Fearless Leadership

Observations and lessons after six years of leadership inside a hyper-growth cloud software business.

I've enjoyed some excellent conversations recently about the cultural and developmental challenges fast growing companies have to contend with every day, particularly from the perspective of leadership behaviour and how that can play out.

Some top of mind notes.

  1. Accountability is lighter than air. If your team knocks it out the park, it's down to your team and not you. If your team screws up, it's your fault. Always be humble.
     
  2. Strong principles, loosely held. No matter how enamoured you may be of your latest brainwave, your excellent idea or decision will most likely suck one day. The best way to mitigate the chances of future separation anxiety from your once grand vision is to not get all that close to it in the first place. And if you're doing your job of hiring well, the shelf-life of your greatest ideas should be really short anyway.
     
  3. Eventually there's nowhere to hide. There's the tale of the old Soviet premier, Nikita Khrushchev, who upon leaving office handed his incoming successor two letters with some instructions:

    "When you encounter the first crisis of your leadership, open the first letter and what's contained inside will tell you exactly what to do. And when you meet your second crisis, you should then open the second letter."

    Soon enough the new premier finds himself in his first major crisis and remembers Khrushchev's advice, and so opens the first letter. 

    t simply reads, "Blame me.

    He duly blames his predecessor and the crisis quickly subsides. In the event of the second crisis of his premiership he opens Khrushchev's second letter which curtly instructs him to "Sit down and write two letters."

    The point being, the longer you're in post then the more everything becomes just your own big fat fault, and the associated guilt, depression, shame or whatever the negative equity that can build up around the tenure of a manager or leader are often what leads to the eventual and sometimes sudden downfall of many.
     
  4. Dealing with nowhere to hide. Following on from #3, after six years as managing director at Xero I've come to recognise that most of the apparently dumb historical ideas and decisions that my management team are encountering today were probably mine. I try deal with this in a couple of ways. First, and related to #1, if you don't permit yourself to luxuriate in the glory of your victories then neither should you feel obligated to shoot yourself in the face when things happen to go sour.

    You do need to develop a thick skin but a good philosophy would be to not strive for every decision you make to be Nobel Prize winning material. Just make decisions.

    Also, the longer your tenure runs then, logically speaking, the more likely it is that things have gone more right than wrong - so the emotional drag of fear of early failure (like total abject, you're out after six month months failure) should have passed, hopefully leaving you with a healthy void where your fear of failure once was.

    Having no fear is a powerful thing and can enable you to deal with just about anything.
     
  5. Values are important. Open celebration of company values in a growing company is vitally important because values in this context act more like a cultural preservative than a future remedial destination, as is often the case where 'Values Programmes' exist in larger or more mature organisations.
     
  6. Everybody owns the culture. Have some guard rails but don't hardline enforce your culture. That's how wars start.
     
  7. Obsess about your organisation and your customers, not your competition. You can't entirely ignore competitors but you'd be surprised how many organisations are crippled by OCD, Obsessive Competitor Disorder. I'm quite often asked who I fear as a competitor, and taking care to not be a dick about it, I usually answer "Nobody."

    Not because I'm a chest-thumping, war-painted delusional but because ultimately you'll find that the most likely determinants of your future success actually reside inside your firewall, not outside.
     
  8. Pride comes before a fall. Related to to #4 - nothing should ever really be good enough. Busted your sales target or beaten an unbeatable deadline? Well done. Light a cigar and put your feet up for fifteen minutes and then get right back on it, hot-shot.

    However, this impossible quest for perfection is an arduous (and endless) one and can also turn toxic - but if you balance praise with ambition correctly it's a tax worth paying since wallowing in your successes is one step away from the management rot of entitlement which then leads to complacency and, ultimately, oblivion.
     
  9. Hire well. Some of my worst decisions have been about people. The Bozo Explosion principle is well documented but like all theories, it may look simple but it's actually not. Products, ideas, strategies and systems are all important, but also stand for nought if you don't have great people around you. This is probably a whole other post in its own right.
     
  10. Fast = hard. I took my first role as managing director of a software business in 2003. It was a mature desktop software business which back then was doing very well (if I do say so myself) to grow by around 10% every year when the industry norm was well below 5%. I recall at the time having huge admiration for the then-up-and-coming Salesforce and imagined how amazing it would be to be inside such a fast growing business, just watching all that limitless revenue walking in the door all by itself.

    Sadly, I've come to learn that with the exception of a few right-place, right time freaky unicorns, there's usually a very direct and unforgiving and correlation between output and input : the faster you grow the harder you needed to work to grow that fast. It's like some kind of cruel trick.
     
  11. Building a skyscraper takes time. Another question I get asked is When did you notice that things really started to take off? and I think again this comes from that over-simplified inflection point theory, like one day you came into the office and BAM! growth just exploded exponentially like rocket.

    It doesn't work like that. It certainly can sometimes look like it works that way from a brand awareness perspective, but I'm pretty sure it doesn't operationally for 99% of growing businesses.

    But people do say "Wow, everyone just seems to be talking about your company lately, it's really taking off!" So, why do some growth businesses look like overnight success stories when in fact they're often six, seven or eight-year long overnight success stories, whether that's Xero, Airbnb, Uber or Netflix. 

    My favourite analogy for illustrating what's going in here is this : when construction starts on a new skyscraper in the centre of downtown Manhattan very few people actually notice until you've built the requisite number of floors such that your building's profile eventually pops above the skyline. Then everyone suddenly notices you like you came out of nowhere. They just don't see the all hard work and the time it took to get to that stage.
     
  12. Always be on the cusp. Hockey stick growth curves are really just lots of micro-inflection points joined together with short periods of mundane execution. There is no such thing as a smooth growth curve in practice, even if it looks like one from a high enough altitude. At ground level it tends to be more like improve a little, sustain for a while, improve a little, sustain for a while. Lots of straight lines with barely noticeable upward inflections (and the odd deflection). 

    There is no cusp. Just lots of micro-cusps.

Software 2.0

While I'm sure nobody got into it expecting it to be easy, it turns out that building a successful cloud software business is incredibly difficult. In fact, I think the level of difficulty ramps several orders of magnitude more aggressively than many founders had reason to expect when they first started.

I think part of the problem lies with our perception and our inability to fully comprehend the ultimate nature and future impact of new technologies when they first appear. I suspect the reason for this is that we have become collectively conditioned to expect hardware and software to improve in predictable, incremental steps and not huge exponential leaps.

And while those early browser based apps might have looked innocuous enough when they first leaked into mainstream awareness around a decade ago, it's now clear that the high level of difficulty associated with building a successful cloud software business feels decidedly out of step with this notion of incremental improvement. Building a cloud software business is not incrementally harder, it's exponentially harder.

Why is that?

Many of the disciplines required to succeed in a cloud software business; software development, marketing, sales and customer service models, the constant need for more funding etc., bear little or no relation to those of their desktop ancestors. In fact it's frequently the case that classic software business thinking isn't simply ineffective inside a cloud business, it can actually be toxic. 

So, I think it's much tougher to succeed in cloud because those who try not only require to build and construct their own products, teams and business processes, they're also unwittingly constructing an entirely new software industry.

Therefore it's logical that building a new industry should be several orders of magnitude harder than just building a business. And I guess not many thought they were signing up to build a new industry.