26 September 2013

Family Business

Over the past few decades, I've had several experiences with family businesses.  None were my family (which probably is the reason I've had to work so hard in my career).  But they are a special breed of entrepreneurial endeavor.  Recently, I was interviewed for an article in the Harvard Business Review about a fictional (at least the names were changed to protect the guilty) family business.  Attached is a link to that article.  The Ex-CEO Contemplates a Coup.

17 March 2013

Back to School

Last Thursday I made what has become an annual pilgrimage to Cambridge, Massachusetts for a set of MBA classes at Harvard Business School and MIT's Sloan School.  In the classes, a combination of professors lead by Noam Wasserman present the Les is More X 4 case that was created several years ago.  Each year is both humbling and invigorating.  Humbling in hearing these smart students pick apart my actions at the various CEO engagements that I've had. (I sure wish I had carried around a pocket sized HBS class with me before I did some of the things I did.)  Invigorating, in that I get energized by the exuberance of the students and their intellectual prowess and innovative thinking.

This year however was a bit different than the four years prior.  First of all I was set up to do five classes in one day at the two Universities -three at Harvard and then two at MIT.  Even just physically, it is difficult to get "up" for each of five classes in about 8 hours of duration, as well as navigating through Cambridge across the river (Charles) and between these two schools.  But perhaps more interesting is how the day started and ended.

Typically I arrive on the Harvard campus about an hour before the first class.  This was no exception.  I was greeted by Matthew O'Connell, Professor Noam Wasserman's assistant.  He ushered me into Noam's office where we touched base about the logistics for the upcoming day.  This year, Magnus Thor Torfason, Assistant Professor of Business Administration, was joining in the fun and has been teaching a 3rd section of Founders' Dilemmas at HBS.  Our cordial conversation started off as usual with Noam mentioning innocently along the way that a partner from Northbridge Venture Partners would be attending the class as a guest.  Apparently Noam had not put together the name, Michael Skok with the case itself and was unaware that Michael was actually the Board member at Active Endpoints that had at the end of the case been the lead board member who fired me.  Awkward was an understatement.  Noam asked whether we should make different plans.  We both agreed that we would proceed as usual with Noam making me promise not to change anything about the way we had gone about presenting the case in the past.  For the uninitiated, the case ends with me playing the role of Michael as the student plays me, negotiating his role as CEO.

In any event, the class went on as planned.  I was quite aware of trying not to hold anything back and when it got to the time where I played my board in a mock phone call with the student, I gave as real a rendition of what actually happened as I could.

So how did Michael react?  He paid what perhaps could have been the ultimate compliment to me and to Noam the author of the case.  He said that he emphatically believed that what we had portrayed was completely authentic!  In the event that I have not, over the past 7 years, been able to vent my emotion over what happened that infamous spring,  I now am over it!

And so you ask, how did the ending top that?

In the last class which took place at MIT, I was finally and comfortably situated in the classroom in advance of the class.  Professor Matt Marx and I had decided that I would not be introduced to the class until about half way through when the students had (incorrectly as always) voted on what they expected the outcome of the Active Endpoints case would be.  Shortly after the class started, while interrogating my actions at Metaserver, my first venture as CEO, one of the students who was exasperated by the stupidity of one of my actions blurted out: "Les needs to put on his big boy pants" in order to become more mature in my approach.

When it came time for the vote and the class all voted as usual that I would save the day, Matt innocently points to me in the back of the room and asked whether or not the class was correct.  When I answered, I suggested that I would have to pause for a moment in advance and "put on my big boy pants" first.  The class erupted in laughter.  And the student who had made this statement was embarrassed.  But it was all in good fun and education as I took the floor and answered the eager questions from the students.

Afterward, by the way, I told the student to make sure he never backs down when he has thoughts like he did.  Because, although it might have been awkward to hear, he no doubt was correct!


