Leading with 'what' not 'how' as a startup scales

Strategic leadership, the CEO Marshmallow Test, and a reading list on scaling

Service notice for regulars: In my last update I wrote about what I should be doing this quarter to become more effective. This is a good moment to grade myself on progress to date, 30 days later, 1/3rd of the way into Q1. I’ll post an update at the bottom of the piece, to avoid distracting those who are here for the title topic. If you’re a regular reader, enjoy the update and thanks for reading!

A leadership lesson from voice therapy

I’ve struggled with my voice lately. I don’t mean I feel disenfranchised. I’ve literally been losing my voice daily. Many months spending all day on zoom calls, where we sub-consciously alter our tone and volume, have affected how I am using my vocal tract to produce sound. I’ve started seeing an excellent voice therapist who gave me an explanation that I hadn’t expected: “loose breath”. Bear with me on the metaphor.

The diaphragm is a muscle that contracts and flattens as we suck air in, then expands upwards to push air back out through our vocal tract. I learned that if we take in a deep breath, it pushes the air back out fast. Take in smaller ‘sips’ of air, and the air is released more slowly as you speak - the body regulates its airflow. During hours of zoom presentations, impassioned debates, and exec hiring, I’d been pitching or discussing Lingumi with investors, prospective hires, my team. I get very excited doing that; I’m deeply passionate about our mission and the business we’re building, and speak with some fervour about it. I talk fairly fast, and sometimes get carried away exploring the far reaches of our teaching paradigm. Zoom, and living next to a noisy building site, were changing how I was doing that. Subconsciously, I’d changed how I was using my voice, taking deeper breaths, and using just my throat muscles, instead of my whole abdomen, to try to control the breath as it rushed back out with the excited projection of the next sentence.

I’m working on restoring my voice now - listening to my body, letting myself sip air, regulating my vocal energy levels. My breath was, as the therapist termed it “loose”. Reflecting on the problem, though, I think that my voice is itself just a symptom of something more fundamental about my leadership. I have led with a certain loose energy. I need to now channel that energy in different ways as the business grows.

Channeling energy effectively as CEO

I get very excited when discussing our strategy, reviewing metrics, debating things with my team. I think this is powerful - positive energy is infectious, and startups are tough. But it can also do damage. For my voice, I was attempting to control that energy with my throat muscles, physically constricting the flow of air - the energy - as it rushed out. For my team, it meant the energy has been channeled loosely, touching every aspect of what we do, but perhaps with too little focus on the highest-leverage questions.

I’m not suggesting that being a high-energy CEO is a bad thing. Rather, I’ve been reflecting on how I need to channel my energy differently at different stages of the business. The conclusion I’ve arrived at is that I need to move from focusing mostly on the ‘how’, to focusing mostly on the ‘what’.

Put simply, leading with ‘what’ means giving a goal (‘we need to increase revenue by 100% this year’), instead of ‘how’ (‘we need to increase prices’), then letting the team work out the how. I’ve read accounts that termed the former ‘strategic leadership’, and the latter ‘tactical’, which, though both words have a million definitions, may work as a mental model for some.

I won’t discuss communicating the ‘why’ in this piece, but communicating the mission and the context is mission-critical table stakes, and it has been well covered by mesmerising, silver-tongued startup bro-tivator Simon Sinek.

Learning to lead with ‘what’

I am still forming my team. The business still feels uneven. This is the natural state of a growing startup. It makes the challenge of moving from leading with ‘how’ to leading with ‘what’ harder, but more important. A clear, shared goal is a lighthouse in the storm. Leading with ‘what’ (and yes, starting with why first) gives essential clarity amidst the messiness of a growing team and business. I’m right at the beginning of this transition, so treat this as me laying out my tent, and learning in public.

Linking back to what I’ve previously written, leading with ‘what’ is going to be essential for clearing up the time and energy to move from ‘builder’ to ‘architect’ CEO. It means setting even less fluffy strategy, clearer goals, holding higher expectations. As a startup grows, poor judgement, lack of focus, or misallocation of time and energy from the CEO radiate across a larger surface area, wreaking ever greater damage.

Three pieces that change how I think about my role

Don’t mistake this for a damascene moment. I’ve reflected on flavours of this transition in previous newsletters, linked above. In the last month, though, I’ve been clarifying my expectations for myself by reading more on scaling teams. One of my team passed on some pieces from First Round Review, which is a phenomenal resource, but not an instruction manual one can copy and paste, despite the appealingly dogmatic structure of their pieces. Here are four that stuck, with my key takeaways, and a link to the original piece if you click on the title.

How growth needs to evolve at every startup stage

  • In Phase II (scaling), the potential pitfall is not deeply knowing why you’re growing, dividing into functional silos.

  • (On growth) Focusing solely on optimisations early on means you hit a local maximum - you need to also take big swings to make strategic step changes.

