To whoever think their words affect me is too stupid
And if you can do it better than me, then you do it
—Kanye West, “Cold”
One obvious yet under-appreciated law of business physics is:
For any given company, the larger the company becomes, the more opportunities emerge to screw it up.
Another obvious but not well-understood law:
The more screwed up your company, the more people will complain about it and blame you.
If we take these two together, it is easy to see that without intervention, the larger your company becomes, the more people will complain and blame you.
This seems simple enough, but CEOs often fail to understand the logic, become overwhelmed by the criticism, lose confidence in themselves, and decide that they are no longer capable of running their own companies. This can be tragic as I explained in “Why We Prefer Founding CEOs.”
If you are a logical and open-minded person, it is difficult not to take a 10X increase in criticism seriously. More importantly, it’s difficult not to take a 10X increase in criticism personally. So how can a CEO keep from getting grounded into sawdust by complaints from her own people? The answer comes from a simple CEO aphorism: You either apply pressure or you feel pressure.
Let’s begin by looking at the overwhelming spiral. As your company grows, people start complaining about everything from your sales efforts being underwhelming to there not being enough organic snacks in your free food section. Meanwhile, you are trying to wrestle serious product strategy questions posed by scary competitors to the ground. You don’t know the answers to most of the complaints, so you defer them and focus on what you know. The problems related to the complaints fester and grow. Your employees get frustrated that the issues are not being fixed, and they complain louder. They begin to lose confidence in you as CEO.
The Best Defense is a Good Offense
The key to breaking the cycle is to stop feeling pressure and to start applying it. The most basic way to do this is to assign the problems to your team. This transfers the pressure from you to the organization and has the added benefit of empowering the team.
At this point, those of you who have read my book are thinking: “Ben, that’s not the hard thing about this. The hard thing isn’t delegating, the hard thing is when the executive disagrees that there’s a problem or there is no logical owner or the problem is cross-functional or the executive tries to give it back to you.” Let’s take these in order.
The executive fundamentally disagrees that there is a problem. Imagine that your employees are complaining about the number of bugs in your product and you ask your head of engineering to improve quality. Chances are that he will not say: “Sure thing, boss.” He will much more likely say: “By what definition?” He will likely have way more data than you about product quality and it will be difficult for you to win the argument. Yet you know the employees are right, which is why you didn’t explain to them they were wrong in the first place.
The reason for the stalemate is that quality in the abstract is an intractable problem. In fact, most problems in the abstract have this property. If you want it fixed, you must be specific. Doing so is tricky in this case because no software organization has ever produced bug-free software in every version. So if you don’t want zero, then how many bugs are too many? The best way to start is to frame it in terms of something that you know well. Sometimes this will mean moving to a more qualitative argument.
For instance, pick your three favorite bugs and use them as examples. Describe why they are particularly damaging and try to classify them as best you can. Let your executive know that bugs like that should not ship and if they do accidentally ship, then the company should not rest until they are fixed. Then ask him to do something specific: Have him tell you exactly how many bugs are outstanding in the classes that you identified and report back on when they will be fixed. Then ask him to make a proposal about how he will systematically do a better job on this in the future. Finally, let him know what you are willing to give up in terms of other work (schedule, features, etc.) to make this a priority. Getting specific will help energize the team as it will give them a problem they can actually solve. It will also clearly communicate that you are super serious about the issue.
The problem is cross-functional. Imagine that your sales people keep complaining that there aren’t enough leads. You feel as though they are Jack Lemmon in Glenngary Glenn Ross. But then you go to your head of marketing and he demonstrates that he’s generated 150 percent of the leads that he was supposed to generate based on his objectives. What do you do?
