Seeing Around Corners

by Rita McGrath

  What Does This Style of Leadership Have to Do with Seeing Around Corners?

  Throughout this book, I’ve emphasized that spotting and acting on emergent inflection points can’t be done by one person in a lofty corner office. As Jeff Bezos has said, seeing inflection points coming is typically not the biggest challenge. It’s seeing their implications for the taken-for-granted ways we do business, deciding which vector your organization will pursue, and then bringing the organization along that allows it to navigate through an inflection point and come out stronger on the other end. It’s also thinking through the long-term benefits for the organization, even if the short-term transitions are somewhat painful.

  In other words, you first have to see the potential for an inflection point as an organization. Then you need to decide what to do about it, collectively, as it isn’t always clear what to do just because you’ve seen a change coming. Then you have to mobilize the organization, which is often difficult, as people will have grown used to the typical way things are done. Most people in the organization have never been through a major inflection point. Most people have been rewarded for, well, doing what is in the interest of the current way of doing business and business model. Expecting them to leave all that behind and embark on a journey that seems highly uncertain is a tall order.

  If snow melts from the edges, then the ability to get to the edges and hear their messages is absolutely key. Being able to detect weak signals that things are changing requires more eyes and ears throughout the organization. The critical information that informs decision-making is often locked in individual brains. Somehow leaders need to be able to access that information and make it available, with the right level of accuracy, to everyone.

  People have to be willing to bring you, as a leader, disconfirming evidence—indicators that your assumptions were wrong and challenges to the taken-for-granted ways of doing business. Genuinely relating to customers, their pain points, and their jobs to be done requires being motivated and incentivized to get into the field and empathize with them.

  Providing people with the courage—and the methodologies—to engage in fast learning even when things are uncertain is something that can have an impact at scale only if the senior team is behind it. Mobilizing the organization around a common set of goals is, again, a core task of the senior team, as we saw with the experience of Satya Nadella and Microsoft’s transformation. Bringing both the core business and the new business along together requires a deep respect for what both bring: sensitivity to the human side of things and a willingness to break the mold a bit, as we saw with the Klöckner story in Chapter 7.

  Let’s dig into what this looks like at a granular level. What must one actually do to create an organization that can see around corners collectively?

  Let’s consider one remarkable leadership story, that of a founding CEO who took a startup from just barely surviving to an IPO and then to a massively profitable acquisition over a grueling nearly seventeen-year stretch. Her name is Gail Goodman.

  “The Long, Slow, SaaS Ramp of Death”

  The email-marketing company Constant Contact provides a perfect inflection point story. The company made incremental progress for years before it finally achieved success.

  In 1999, Gail Goodman joined the startup company Roving Software, a seven-person firm founded by Randy Parker and working out of an attic in Brookline, Massachusetts. She was, in reality, the startup’s CEO. At the time, the company had an idea about creating software that would help small and medium-size enterprises, but it hadn’t yet entered the market. As Goodman said in 2013, “I joined pre-product, pre-revenue, and pre-funding.”

  When it launched, the company offered email marketing support to small businesses and not-for-profits to help them build their audiences. Given their target customer base, a monthly subscription price of something like $30 was about all they could hope to get for their services. Goodman later said, “The VCs puked all over it. You cannot make the math in this business work.” That was in 1999, before the business model for recurring revenue, software as a service (SaaS) was recognized as potentially attractive. She admitted, “They kind of had a point—to get to scale was going to take a long time, hence the long, slow, SaaS ramp of death.”

  Roving Software launched its cloud computing solution in October of 2000. Customer uptake was slow—starting with a hundred customers, then a thousand. The idea the company had at the time was that scaling would take place in inflection point fashion—that there would eventually be a tipping point and growth would then explode.

  Unfortunately for them, the promised tipping point turned out to be so many “mirages.” As Goodman would recount later, the early stages were a lot more like a flywheel than a hockey stick—find something, repeat it, find something else, repeat that, and so on. This went on for years.

  Discovering an Arena in Which the Company Could Win

  Finally, the company, which changed its name to Constant Contact in 2004, did reach an inflection point. What made that possible was figuring out the dynamics of its arena—as Goodman later put it, a “combination of understanding our channels at the top of the funnel, our funnel conversation, and our lifetime business value.” When those all came together, the company invested strongly in growth. At last, a desirable inflection point—and the business took off! As Goodman somewhat triumphantly said in 2012, “So this year we will do over $250 million in revenue . . . and we will do it thirty-nine dollars at a time.”

  Clearly, results like this do not happen by accident. I was intrigued by the leadership lessons one might glean from this company’s seventeen-year journey up to that point.

