People Management: Startup Teams Should Dip but not Skip

Posted on Jul 1, 2010 | 26 comments


We all like to think of startups as “non hierarchic” organizations and to some extent that should be true.  I’m not a big believer in too much hierarchy.  A good early-stage CEO needs to be accessible, to be accountable for producing results and should be establishing the cultural norms of the company through direct leadership at all levels.

But issues do arise as your company grows.  I never built a Google-sized business but I did build an organization from scratch that grew to 120 employees in 5 countries before we sold it.  And having sold two companies I worked inside much larger companies that acquired us and observed even bigger company structures.

As your organization grows and you hire senior staff where you are no longer managing every employee directly the issue of how to manage people that are not your “direct” reports arises.  This applies to both founders and to VC’s that work with them.

I see two common mistakes in companies (not just in startups, in fact).

1. Dipping:
As a decision maker you rely on information being passed to you by the people who report to you.  You’ll get sales information from your VP of Sales, marketing information from your VP Marketing, tech information from your CTO and so on.  But as a CEO you can’t rely solely on this information.  You need to “dip” down into your organization and learn directly from employees at all levels and with all skills.

It’s not just a Reaganesque “trust, but verify” issue although that’s certainly part of it.  As a leader you need to have an intuitive sense of your business that can only be formed by hearing directly from staff in every corner of your businesses.  Think of it kind of like running a national chain of restaurants and occasionally stopping in to wait tables to have a more intuitive sense for your processes, work conditions and the quality of your products.

An obvious example would be in sales.  As a CEO you never stop needing to go on sales calls (or to work the phones in telesales or customer support) and ceasing to do this as your company grows because you’re focusing on investors, recruiting, PR or whatever is a mistake.  By going on sales calls you pick up directly the feedback of what customers want and also what they’re telling you about competition.  You’re also learning directly about the skills of your sales staff by observing them in action.  It might tell you that you need better sales training or to hone your key selling messages.  They will tell you directly which features they think are necessary to win more deals (take this information as data points rather than conclusions).

I also liked to sit in on sales pipeline meetings.  I didn’t lead the calls – our VP of Sales or country managers did – but I listened in to hear about deal specific dynamics so when it came time for forecasting between the VP of Sales and myself I had direct knowledge of the deals from having heard the sales reps talk about their individual pipelines.

Similarly I liked to keep myself apprised of the technical decisions we were making.  I had long ago ceded the knowledge and responsibility for making the detailed technical recommendations about platforms, databases, hosting solutions, etc.  But I knew that to be a good decision maker I needed first hand knowledge rather than just a summary from my CTO.  So I would go to lunch with our senior architect and ask 50 questions about the differences between Postgres, MySQL and Oracle databases.

At my first company we went with Oracle because it had better handling of “clustering” at the time where we could have multiple instances of databases that we could keep synchronized.  By the time of my second company MySQL was a much more robust solution and worked well when you had to read a lot of information but was less performant on “write” activities.  As a content management system we had lots of write activities and went with Postgres.

I helped make this decision by “triangulating” between our DBA, lead technical architect and our VP of Engineering (who had a better grasp of the financial costs & development costs of each decision).  I could never have been involved in this decision without “dipping” below my CTO to understand the details.  If my CTO would have given me his update much detail would have been lost in translation.

I provide this level of technical detail because I want to remind CEO’s that you need to own these decisions.  If your company is small then make sure you’re asking CTO’s of other companies how they made their decisions about whether to self host or go with Amazon AWS.  How did they decide whether to use RightScale or to manage AWS themselves?  You might be a business person rather than technical but for key decisions you need information to make the best decisions.

It’s why when I’m evaluating an investment I often ask the CEO lots of detailed questions about all parts of their business.  Attention to detail matters.

2. Skipping
While some leaders make the mistake of not dipping into the organization to get a first-hand feel for work being produced at all levels, even more leaders are guilty of the opposite problem: skipping.

Skipping is when you skip a level of management in directing decisions or employee’s work.  It’s far too common and is more destructive than leaders realize.  When you hire a VP of Marketing who has three direct reports and then tell the people reporting to your VP Marketing what to do, you usurp the power and authority of your VP.  It’s both destructive to the more junior employee who doesn’t know whom to take direction from and also to the VP who feels they don’t have the authority to direct their own people.

It can be harder and take more time to coach your VP Marketing to get his staff doing what you think is right than just telling them yourself.  But if you can’t get the results you want from your VP of Marketing or through coaching them then that is a different problem.