01 January 2013

Making Employees Smart Health Care Consumers


Each year executives across the country are faced with tough decisions regarding the provision of health care insurance to their employees.  Questions like what type of coverage to provide, how much employees should contribute towards this insurance, and which employees are covered, are coming under much more scrutiny than in the past.

The idea of employers owning the burden of providing health care insurance in the United States originated less than two generations ago during WWII.  Then employers found offering health insurance to be a way to get around the wage freezes, as an enticement to attract scarce workers.   In 1945, when President Truman failed to get his sweeping national healthcare programs passed, corporations offering health care insurance steadily became a standard part of the employment relationship that has continued through today.

Health insurance programs, usually offered to full time employees, have taken much of the risk of health care coverage from American employees.  However this risk has been replaced by a sort of malaise when it comes to employees making intelligent health care consumption choices.  Since many insurance programs don't discriminate among the various choices for the provision of health care services (for example choosing to visit your hospital emergency room for a bad cold), employees often don't act like smart consumers when it comes to health care choices.  Employees who fail to consider the most effective venues and treatments for their illnesses contribute to increasing costs of healthcare and significant inefficiencies in our system.

But as we all are becoming aware, our healthcare system in the US is changing, as are the ways in which we insure against these ever rising costs.  During the Obama administration our federal government has made the furthest inroads yet on prescribing who and how Americans procure health insurance.  A prolonged recession is putting extraordinary pressure on US corporate profits, causing executives to rethink this grand bargain. Technology is expanding the choices available to treat illness and extend life expectancy.

Does the relationship between what has become the benevolent corporation expected to offset the health insurance costs of the individual still make sense in the 21st century?

I personally believe it is time to rethink this bargain.  We must use market demand, consumer choice, and free market pressures to balance and align health care as we do in so many other consumer markets.  As employers we owe it to our employees not just to help subsidize the extraordinary cost of consuming health care through the offering of health care insurance, but also to help them make good choices.

One way we ought to consider changing the status quo is by offering subsidized health savings accounts coupled with high deductible insurance programs in lieu of many existing health insurance programs.  High deductible plans mean that for the first several thousand dollars of an employee's annual health care spend, they actually pay this out of their pocket.  I expect that involving the employee in actually paying real money for their health care consumption might encourage them to ask more questions, be more selective in their services, and think about costs rather than just plunking down their employer backed insurance cards. Subsidizing health savings accounts will help to take the sting out of the high deductibles paid by the employee - but still require the employee to physically pay the bills.

The cost to employers for offering these types of plans should end up being a wash.  High deductible health insurance should cost less than other plans.  That savings could be used to fund the subsidies for the HSAs.  Healthy employees can keep the money in their HSA and roll it over year to year, gaining value and maintaining that as a rainy day fund should their employment relationship change or something catastrophic occur.

As employers we need to start thinking about these kind of alternatives as our small way of participating in finding a solution to escalating medical care costs.

26 March 2012

The Tyranny of the Urgent

http://www.theinsidetrac.blogspot.com/2012/03/taking-time-to-work-on-rather-than-in.html

31 December 2010

The Inside Trac

I have moved my current postings to this new blog: The Inside Trac. There I talk a bit more specifically about the related experiences of my work at Force 3, Inc.

25 August 2009

Don't Mistake Loyalty for Leadership

A common trait of founders, CEOs and in fact most executives, is the loyalty they command among their troops. During times of crisis (including most of the early years of a developing company, integration of mergers, etc), loyalty is a critical characteristic of the leadership team. But in order for a company to scale, leadership is much more important than blind faith alone. It's apparently quite difficult to separate the two. And clearly, the bonds born of loyalty are hard to overcome.

As companies mature and it becomes necessary for management decisions to distribute beyond a strong single central decision maker, loyalty alone is not sufficient to generate good decisions. So CEOs need to steel themselves to objectively view their teams as either capable or not to operate on their own. Coloring (or perhaps blinding) the decision of who sits in these important leadership seats is a mistake too often made.

