The Missing Link in Startup Execution

In the past few quarters, our companies have seen tremendous improvements in the operational execution – focus and intensity have increased drastically, which has improved the output per hour. Add to that that we have recruited some very promising talents! It should be a recipe for success.

Similarly, we seem to be alright on the strategic level. We set goals – some more ambitious than others – and we do have plans in the form of budgets. While no one can foresee the future, the budget is our North Star – it guides us and helps us make the right decisions today so that we can achieve our goals in the future.

Despite improved operations and clear goals, we are still not moving as fast as I would like. It’s not for lack of trying. I have rarely seen people work as hard as we do these days.

Great input, lack of output

Here’s an example of how we fail on this from a portfolio company: We have a goal of recruiting for a specific role – we know how many people we need and that we need them asap. So far, so good. One month goes by – no one is recruited. Another month goes by – still no one recruited. Every month ends with the conclusion that we must do better, but the results are all the same.

Another example: We want to grow our top-line 25% a month for one of our companies. We push everything we’ve got in marketing and grow 5% one month. The next month, same effort, but grow only 3%. The month after, we don’t grow at all and topline is flat.

In both examples, the challenge is that we didn’t manage to effectively bridge our strategic goals with our daily operational tasks. Once the goal is set, we just ran at full speed ahead. We approached it the way kids play football: All focus on the ball – no plan! 

It turns out that this is not the most efficient way to get there. This may sound like a trivial point, but it isn’t.

In classic business/military jargon, we are missing the tactical level of execution – the bridge between the strategy and the operations. It’s a common problem and needs to be addressed.

In many larger organizations, the division of responsibilities between layers of management makes it clear that the person on the factory floor should not think about the strategic priorities of the business and the director may not need to think about the operations. In startups, the distinction is less clear as everyone needs to think on all three levels.

Getting the tactics right

Going back to the recruiting example, we didn’t have a clear tactical plan:

  • How do we expect to get the right candidates? If via inbound applications then, where should we get the job description posted and how do we get it there? How do we prioritize our time across all the places we could advertise the opening?
  • What does the right candidate look like? 
  • How do we want to run the recruiting process? What are we testing for in our interviews and how are we performing those tests?
  • …and common for all of the above – how do we know if we are doing well? Do we have granular enough milestones that our measure of success is not limited to the final output (a recruited candidate) only?

For the second example of growth, the challenge was similar:

  • If we need to grow 25% per month, what are the ways to get there?
  • What can we do in our existing marketing channels? What are our levers and how much can we squeeze them?
  • What are the other channels we should engage in? How can we approach them? Do we have the expertise or do we need to seek that externally?
  • How do we prioritize our time across the different options?

When the above is done well, our strategy drives the tactics we deploy, which – in turn – defines what tasks we must do and the problems we must solve today and tomorrow.

Conclusions

When we learn from the two examples above (I have an endless list of such examples), we become more effective entrepreneurs and company-builders. So remember:

  • We must have the right strategy and goals,
  • We must break the strategy down into tactics that can be executed, and
  • We must break the tactics down into operational tasks

Entrepreneurship is probably 90% operational execution. It’s about closing a deal here, split testing there, and tweaking the marketing to get the right outcome. But in the end, it’s important that we have the right direction and the right actions. Doing the wrong things perfectly won’t get you where you want to be.

*****
Image: Pexels

A thank you note from your future self

I was reminded of an important point today: We are oftentimes limited in the projects we can take on, simply because we don’t have enough capable people in our organizations. 

We have new products to launch, markets to enter, marketing initiatives to execute; why aren’t we? Every single one of our businesses has an endless list of important strategic priorities that we can’t execute on today simply due to lack of bandwidth – we never have enough responsible, entrepreneurial people to handle everything we want to do!

It’s a common theme to recruit people only once you have a project for that person. The combination of the time horizon for sourcing, interviewing, signing, and onboarding a new person and the speed with which the business evolves at the early stages, we will always have more high-ROI projects than people to execute on them.

As entrepreneurs, we must always be on the lookout for the smart talents that can step up and over time become the leaders of our future markets, products, etc.. 

I am yet to see an organization with too many talented people. Time is always our biggest bottleneck – recruit AAA people and gain additional operational leverage. In the current environments, financing is never an issue, as long as the projects provide a great ROI.

Whenever you find yourself with an opportunity to grow your business further, the one thing you would love more than anything else is to have recruited a great person to take responsibility for this, six to twelve months ago. That way, she would be fully onboarded and well up to speed on your business so that she could take full ownership and execute with the required understanding, context, and urgency. Recruit today so you don’t have any regrets in the future.

Recruiting people with future projects in mind is obviously different from recruiting for a specific project or role as you can’t be as specific in your pitch. It is therefore important that you talk more about the sorts of things the candidate could do rather than exactly what they will do.

