agenda, to lead the debates, and to put forward proposed direction.
CEO transparency, structured and standardized data sharing, respect for freewheeling debate, a continuous search for truth, respect for CEO authority, and shared participation in the real work of scaling the company characterize a strong board.
Executive Group Meetings
The purposes of an executive group meeting are to learn, share, decide, align, monitor progress, and coordinate. Exec group meetings tend to be weekly. There are many ways to sequence and organize things, but a productive meeting will include:
- A weekly review of critical company business metrics
- A structured review of progress on strategic priorities — often with “Green/Yellow/Red” designations at the project and task level (only the most important 3–4 projects and the most important 2–3 tasks for each)
- Each exec provides brief sharing of critical events, priorities, and progress
- An open discussion: a known key issue put forward by the CEO, or a proposal prepared by one exec to share with the group, or a key issue that has emerged from the individual exec updates requiring a broader conversation
- A structured way to avoid “rat holes” — such as a “Parking Lot” flip chart
The CEO’s role is to run the meeting, facilitate discussions, secure cross-functional decisions, and challenge executives to execute in an efficient, effective, well-coordinated way. As issues arise, you will frequently need to decide how to decide. You can make a decision on the spot, take it under advisement, assign it to one or more executives to come to you with a proposal, ask these executives to come back to the whole exec group with a proposal, or delegate the decision to one or more executives with or without a request to be updated on the decision. Please see Chapter 14 of People Design for more detail on decision-making approaches.
As CEO, your meetings with individual executives are moments of great leverage. It is here that you open yourself to influence. You seek to understand the executive’s perspective on priorities, the strengths and weaknesses of key players, the most significant growth blockers, and her personal goals and needs. These inputs shape the contours of your thinking and influence your decisions.
You also seek to project influence. Executives are one means by which your directional, executional, and moral voice translate into action.
One-on-ones are both scheduled and unscheduled. The scheduled one should be somewhere between weekly and monthly. Unscheduled drop-ins and hallway conversations add to the mix.
The first priority of a formal one-on-one meeting is to confirm strategic and tactical alignment. You need to make sure that each executive aligns with the strategic priorities. You also need to verify cross-functional alignment. As a company scales, silo risk grows. Yours is the only role that looks across the entire company; with this perspective, you are best positioned to spot misalignment. The one-on-one meeting is the right place to address it.
The next priority is performance management. Continuously addressing executive performance takes the sting out of the conversation. It becomes routine. At the executive level, performance expectations are always high. You expect “class A” work on projects and you expect executives to meet key financial and operational objectives. Depending on your assessment of the task-relevant maturity of each executive, your approach will vary — but you must always help each executive understand the current state of her performance and the next growth challenge.
Every executive must be a self-aligned cultural evangelist and a developer of leaders. Here too your coaching role is essential. Do your executives all hold regularly scheduled one-on-ones with their direct reports? Are they appropriately challenging them and coaching them? Are they providing their mid-managers the experiences that will help them grow as leaders, such as project leadership roles? And as to culture, what specific actions have they taken to advance the values your company holds dear?
Finally, the one-on-one is an opportunity to nudge. A nudge might occur during a scheduled one-on-one meeting or a hallway conversation. As CEO, you have a right to an opinion on matters of the day, even on those that you have assigned to others. Offer input. Pose the leading question. As you do, be sure to reinforce that it’s the executive’s decision. A well-delivered nudge helps an executive sharpen decisions without disempowering her.
With mid-managers and individual contributors:
One-on-ones are important at every level of the company. As you move down the hierarchy, the attention paid to strategic alignment reduces and the attention paid to tactical execution increases. For managers, the one-on-one provides a venue for coaching effective management practices. These are teaching moments on how to provide developmental feedback, how to address underperformance, how to hire and fire, and so forth. These meetings also afford managers the opportunity to “learn what’s really going on,” and to identify workflow breakdowns and customer issues that may be lying under the surface.
For the individual contributor, the one-on-one meeting is a chance to confirm that performance is in line with expectations, to receive coaching, and to provide input to management about critical issues and needs.
At least once a year, you should arrange for your executive group to come together in a one or two-day strategy retreat. The outputs of a great strategy retreat are a clear statement of the company’s strategic imperatives for the next 12–18 months and the major project initiatives that will be required to bring them to fruition.