  Leadership as Relentless Alignment and Collaboration

  Goodman came to the company after she’d had a number of experiences at other firms that bugged her. As she told me in September 2018, “An interesting thing that I went through as a first-time CEO was that I had not seen an executive team collaboration role model. I hadn’t been on a single executive team where everybody worked together. I set out to do that differently. I saw what a tremendous waste of resources it was to have all that infighting on the executive team. By getting on the same page, you can use your resources more effectively.”

  The Key Role of the CEO: Keeping Executives on the Same Page and Working Together

  One universal aspect of leadership of all kinds is that where the leader focuses attention is where the organization tends to focus it. “As a leader, where you are spending your time is one of the most important investment decisions you can make,” Goodman has said.

  The first distinction between the way Goodman approached her role and what we might think of as more traditional top-down leadership is how she defined the unique task that only the CEO can perform—acting as the essential glue that keeps a diverse set of employees working consistently toward a well-understood set of priorities. As she put it,

  The quality of the leadership team you can bring together is going to be a major swing vote in how successful your business is. But the point I would make is that it is not just about the individuals but about the quality of the teaming of the individuals as well. At Constant Contact, we invested a ridiculous amount of time in being a great team, at the executive team level, the next level down, and the next level down. Why? I had had several experiences before Constant Contact where the executives were not aligned, and were fighting. And what that did to the organization was just horrible. It was chaotic, it was wasteful . . . We all know these stories, but if you let it happen, it will waste resources in a dramatic manner . . . You will also find that the antidote to complexity is team alignment and prioritization.

  In a 2013 talk, she described the process of taking a two-day off-site twice a year for the team, with a one-day off-site at other points. During that time, she said, “we got ourselves aligned.” First issue: strategy. Strategy, she said, is pretty straightforward, defining “who are we serving, what problem are we solving, and what is our unique competitive adv
antage.” While that seems right to the point, she cited the problems that can arise when the overall strategy is not clear to all the team members. If you’re sloppy on the direction of the company’s strategy, lots of things get built that aren’t needed, and lots of people get confused about the “why.”

  The second thing on the table for alignment is what she referred to as “the culture stuff.” This includes mission, vision, and values. She could recite each of these when she was at Constant Contact and made sure that everyone else on the team could as well.

  Next is alignment on key priorities. Gaining clarity about what is really important in the business and in what priority order is a critical topic. These are called “rallying cries” in Patrick Lencioni’s book The Advantage. “We would come out of these off-sites with rallying cries and priorities,” Goodman explained, then added, “It’s always better to do two or three things completely right than do a half-assed job at eight.” As she pointed out, the executive team needs to exercise the discipline of making choices—and being aligned on the right choices takes time.

  From Command and Control to Leading Through Feedback

  Another aspect of Goodman’s leadership that I find distinctly different from the traditional command-and-control model is the extent to which she emphasizes the importance of feedback in shaping her own behavior. In other words, she recognizes that only through feedback can she remain effective. As she said in 2013, you have to be willing to look in the mirror.

  She described how, relatively early in her tenure at Constant Contact, she enlisted the help of a facilitator to obtain feedback from her colleagues. Her initial reaction was one of shock at how much she was doing that others perceived as not being very helpful.

  She told a great anecdote about how we all tend to see our weaknesses as strengths (in our own minds). She said that one of hers is being impatient. “But it was also harming my team in some pretty profound ways. One of the things I invented along the way was my own little internal signal to presenters—it kind of went like this [a circular motion with her hands]. You know what it meant: ‘I got it, I got it, go faster.’ And again, I had a little rationalization to go with it—it’s affirming to them that I’m with them [to much audience laughter].

  “As is obvious to you in the audience, that is not a pleasant thing to be on the receiver side of. The first problem is that it was stunting discussion. Second, it was sending an immensely disrespectful signal to the presenter . . . But then, the really bad part started to sink in. I found that people were not bringing their up-and-coming new talent to present to me, because they didn’t want them to get demoralized. These were the very people I wanted to meet and nurture. They were the future of the company, and I wasn’t meeting them. And so I had to change.”

  Among the new practices she put in place for obtaining feedback was spending time with a peer mentoring group comprising people outside Constant Contact (and thereby outside her control). The group members would provide one another with feedback on a regular basis, such as asking, “Where did you spend your time last quarter and where do you hope to spend it this quarter?”

