Congratulations! You have been brought in by investors to repair or scale a struggling tech company. The investors still believe in the company and need an experienced operator to right the ship.
The investors likely brought you in because either the company is shrinking or not growing (see Figure 1 for likely scenarios) and the investors have decided the problem was leadership. Or, perhaps the outgoing CEO was tired or didn’t have the skills for the next level of growth.
Regardless, you now have the job so you better have done your homework before accepting the role. You hopefully understand the financial situation, why the CEO departed, individual board members’ views of the company’s opportunity/risks/expectations and the ownership (cap table). You should have also fully digested all available news, analyst research, competitive positioning, and GlassDoor feedback. Oh, and find the date of the next board meeting. After all, you do report to them.
Your job is to lead the company, find growth, scale the organization (In figure 2–move the company from A to B) and do a stupendous job communicating to all the stakeholders.
You need a 30-day plan.
But Be Careful. You must learn quickly, but you don’t want to bring down the entire organization doing busy work as you come up to speed. Be respectful of people’s time and leverage the finance team as much as possible versus customer-facing employees. Realize that you are an unknown to the ecosystem; all people know about you is what is online. In other words, they will have judged you before they have ever met you. Be careful not to undermine your new management team by going a couple levels down in the organization without their consent, and be careful not to engage in speculative discussions (spitballing half-baked ‘what if’ ideas) that could easily be misunderstood. And above all else, in the first 30 days, provide no directives unless you are forced to, and then only move forward with the thoughtful involvement of your team.
Note: McKinsey wrote a great article about the time between accepting the CEO role and starting the job. You can find it here.
First Step: Broadly communicate your vision of a better company
Help the employees understand why you took the job and your approach. It’s too early for specific plans however you should convey the values that you will use as a framework for making future decisions. Be clear about your management style so everyone is not wasting energy trying to figure out how to please you.
Here is an example of Dara Khosrowshahi’s first message to employees at UBER.
Second Step: Get your team together
Face to face is best (because you want to take a temperature of the team dynamic) but if you are geographically dispersed then make the best of it. Go around the room (or call) and ask the team to speak to the following in 5 minutes or less:
- Introduce themselves (how long they have been at the company and something personal like what they enjoy doing in their free time).
- The top 3 things they must get done in the next 30 days and who on the leadership team they are working with on the task- no detailed explanation for each or discussion (only clarifications if necessary).
- Something they want to know about you.
You should go last and provide as many answers to their ‘something to know about you’ questions as possible and then explain how you will proceed with your next 30 days of learning. Your goal is to get introduced to the team dynamics, understand some of the cultural norms and help lay some groundwork so they understand how you think and what the next few weeks are going to look like. You might also find that there are a couple of surprises hidden in the team’s top 3 priorities that you need to understand more clearly in a 1-on-1 discussion.
Third Step: Schedule 1-on-1’s
Start collecting data ASAP. Start with your management team, then meet with as many individual sales representatives as possible as they will have the best understanding of the market, then meet a minimum of 10 customers and partners (see the ‘be careful’ section above…). Try to get a true idea of the culture –not just what you read on https://glassdoor.com. The culture is made up of all the stories employees, customers and partners talk about when you’re not around–so it takes time to understand.
Be consistent with the questions you ask–Here are some suggestions:
The remaining steps are in no particular order. Your goal is to get enough information to begin to understand the culture, the people, the customers, the partners, the issues, the opportunities, and the risks.
— “Once the information is in the 40 to 70 range, go with your gut.” – Colin Powell
Finance: Dig into the financials and the KPIs
Go over all the standard financials (Income statement, balance sheet, P&L, budget, forecast etc.) in detail looking for anything that does not meet the standard KPIs.
- For Software as a Service (SaaS) businesses leverage all the well-known metrics and KPI’s (CAC, LTV, MRR, Churn etc..)–you can find all the metrics and KPIs here. Specifically look for any KPI’s that are out of range such as a low LTV to CAC ratio (LTV should be >3x CAC) or when months to recover CAC < 12…. Great site for deep dive on SaaS financials here.
