CHAPTER FOUR
TELLING THE STORY TO YOUR TEAM
If you've spent enough time conceiving, writing, and revising your story and telling it to investors, you're ready to move on to the next phase: telling it to your team. What is the goal you and your team are moving toward (your mission)? What will the world look like once you've achieved that goal (your vision)? What are you willing to do—and what are you not willing to do—to realize that vision (your values)? Most startup CEOs will have answers to those questions before Day 1. Like every other part of the startup story, your answers will only improve as you learn more about your customers and your marketplace, and respond accordingly.
DEFINING YOUR MISSION, VISION, AND VALUES
As a startup CEO, you'll never stop adjusting your goals and behaviors to market realities. At a certain stage, you should have a clear idea of who your customers are and how your company serves them. In fact, it should be clear enough to state in a handful of short sentences. As David J. Collis and Michael G. Rukstad wrote in the Harvard Business Review article “Can You Say What Your Strategy Is?,” most executives can't do this. “It's a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can't, neither can anyone else.” Hopefully, this statement doesn't apply to the senior people at your company, but what if it does? And if it's not applicable to senior people, could it be true for others in your company?
Even if you're a crazy micromanager, the minute you have more than a handful of people, you will be delegating a vast percentage of the company's work and decisions. It is vitally important that your team has clear, codified guideposts for doing things that work and making those decisions. Once you've defined your business strategy and defined what kind of company and culture you want to build, that's where a good set of mission, vision and values statements comes into play.
Over the years at Return Path, we've done a few rounds of defining and redefining who we are as a company and where we are going. This includes what our mission is, what our strategy is, our source of competitive advantage, and what our values are. We haven't used a consistent framework for this—though we've always used some framework. In the end, it's less important how you do this work than that you take the time to create a simple governing document for your organization.
Simulmedia CEO Dave Morgan on Defining Successful Companies
Every startup CEO you speak with will emphasize the importance of vision and strategy to a startup's success. As a three-time entrepreneur, Dave Morgan has proven the importance of those repeatedly, first at 24/7 Real Media, then at Tacoda Systems and now at Simulmedia.
My father, a former district attorney in rural western Pennsylvania, always sent his witnesses off for cross-examination with the admonition, “Think your answers through to the very last word before you open your mouth to speak the first.” There's an important lesson in that statement for entrepreneurs: it is critical to think through and articulate the last word of your company's vision and strategy before you start executing on the first.
The world of most startups, particularly the world of tech startups, is a dynamic place full of ever-changing products, market conditions and consumer behaviors. In that world, you don't have the luxuries of predictability, defined rules, and procedures, or the ability to plan and prepare with the level of detail that major enterprises are accustomed to. Your world is one of chaos and uncertainty. You plan in advance as best you can and improvise as obstacles and opportunities present themselves—recognizing that they almost never present themselves as anticipated.
In this world of constant improvisation, entrepreneurs and their teams have no better friend than a clear, concise, and well-understood vision and strategy for their company. You and your team can't survive and thrive in the unpredictable world of startups without a well-thought-out point of view on the future of your market and what it is that you are trying to accomplish in that market. Additionally, you need to know how you intend to achieve it.
This vision and strategy doesn't have to be perfect. It doesn't have to be all encompassing and fixed for time immemorial. It doesn't have to anticipate all potentialities. However, it needs to be bold enough to excite and motivate. It needs to be focused enough to serve as your magnetic north. It needs to be clear enough to help you prioritize your people, time and money. It needs to be far-sighted enough that it doesn't need to be rewritten every quarter.
Setting the vision and strategy for your company can be one of the hardest and most intellectually and emotionally challenging phases of a startup, but it's also one of the most gratifying and unifying. More important, it can also help you build a much better business by forcing you to confront assumptions that might otherwise slip by unchallenged.
My father learned that forcing his witnesses to think through their cross-examination answers in their entirety resulted in very different—and much better—answers than they were initially inclined to give. So, too, for entrepreneurs. Those who work diligently at setting their company's vision and strategy from the beginning not only have more focus, a better framework for decision making and a more unified team; they also end up launching their businesses in different—and much better—ways than they had initially planned.
