The Role Of Operations

  Drummer

There has historically been a lot of focus on the role of the CEO, the tech & product teams and sales & marketing personnel. Business writing has engulfed each of these functions and the tabloids rave about celebrity executives from each function. But there is more to a team than just these roles.

Like the under-appreciated drummer in a rock band – the operations roles seem to go shockingly un-noticed.

Even before a company has a person flaunting a formal operations title, ops plays an important role in a company. Here’s how I think about it:

  • Executives build companies 
  • Development & product folks build products 
  • Sales & marketing professionals build customer relationships 
  • Operatiors build institutions

Building an institution is a pretty cool concept. Operations folks not only make doing business possible, they develop routines & processes that can be repeated in a manner that makes the company sustainable.

While there are lots of different types of operations functions, they all share this characteristic. Whether creating inventory management systems for a warehouse or simply creating the rules for how customer complaints get treated, the role of operations across the various aspects of a business are mission critical for scalability.

When Do CEO's Scale?

CEO's ScaleWhen discussing how CEOs scale within their companies, most people are referring to a CEO's ability to delegate or manage a larger team. What's interesting is that I suspect that the delegation skills required to be successful in managing an organization of far greater than five to 10 people are probably very similar to the skills required to manage five to 10 people.

While Kohort, the social media start-up I co-founded, does not yet have a large team, adding more folks to the core team has not dramatically changed the way I operate and make decisions as CEO. Here's why: I believe my leadership team has already scaled.

If you want to have a constructive debate, there are only so many people that can be in the room. You can't hash something out with 50 people chiming in. As a result, when you think about each level of a corporate hierarchy there are social interactions that govern how wide each layer of an organization can be. The executive team can only be productive if it's a small enough group to have a conversation.

Based on that, when you expand the headcount of an organization you often grow wider and wider in the lower ranks, yet keep a relatively small management team. This creates the visual of a pyramid that we all associate with organization charts. When we hire more people at Kohort they're usually reporting to a lieutenant and my circle of interaction hasn't changed all that much.

So, given that, what does it mean when someone asks, "Can this CEO scale?"

While they might be referring to a number of different dimensions of the CEO's role –thinking big, using sophisticated business planning and analysis, and beyond – they're typically referring to a CEO's ability to delegate. My intuition tells me that a CEO's ability to perform in this dimension is observable once the team crosses into the double digits in terms of number of employees. If they can't empower others to drive a process (while also providing sufficient bumper rails) with 10 to 15 people, they probably won't be able to with a team of 100. The implication is that the test of delegation comes relatively early in the life of the company. If you're having trouble delegating relatively early on, either learn or re-evaluate your position in the company.

This post originally appeared on Inc.com.

The Rule Of The One-Way Street

One-Way
Ever find your team debating a decision in which there are two very different yet justifiable solutions to a given problem? We all have.

Very often these are the most contentious and most complicated decisions simply because despite rigorous review and research there just isn't a clear answer. With no right or wrong, smart people seem to line up behind one set of rational conclusions or another, sometimes pitching battles that can last for weeks or even months without a victor.

In most organizations these are the moments when the CEO is supposed to intervene and make the final decision. While that can get you to a conclusion, the CEO may not know which path to take. So, what should the CEO do? Flip a coin?

Whether the debate surrounds a pricing strategy or feature set, very often the only way to find the right answer is through trial-and-error. Pick a strategy, try it in the market and then re-evaluate if necessary. It's an ugly system, but in many of these cases it's the only way to figure out what to do.

So if that's the case, which path should the CEO try first? The answer might lie in the rule of the one-way street. It's pretty simple. Identify which strategy it would be easier to abandon and start with that first. If it's easier to switch from strategy A to B (then vice versa), then start with strategy A. If you're unsure about which price point, start higher—your customers will be more forgiving of a price break in the future than if you start low and need to increase.

You're not going to make every decision perfectly without market reactions, so always do your best to give yourself room to correct. This mindset should help you unravel some of the most complicated decisions on the horizon.

This post originally appeared on Inc.com.

Kohort Rings NYSE Bell

Kohort was asked by the Startup America Partnership to help celebrate their 1-year anniversary. Alison and I ended up ringing the bell at the NYSE. The video is below.

PS - the "bell" is actually a big green button.


How We Brainstorm

Improv

During my first week at Columbia Business School in the fall of 2007, class was interrupted to do an exercise with an improv troop. Not being much of a thespian, I scowled thinking that my time was about to be wasted. I was totally wrong.

While the leaders of this exercise were actors by trade, they came to Columbia to teach us how to brainstorm. Improv is a unique cross-section of theater and comedy. What's special about it is the absence of a script. With no plans, preparation, or choreography a group of people can create a story on the fly, and do so seamlessly.

The key to the technique I learned then, and have since adapted at Kohort, is a two word phrase: "Yes…and…"

While it's a simple little phrase, it's an important one. "Yes…and…" encourages momentum, fluidity, and acceleration in a conversation. No matter what someone mentions before you, if you build on it by saying "yes…and…" the conversation is taken down unexpected paths.

I've found what's so special about this system is that it can transform the most idiotic comments into brilliant insights. When someone provides unfiltered, knee-jerk reactions to another person's suggestions, we have the opportunity to tap into new ways of thinking. Pinned together, a series of knee-jerk reactions can take ideas further and further from conventional thinking, triggering a stroke of genius.

The key to this system is that anything goes. By encouraging people to share any obscure and even bizarre ideas for solving a problem, you introduce new color and perspective that can help other people in the room think about a new dimension of the issue, igniting profound and deeply rational solutions. One person's wacky suggestion can help unearth a deep insight from another person.

We keep the rules for our brainstorming sessions quite simple. We start by all throwing out ideas for the topic of the day, we review them as a team and select one. I then start the brainstorming session by asking the problem as a question.