  Within the Constant Contact management team, she went to great lengths to prompt the entire team to give serious feedback in terms of individual performance, team performance, and how well the team members related to one another. As she put it, “I had to be willing to constantly look at myself, as the CEO, as the leader, and recognize that I was screwing up the team.” If the team is dysfunctional, she said, as the CEO, “it’s you! It’s you because either you’re not creating an environment where the team is forced to resolve their conflicts or you are not listening, or one of your team is not listening and you’re not telling them that that’s not OK. One of your key responsibilities is making sure your team is a team. They don’t tell you that in the CEO handbook, but it is, and it takes time to do that.”

  In addition to feedback loops, Goodman insists, engagement with strategy requires a huge investment of communication. Communicate, communicate, communicate—mission, vision, values, priorities, rallying cries, key themes. Communication has to go all the way down, not just one way but both ways. People have to engage with the material and the content to internalize it. As she has said, “People don’t sit at an all-hands and get strategy.”

  Feedback is a gift, she notes, but it’s a gift leaders would much rather give than receive. The more senior you get, the less unfiltered feedback you receive. And the more you need to structure leadership processes to guard against that.

  Relentless External Focus and Leading Indicators

  Consistent with the other great leaders featured in this book, Goodman kept her team at Constant Contact focused relentlessly on leading indicators and external data. Because their strategy was to attract large numbers of small businesses and to keep them as clients, the key leading indicator for them was managing the sales funnel. As she has put it, “Everybody in the company knew about funnel management.” This brings to mind Satya Nadella of Microsoft urging his leaders to focus on leading indicators of customer utilization, including “customer love.”

  In conjunction with her focus on leading indicators, Goodman has said that she gets asked a lot why the company kept going during the long, slow ramp phase. She reiterates the fundamental passion that Constant Contact leaders had for their customers. “It was our customers, and their affirmation of our value. The number one thing that holds us together is our passion for helping small businesses. We just kept seeing that when they used our product, they got real revenue, and it lit us up. We told a customer story every week, and we still do. Because what we do matters to the small businesses.”

  Waking Slumbering Strategic Change Muscles

  Goodman makes a distinction between the kind of leadership that is necessary in a changing, discovery-oriented situation and the kind in which you can just execute. As she told me in 2018, “If your model stays static, you can have a leadership team that isn’t engaging their strategic change muscles. They are just executing—turn the crank and do it again mode. But if you are in an industry that is under change, you either have to change in advance or in response. You need your leaders to be in discovery mode, with you as the CEO. You cannot be in discovery mode alone. It does take a different leadership style—as a leader, you need them to understand the ‘why.’ What are we trying to figure out? The goal isn’t to prove something is wrong, rather it’s to get it right.”

  “Crescive” Leadership: Did Female Leaders Discover a New Model Before Its Time Had Come?

  Back in 1984 (before Sally Helgesen had even done her research), Jay Bourgeois and David Brodwin set out to catalog different approaches to leadership. They duly cataloged a number of different, traditional leadership styles. They found, however, that they couldn’t account for some of the leadership behaviors they had observed without including a category they dubbed “crescive” leadership.

  In the crescive approach, as they described it, “the role of the CEO has moved from designer to that of premise-setter and judge. Here, the strategic problem revolves around the CEO’s ability to define organization purposes (i.e., set decision premises) broadly enough to encourage innovation, and to select judiciously from among those projects or strategy alternatives that reach his attention.”

  Among the most significant departures from the other leadership roles they examined was that crescive leaders actually yield strategic control. As they put it, “The CEO in the crescive model must be willing to risk loss of control over strategy initiatives in order to capitalize on the new business opportunities impossible for him to apprehend from his perch at headquarters.”

  Follow the Talent

  Michael Sikorsky, a serial entrepreneur originally from Canada, has been named a “CEO to Watch” by CNN Money, “Canada’s Internet Revolutionary” by Profit magazine, one of Alberta’s 50 Most Influential People by Alberta Venture, and the 2013 Technology and Communication EY Entrepreneur of the Year. His company, Robots & Pencils, i
s as good an example as I can find of an organization that embodies the notion of crescive leadership. Full disclosure: I am one of the company’s founding fellows and an adviser, which is how I got to know about its fairly unique perspective.

  Robots & Pencils has articulated what it calls a “follow the talent” strategy. Its strategic positioning is to help its clients “discover what’s next” in the world of technology so that they can, as company leadership says, become “future proof.” This is very much a company that has bet its success on helping clients navigate through inflection points. As its website says, “Our approach has been to create a company designed to follow the talent, allowing us to amass an unfair share of hyper-skilled people who call Robots & Pencils home. A team of people who not only develop innovative solutions to transform businesses, but also create products that have been previously inconceivable.”