The Fork In The Road

What Corporate Leaders Can Learn From Dr. King

                                                                                    Image by L. Kragt Bakker

As the US prepares to inaugurate President Barack H. Obama for a second term, it makes sense to think about where the country is headed. Not only is President Obama leading the country, we in the US are following. It’s easy to say: we follow because he is the elected president. So, why do we follow leaders who are not elected? Or, what makes a great leader?

Because it’s also the Martin Luther King Jr. holiday, this gives us an example of a great leader to examine. It’s true that Dr. King was charismatic, but charisma only takes you so far. Charisma is like a candle. It may burn bright, but eventually it burns out. Unless there are other attributes to keep interest, it’s a short-lived experience.

Dr. King was a great leader because his strengths went beyond his ability to captivate. An intelligent and studious man, Dr. King prepared for every speech, article, match and conversation. His writings and oration included scripture, spiritualism, historical fact and intellectual concepts. Simple ideas of right and wrong were presented on multiple planes.

Although Dr. King was African-American, his work was not to help better his own existence. He took a stand for others, people outside his immediate community and eventually the world. In addition to being a non-violent leader in the civil rights movement, he eventually took on poverty and the Vietnam War. Leaders must possess pathos to be able to say and truly mean: we cannot stand for things to continue this way.

It seems silly to say a great leader must also be organized, but Dr. King most definitely wasn’t the person on the ground organizing every visit and every march. Too many inexperienced CEOs believe they must have their hand in everything to make sure it’s done the way they would want it. This is the sign of someone who happens to currently be in charge not a leader. Micromanaging is one of the clearest signs of a non-leader.

Lastly, a great leader must be willing to sacrifice. I don’t mean the ultimate sacrifice that Dr. King made. A leader must be willing to sacrifice their time, comfort and sometimes even their dignity for the good of the organization, cause, employees or shareholders. With this complete definition, there aren’t many truly great leaders, but when you find one, they can lead well beyond the horizon.

Creative or Analytical? - It’s the Wrong Question

I’ve been waiting a few weeks to figure out how I can politely address what may seem like a pet peeve. I’ve finally decided to not be so sensitive and accept that some people will see themselves in the blog post and will need to accept they are less than experts when it comes to marketing.

Wow. What a buildup for what seems to be a simple question: Are you creative or analytical?  As I’ve moved into senior global marketing roles, I’ve been asked this repeatedly. Usually by CEOs who I assume are intelligent in aspects of business.  I’ve always been polite, in part because it’s usually been in the middle of a job interview when this question is asked.  Now it’s time for me to share what’s behind my very polite smile: What an incredibly stupid question!

Yes, there are people in the marketing discipline who lean heavily toward creativity or analytics. However, do you really want to hire one of these people to head your marketing efforts?

Marketing executives, especially in high growth companies, must have a penchant and passion for both.  Only working through a “playbook” of marketing tactics neglects great opportunities to engage prospects.  For companies with a technology without widespread awareness or adoption, working through a series of marketing tactics because you think that’s how marketing is done, may ensure your solution is never seen by the most qualified prospects or that it’ll take a lot more money to get on their radar.

At the same time, I hate, hate , HATE, “gee whiz marketing.” These are super-cool marketing efforts done solely for the purpose of looking super-cool.  Marketing must be done for a purpose.  Sometimes this is lead gen, sometimes it’s awareness, sometimes it’s positioning for a liquidity event.  One of my earliest professional memories was promoting the Clay Court Championship in Pittsburgh, PA.  Our budget was just above USD$ZERO for an event spanning several days and a client willing to try something for the sake of drawing attention to it.  What I came up with was a celebrity charity tournament to be held on the first day of the event.  In Pittsburgh, “celebrities” were mostly media personalities, or in other words, TV  news anchors.  As planned, the celebrities that were invited to participate came with camera crews to show how the stations were supporting the community.  Each then ran it on the evening news.  The result was a measureable increase in attendance both from the previous day and also in comparison to previous years. 