Dave Morgan, CEO, Simulmedia
THE TOP-DOWN APPROACH
In the early years of a startup, the only way to define your mission, vision, and values is by way of a top-down process. There's a simple reason for this: at this stage, your company consists almost entirely of co-founders and executives. There is no crowd of employees to crowd-source from. Either the CEO or a few members of the senior team have to sit down and craft these basic statements, being careful to separate the what (mission and strategy) from the how (values).
When Return Path turned nine years old, we were ready to take another approach. The company had gone through a major reorganization (we had sold or spun off a several business units and refocused on a new, tightly defined core). We had grown from a small team to over a hundred employees in offices around the world. We could have run another top-down process, but we felt like that was the wrong approach for us as a talent-centric business. It was time to redefine our company from the bottom up.
THE BOTTOM-UP APPROACH
When we ran the process of defining our mission, vision and values at Return Path, we thought we had a pretty clear sense of our values, as well as where we were going as a business. To test that hypothesis, we decided to solicit opinions from the entire company.
The framework we selected for the process was from the Harvard Business Review article by Collis and Rukstad I mentioned at the beginning of this chapter. (You can read the article at http://hbr.org/2008/04/can-you-say-what-your-strategy-is/ar/.) We divided the company up into about a dozen teams of 10 people each. The team assignments were random, and each team was led by a senior person in the organization (not someone on the executive team). Each team received a copy of the Collis/Rukstad article and we had an all-hands meeting where we talked about what we were doing and what we were trying to achieve. Then we sent each team a template to fill out and gave everyone a month to come back with their answers.
Then we held our breath. We weren't quite sure what was going to come back. On the day all the completed templates were returned, we reviewed them at a team meeting. Although they obviously differed a bit here and there, we were pleased that the 12 teams had come up with fairly similar views of the company's mission, values and strategy. This was less surprising about some aspects than others. For example, I wasn't surprised that there was a high degree of convergence in the way people thought about the organization's values since we had a strong values-driven culture that people were living every day, even if those values hadn't been well articulated in the past. But it was a little surprising that we could effectively crowdsource a strategy statement and key performance metrics at a time when the business was at a fork in the road.
Given this degree of alignment, our task as an executive team became less about picking concepts and more about picking words. We worked together to come up with a solid draft that took the best of what was submitted to us. We worked with a copywriter to make the statements flow well. Then we shared the results with the company and opened the floor for comments. About 40 employees took the time to redline the document and send it back. Again, we looked through the comments and selected the best of them. We went back to the copywriter, finished up, and published the results to the company.
THE HYBRID APPROACH
Four years later, we felt that it was time to review these statements. Our business had grown from 120 to 350 people, and from $15 to almost $60 million in revenue. We went from having two offices to having 12 offices on four continents. We had released a bunch of new products that broadened the scope of our business. Our strategy and mission had broadened slowly over the years, without redefinition. Our values hadn't changed dramatically, but living with the statements we'd written for four years taught us that the statements themselves were clunky. It seemed like time for a refresh.
The first thing we decided to do was to pick a different framework. The Collis/Rukstad formula was a little heavy for us. We decided to borrow from Patrick Lencioni's fantastic book, The Advantage: Why Organizational Health Trumps Everything Else in Business, and answer five simple questions for ourselves:
- Why do we exist?
- How do we behave?
- What do we do?
- How will we succeed?
- What is most important, right now?
We might have crowdsourced the process again, even with 350 people, if we had felt that we were at a real turning point in the life of the business. Because we viewed this exercise as more of a refresh, we did a hybrid of top-down and bottom-up approaches. This time, we started by working through drafts of the governing document as an executive team. We were able to get to a solid working draft in about three hours.
