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When I went away to college, my father was home alone.  He didn’t have many close friends and spent most of his time reading and in front of the TV.  As my visits stretched from every few months to a couple times a year, I began to notice him developing some strange behaviors.  He had always been a bit of a creature of habit, but these routines developed into Groundhog Day rituals over time.  Same cup, same spoon, same plate—always arranged in the exact same way.  Every day of the week had its own meal, prepared exactly the same way at the same time.  We had a great relationship and when I’d visit, I was constantly calling him on it: “Dude, you’re turning into Howard Hughes!”

I also took great pleasure in derailing his procedures: I hid his special cereal spoon one morning and remember hearing him slowly come unglued as he banged around the kitchen. He eventually shouted out, “Hey, where’s my spoon?!” I choked back the laughter and replied, “Your spoon? I don’t know but there’s a whole drawer full of them in there!”  In spite of his idiosyncrasies, he was remarkably self-reflective and would actually change his behavior.  My aunt commented, “You should visit more often, he actually started wearing clothes that matched for a change…”

I’ve come to believe that the main driver of my dad’s eccentricities was a lack of feedback.  There was nobody close enough to him that was willing to call out the strange behavior.  So, left to his own devices, it just got progressively worse.

This dynamic is especially relevant to CEOs.  Most companies don’t have a good mechanism to give the CEO real, honest feedback.  Sometimes the board gives feedback, but it’s often based on impressions at board meetings, perceived success of management hires and overall results of the company; no specifics on how to lead and inspire people, conduct better meetings, or deal with conflicts, to name a few.

Some of the most dysfunctional organizations I’ve observed have evolved from dealing with a leader’s idiosyncrasies: He’s stereotypically passive aggressive, erratic, a bully, or plays favorites.  Whatever the weird behavior, it drives massive turmoil as the company adapts a workaround to the “Emperor’s New Clothes” syndrome.  The frequent resolution is the CEO is fired because dysfunctional organizations underperform their peers and the board finally reacts.  The sad fact is that the vast majority of these CEOs are likely great leaders who had poor role models and lacked frequent, candid feedback to know how to change.

After experimenting with a number of different approaches, I believe there’s an unassuming process to solicit feedback for just about any leader:

  • Present it as a private “for your eyes only” gift that has no other purpose than to make the recipient a better leader.  It has to be separate from any other evaluation for advancement or compensation.
  • The interviews should be conducted and delivered by a truly independent and unusually competent third-party—typically an external consultant.
  • A critical mass of 360-degree feedback should be gathered from 10 to 20 different people. For a CEO: the entire board, direct reports, customers, partners, admins—the more the better.
  • The interviewees need to be prepped as follows: 1) this is to make the recipient a better leader, not for compensation evaluation purposes; and 2) everything is kept extremely confidential (e.g. quotes are anonymized and intermingled with a critical mass of other interviewees).
  • The questions are short and simple: What are the leader’s three greatest strengths?  Three biggest areas for improvement?
  • The interviewer must create a comfortable, trusting environment and press hard for examples.  Ideally, he should read back the quotes to the interviewee to ensure clarity and anonymity.
  • The feedback should then be summarized and the raw quotes attached as backup and presented to the leader.

Feedback for leaders is often nuanced and difficult to deliver.  That said, hearing you are passive aggressive from 10 different people described 10 different ways becomes hard to ignore.  And this shouldn’t be a one-time thing.  It’s important for a leader to hear about his blind spots on a regular basis so working on them is periodically top of mind.  For example, I’m not a particularly good listener.  I don’t like sweating the details and I’m pretty disorganized.  To be a better leader, I need to stay on top of these shortcomings and being reminded really helps.

Lastly, the leverage from feedback can be powerful: not only can it grind off a leader’s ingrained dysfunctional behavior, but it can also convince him of the value of a strong feedback process for the entire organization.

In 1950, my Uncle Ed Kalin opened a small designer furniture store. After years of hard work, he saved up and opened a larger one. Growing up working there, I’d observe him doing things that, at first, were hard for me to understand.