Marketing must be a mix of creative new ideas and previous efforts with a proven track record. Both need forecasted results and ROI, and just as important, thorough measurement during and afterward. The measurement also needs to be the right measurement. For example, measuring lead generation on incoming leads is only a portion of what should be happening.  Ultimately, lead generation should be graded on how many leads reach the opportunity stage and the percentage of projected revenue in those opportunities.  It is also a mistake to assume public relations’ and analyst relations’ efforts cannot be measured.  There is always a way to measure. It takes someone who is creative and analytical to develop a metrics that fits the discipline and the company.

So, I ask again: Would you really want to hire someone who doesn’t have a passion for creative marketing to discover new ways to reach prospects, develop solutions and position your brand AND the analytics to continue to improve your (M)ROI?

 

Where Founders Should Go After They’re Done Founding

It is rare to find a founder who is visionary and can grow a $1+ Billion organization. For every Jeff Bezos, there are 100s of founders who create very good concepts and then allow their companies to miss their true potential because they don’t know how to move beyond being the founder, CEO and company rudder.

The best founders know whether they are the right leader for the next stage, when it’s time to have someone replace them, or even leave the organization. The second best version is the founder who has trusted advisors who can provide this outside guidance.

For the founder who chooses to leave the company they helped create, their next step depends in part on what brought them to become founders in the first place. For some people, it is as if they have no choice but to create over and over again. For others, founding their first company was based on happenstance. For example, Engine Yard received the funding that put it on the path it’s on today because VCs noticed other companies were using it to build their technology. Wildfire Interactive was created after its founders experienced the painful process of trying to create promotions for Facebook.

Three options are available outside the initial company:

1)   Move into a technical or business role in a related business sector. Yahoo and Google have been known to hire former founders. A large technology company could be a good fit because the founder’s technical skills married with the personality characteristics required to develop and launch a company (determination, organization and confidence) makes these people more likely than their peers to prove themselves and move up quickly.

2)   If the VC who funded the initial company sees potential in the founder’s skills and creativity, an entrepreneur in residence position may be offered. This gives the entrepreneur the opportunity to assist other startup companies by providing insight and subject matter expertise. This also gives the entrepreneur in residence a needed break in which they can cultivate their next idea.

3)   An often-overlooked option is moving into academia. It’s unfortunate that this isn’t considered more. Just as some founders have an abundance of determination, organizational skills and confidence, others are much more interested in the process of creating and perfecting new things. These people will be more focused on details than the big picture. The same characteristic that makes it hard for them to decide what is the best business approach and stick with it makes these people good academics because they want to examine and reexamine every possibility multiple times.

For founders for whom it is not appropriate to remain in any role at their company, what comes next could be uncertain and an ego blow. Two important things to keep in mind: (1) whether you are currently in charge or not, the prosperity of the company you founded is bigger than you and it comes first; second, you can find success beyond one company.

 

Moral Bankruptcy in DC

Bankrupt = not enough money to pay what is owed. People/organizations that are bankrupt default on their loans. Morally bankrupt = not enough moral fiber to do what would commonly be believed to be right. When people/organizations are morally bankrupt, they are so lacking in morals they don’t know or care what is morally right.

Someone who allows the US government to go into default because of political arguments is morally bankrupt.

Although the US media is covering the possibility of the debt ceiling not being raised, many people don’t realize what that means. This is not the same as not making a car payment.  It’s seeming less and less likely that an agreement to raise the debt ceiling will be reached by August 2. It is not just an agreement that needs to be hit by that date, but it must be passed by both branches of Congress and signed by the president. If it doesn’t happen, the ripple effect will hit practically everyone:

• It will be more expensive for corporations to borrow and the stock market will take a hefty hit. When Lehman Brothers failed and the stock market crashed in 2008, the market dropped more than 21%. By all accounts, this will hit much worse.
• Individuals who depend on US government checks (Medicare, Medicaid, Social Security, EDD) may see them delayed, for how long is unknown.
• It will be more expensive (and for some impossible) to get credit. This will affect the already-hurting real estate market as mortgages take another blow.
• Other governments and entities that use the US Treasury as their base for stability or rates will be affected. The Chinese Yuan is linked to the US dollar at the current rate of 6.44RMB to 1USD. If the US is trying to hurry its move into the number two spot of global economies, failing to raise the debt ceiling is a good start.
• Finally, if the debt ceiling stalemate extends beyond a few days, the effects could be more severe and lasting.