02 July 2009

Now these were some real Founders!

THE 4TH OF JULY Have you ever wondered what happened to the 56 men who signed the Declaration of Independence?

Five signers were captured by the British and executed as traitors. They were tortured before they died. Twelve had their homes ransacked and burned. Two lost their sons serving in the Revolutionary Army; another had two sons captured. Nine of the 56 fought and died from wounds or hardships of the Revolutionary War. They signed and they pledged their lives, their fortunes, and their sacred honor.

What kind of men were they? Twenty-four were lawyers and jurists. Eleven were merchants, nine were farmers and large plantation owners; men of means, well educated, but they signed the Declaration of Independence knowing full well that the penalty would be death if they were captured. Carter Braxton of Virginia, a wealthy planter and trader, saw his ships swept from the seas by the British Navy. He sold his home and properties to pay his debts, and died in rags. Thomas McKeam was so hounded by the British that he was forced to move his family almost constantly. He served in the Congress without pay, and his family was kept in hiding. His possessions were taken from him, and poverty was his reward.Vandals or soldiers looted the properties of Dillery, Hall, Clymer, Walton, Gwinnett, Heyward, Ruttledge, and Middleton. At the battle of Yorktown, Thomas Nelson, Jr., noted that the British General Cornwallis had taken over the Nelson home for his headquarters. He quietly urged General George Washington to open fire. The home was destroyed, and Nelson died bankrupt. Francis Lewis had his home and properties destroyed. The enemy jailed his wife, and she died within a few months.John Hart was driven from his wife's bedside as she was dying. Their 13 children fled for their lives. His fields and his gristmill were laid to waste. For more than a year he lived in forests and caves, returning home to find his wife dead and his children vanished forever. Some of us take these liberties so much for granted, but we shouldn't. So, take a few minutes while enjoying your 4th of July holiday and silently thank these patriots. It's not much to ask for the price they paid.

Remember: freedom is never free! - enjoy the fruits of their efforts this weekend and every day.

23 June 2009

How did you get here? And where do you go from here?

This morning, I presented this speech to our first Leadership Class at Force 3. The class is taking place at the Smith School of Business at the University of Maryland.

Eight years ago, I had the honor of addressing the first leadership class that my company at that time, Transcentive, ever held. I gave those remarks in June of 2001. And our leadership program became the launching pad for greatness for Transcentive’s professionals as we dealt with the tragedies of 9/11 during which we lost several of our customer and partner community, the dot.com meltdown which changed the complexion of the entire technology industry and specific to Transcentive’s business, changes in stock option regulations that almost swamped our industry.

In preparing for this program, I shared with Rocky and with Jim the remarks I had made at that time. When he read them, Rocky thought that they still resounded today and asked me to address you with similar thoughts. It was interesting that many of the same themes still apply today.

As many of you know, I like to read. I like to learn. Perhaps I get that honestly from my mother who was a teacher for some 35 years. Of all the books that I have read, one of my favorite books is The Last Word on Power, by Tracey Goss. What Tracey says is that everything that got you to where you are today will hold you back from succeeding in the future. At first glance this seems a bid absurd. But in reasoning through her words and arguments, it now appears perfectly clear to me. The stuff I did in the past to succeed, was intended to solve the issues, problems and situations that I encountered at that time. My new role at Force 3 has required drastically different thinking. Drastically different responsibilities in a drastically different market. When it comes down to it, if you think that life has changed, or that your role at work has changed, how could applying the same recipe to it really work?

Think about managers for a moment. We insert managers into most organizations to help direct workers and projects. Most managers got to that position by succeeding in what they had done in the past. Either you were an individual contributor and you got good at your contributions, or you were a manager of people or projects and you were able to drill your team and help cause some successes. Either way, you were promoted based upon what you had already done under very different circumstances. So how can we expect that same person to be prepared for this new role without providing them with new training or guidance? But in most cases we don’t! And it leads directly to something that has become known as the Peter principal. We promote people until they get to a point where they are no longer successful. Until their success formula breaks down.