- For traditional businesses leverage old school KPI’s found here.
Finance: Go deep on expenses
Review 20% of the expenses that make up 80% of the spend. Tag each expense with its corresponding revenue impact and its significance as best you can… With an immature team, this may be difficult but give it a go.
Then chart out the expenses and prioritize quadrant’s A and B so you know what the team can cut if they either needed to invest in something more important OR had to ensure a minimum of 2 months of working capital available for payroll.
Finance/Sales: Go deep on current contracts
Look at the 20% of the contracts that equate to 80% of the revenues. Dig into as many as possible and look at their profitability, % of business, terms, risks, upside and most important their significance to the company.
Chart the contracts out so you can visually see how they map to the organization.
Contracts in Quadrant A you should understand the issues and determine if there is any way to renegotiate. Quadrant B – How can we get the cost down ‘per account’? Quadrant C – How can we get the cost down ‘overall’. Quadrant D – Ask: How do we do more of these?
Finance: Go deep on AR and AP
Accounts Receivables (AR) and Accounts Payables (AP) – You want to ensure you understand any large outstanding receivables or payables that are behind and could impact near-term cash flow.
Finance: Break up the P&L
Break out the natural categories of a P&L and look into the company’s performance per sector, per vertical, per product/service. If professional services are sold break out into separate P&L (more). You need to understand where the company is financially strong and where they are struggling.
Finance: Budget vs. Actuals
You need to figure out the budget process and how well the team has done. Are they always behind budget? are they always exceeding? Or are they on target? Each result tells you something different.
Finance: Understand banking, legal, accounting, tax and insurance relationships
These third parties should be consultants to the company–you need to gauge if they are being used in this way.
Sales: Do a pipeline review
…of each appropriate segment (example: Enterprise versus Small & Medium Business (SMB))
For the Enterprise segment you want to figure out how well the team understands their customers’ business, the competition, how tight of a solution sales process exists and to get a general sense of the potential of the organization.
Try to review the top 80% of the revenue opportunity by account representative. If possible also look at history (closes since start) to see how well they have done for the company and what types of discounts are being applied. Comparing that history to the current velocity/deal revenue is also key.
Dig into the deal dynamics and see if the team understands (Pain) i.e. what is making the customer buy? (Power) How well does the rep know the person empowered to write a check? If the deal is 40% or higher do they have a written commitment in email? (Vision) How well the rep knows how our solution would fix the problem and by when. (Value) Does the rep know how much our solution would this save (or make) the customer? (Control) What are the next steps w/dates? …and if the company is using Solution Selling read a few of the ‘Sponsor Letters’ & ‘Evaluation Plans’
For the SMB segment, look more at velocity and the process surrounding the business. Compare the rep history to the pipeline. Spot check a few of the bigger deals. Understand the link between marketing and the SMB sales team–are there any gaps (example: when a prospect fills out a form how long before an action). Understand the automation, the CRM and all the tools surrounding the process.
For channel deals you want to understand the registration process (if one exists) and how well the channel opportunities are managed and if there is ever any negative competition between the channel and the sales teams. Compare the history to the current deals and stack rank the top partners to ensure you know who they are and setup exec to exec meetings as soon as possible.
Sales: Pipeline Post Mortem
Identify why we are losing/winning and find the trends… Understand customer churn. Understand the number of deals (and revenues) we lost in the past 12 months and why. Understand who (competitor) we are losing to (or winning against) consistently.
Marketing: Conduct a simple Customer, Employee, and Partner anonymous satisfaction survey
Have your marketing team pull together 3 quick surveys using Google Survey or another tool like SurveyMonkey. Add your own personalized message to each of the outgoing messages introducing yourself.
If the company already does these surveys that is a great sign. If so, there is no reason repeat these surveys just dig into the feedback AND also understand how the feedback is incorporated into leadership/management strategy, product planning and HR/Sales/Marketing/Support process changes.