From there, we presented the results at an all-hands meeting and walked the company through the current statements, the logic of needing a refresh, the change in framework, and the working draft. Following that, we circulated the working draft to the company and the executive team did a blitz of roundtable meetings that were attended by nearly all of our employees within about a week. People came to the meetings extremely engaged and with detailed feedback, which we compiled and fed back into the revision of the working draft. We circulated that document to the entire company and invited a final round of comments and received a handful of redlines. Voila! A new set of mission, vision and values statements emerged, about 30 days after starting the process.
The second part of the Lencioni framework is something I'll come back to in Chapter 19 when I talk about translating the Mission and Vision into an Operating Plan.
Return Path's Mission, Vision, and Values
Our “Statements of Purpose” as a 13-year-old company were quite different than they were at the beginning of the company's life but, especially in the case of our company's values, evolved smoothly over time. Below are the statements as our “hybrid approach” produced them, along with the questions they answer from Patrick Lencioni's framework in The Advantage.
Our Mission and Vision
Why do we exist? We are building an extraordinary company that helps people and businesses communicate more reliably, effectively and securely.
How do we behave? We put people first, do the right thing and succeed together.
What do we do? We analyze email data and build solutions that generate insights for senders, mailbox providers and users to ensure that inboxes contain only messages that users want.
How will we succeed? We will succeed by building unique solutions to email's most challenging problems. We will cultivate a team of passionate email experts and trusted industry relationships. We will aggregate and analyze data that drive our customers' business results and our end users' experiences.
What is most important, right now? In 2013, we will deliver a scalable, repeatable sales model.
Our Values—The Detail behind “How Do We Behave?”
- People First
- Job 1. We are responsible for championing and extending our unique culture as a competitive advantage.
- People power. We trust and believe in our people as the foundation of success with our clients and shareholders.
- Think like an owner. We are a community of A players who are all owners in the business. We provide freedom and flexibility in exchange for consistently high performance.
- Seriously fun. We are serious about our job and lighthearted about our day. We are obsessively kind to and respectful of one another and appreciate each other's quirks.
- Do the Right Thing
- No secrets. We are transparent and direct so that people know where the company stands and where they stand, so that they can make great decisions.
- Spirit of the law. We do the right thing, even if it means going beyond what's written on paper.
- Raise the bar. We lead our industry to set standards that inboxes should only contain messages that are relevant, trusted, and safe.
- Think global, act local. We commit our time and energy to support our local communities.
- Succeed Together
- Results focused. We focus on building a great business and a great company in an open, accessible environment.
- Aim high and be bold. We learn from others, then we write our own rules to be a pioneer in our industry and create a model workplace. We take risks and challenge complacency, mediocrity, and decisions that don't make sense.
- Two ears, one mouth. We ask, listen, learn, and collect data. We engage in constructive debate to reach conclusions and move forward together.
- Collaboration is king. We solve problems together and help each other out along the way. We keep our commitments and communicate diligently when we can't.
- Learning loops. We are a learning organization. We aren't embarrassed by our mistakes—we communicate and learn from them so we can grow in our jobs.
- Not just about us. We know we're successful when our clients are successful and our users are happy.
DESIGN A LOFTY MISSION STATEMENT
In The Advantage (p. 82), Patrick Lencioni describes the main criteria of a good mission statement:
An organization's purpose—why it exists—has to be completely idealistic. Many leadership teams struggle with this, afraid that what they come up with will seem too grand or aspirational. Of course, that's the whole point. Employees in every organization, and at every level, need to know that at the heart of what they do lies something grand and aspirational. They're well aware that ultimately it will boil down to tangible, tactical activities. All organizations exist to make people's lives better … to aspire to anything less would be foolish … the point will be somewhere just shy of “to make the world a better place.”
My friend Jonathan Shapiro runs an e-commerce company called PetCareRX that sells pet medication and basics like flea and tick treatments. How lame would it be if his organization's statement of purpose was “to rid the world of fleas and ticks”? Or, even worse, “to be the leading e-commerce company focused on the pet vertical”? Instead, Jonathan and his team craft ed this statement of purpose: “Adding Love to the World by Enhancing the Lives of Pets & Pet Parents.” Adding love to the world is awesome. Images of a cute puppy licking the face of a laughing child come to mind. Who doesn't want that?