The preparation for a strategy retreat begins a couple of months beforehand. The most critical input to this retreat is an accurate understanding of the current market position and emerging trends. Is your product growing into an exploding category of which you are the leader? Do you face increasing threats from feature or price-advantaged competitors? Or is there a fundamental product flaw that is driving low customer acquisition and high churn?
As CEO, your first retreat preparation step is to come to terms with the degree of change your company requires. As Katzenbach and Smith underscore in The Wisdom of Teams, particular situations trigger a requirement for significant change initiatives:¹
- The company must excel in an area in which it currently is not strong
- A significant behavioral shift of a large percentage of employees is required
- The company has no experience with the shift that is required
- Employees don’t understand the required behavior change, nor the urgency
A couple of months before the retreat, put your execs to work to gather research and prepare functional presentations. As CEO, if you challenge each exec with a list of provocative questions, you will guide them to confront the factors you believe are significant in ascertaining your current market position and defining the strategic imperatives.
For the retreat itself, it’s best to have an experienced facilitator who frees you as CEO to concentrate fully on participation, as opposed to having to worry about facilitation.
At the beginning of the retreat, it’s on you to set up the challenge. You restate the mission and vision. You review your past year’s performance. You discuss the board’s financial expectations. You note the critical issues and opportunities you see facing the company. And you propose initial thoughts on the key strategic imperatives.
It’s then important to quickly capture the perspectives of your executives. A “hopes and fears” exercise, in which each executive must present one hope and one fear until all executives have exhausted the hopes and fears on their minds, can help you quickly ascertain the “elephants in the room.” It’s common to then move to the functional presentations. If there are six executives and each presents for a half hour, you’ll quickly find yourself past lunch by the time you get through these presentations.
With all the data on the table, it’s time to validate the strategic imperatives themselves. This can be done by open discussion when the whole team critically reviews and debates the CEO-proposed imperatives. Or you may break the group into two or three subgroups, each charged with defining the top four strategic imperatives, then bring the subgroups back into a full group discussion to debate.
Once you have full exec group alignment on the top strategic imperatives, work must be done to determine the project initiatives required to make them happen. At this point, each executive begins to come to terms with the sacrifice necessary to achieve the chosen imperatives. They will wrestle with questions of capacity, competency, and how the work will impact short-term results.
Operational Planning Retreats
An operational planning retreat usually occurs once a year, unless there is substantial variation between planned and actual performance. In an operational planning retreat, the goal is to gain deep executive group alignment about the operational priorities of the company. Each executive must walk out of the retreat understanding her responsibilities in the achievement of the company’s financial and operational objectives over the coming twelve months.
Once again, preparation is essential. Each executive must prepare a proposed operating plan for his function. As CEO, you should work with a facilitator to plan a retreat agenda that ensures these plans are presented, critically reviewed, and adjusted to support cross-functional alignment. For instance, it’s helpful to conduct a “Brainwalk” exercise. Here, each executive’s name is placed on flip chart sheets on the wall, side by side. Each executive is asked to list his top work priorities. Once completed, each executive steps one to the right, providing input on additional priorities up for consideration. The process continues until every executive offers every other executive feedback on the priorities they should be considering.
Such exercises, and the discussions that follow cause executives to confront the magnitude of the work to be done and to confirm that the necessary time, resources, and cross-functional support are in place to make it happen.
Quarterly Business Reviews
Once a quarter, it’s appropriate to schedule a longer-than-normal exec group meeting — perhaps three hours — to go through current business performance. Are you hitting your financial and operational objectives? Are there underlying problems with unit economics? Is the culture healthy? Are changes needed? These quarterly business reviews enable you to step back from the day-to-day fires, confront emerging reality, and determine next steps.
The quarterly business review will help you to keep focused on the right priorities. You will be able to deliver you board a more complete and accurate understanding of current state and strategic implications. And you’ll move faster to make whatever business adjustments are necessary.
Functional Group Meetings
For those executives who have directors and managers reporting to them, the functional group meeting is similar to the executive group meeting. The executive’s goal is to learn, share, decide, align, monitor progress, and coordinate.
Workflow Group Meetings
When workflows cross functions, workflow groups become useful. In a workflow group, individual contributors and mid-managers work together to identify opportunities for workflow optimization. Productive work groups measure each step in the workflow and share data.