Marketing: Marketing Review (Product, Place, Promotion, and Price)
It will take time to learn how well your marketing team is managing the website, the social networking presence, event marketing, landing pages, and paid advertising. However, it is always eye-opening to find the gaps in the data (“we don’t track that…”).
Find out how traffic is getting to your website and what is it costing the company:
Understand the social networking activity:
Understand how much events are costing the company and how the team is tracking success:
Understand Google/Bing ad spend and ROI:
Understand what landing pages are the most successful and why:
Sales/Product/Marketing: Understand the market
Understanding the Total Addressable Market (TAM) is key to any business.
Here is an example of how one group measured how many companies in the USA were potential targets (dark blue) based on employee count and vertical industry–just using US Census data.
Sales/Product/Marketing: Understand the competition
Read everything you can about your competitors. If you can afford Gartner research buy it… You need know your enemy.
Know your strengths and weaknesses: if you know the enemy and know yourself, you need not fear the result of a hundred battles. –Sun Tzu “The Art of War”
Product: Product Review
Learn as much about the product(s) as you can… Take training, use the product(s), read any patents etc… There is no need to be an expert, but you should understand the nuances of what your customers are purchasing, complaining about and why.
You need to also understand the product development and DevOps processes as they currently exist (high level). What tools (Atlassian, Jenkins, Kubernetes, Docker etc…), what hosting providers (AWS, Azure, Google etc..), what languages (C, golang, etc..), what third-party services are integrated into the solution (CRM, Database, OpenSource projects etc..).
Assuming the team leverages Agile (if not, you need to dig into why) you should understand the sprint cycle (1 week, 2 weeks etc.), burndown, and velocity. Does the team use LEAN startup practices such as the MVP concept?
You should understand how well the team is performing Agile (how long are standups, are they documented, how retrospectives are done, does the team use business value points). You should also get a view on how well the team is doing continuous delivery and if they are measuring items such as ‘Commit to Deploy’ metrics. It’s important to also understand how the team manages with defects and bugs.
Finally, if some of the team is offshore, or part of a third party, it’s important to dig into how well those groups are integrated into the teams to get a sense of productivity.
Product: Review Product Backlog with Product Owner
Now that you understand the product, go deep on what the Product team is working on and why. Try to get insight on how well the plan correlates to the market needs. If the team is using Story (Business) Value points validate these with what you are learning from the rest of the team and from customers (If not, then clearly understand how they are prioritizing the market needs as this is SUPER critical for success).
Support/Product/Sales: Review Customer Support Issues
Customer support excellence can be the key to customer renewals, product backlog prioritization and upsell/cross-sell sales if used appropriately. Dig into the issues, the timeliness and quality of resolution and understand how those issues are used in the organization.
“Your most unhappy customers are your greatest source of learning.” — Bill Gates
Human Resources: Understand Employee Performance and Rewards
Your Human Resources team should be able to provide you a list of roles in the company and their compensation bands and then a list of employees for each role with their date of last performance review (and rating)–if not, you have more work to do… You’re looking for how mature the HR processes are… How people are rewarded… Are you paying market rates… and most importantly turnover rates.
Human Resources: Understand Recruiting
Hiring qualified employees is hard and hiring the best is difficult. Hiring the best is going to be key to future performance gains. How well is your team set up to hire the best?
Human Resources: Understand HR Policies and Procedures
Review the employee handbook and all policies and procedures. Some examples: Logical access policies, Incident response plan, disaster recovery plan. If the organization is SOC 2 certified review the audits.
All Teams: Understand the risks
Risk management is something that must be done continually. Doing it well can be the key to success if you need to make a quick pivot in the future. If the team is not doing this already you need to add it to your 60 to 90 days list.
You: Report card
After 30 days you’ve learned a great deal and hopefully formed some opinions about the people, processes, and product(s). It’s a good idea to record it all on a report card–not to be shared but to refer back to periodically and reflect. Write down why you rated each group the way you did as it will be helpful to use this as you continue your journey.
Now it’s time to lead! You and your team now have to determine what actions are required to grow the business.