"How can we promote our product?"

Then the team starts to work their magic.

The first rule is that every person must start their response with the phrase, "Yes…and..."

"Yes..and…" we can rent a hot air balloon."

"Yes..and…" we can fly it over a baseball game."

And so on. No matter how crazy the ideas are we write them on the whiteboard.

The only other rule is that no one is allowed to use the word "no" or ever react negatively to an idea. If "yes…and…" is the gas pedal, "no" is a giant screeching break. It interrupts the rhythm and makes people embarrassed to offer their otherwise ridiculous knee-jerk reactions—killing the creative process.

The vast majority of our brainstorm suggestions are wacky. But the hour-long exercise usually yields some very compelling ideas—ideas we use in our business and would have been far worse off without.

This post originally appeared in Inc.com.

#SOPA / #PIPA Explained

For techies who are nestled in their startup caves some of the major web properties (Google, Wikipedia, etc) protested SOPA/PIPA yesterday by either shutting down their sites or changing some of the content on their homepages.  

While we have a smaller reach at this point, Kohort participated in this movement by replacing the product overview video on our homepage with a video about the issue.  You can check out the video & take action here.

For those who haven't been following the issue or don't fully understand what it's about - check out the video below - the Khan Academy does a great job of explaining the bill & it's implications.

Everyone should be aware and concerned about this to save the web.

Why We Brainstorm

Brainstorm Lightning

Once a company starts operating, brainstorming often falls by the wayside. But there's a cost to that—big ideas get missed and, unexpectedly, your team's morale may lag.

So every week I huddle with the team at Kohort for a brainstorming session. The group and I meet every Wednesday at 5PM. If we don't have a topic we need to address, we brainstorm one. Sometimes we brainstorm about the future, working through how we want the company to operate years down the road.

While at first glance, this might seem like a waste of time, I know it's not. While it does consume the attention of everyone on the team for an hour—and adds up to quite a few man-hours—it's invaluable.

Brainstorming forces everyone to get out of the weeds and focus on the big picture. It's a chance to come up for air and remember how the whole project fits together and why we're here. Brainstorming makes the North Star shine a little brighter.

Brainstorming forces us all to think deeply and critically. We unveil new ideas and illuminate previously unnoticed shortcomings. We find ways to be better. Sometimes, we change our path.

Most importantly, brainstorming unifies our team. The act of brainstorming weaves our various ideas, hopes, and dreams together. It defines a vision for each topic that unifies divergent perspectives and aligns us more closely around a common goal. In this way, it also—I believe—is helping us to reach our potential.

This was originally posted on Inc.com.

High Peaks Launches Seedlet Program

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The cultural norms in the venture capital industry change. What I mean is that deal terms – valuation, control rights and beyond – change over time. A sweetheart deal last year is an outrage this year.

A few years back a typical Series A round was characterized by a $1-5 million investment. As capital requirements for tech startups took a noise dive, entrepreneurs began to seek smaller rounds of capital – they could prove milestones and potentially reduce their total dilution by raising less money initially. Entrepreneurs demanded and investors listened – seed investments came into vogue like jean shorts in the early 80s.

While Seed rounds started out as $100-500K slugs, as they became popular and investors dog-piled in seed rounds have increased in their bite size to $750-2 million. As a result, Seed rounds have inched up to look more and more like the Series A of old leaving many entrepreneurs with an increasingly hard time finding investors who would give them their very first $100-500K.

To help entrepreneurs, today High Peaks is announcing its Seedlet Program.  After just a meeting or two, we’ll write small checks ($50K to $150K of a round up to $500K). You can read more about the program here.

Want to learn more? My partner Brad Svrluga also wrote a post on the topic here.

Social Media Makes Us Happy...Chemically?

There's some very interesting research presented in this TED talk about how our biochemistry drives our happiness & good intentions.  

Interestingly his studies have shown the engaging people in our lives through social media also triggers the biochemistry that makes us happy.

Check it out.

 

Minimum Viable Team

Old-baseball-team

The phrase ‘minimum viable product’ has become part of the start-up lexicon. It’s a useful term for that significant milestone in the start-up life cycle—when an entrepreneur has built a stripped-down most basic version of his or her product so he can begin to get customers and feedback.

Borrowing from this phrase, I’ve found myself highlighting a different inflection point in the start-up lifecycle: when it has a ‘minimum viable team.’ This is the group of initial employees that enable the CEO to focus exclusively on performing the duties that CEOs are supposed to do.

At each stage of start-up development, additional employees increasingly specialize in their roles. In the extreme, when founders first setup shop they do everything. Founder-CEOs initially act as CEO, CTO, head of HR, head of sales, administrative assistant, junior operations managers, and mail boy. As the company grows, those functions are divested to members of the team who specialize in those respective areas.

Eventually founder-CEOs find themselves entering a state of operational nirvana in which they transcend into handling only the core responsibilities of the CEO. In my view, this is a very short list limited to: strategic alignment, company culture, talent recruitment and optimization, and broadly being the firm’s face for marketing and fundraising.This nirvana is likely to be interrupted. When a team changes, the CEO may temporarily pick up slack. The inherent volatility of running a new company will also inevitably bring unexpected challenges that sit on the rocky banks of the CEO’s river of duties.

For some CEOs, there isn’t a team large enough to liberate him or her from non-core tasks. A CEO also needs to be capable of appropriately delegating, and giving over certain responsibilities, so that the minimum viable team can free up the CEO.

Whether or not the minimum viable team phrase makes it into the mainstream start-up terminology, the concept should, as CEOs should be working toward developing an environment in which they can focus 100 percent on properly doing their job…and only their job.

This post originally ran on Inc.