There are many possible issues: The definition of a lead differs, the profile of the target customer differs, somebody is lying, etc. As tempting as these possible solutions may be, resist the temptation to solve this one yourself. Instead, get both executives together and let them know that you need them to agree on a common definition of a lead, a method for determining whether any given lead meets the description and an objective for the head of marketing to hit next quarter that both he and the head of sales will be happy with. Give them a firm deadline and let them know that you will take no excuses, because you have a whole field filled with demotivated sales reps and you will not stand for that. Apply pressure.
There is no logical owner. Sometimes a problem has no owner. Customer churn has increased in the past two quarters. It’s an important issue, and left unchecked it could become mission critical. However, it’s not the top priority in the company today. To further create CEO procrastination, it’s not clear whether it’s a customer support problem, a sales problem, a services problem, a product quality problem or some combination of all four. In reality, it’s probably a CEO problem, but if it’s not the top priority in the company, having the CEO personally drive it to resolution may not be the best idea. So, what do you do?
You assign the problem to an illogical owner. In this case, you might assign it to the head of sales, because she has the highest incentive to fix it properly. Otherwise she has to resell all those deals to make quota. You empower her to dig into each churned account, find the root cause analysis, and report back to the team on a frequent basis. Once the root cause has been determined, she should propose a cross-functional plan to fix the problem.
This is an imperfect strategy in many ways. The problem might be entirely with sales setting poor expectations and she might cover that up. The various groups might not get along well and not want to listen to a peer. The head of sales might not have a great idea of what’s possible in engineering or customer support. Imperfect yes, but far better than doing nothing, which is generally what happens when the CEO has too much on her plate and doesn’t apply pressure.
The assigned executive tries to give it back. Your company’s engineering schedules are unpredictable and your engineering throughput is poor, so you ask your VP of engineering to fix the problem. She complains: “The schedule keeps slipping because the product management team keeps changing the priorities and thrashing the engineers back and forth across the various projects.” You say: “Great. I will work with product management to get them to cut that out.” The VP of product management replies: “I’d love to stop with the requirements, but we need certain things to close large deals and make the quarterly number.” You then go to the head of sales and she says: “Do you want me to make my number or not?”
In this case, everyone is under-empowered to make the right decision and get you what you want. The key to delegation is better empowerment. You could simply give the head of engineering the ability to say “no” to everything, but you may well miss all your sales forecasts and cause yourself an even bigger problem. A better approach would be to formalize the change process. You can say that once a project begins, you can alter its definition, resources, priorities or schedule, but doing so requires a formal meeting with all the stakeholders and the CEO. At that meeting, all changes and their potential consequences will be discussed and a decision will be reached. If you implement such a process, you will find that the number of changes drops by an order of magnitude. By simply making it more difficult to make a change, you will apply pressure to the team to find another way to make the sales number.
At this point, you haven’t empowered the head of engineering to control her own destiny, but you have empowered the team to give you what you want.
Using Pressure to Evaluate Executives
Founding CEOs often find it difficult to evaluate executives. How do I know if my head of marketing is world-class? I’ve never run marketing. Applying lots of pressure is a great way to sharpen your instincts when evaluating executives.
If you consistently apply pressure to an executive and get no results, then you very likely need to upgrade that position. The whole point of paying an executive all that money and giving her that fat stock option package is to take the pressure off of you and give you some leverage. If she can’t do that, then she must go. She may be a fine executive for another CEO, but not for you.
On the other hand, when you have a problem that you have no idea how to solve and you delegate it to an executive and she solves it, then she’s extremely valuable.
If you are feeling overwhelmed and under competent, then you are very likely not applying enough pressure.
Editor’s note: Ben Horowitz is a co-founder and partner at Andreessen Horowitz, and the New York Times bestselling author of The Hard Thing About Hard Things. He was cofounder and CEO of Opsware (formerly Loudcloud), which was acquired by HP, and ran several product divisions at Netscape. He serves on the board of such companies as Capriza, Foursquare, Jawbone, Lytro, Magnet, NationBuilder, Okta, Rap Genius, SnapLogic and Tidemark. Follow him on his blog, and on Twitter @bhorowitz.