From my experience, being able to recruit (future) rockstars and to set the right level of expectations for them are the two single most important skills for any leader. Take a proactive approach to growth – your future self will thank you!

If you’re looking for inspiration on how to recruit the best candidates, I shared our approach in this post.

****
Image credit: JoinCakre

Practical Thoughts on Recruiting and Interviewing

As leaders, we have four primary tasks besides the daily interactions with our team:

  1. Make sure the business doesn’t run out of cash
  2. Define the direction and objectives of the team/company (whatever you are the leader of)
  3. Set the right team (not just the one that will win today, but the one that can win the future as well)
  4. Set the right (level of) expectations to the team and ensure they live up to them

This post will focus on the third point – how do we hire and set the right team? And why and how we spent more time than 99% of companies out there on the interview process. To us, recruiting is easily one of – if not – the most important challenges for any leader.

We often get it wrong

As the old adage goes, “leaders spend 20% of their time recruiting and 80% of their time making up for recruiting mistakes.” A headhunter I know once mentioned that to his experience, good leaders get senior recruiting right 20% of the time, great leaders may get it right 30-40% of the time. It doesn’t mean that the remaining 60-80% are disasters, but they aren’t the stand-out profiles the employers were hoping for.

The difficult balance

What this means is that we must do our very best in recruiting. At the same time, we must not be too afraid of making recruiting mistakes, as we would then become our own biggest enemy and bottleneck for the business. The balance between finding the right candidate and getting a candidate right now is probably one of – if not the – biggest challenge in recruiting for us as leaders. 

Nobody is perfect. When it comes to speed versus perfection everyone has a bias in one direction or the other. Becoming aware of your natural bias can help you adjust in the opposite direction.

I, for one, tend to be too critical in my recruiting, resulting in longer recruiting processes (and hopefully a lower rate of mistakes). I, therefore, like to speak to people I know who are more in the other direction for sparring to ensure that I don’t shoot myself in the foot. Am I being too critical? Am I looking for a unicorn of a candidate – one that doesn’t exist?

Recruit for potential rather than skills

It is particularly important for fast-growing companies to recruit people who can grow with the company and be future leaders or excellent individual contributors rather than simply someone who can do the job today. That’s the nature of our business given the high growth we are expecting.

Our companies may not always be the biggest companies today, but we must never make recruiting decisions based on the size of today. To use an analogy, we must recruit people that will fit into the starting 11 of Liverpool or Manchester City (for those who don’t follow football, note that these are probably the best teams in the world right now). If we recruit for our current size rather than where we will be, we will never be able to make the leap.

As your team grows and approaches, say, 50 people, you will have a few team members who may not be rockstars, but you cannot afford anything less than A players when you’re still a small team.

The baseline

Interestingly, most entrepreneurs are data-driven in most decisions. Ironically, this doesn’t extend to the most important ones – recruiting.

Over the past years, we spent a tremendous amount of time thinking about how we could improve our chances of getting our recruiting decisions right, and with all modesty, I’d say that we have built a decent track record. We are not perfect and we certainly can improve further, but I wanted to share our approach so you don’t start from scratch.

In our interview process for key hires, we follow the below process. Each type of interview has a very specific purpose and I’d recommend you don’t skip any of the steps, even though the process may look quite time-consuming.

Our process

As you will see, we use a recruiting tool, FirstMind, that is based on the StrengthsFinder concept. We like this system as unlike most other personality assessments, it doesn’t break a personality down to four letters that are each binary. Rather, it shows the relative dominance of 34 different “talents” (I highly recommend Marcus Buckingham’s books on the topic). Whether dominance from a given talent is positive or negative is entirely contextual – being e.g. competitive may be great under some circumstances and counterproductive under others. Interesting conversations arise when understanding how the candidates handle conflicting talents (everyone has conflicts) or if they are dominated by mutually reinforcing talents. Examples of conflicts can be between maintaining relationships and reaching a goal. An example of reinforcing talents can be e.g. very analytical and backwards-looking profiles – how do they ensure to take action and not get caught in analysis paralysis?

Before interviewing, do yourself a favour and write out the job description and think about the talent profile you’d like to see (we use 3 “must-haves”, 3-5 “nice-to-haves”, and 3 “minuses” that we prefer not to see in the top 10 talents. Sometimes talents can substitute for each other (e.g. we often like to see either competitive, targeted, significance, or focused and are therefore indifferent to whether people have the one or the other).