The Principles of Quantum Management

  • The leader should never step up to the whiteboard and sketch the solution. That is the way to kill Shroedinger's cat - read the piece for full analogy.

  • Present the team with the goal or problem, then let the silence sit if necessary. The team need to solve the problem.

  • Instead of giving solutions, the leader should ask socratic questions, and drop small breadcrumbs if needed, to help find a route to solve the problem.

    On this topic, my friend Johnny, a founder and reader of this newsletter, had to spend just one hour working with me and the Lingumi design team a year ago to point out my unhelpful tendency to “lead with solutions”! The habit is hard to shake.

Lessons from Coinbase - Four Rules for Scaling

  • Make the company’s shared goals extremely clear.

  • Shape the organisation to achieve the company’s goal.

  • Every single team should be able to look at that KPI and say, ‘Is the work I’m doing going to drive this metric? If so, is it the highest ROI thing that I can do?’

The Power of the Elastic Product Team at Airbnb

  • Your company vision is what you want the world to look like in five-plus years — outcomes are the team mandates that will help you get there.

  • Struture your product teams based on outcomes you want.

  • Get the team comfortable with being flexible and shape-shifting regularly to try to get to those outcomes.

Why is it so hard to lead with ‘what’?

This all sounds staggeringly simple, right? I’m always struck, when reading business books or articles, by how damned easy it makes it all sound. But I think it’s easy in the same way as telling someone with anxiety to ‘just relax’. Dogma and development mantras are alluringly simple to absorb, but achingly difficult to imprint onto the infinite, unique complexities of humans. As cognitive complexity increases, our thirst for simple answers intensifies.

It makes total sense for a founder-CEO to be bad at leading with ‘what’, and hang on to the ‘how’ for too long. I’m bad at this, and I bet a bunch of my readers feel this too. Personally, I feel four challenges to making the transition.

Challenge 1: at the beginning, you have to do both

Early on, while scrapping about for product-market fit, the founders are responsible for the how and the what. They’re often the entire team. Like many founders, I’m a “blue-sky thinker”, so ideas come ten-a-penny…and are usually worth about that much. In the early stages of the business, we’d chase ideas too vigorously, without focus or strategy (see this post on lessons learned and this on setting strategy for more), and that was my fault.

Challenge 2: the ‘what’ is scary, the ‘how’ is fun

The uncertainty of the early stages makes it scary to pin down the ‘what’, the metric, goal. There’s safety in the paddling pool of the wishy-washy, and I guiltily reflect on splashing around in it for too long. I think recent metric-driven frameworks for product-market fit from Rahul Vorha and Sean Ellis are essential reading for new founders to avoid that balmy paddling pool and grow faster.

Challenge 3: scaling teams is uneven

I’ve been doing a lot of team-building recently, which is an uneven process. Lately, we’ve been hiring for a Chief Commercial Officer, and in the interim I ran the team that they will inherit. This involved wearing two contrasting hats: as CEO, I am trying to pull back, delegate more, focus on making my team effective. But running the commercial side of the business, I had to lean in, helping set strategy, negotiate for resources, choose goals, hire. I didn’t notice the asymetrical power of having the CEO in the goal-setting or resource allocation discussions, because in my head, I wasn’t wearing that hat. But my team certainly felt it.

To compound the problem, I was enjoying it! Building up a function is challenging and fun. Arguably, this enjoyment distracted me from my real job - being CEO, whose focus is to build a senior team, set the company’s key goal, then, as one of my team told me last week in a light-hearted but punchy bit of feedback, let them do the work!

Challenge 4: the ‘how’ is what got you here

This is maybe the hardest challenge. By switching from focusing on ‘how’ to ‘what’, you’re stepping back from your own track record. Coming up with how is why you’ve got where you are, right? The vision, the initial product-market fit, the first growth levers, the brand - like rings on a tree, they are a living history of the founders’ net-positive input on how the product works, grows, looks. Isn’t leading with ‘what’ folding a winning hand? The fables of Jobs, Bezos, Page, Brin et al. compound this feeling.

There is this nagging feeling, for me at least, that it’s those wacky ideas, the big bets, the thinking bigger, that will put us ahead of the pack. I feel quite embarrassed writing that! Maybe there is truth to it. I hope that, if I were applying for my own job, some of those characteristics would push the board to hire me over older veterans. But when I look at my team, when I see their work, 90% of it is way better than anything that I could ever cook up…yet is ingrained with Lingumi’s mission, our DNA, our values. The company is full of brilliant thinkers and do-ers. That is a sign of talent density increasing, of the mission being clear, and is my cue to step away from the ‘how’ a bit.