These two concepts – Tracey Goss’s and Peter’s both actually converge. If you are not capable of giving up your past, or reinventing yourself, you have no chance succeeding going forward.

· What if we kept acting as if 9/11 never happened,
· or expect to keep acting the same despite the financial meltdown?
· What if we kept acting like we were still a 100 person company.
· What if we kept acting like Obama never got elected.

You get the picture. Our actions change because the world in which we live is different. Our situations are different. And in fact all of our jobs are different.

But many people end up as positional managers. Positional managers are managers who manage based upon what position they hold. Like, I am the Sales Director so the sales people will do what I say. In fact positional authority often does cause short term action.

But in the long run positional managers are ineffective. They are limited by what they know, how much domain they can control, and how demanding they are. Their people respond only to their demands. They do not trust their manager, nor care about the end results. Since often times it is the positional manager who then succeeds (if there is success) and the workers get only the blame. This is sort of like treating people like machine parts. Henry Ford era. Think about the professional basketball coach Phil Jackson trying to get 5 prima donnas to listen to what he tells them to do. That simply does not work in this day and age.

What’s required are Leaders! Leaders are managers who have figured out that their position (their title) is meaningless. I tend to call it the second step of becoming an effective manager.

Leaders attract talent they don’t herd them.
Leaders inspire workers, they don’t push them.
Leaders listen more often than speaking.
Leaders motivate they don’t just manage.
Leaders do the right things, they don’t just do things right.

So let’s talk a little more about leaders and how they differ from managers. First of all effective leaders are genuine. What does that mean? Well first of all, we know in today’s complex environment that it’s impossible to know everything about everything. Certainly life and industry used to be much simpler. But today, can you really tell me that you know everything they need to know to get the job done? Do you really know how to do even just your own job? Aren’t there things you wish you knew? Aren’t there books or seminars or people you could talk to or other companies who MIGHT do things better, more efficiently, more innovatively than what you today are doing in your own departments?

So the starting point is: check your ego at the door!

Second step, realize that there is no involuntary servitude in this country. Your department, your coworkers and everyone across the entire organization is there because they CHOOSE to be, not because they have to be. Many of you already know that. We’ve experienced extremely high turnover for a company our size and for our position and performance and potential. The reason for it is US! Don’t point to any other cause other than we are inept at leading (and perhaps in hiring). People leave because they are not being led, or they don’t chose to be lead by YOU! Once you realize that, you’ll find that in order for you to succeed, you need to connect with your people and ensure that they are ready and eager to be lead…by YOU! If you think about it it’s an awesome task.

The main reason that people want to be led by you is that you empower them. You offer them the opportunity to be great. And you make sure they know when they are and they aren’t. And then empower them to do it better than you ever could on your own. That doesn’t mean they run haywire throughout the organization. That doesn’t mean that you don’t mentor them, provide them with insights that perhaps you learned the hard way, that doesn’t mean that you don’t reward and punish their behavior. It does mean that you start out with great people (good hiring is very important) that are BETTER than you or can become BETTER than you in figuring out how to do the job. So that’s step 3, find better people than you to do the job. Remember Phil Jackson and our basketball analogy. No successful coach is nearly capable of going out and beating his players. So why wouldn’t you hire people who are better than you at that job?

Then fourth, you got to give them a good reason to excel! Why should they WANT to do a good job. To me again the answer is pretty clear. WIIFM. What’s in it for them? Figure it out, in advance and respond to it. Our millennials, generation X’s and Y’s are motivated by different things that perhaps our parents or even ourselves. They want freedom, they want recognition, certainly they want rewards, but most of all they don’t want a wet blanket manager who holds them down and suffocates their initiatives.