The process we use currently have the following stages:

  1. Screening interview (15 mins) – the aim here is to ensure we don’t waste the candidate’s and our time with people of the wrong profile/motivation. This part can be outsourced, but you must be 100000% aligned on what “good” looks like if you do. Working with the same person continuously is the best way to build consistency in the screening
  2. Candidate takes a personality and an abstract reasoning assessment – we use these to get a better view for initial screening of the candidates as well as for further in-depth interviewing afterwards. We use two assessments:
    1. FirstMind gives us a qualitative view of the personality
    2. Raven’s Progressive Matrices gives us an indication of the mental horsepowers – not the IQ per see, but an indication of the abilities in abstract reasoning also known as fluid intelligence. We prefer this format as it is non-verbal and can, therefore, be applied across languages and doesn’t favour native speakers
  3. Introductory interview (Up to 30 mins) – we are getting a good understanding of the profile and motivation. In addition, if the CV is superb, but the talent profile differs from our pre-defined ideal, we do a bit of testing to see if our the candidate’s talents are indeed not a good match. In that case, we keep the interview short and end the process. 
  4. “Who interview” (60 mins) – this is the interview where we go in-depth on the CV.  The Who interview seeks to understand how the person has performed historically (we usually go all the way back to understanding high school performance) and motivation for career/educational decisions made.
    I’d highly recommend using the template from “Who” by Geoff Smart which has a lot of good examples of phrasing. The devil is really in the detail here. This interview can be merged with the first interview but it is usually best if the candidate has shown interest in the job before so they have an incentive to share as well – otherwise, the interview becomes a bit odd
  5. FirstMind interview (60 mins) – this is one of the most important interviews. We get really deep with the candidates and seek to understand both their talents and how the individual talents act together. This also gives a good indication of the candidate’s self-awareness. Nobody is perfect, so do your best to understand the conflicts between talents and the work environment and assess how the candidate copes with these. Ask yourself, if you can live with their short-comings? How will the candidate complement the current team? As a leader, what do you need to do to ensure the person can blossom in your team?
    The FirstMind report will not tell you whether to recruit the candidate or not, but it will definitely help point you to the specific areas that require more detailed in the interview process for the particular candidate.
  6. Technical interview(-s) (as you need them) – this is for role-specific tests, e.g. in-depth on accounting questions, Google AdWords, sales, etc. Test for the hard skills that you’d expect the candidate to have.
    For us, we don’t expect people to know everything, but it is a red flag for us if a candidate has spent 3 years working on something and aren’t able to explain it in a clear, linear, and logical way
  7. Potential cultural fit interviews (less formal and as needed) – these are more general interviews which give both us and the candidate a chance to get to know each other better. We know that we have a unique culture and we rather want to be the perfect place to work for 5% than a decent place for 80%. We, therefore, use this chance to raise some of the common challenges people have in fitting into our culture and try to anticipate challenges specific to the candidate based on the previous interviews. When these aren’t addressed directly in the talent interview, we try to understand e.g. if people are higher on the relational than the results-oriented dimensions, how will they cope with extreme directness and transparency? If they are driven by people over targets, how will they deal with our performance culture? If they don’t fight for their views, how will they cope in our discussions? (Which are very direct and can seem harsh for people who aren’t used to this kind of environment). etc.

To some, the number of interviews we conduct may seem intimidating or excessive. To our experience, this is definitely much less painful than having to start over again after making the wrong hire. And this goes for both us and the candidate.

If you have multiple people involved in the interview process, it’s easy to lose efficiency in the process. I remember once structuring the recruiting for a senior technical hire. We had three people interview the candidate for his technical skills. Even though the interviewers came from different backgrounds, they had without knowing all asked more or less the same questions. In other words, there was little to none benefit to having three interviews rather than one (and it probably seemed unprofessional).

When you have multiple people involved, ensure to a) be specific about what you need each interviewer to look for specifically (and what not to spend time one) and b) to find a way to get the feedback in a structured way. We like to get all the interviewers together in one room after our interview processes so that everyone can air their thoughts. If one person has a concern others can address that if they had a different experience.

Direct feedback

We like to be very direct. Even to the extent that we give live feedback in the interviews if some answer or the speed of answering aren’t at the level we had hoped for. E.g. “I would have liked to see you getting to another conclusion in the case, here is why…” or “When you say that, I fear that may be a problem in our culture because of X, Y, Z. How would you think about that?” Direct feedback in the interview gives the candidate a chance to clear misunderstandings. Secondly, since our culture is very direct, it tests how the candidate take the very direct feedback we give. Does the candidate take it personally or does he/she understand that the feedback relates to the answer, not the person?

As you can see, we use a few tools: Raven score, FirstMind Talent Report, and the CV. The tools help us systematically cover specific questions:

  1. We understand the nature of the candidate and motivations (FirstMind, Who/CV)
  2. Understand actual skills and potential for further development (technical, Who/CV, FirstMind, Raven)
  3. Minimize the risk of cultural misalignment (cultural fit, FirstMind, Who)

Remember, when you hire, you are in a state of uncertainty. We don’t truly know how the candidate will perform – only working together will give this answer. We, therefore, must minimize the risk of failure but also acknowledge that there is a cost to delaying hiring decisions.

All of this, of course, assumes you’ve done well on your sourcing. I’ll cover that in a separate post.