The workflow group is an effective place to spot frontline talent. Individual contributors may display a unique capacity to identify problems and propose insightful solutions. When you find someone who can work both “in” the business and “on” the business, you’ve identified a person with the potential to grow into leadership roles.
MBWA/Open Door Policies
Back in the seventies and eighties, Hewlett Packard distinguished itself with an open and high-integrity culture. One of its canons was MBWA — “Managing By Wandering Around.” VPs, directors, and managers challenged themselves to get out of their offices and meet individual contributors in their departments and beyond. These informal, by-the-desk conversations helped leaders learn and share, while simultaneously assisting individual contributors get to know the people hierarchically above them.
MBWA and open door policies advance the free flow of information and build relationships. They are critical tactics in creating a high-trust culture. Every employee in the company has a right to understand and be understood. Informal connections between leaders and followers are at least as meaningful as the formal ones; they are instrumental to an effective communications architecture.
An increasing number of companies routinely survey employees to gather data on cultural values, workflow management, and leadership quality. Most progressive companies share these results broadly and provide the inputs used to evaluate leaders.
Google is an example of a company that provides full employee survey data transparency while preserving employee anonymity.² So too at Lightbend, where CEO Mark Brewer presents employee survey results and trends at every all-hands meeting. At these companies, employee survey data is key to cultural health and continuous improvement.
The all-hands meeting is a high-leverage event. Usually held monthly, it’s an opportunity for you as CEO to remind everyone of the mission and vision, share company performance, emphasize key company priorities, and reinforce cultural values. Your choices as to who presents, who is recognized, what you say, and what data you cover speak volumes. They signal to everyone where power resides in the company, what values are most important, and how transparent and empowering you are.
Consider the following when planning your all-hands meeting: Is the meeting a place where all voices regardless of the hierarchy can be heard? Do you freely share financial performance? Do you present employee survey results, including the negative data? Do you allow for an open-ended Q&A session at the end, where any person who poses a question can do so without fear of recrimination?
The all-hands meeting has a significant cultural impact. Trust grows if and only if you combine your directional, executional, and moral voice with voices from all parts of the organization.
. . .
The rollout of SparkAction CRM 3.0 was flawless. For the first time, auto dealers could buy a comprehensive, end-to-end CRM system from SparkLight Digital. The new CRM system offered all brands to dealer’s on the sales side and a full set of analytics for dealer groups. Every time someone wanted to buy a car and asked for a price quote, SparkAction CRM delivered an immediate multi-vehicle quote, with a follow-up experience that was seamless and easy to manage for the sales reps. Customers could even post comments about their satisfaction with the purchase experience.
But now with the launch of 3.0, you offered dealers service side CRM functionality as well. A car owner could schedule an appointment for service, receive confirmation, receive service updates, check repairs pricing, and immediately approve work estimates via text. The dealer could manage service bay and technician utilization rates to maximize profit. A follow-up survey was built in to capture satisfaction measures and an analytics package displayed these measures and how they trended at both the individual store and dealer group levels. And the platform could be used by dealers to respond quickly to social media posts, whether on Twitter, Yelp, or elsewhere.
This was a big deal. Unifying the dealer’s end-to-end customer experience created a powerful data advantage and a “one-stop shop” experience for the dealer.
SparkAction CRM 3.0 launched three months ago. Today, as you walk through the sales floor and hear the buzz of forty simultaneous conversations, you marvel at its early success. Reactions from dealers are strongly positive, complemented by a spike in sales. As you walk through Bill’s customer success department, you observe high-paced work. The launch managers seem to be frazzled; a quick chat confirms that they are overwhelmed with new orders. The time from contract to launch is now four weeks, up from two. That’s a problem.
But let’s face it. It is a good problem to have.
. . .
Next up Chapter 16: 120 Desks — On Recruiting, Hiring, and Promoting. To see all published chapters of People Design, please click here.
Please visit us at CEOQuest.com to see how we are helping tech founders and CEOs of startups and growth-stage companies achieve $10m+ exit valuation.
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- Jon R. Katzenbach and Douglas K. Smith, The Wisdom of Teams: Creating the High-Performance Organization, Reprint ed. (Boston: Harvard Business Review Press, October 13, 2015).
- Laszlo Block, Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead, (London: John Murray Publishers Ltd., April 22, 2015).