Compensation, Alignment, Long Term Company Building

I have been watching the much publicised exodus of senior leadership at so called brillaint new age dot com, silicon valley company. At a cursory glance it strikes me that "the management team" at such companies come together for a bull ride and bail out at the first sign of trouble. By definition a "great team" is supposed to be measured on how they solve problems when they hit a rough patch. I am beginning to derive that it all depends on for what reasons they come together and the motivations with which they perform.

If the reason for coming together is more based on "Stock Options" and less on the challenge of the opportunity, then when the stock gets valued down from $700 to $400, it is very hard to motivate the so called top class management team. Whereas if the team comes together to address a big challenge, under challenging times they forego the opulence of perks to meet the challenge. The targets are self set and motivation is self driven for such a team and more challenging the circumstances, the more the motivation.

By the very nature of capitalism and economic cycles ... "challenging business times " at some point during the lifecycle of a corporation are a given.

May be long term sustained value creation needs a different breed of managers and compensation alignment may be a must for consistent value creation in good and bad times.....

Balance between Excitement and Process

There is a constant struggle between the value of process,consistency versus unbridled excitement and startup energy. Most organisations reach their peak too soon, because of their inability to mix and match both the aspects. When is an organisation too big to be excitable ? When is an organisation too small to be structured ? The answers to both these questions vary from group to group , organsiations to organisations. It is a function of the DNA with which an organisation evolves.

The smaller the functional unit in an orgnaisation the better it is equipped to handle the dichotomy demanded by the market place.

Recognizing the Inflection Point

The task of management team is to recognize inflection points. There will be Business/Customer acquisition inflection points, There will be Operational Inflection Points , then there will be the People Management inflection points.

Recognizing these inflection points is half the battle won. Inflection points by nature will not be apparent until you have a management team that is capable of introspection. Customer inflection points are the easiest to recognize as the impact of that will be far reaching and has a true impact on the financial status of the company. Every start up gets that one customer that show cases or validates the capability - beyond which event - It is almost ( until the next inflection point) more of the same. So the management team should recognize that inflection point and invest substantially and heavily in more sales for that one kind of service. Afterall repeatable sales is what makes an organisation grow from a startup to a success.

Operational Inflection Points - are slightly more milder and harder to detect unless there is enough data that can be analysed. For an analytical management team - it will be easier to detect, This has got less to do with introspection and more to do with data analysis. An example for that might be "delivering flawlessly million transactions a month ". When yuo deliver consistently so many transactions - your intellectual property in operations management takes a life of its own and suddenly that elusive scalability seems all human and possible.

People Management Inflection Points - These are the most subtle and most difficult to detect and the ability to detect these separates the men from the boys. Providing consitent and complete feed back is the key to recognizing inflection points in growth and scalability of the people. At each success point in an organisation it is important to reward and recognize based on the company culture. If the company culture is to make heroes of individuals then the reward and recognition scheme should relate to that , if it is a team oriented culture then the recognition should be team centric and should not have any conflicting messages. The inflection point comes when there is disconnect between expectations and self evaluation vs peer view of contribution.
If more of the senior management finds a gap between self evaluation and peer view of contribution then the inflection point has come.

Aligning Sales Strategy to Vision

The act of maturing from a "start-up" with a proven business model to a "sustainable business" happens with a few key sales wins essentially delivered by a few key sales people who are passionate backed up by truly super human execution. The execution team will stretch its capability consistently to make it a sustainable business.

World Class enterprises are bulit when we transform the "Sustainable Business" to a "long term value creator" . This transformation happens when the vision of the organisation is clear and complete. With a complete vision it is very easy and straight forward to translate to measurable and executable sales strategy.

The grounding principle of a sales strategy is a deep analysis of why people buy from the organisation. What Customers buy from the organisation will keep changing based on market conditions but Why customers buy from an organisation rarely changes.

The why could be "Passionate Execution" and if that is so - All parts of the organisation should resonate and breathe it. This passion should be communicated up front and all touch points in the communication should reflect it. Such deep rooted philosophies cannot be packaged. It can only be practiced and if practiced - it will be perceived by the customers.

With a solid sales strategy and a consistent sales theme - There is a strong possiblity to build a lasting enterprise that creates long term value for the customers.

Importance of having the startup energy

Organisations like human beings seem to have "energy swings" ( not calling it mood swings). It is very important for one part of the organisation to keep on focussing on the business as usual activity and another part of the enterprise to try and push to new frontiers of growth. The growth either in offering or market segment is crucial for a variety of reasons.

The most important reason is that it tries to keep the organisation hungry and pushes up the energy level few notches up. It is a fine balance that one has to strike between mature process growth and startup frenzy with in an organisation. The startup energy boost that the enterprise gets will transcend the limited group which is driving it and reach the extended enterprise and there will be positive energy resulting in excitement and big dreams.

How do you acheive it - if the core group of start up members are still there with the enterprise - the act of venturing out to new frontiers ideally should belong to subset of the initial members as they have it in their DNA to do startups and also they might have lived the success.

Stay Hungry , Stay Foolish

“Stay Hungry. Stay Foolish”. – Whole Earth Catalogue


These two simple sentences capture the essence of all well built organizations

Staying Hungry – Each and every one of us, be it in Sales, Delivery or Support need to get hungrier and approach our role with an attitude of what can be done better. In our roles we all contribute to the maturity of the organization. When there is self respect and self confidence , we approach the role with a sense of purpose. Staying hungry is believing what we are doing is still not the best and challenging yourself to do better. If your basic competency is in Sales – you stay hungry by telling yourself that, before the financial year is done I have to put a 10+ million dollar deal on the table for the group. If your comfort zone is the million dollar deals, but your hunger should be the 10+ million dollar deal. I would advise you give up your comfort zone and go for the hunger zone.

There is a lot of excitement and challenge in it. !!!!!

Staying Foolish – The biggest risk in organizations that are growing is some people stop dreaming big. Complacency and fear of failure are two main reasons organizations don’t grow to the levels that they aspire. By allowing yourself to look foolish, you can give yourself the opportunity to dream big and avoid being complacent and not be afraid of failure.


Stay Hungry and Stay Foolish

Young organisation - Pains

The key element of growth in companies come from conscious and sub-conscious organisational learning. Conscious learning is a set of rules that are captured over the duration of adoloscence of the company. The do's and dont's that end up as part of employee handbook or employee appraisal formats and operational practices that are internalised. One of the important aspects of this consious learning is "the need for stability" in the thought leadership team. Constant change in that team causes temporal loss of the learning and hence the organisation is always relearning.

The other important aspect of the Organisational learning is the sub conscious learning. Great organisations live or die by this. It is rarely spoken about or written about, but this is what drives long term success. A key component of this sub concious learning would be - how is risk taking viewed by the core group of people ? How is failure judged ?