Skipping is insidious.  The organization gets used to it and adjusts.  But it sets the wrong culture.  Senior management feels undermined.  Staff never knows whom to listen to.  Decisions get overturned at the last minute by the big boss.  People avoid making the tough decisions because they know the CEO is going to step in at the last minute and change everything anyways.  And you build an organization of under-empowered people.

Let information flow up but direct your staff and execute through hierarchy.

And Finally, a word about VC …
We VCs need to be as conscious of dipping & skipping as management teams are.

A quick example.  One of the first boards that I ever got involved with where I wasn’t the CEO was with a company in which I hadn’t invested but was brought on board to look deeper into operational issues.  I spent a ton of time with the CEO and VP Finance understanding the businesses, its customers and its operational challenges.

Had I stopped there I would have felt great about things, which is what I think happened to the board members / investors who had been involved before me.  Information flowed up within the organization and the CEO always packaged things nicely for the board and investors.

Investor decision-making was based almost exclusively on board packs and financial information produced by these two.  When they heard from the VP of Sales it was during a board meeting where that person was presenting in front of her boss – not exactly the environment for you to get unfettered information.

In addition to attending board meetings I spent time with the CTO trying to understand the technical challenges he was trying to solve.  I then spent time with the VP Product Management to understand his functional roadmap and his perception of what customers wanted.  I then did a pipeline review with the VP of Sales.  I went through the customer service processes with that VP and asked her what problems our customers were having.  I developed a totally different understanding of the business and one that would NEVER have come up through a board meeting.

  • our product wasn’t modularized so new features took too long to implement and regression test
  • we didn’t have remote monitoring so when our product had problems in the field we didn’t even know we had outages.  We certainly didn’t have a NOC
  • our internal tools for managing the content in our system were under invested in so it took more people to make changes to our system than it should have.  They didn’t have visualization tools so when they made changes they couldn’t easily see how they looked in the system.  This led to a lot of human error
  • On sales it turned out that our power was limited to below “C” level so where I was hearing forecasts of customer sales I knew instinctively we were further behind than the CEO thought we were

The bottom line is that the investors had never had these conversations.  Management knew the issues, investors did not.  So when I heard investors speak about what was going wrong with the company I felt like they were talking about a totally different businesses.  They were self rationalizing things that weren’t accurate.

If VC’s don’t “dip” into their organization I don’t know how they can really be effective at the board level because there is no way of having an honest debate with the CEO.  As a founder I believe you want investors to help and if you want them to help you need to empower them with direct knowledge rather than protect this information or these relationships.  This obviously depends on having the right VCs.

I also make visits to senior level customers of portfolio companies with which I’m involved.  I like to do this so I can be helpful to them because there are certain meetings I can have that are harder for the company to have (sometimes due to politics).  But I also like these meetings in the same way I did when I was CEO.  It gives me an intuitive feel for whether our products are resonating with customers or partners and how they perceive our management team.  This is invaluable in helping the management team.  Again, I can’t imagine being a VC and NOT doing this.  Many VCs do reference calls before they invest and then stop customer contact altogether after they’ve made the investment.  Strange.

But I work hard not to “skip” below the CEO or founders.  I try not to direct staff even if I feel that they need to focus on something other than what they are doing.  I try to bring that information to the CEO / founders and give them my observations.  If I “skipped” then I would imagine that most CEO’s wouldn’t want me near their teams.  No leader wants his/her investor directing staff what do to.

Dip.  Don’t skip.

  • dereklicciardi

    Interesting topic. You probably need to reread it and make an update or two because I think you are missing multiple words in a couple of places. I've read your blog long enough to fill them in but for whatever reason, this post seems a bit rushed.

    As to the topic, I tend to agree but would add that the person doing the dipping needs to watch how that impacts the person they are bypassing. When things are going well and there's nothing but good news to be had from dipping, I'm sure the process is easy and light-hearted. If things turn for the worse then it is very possible that dipping comes off as a trust issue or some other negatively viewed way. To the extent that this can be done is probably a function of the personalities involved and the basic understanding of the VC/Founder relationship or CEO/VP relationship.