The US economy has been coming back in a positive way since the second half of 2010. Although unemployment numbers are at times mixed, some sectors, like technology, have seen a sharp increase in job growth. At the same time, venture investment and IPO filings have increased.

Only someone who is morally bankrupt would put the economic recovery on the line just to be in good standing with the handful of people who voted them into office. It is the height of being self-centered to care more about your own short-term future, than what is necessary for so many, and it is shameful.

Employees Are In The Driver Seat Now

It seems everyone I know professionally is currently recruiting for a position or trying to help a friend who is recruiting. In the Bay Area, you can’t throw a stick without hitting at least eight openings. On the 101 corridor, we are also back to the flush times of billboards advertising that companies are hiring.

In short, the tech employee is king again, though not everyone realizes it yet.

Companies looking to hire today must balance finding the best candidate because they may not be able to find additional candidates later and not take too long to decide or their preferred candidate will be already hired somewhere else.

Even if a company isn’t looking to expand operations, they are still affected by the upswing in hiring. An unsatisfied employee is a short-term employee. This doesn’t even necessarily mean they’re unhappy, just not happy enough. Instead of asking “why would my employee leave?” they need to ask “what incentive have I given my employee to stay?” These could be two different answers. Beyond pay and potential equity, there is the position itself. Because what’s important to employees varies and frankly some people are too dense to notice, here is a quick list of possible factors driving your employee retention or employee churn:

Pay – do you know what the market rate currently is?

Stock options/equity –Do your employees have skin in the game? Most tech companies have at least some type of stock option program, but there are a few founders that don’t understand the value.

Respect – no one should ever be disrespected. Period. If you or your company doesn’t respect its employees, the exodus is already in the works.

Career Path Positive – if you hire a person to do what they’ve done over and over again before and there’s no growth potential, look for a person who wants a job, not a career path. This doesn’t mean they’re a bad employee. They could be very good at this particular role and very happy in it.

When I hire or take over a department, I ask each employee what his/her career goal is. It doesn’t mean their position is going to change to only accommodate their desires, but I do try to incorporate some responsibilities that will help them achieve their overall goal. For example, in one department I inherited, the database marketing manager said she would like to eventually be in product marketing and wanted to create content. We added creating the customer newsletter to her responsibilities. Interestingly, the first person to comment on her newly-displayed writing skills was the vice president of product marketing.

Lifestyle Fit – Speaking from personal experience, I work a lot. A whole lot. I interact with Europe on a regular basis, and in previous roles have regularly interacted with Europe and Asia. I usually start reading email at 5:30am and a few times a week have conference calls at that time. I also work until I go to bed. I’m perfectly happy with this arrangement because, frankly, I have trouble shutting my brain off. However, if I ever worked for someone who said I had to work 15 hours a day, I would be very unhappy. Other people have scheduling priorities they must meet. It’s a tricky legal line to walk, but finding and keeping employees that fit your companies priorities will help retain employees who are critical to growing your business.

The Perks – in some ways, the message the perk sends is more important than the perk. I was at Mashery during a technical rollout. The guys in engineering worked until 2-3am. Two days later, the company brought in a masseuse and sent an email for everyone to sign up for chair massages. It was a very classy thing to do. I’m sure it didn’t cost much, but the message it sent was “we know you worked hard and we value it.”

Behind an economic stall, the biggest threat to the tech sector’s growth is a shortage of qualified employees. We are already seeing it in Silicon Valley. In the New York area, there are companies trying to convince potential employees to work for equity only with promises that they will be rich in the future. This will only last for so long. Employees may not always need to feel loved, but they won’t be with you long-term if they don’t feel respected. Giving them a reason to stay should be the cornerstone of your employment policy.

Why The Cloud Doesn't Always Rain Money

So much time is being spent speculating if we are in a bubble or not, that what’s really important is being overlooked: evaluating companies for the long term. It’s time to change the focus of the discussion to business models. We all know that when companies fail, it always comes down to not enough revenue and/or too many losses.  This is a fundamental of business, as well as a pretty obvious statement. Whether it is optimism or misjudgment this is something businesses still fail to grasp. 

Planning for future revenue as the savior of a company is not new. In 2000, I had a client who told me once the add-on technology was offered to the public in two or three years, they would be profitable. In the meantime, if they kept a customer for a year, they only lost $10 on that customer. Two additional facts: (1) they had multiple millions of customers, and (2) in hindsight, we can see the technology for which they were planning only started to hit the market in 2007.