(Side note: one of my readers has told me they experience imposter syndrome about getting out of the way and focusing on the ‘what’. Imposter syndrome is Challenge 5. As a young/unproven leader, we want to prove ourselves to our teams, be visible operators, feel we are busy. I don’t feel this now, but I used to quite strongly, and my coach has helped me a lot here. I wrote about it a bit in ‘builder to architect CEO’. My advice was to turn to Andy Grove’s maxim in ‘High-Output Management’. To quote loosely, “the success of a manager is measured by the success of their team.”)

How do I know if I’m leading with ‘what’?

I’m too early in this process to share how I’m leading with what, but perhaps I can share the questions I’m asking myself, and you can ask the same ones. Let’s call this the team effectiveness litmus test.

  1. Does the team have a single, north-star metric they all can understand, track, and feel the impact of their individual and team work on?

  2. Is there a time-constrained goal attached to that metric for the quarter, half, and year?

  3. Is the team culture elastic & agile enough to morph and re-shape itself to maximise the chances of hitting that goal?

  4. Are the sub-teams working on ‘bets’ to help hit that goal cross-functional (i.e. as a self-contained they have all the skills needed to test multiple hypotheses)?

  5. Are those sub-teams small enough to share two pizzas, but big/experienced enough that they aren’t splashing in the deep end without arm bands?

  6. Are there clear owners on the senior team responsible for the handful of ‘leading indicator’ input goals or workstreams?

No doubt there are many other good litmus test questions. For this list, I’m skipping questions around culture, mission, talent density, but those are all equally critical. Perhaps you can help me build this checklist. What other questions are good QA for team effectiveness? Hit ‘reply’ please!

By my assessment, we’re currently hit and miss on this list. My team might give a more accurate appraisal than I can. Either way, I will channel my energy towards ensuring we’re always at a 100% pass rate.

The CEO marshmallow test

Without getting too woo-woo on you, I think our energy itself is just a force - it doesn’t have an intrinsic shape or direction. We send it down particular avenues. Some come more naturally to me than others, but when I do channel it differently, it’s equally effective and rewarding. I’m just not used to it, so it feels scarier at the beginning.

My natural energy has been channeled for years into lateral thinking, idea generation, out of the box exploration. Setting numerical goals, bluntly holding people accountable, and stepping back from the ‘how’ feel instinctively unnatural. The piece linked above on quantum management gave me the most clarity of thought on where to focus on channeling my energy for the next stage of the business. Instead of exploring a new way to solve a problem with a team member, can I channel the energy into asking socratic questions (n.b. good short guide)? Can I channel it into setting fewer, clearer goals? Most importantly, can I channel my energy into improving the effectiveness of my team?

Just as asking unbiased customer interviews is hard because we want to hear certain pre-conceived things that we already believe (see Rob Fitzpatrick’s “the mom test” talks/book for a brilliant exploration of this), leading a team with clear expectations and open-ended questions feels much harder than leading with solutions.

Perhaps in startup techno-babble, this gets called “solutionizing”? When I see a problem, my itch is to go to the whiteboard, cognitively or literally. I need to adapt to a new channel for that energy. Instead of giving answers that might fix the problem to a local maximum level, and squash the development of my team, I need to bite my tongue, shaping that thought into an unbiased question that challenges our existing line of thinking, or generates new questions for them to answer. The pay-off might take longer, but be substantially bigger, both by finding better solutions that surpass the local maximum of my own brain, and by building greater strength in the team. The “socratic question test” is the marshmallow experiment for leaders.

Review of last month’s goals:

As promised, accountability in public for last month’s goals:

  1. Quantified strategic “trigger points” for the business in 2021 - delegated (good!), now being led by a member of my team. Expectations set. On track ✅

  2. A skeleton plan for my team offsites and board meetings - done for board, not done for my team (even more important). On track for a B-, must improve!

  3. Finding, hiring and onboarding senior leaders for Level 3 - one joining next week, with rigorous onboarding plan prepared following the process I linked to on the NFX blog last month ✅

  4. Peer group of other CEOs and senior leaders across different functions at later stage co’s - no progress here at all. C- ❌ In the Zoom age in particular, I’m finding it very hard to connect to a peer group. Thanks to those who reply to this, though!

  5. How I’ll need to change my own behaviours, my team, and my routine to continue navigating Level 3 - on track…you’re reading part of the work! ✅

  6. What level of performance and change I expect from my team members in the next 12 months. Done - I review them ~weekly, and am being mindful to over-communicate them. ✅

Overall, I’m pleased with the progress here, but still distinctly feel ‘in the trenches’, that alluring place to be when things are busy and metrics are growing and fires are springing up. In other words, I’m spending time on ‘how’ that I should be re-focusing onto ‘what’ (see 5, above). I’ve loved the debates and questions that I’ve had in replies to these emails. Please keep ‘em coming and send this on to friends or portfolio companies if you think it’s useful or therapeutic!