Reference the figure below–You’ve likely been brought into the company in the ‘production stage’ either in A (the company has not achieved Product-Market Fit and is surviving on Professional Services revenues or Other People’s Money) or in B (the company has reached Product Market Fit and it’s time to tune the organization for growth). Likely it’s going to be somewhere in between, however, the key is to now have a good idea on where to focus your energy for the next 60 days because you can’t do everything (A. Innovation management and Product/Program management or B. Leadership and Sales/Marketing management).
–“People… Process… Product…” — “The Profit“
It’s easy to be overwhelmed at this point–the business is going to start coming at you fast. Customers, prospects, managers, partners, analysts, board members, bankers, attorneys etc… will all want a piece of your time. The issues at hand will require time… Scheduled event and meetings will require your time. Your job–not to become reactive to the demands on your time (remember the ‘Big Rocks’ story from Stephen Covey?)–project manage your schedule to where you continually reprioritize the demands on your time and STAY PROACTIVE. Remember, you have a job to do and that is to ignite growth in a company that has not been growing–that means doing something different and if you become reactive to these demands you will become part of the problem. I’d recommend 2 actions now–Schedule a leadership team offsite and get into the right frame of mind by re-reading that old book on your shelf called The Five Dysfunctions of a Team. You’re also going to feel like diving right in and starting to provide guidance and poking harder at the items you rated low in your report card–just recognize how disempowering this may seem to the team. You have to get your hands dirty–that’s required but at this point in your journey, you need to lead vs. manage. The next 60 days are going to be difficult. You may need to tighten up the people, processes, and temperament of your leadership team. You and the team will need to determine what to prioritize and de-prioritize… and then change management comes with its own cultural challenges.
A preliminary view of the next 60 days in the role…
- Communicate with the board – As you develop your boardroom relationships, you must view the directors as neither friends nor confidants, but as bosses who hold you personally accountable for the success of the company. By actively investing in director knowledge and relationships—through one-on-one contacts, e-mail updates of corporate progress, and distribution of background material, for example—the best CEOs turn board meetings into participatory discussions rather than show-and-tell sessions by management. A new CEO who is open with—and creates the opportunity to collaborate with—their directors will be more likely to garner support from these bosses. – HBR
- Help your managers understand your expectations in regards to ‘leadership’. If Management is about systems, processes, policies and resources and Leadership is about vision, inspiration, values, and people then the basic premise is that ‘Leaders deal with management shortfalls’. Basically, leadership is required when the systems & process do not work…. Leadership is required when the policies are not applicable or do not exist… Leadership is required when there are not enough resources to accomplish the task… (more)
“You are entirely responsible. It all comes down to you.” —Extreme Ownership
- Begin to introduce your team to strategic planning (if necessary)
You will quickly begin to understand how well the troops understand what the company’s Vision and Mission are and if it means anything to them (example: Microsoft’s Vision/Mission is “We believe in what people make possible. Our mission is to empower every person and every organization on the planet to achieve more.”). You will also quickly find out how well the teams know the goals they are trying to achieve, their strategy for achieving the goals, and how they are measuring success toward those goals. If you find gaps up and down the chain it may be time to do a bit of work on your strategic plan.
- Begin to introduce your team to innovation planning (if necessary) — Perhaps leverage Blue Ocean Strategy
If you find that the company is competing head to head with others and losing share it may be time to look at creating uncontested market space that can create new demand or break the value-cost tradeoff.
- Depending on where your team scores on the report card it may be time to begin to introduce a new way to approach the business. Here are some of my favorite tools:
- Introduce your team to SCRUM (not just the product team)
- Introduce the leadership team to shared goals (it’s all outlined in the book mentioned above called the 5 Dysfunctions of a Team)
- Introduce your enterprise sales manager to Solution Selling
- Introduce your marketing and SMB sales manager to Predictable Revenue
- Introduce your channel manager to Building Successful Partner Channels
- Introduce your services manager to Managing the Professional Services Team
- Introduce your services team to The Service Culture Handbook
Good luck, I can’t wait to see you ringing the NASDAQ bell someday soon!
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