Today, some cloud computing companies are embracing business models that are only successfully in their overly optimistic dreams. The problem with this is they are taking their investors, customers and employees along for the ride and turn ugly when anyone questions their assumptions.

Cloud computing executives should invest in two things:

1)      an analyst whose job it will be to consistently assess the marketplace and the company. This person is likely to straddle finance and sales/marketing.

2)      an honest opinion. You would think this should be the role of everyone on the management team, but too often groupthink, fear or frustration stifles what is sure to be an unpopular question. Ideally, someone on the team will be given this role. If the company cannot do this on their own, a trusted advisor or consultant is essential. Otherwise, you are in danger of engaging in groupthink, which never turns out well.

There are a few versions of cloud computing business models that need to be assessed more closely:

1)      trying to make an enterprise software-style sale via cloud computing. There is a class of SaaS company which isn’t truly SaaS. If your company must do tons of custom work for each installation and you only close a handful of deals a year, your company is not a SaaS company. It only happens to be delivered via the cloud. As more true cloud-based offerings are available in your space, it will become more difficult to sell solutions that take months to implement, require significant investment of customers’ IT resources and cost more than other cloud-based offerings.

2)      Freemium models that don’t have either a path to Premium or an additional revenue source, such as advertising. High-volume user plays are a good sales plan as long as the “free” users don’t become a drain on the company. Having a model that includes“free” users must at least pay for itself. Companies must also take into account the cost of supporting these users. Free trials or limited functionality are two ways to increase the conversion rate to paid customers.

3)      Ridiculously thin margins are the death of many restaurants and will eventually be the death of many cloud companies. This coupled with a “do anything to get the deal done” attitude occasionally results in negative revenue by the time the solution is fully deployed. This goes back to having ongoing analysis of revenue and the cost of sales.

As investors look for what can go wrong in the marketplace, they need to first look to see what could go wrong in each individual company. Only then will there be sound companies that can blossom in sunny times and weather any storm.

Work Globally or Someone Else Will

In 2009, Cisco’s WebEx launched a “Pass the Ball” campaign. The idea was to keep the work moving forward by passing projects along through WebEx. It is a good concept and obviously speaks to WebEx’s core value. However, this stops short of where business is going.

I’ve looked into a borrowed crystal ball and see that competitive technology companies, particularly cloud-based companies, will be embracing a distributed workforce more in the near future. As companies become more global, they must operate in multiple regions and time zones. Some companies see this as the cost of doing business; the smart few know how to leverage this to propel their company forward.

Smart technology companies will not only “Pass the Ball” with projects, but allow ownership of key functions to live outside of headquarters. Many technology companies already feel comfortable outsourcing development of new products and core technology to less expensive, but highly educated, regions of the world. In some cases, a shift has been made from outsourcing to having an official office in one of these locations. Ranging from Bangalore (India) to Yerevan (Armenia), over the last five years, former outsourcing locales have become the home of official company offices.

The key benefit of this is having a consistent person working on development. This enables the person to develop a deeper understanding of the technology as well as loyalty to the company. Ironically, years of bubbles and layoffs has made company loyalty a rarity in the US, but in these newer office locations, company loyalty is more possible to foster.

The next step moves from development to business processes such as finance and marketing. Having accounts payable on a different continent than headquarters should not be a problem, as long as there are work-arounds for emergency exceptions and someone with authority to activate them.

Although it takes more planning to have marketing effectively operate this way, it is possible. I have a great person working with me in Antwerp. He owns specific functions and a few times a week I have a call with him at 5 or 5:30am PST. Yes, I know that is painfully early. However, what I get in return for my missed sleep is a professional who can own many marketing tactics without constant supervision. He also knows when to call me in the middle of the night with a problem. We have an unspoken agreement: him – can figure out most things and me – I know if I’m getting a call at 2am PT it is really important and I don’t blame him for waking me.

Cloud computing companies seem to be leading the way, but other than personal preferences of executive management teams or board members, there is no reason why this should be limited to cloud-based companies. This more efficient approach will need to be embraced by global companies or it will be yet another advantage cloud-based companies will have over their competitors.