Live the Organization's Values
You cannot, in a million years, expect the people in your company to live by your organization's values and policies if you don't do those things yourself. Do you think Jim Bakker's and Jimmy Swaggart's employees found it easy to accept their bosses' sermons about the sins of adultery after their own public confessions? In an example that hits closer to home, I worked at a company years ago that was incredibly frugal and had a super tight expense policy with strict enforcement. For example, employees couldn't spend more than $150/night on a hotel when traveling for business in major cities. (One employee stayed at a place that cost $180/night once, and the CFO made him refund the extra $30.) But when our CEO traveled for business, he routinely stayed at the Four Seasons, even if he was on a trip with other employees who had to stay elsewhere. When he was questioned about not following the rules, he changed the policy to exempt himself from it. You think that made it easy for the rest of the team to embrace frugality?
Moz CEO and Founder Rand Fishkin on Living Your Company's Values
As founder and CEO of Moz (formerly SEOmoz), Rand Fishkin has not only done a great job of codifying his companies values; he's done an amazing job of making them a part of the entire Moz culture.
When we started Moz in 2004, we had no clearly defined culture, no specific mission or vision, no stated values, and our primary goal was just to make enough money to pay the rent. We managed to make ends meet, and the company culture grew organically, but there was clearly something missing. In 2007, we began a process to establish core values, and out of that came TAGFEE (an acronym representing Transparency, Authenticity, Generosity, Fun, Empathy, and Exceptionalism). Looking back, it's incredible to me the difference that having a formalized set of values has made.
For us, TAGFEE works like a set of architectural blueprints over every action and decision we take in the business. It affects how we build products, how we resolve conflicts, how we choose who we work with, and, most importantly, how we interact with one another. It's embedded into our hiring process: there's actually a set of questions we call the “TAGFEE screen.” No matter how well a candidate does on other aspects of the interview, we won't hire unless they're a culture and values fit. It's part of how we rate and review performance across teams, but also on the formal, individual reviews we do every 6 months.
It's my personal belief that core values are critical to the long-term success of any startup, but thanks to the work of folks like Jim Collins (who wrote Good to Great and Built to Last), there's a lot of research suggesting a high correlation between companies that scale successfully and those that embrace core values into their culture.
There are a few guidelines I'd suggest following when establishing and implementing values:
- Core values come from within. Your values must be part of the founder's identity. That doesn't mean they should be an exact reflection of who you are in day-to-day life. In fact, I'd suggest choosing values you must strive for: the four to six principles that represent the part of yourself that you're always striving to become.
- Bake values into your interviews and your performance reviews. If you don't, you're just paying lip service and your team will quickly realize that your core values aren't taken seriously.
- Encourage critical analysis of big decisions from a values perspective. Your core values should be the foundation of how arguments are shaped and judged, not an afterthought.
- Accept that values will sometimes come into conflict with one another. This is healthy, but extraordinarily painful if you don't have a system for prioritization. For example, at Moz, transparency and empathy are often at odds. In a scenario where both cannot be achieved, we rank empathy highest.
- Let employees go if they don't live up to your core values, even if they're phenomenal performers. If you don't, you're showing the rest of your team that values come second (or third, or fourth) to other things—and those “other things” become your true, if unspoken, core values. Much of the dreaded “politics” of corporate culture stems from this failure. When you spot a problem, communicate extensively with the employee and make an effort to fix it. If that doesn't work, you have to act.
Some entrepreneurs I talk to have a sense that core values are merely an extra layer of “HR stuff,” or that stating values “sets you up for failure” by making it more difficult to “pivot” and move at the speed of startups. I wholly reject those ideas. If your mission and vision is merely to make lots of money by exploiting a temporary opportunity, ignore this advice. But, if you believe that organizations exist to accomplish what individuals alone could not, and you intend to build something that lasts, I encourage you to establish and embrace core values.