First of all, when he walked around the store, he was constantly picking up trash. Little wrappers, paperclips, cigarette butts and the squashed paper cup that didn’t quite hit the trash can. When I first noticed it, I thought he was trying to drive home a point to me personally—after all, I was the assistant janitor—but it became clear he wasn’t just picking up trash in front of me, he did it all the time, naturally and quietly. You never heard him say, “Can’t they make it into the wastebasket?” He just picked it up and put it in. He was also always straightening: fluffing pillows, righting picture frames, sliding back barstools and getting down on his knees to level a rickety table. One day, the intercom rang out in the back of the warehouse, “Scott Weiss, to the front for a carry out.” Recalling my work ethic in junior high school, I certainly didn’t sprint to get there; I arrived just in time to see my uncle following a lady out with an end table in his hands. “Doh!” He never mentioned it—just did it.

Although this was a high-end furniture store, Uncle Ed was also unusually thrifty. He didn’t cut corners on quality but abhorred waste. “Scott, you don’t need to use that much bubble wrap for a lamp. Here, let me show you.” At home, he would set paper towels on the counter to dry after washing his hands: “They’re not dirty, just wet.” OK, thrifty was an understatement.

There were 80 employees at the furniture store and Ed knew every one of them by name. He knew their families. And whenever he passed anyone, anywhere, he’d have an authentic interaction with them—not a glad-handling schmooze. “When does your son graduate?” “How were you able to fix that scratch? Wow, looks perfect.”  Always with a smile and interested eyes that communicated, “You matter to me.”

In a competitive, low-margin, high-hustle retail business, Ed wanted to project Bloomingdales with a Wal-Mart budget. The showroom had to be beautiful, spotless—just perfect to look the part. Customer service was paramount. In order to be successful, every employee had to have this mentality.

Although we didn’t call it that then, I’ve come to believe that Ed was creating a company culture. We often get wrapped up in Silicon Valley with the “new-new” way that we can forget many times we’re simply rediscovering well worn lessons that date back to the beginnings of commerce.

Like it or not, everyone watches the leader. What does he do? What does he say? What does he not say? How does he react? His behavior is mimicked and amplified throughout the organization. The CEO and the leadership team ultimately set the company culture with their behaviors verses a set of policies rolled out by the HR department. Inspired by Ed, here are a few takeaways that I believe apply to all startup CEOs:

  • Naturally and quietly demonstrate, on a regular basis, that no chore is beneath you: clean up after a conference room lunch, carry the heavy crap to a trade show, replace the water cooler, wipe up the spill. When everyone pitches in a little, you can strip out 5% in overhead.
  • Do your own calendaring and wait as long as possible to hire an assistant because once you do, everybody suddenly needs one. One great office manager can scale to ~50 employees if everyone calendars themselves.
  • Write thorough, thoughtful, candid reviews and be on time with the process. If you don’t take it seriously, nobody will.
  • Get to know everyone by name and something about them—no excuses up to 500 people. This was really hard for me because I have a terrible memory, always have. Get creative: we printed out flashcards from the badge database when I inherited 900 employees at Cisco.
  • Prepare ahead and interview candidates hard—don’t wing it.
  • Be noticeably thrifty: fly coach, stay in cheap hotels, eat in diners.
  • Be unbelievably responsive, available and punctual.

Some of the suggestions above are simply about making a CEO more approachable—one of the hardest and most important attributes for a leader to exude. Are people comfortable disagreeing with him? Will they tell him when something is wrong? In my experience, the more formal the CEO is, the more formal the leadership team is and thus they all become less approachable. And it’s not just about wearing jeans—it’s about behavior. My uncle’s store was a very formal environment: he wore a tie and everyone addressed him as “Mr. Kalin”. That said, he was able to overcome this outward formality with fanatic friendliness, a familiarity with everyone and a willingness to get his hands dirty. Approachability, however you create it, is absolutely critical to creating an innovation environment where employees speak up and challenge the status quo.

I had a real struggle preparing to be a public company CEO. And it had little to do with having scalable internal systems or making the quarterly numbers… I just couldn’t keep secrets from my employees.

As CEO of IronPort, I wanted to be completely transparent with my entire team but my board of seasoned industry veterans was sharply opposed… They raised several serious issues: do you want to leak critical weaknesses to your competitors? Do you want to panic your employees? Do you want to completely reconstruct your culture when you go public? It was just a bad idea. However, the more that I thought about it, the more I believed that sharing absolutely everything would create massive advantages and that we should live with whatever consequences resulted.