This is all driven by your workers knowing that you care.

People don’t care about how much you know unless and until they know how much you care.

That is until you convince your team that you care enough to make them great. And by the way, if its bullshit. If you just say you care and every action that you take is to try to make YOURSELF look better, it won’t work.

That you care enough to ensure that they get credit for what they do. That you care enough to discipline them when they stray.

Caring includes, setting the example yourself. When you become a leader, you’ve got to walk your own talk. That is, never ask someone to do something that you wouldn’t do yourself. That means that just because you’re the boss, doesn’t mean that you don’t have to get your hands dirty. That means that you participate, you put yourself in a position where you are just as vulnerable as they are. You become one of the team, not just the boss. That means putting yourself in a position where you can fail and look bad just like them? To do this you have to become a very sensitive listening device. Stop talking and start listening.

And most of all, seek out the people in your organization that themselves can become great leaders. Because the highest level and most important contribution to a business organization is not being a great contributor, although where would we be without them, its not being a manager of projects or people, although we need them as well, and its not even being a leader of people, although that would propel most any organization to greatness. The real challenge is to become a leader of leaders.

Since coming to Force 3, I’ve pushed our executives to each identify of their own successors. Now that may seem a little foolish. It also may sound like I was ready to replace these managers and just wanted their help in selecting the “who”. But in fact it was a test of leadership. Because you see that despite all you may have heard or what you may think, the way to make yourself indispensable in an organization is to make yourself dispensable. If you are not able to do this, then… your organization will always need you around to do the work. That means when you are not there, productivity lags. That means when you are called upon to reach the next level, you will be skipped over, because there is no one there to fill your void. Think about it. Sounds pretty logical. The best managers are the ones in which their departments manage themselves.

How do you find these future leaders?

· They are the ones with passion and motivation.
· They are the ones that ask to do more.
· They are the ones that are not just looking out for themselves.
· They are the ones who don’t take anything for granted.
· They are always wrestling with the status quo and looking for better ways to succeed.

You’ll know a leader as the one who heads the team into the forest. Climbs the highest tree herself. Surveys the territory and then declares: Wrong Forest! Not just seeing the forest from the trees; but being willing to acknowledge mistakes and make bold moves to correct past actions.

Leaders are forever raising the performance bar, and they like to keep score. They are the optimistic ones. The ones you feel good talking with. The ones that don’t suck the energy out of you and point out all the reasons something can’t get done, but rather ask why not? They may not be the smartest. They may not have the most experience in our particular business. But you know when you meet them that they can do whatever it is you need of them. They don’t have a big ego. They usually describe their past successes as having been either lucky or caused by the greatness of their team.

And so why this program? Leadership is not something you are necessarily born with. It can be learned but does require a commitment. A commitment like what we asked you to start here, by preparing for and attending this week.

And so how do we get there. First of all it takes commitment. Your senior management team’s commitment is required. Because if they don’t raise the bar, no one else can. So you have our commitment. First embodied by this program. And soon to become a part of everything we do at Force 3.

What’s in it for you? I think this is an opportunity unlike any I’ve ever been given. So take advantage of it. It’s your ticket to your next level of thinking and hopefully acting. It’s your next step along the way of your progress to give you an opportunity to become a better leader of whatever it is you are going to lead? Whether that be your children, your civic group, your tribe, your department, your country, or your company. I believe you will find it’s worth the effort. Work hard at it and together we’ll see real tangible results. By creating a culture of leadership we’ll together be able to take this company in new directions and to levels we’ve never dreamed were possible. Because institutionalizing leadership, as we are starting today, is the ultimate act of leadership.

Enjoy the next three days. Work hard and come away with new ideas and new motivation to make Force 3 and even greater part of our collective community than it is today.

15 June 2009

Founder Non-Admissions

A CEO friend of mine posted this slide show on her facebook account. Having read and sat through many a business plan presentation, I would have to say that most of this is true.