So, after board meetings, we would assemble the company and go through every board slide… How much cash in the bank? What’s our burn rate? What are the biggest problems we are facing? Did we decide to build, buy or acquire a critical component? The first couple of go rounds, there was dead silence. No questions—just head nodding and a couple of blank stares. After some probing, we realized that people needed to feel comfortable speaking up, that it didn’t just come naturally. We brainstormed a bunch of different ways to get over this hurdle and here were some experiments that ultimately worked:

  • We amped up the frequency of communication to all employees. Different members of the leadership team would send out weekly emails to all about customer trips, conferences attended, schedules slips and customer issues. These were written very off-the-cuff, informal and in the voice of the different leaders. I suppose we’d be all be tweeting or blogging today…
  • When an employee would reply to an email with a comment or question, we treated it like it came from a customer who deserved an immediate, detailed and thoughtful response.
  • After the weekly staff meetings, we’d send out a summary of the decisions and issues to all of the directors/managers who would then share it with their teams.
  • We emphasized “speaking up” as a core value at every opportunity. Our employee orientation, performance reviews and leadership training all emphasized everyone having an obligation to dissent…
  • We would leave 30 minutes for questions after every all-hands meeting and then press, often uncomfortably, for no fewer than five questions from the group.

Over time, the benefits of transparency coupled with an emerging cultural norm of speaking up became more apparent:

I thought we would surface creative answers faster. When everyone had a clear understanding of the hard problems, their collective brains were on the table for parallel processing. The best information rarely sat with the senior executives but with the employees that were closest to the product and closest to the customers. And the best answers would often come from the most unlikely of places. For example, some of our most innovative features came from customer support reps identifying customers trying to use the product in ways it wasn’t intended.

Initially, it worked better than we expected. IronPort experienced zero voluntary turnover for the first three years. Because we let everyone’s head under the tent, we implicitly trusted them and it worked both ways. For instance, it wasn’t a shocker when we stopped hiring as we were raising money. Everyone knew exactly what was going on: we were running low on cash and had no idea how long the process would last.

Lastly, nobody was confused about what was important and people would point out any inconsistencies and solve them in the background. I remember standing up at a company meeting talking about how excited I was that IronPort anti-spam was working and we’d finally be able to drop our partner Brightmail. After the meeting, the accounts receivable clerk knocked on my door and said, “I thought you should know that two customers are withholding payment because IronPort anti-spam isn’t performing.” Oh crap. But much better to know about it and fix it than go on believing there wasn’t a problem.

As we were preparing to file our S-1, we hired a CFO with public company experience that insisted that we start “practicing” as a public company. Hmm—I knew that our level of transparency would have to change but what did that mean exactly? “You can’t tell everyone how we did this quarter at midnight quarter-end” and “You can’t go through all the board slides like that—too much sensitive information.” So, we started editing, putting shrouds on issues because we were afraid that the information would leak. I remember our first all-hands during the “practice” time. I felt muzzled and cautious, trying to strike a balance between our wonderful transparent culture and an intricate set of Sarbanes-Oxley rules. As it turned out, the practice was critical in working out the kinks. Here are a few things we did:

  • Our CFO and I listened to dozens of public company earnings calls to get a sense for the dynamic and what information was typically shared. The best duos had the CFO as the play-by-play man and the CEO as the color commentator.
  • We then staged mock earnings calls with the employees as the analysts asking the questions. This proved to be a very useful format for reining in my over-sharing and was instructive to the employees as they saw us struggle with what we could and couldn’t reveal.
  • We prepared a mock earnings press release a few weeks after the quarter closed. This helped us practice keeping the numbers quiet, which was difficult because everyone wanted to know how we did at quarter-end.

Although we eventually opted for an acquisition by Cisco versus an IPO, I came to believe that our type of total transparency was a competitive weapon that applied primarily to private companies. In the end, my board members were right—we did have to limit what we shared with employees on the way to going public. That said, I believe it was much healthier to set the default to full disclosure while we were private. When you prepare for an IPO, it’s definitely a high-class problem to have to work backwards with concrete reasons to withhold information from the employees. And when that time comes, they totally understand.