    I equate this to a process I used in a former company. We billed for time as a consulting company and all of our employees used a timeclock to automate collecting billing information. One of my goals was to get average customer revenue up as high as possible so I wanted a true sense of how much time was being spent where, including personal time. We'd clock when we arrived, left, changed projects and anything else that was significant to reporting what we were working on. Every entry had a comment indicating what was being worked on. In that regard I had a detailed dip into what we were doing for our customers at an almost real time clip. The planning information I got out of this was invaluable. I knew how much time someone actually worked, allowing me to forecast more accurately. If I wanted to, I could discipline or adjust employee behavior if the “numbers” were not right. The latter, I never did and I even went as far as to make a pact with new employees that I would never use the information for disciplinary action. It ensured that the quality of information I received remained clean and of value and in my mind was a good execution of what you're describing here.

    Dipping works well if executed correctly and the reason it is happening is understood in advance. Tread carefully on using the information to “correct” things or the workforce will quickly put you in an adversarial position and adapt to your fact finding missions. If you have an understanding of formal and informal feedback loops in social groups, it helps in understanding what I am talking about. In practice you'll be able to see when the feedback you are receiving changing in quality. I think it is important to be up front about how you're going to use the information provided to ensure that the information provided is as untainted as possible and remains that way on subsequent “dips”.

  • http://blog.cahootsapp.com/ Brian Sierakowski

    Dead on as always.

    Nothing constructive to add… just verification that many companies that I've worked for and with somehow make BOTH of these mistakes! It's a bit counter intuitive, but it's possible to skip without dipping, having upper management skip sales and support managers without gaining any useful information while they're disrupting the hierarchy.

  • http://bothsidesofthetable.com msuster

    Thanks, Derek. Many great points. I probably didn't stress enough how careful you need to be when you dip. On the typos – wrote the post at 4.30am so that's probably why. Hopefully caught most. Thank you.

    Regarding how and when you dip for feedback – I always believe in transparency. I never visit staff or customers without managements consent. It's true that this information is easier managed when times are good but it is invaluable when things aren't going well, too. Mostly this arises in a situation where you can be a sparring partner for the person you dipped below. Occasionally it can result in your questioning whether they are right for the job. Either way, you're naked without the information.

  • http://bothsidesofthetable.com msuster

    Thanks, Brian. Not counter-intuitive at all. Unfortunately skipping without dipping is common practice. Leaders sometimes think they know the solution and just ask more junior people to execute against their vision. Common, common, common. Even at large and successful organizations.

  • http://giffconstable.com giffc

    ++ on the post, Mark. Have not heard the terms “dipping” and “skipping” but I totally agree with you. I like to “manage by walking around” but not for the purpose of “skipping”, which is destructive.

    On a different but related topic, another area that often gets neglected is the importance, no matter how busy you are, of regular 1-on-1 (*not* group) interactions between a boss and their reports. How most people act in group meetings versus how they act 1-on-1 is totally different.

  • http://arnoldwaldstein.com awaldstein

    This is important.

    Start ups have the upside of starting from a flat management structure. If your only rule is to never build silos you go in the right direction and touch on your well articulated advice

    One of the biggest issues in hiring execs from big orgs into startups is the tendency to silo which builds structural management problems from the outset. Something to be avoided at all costs.

  • http://twitter.com/xenoterracide Caleb Cushing

    Or in database terms… you can/should read from any of the slaves but only write to the masters.

  • http://www.aaronklein.com/ AaronKlein

    Another awesome post. Thanks!

  • Rahul Chaudhary

    Mark, great post.

    You should also write a separate post about how first time founder, who has never managed a team before, should manage his/her team at startup? I have seen lot of issues with managing and leading teams in this type of situation.

  • http://moolave.tk/ Fred T

    Very good point. Transparency is a broad view when someone in the company just lays it out that way. Dipping is definitely a proactive way of knowing what the minor details of an operation are. Sometimes through these simple details could a company save a lot of money and reduce expenses. Although it would be very challenging for the CEO to go through every employee's situation in a moderately-sized company, most times I've only seen these types of interactions through a “townhall” meeting. However, this is very possible through a startup environment setup.

  • Cynthia Brown

    “Trust, but verify” is spot on. Dipping is so important, and I can see a great connection between this post and “Startup Founders Should Flip Burgers”. I would also add that from a leadership perspective the morale and cohesiveness of a team benefits when the individual members, especially at the lower levels, feel their voice is not stopping at the direct report. As a CEO, dipping combined with a willingness to show that nothing is below your pay grade helps make the team feel that what they are contributing is valuable and making a difference.

  • philsugar

    You crushed it.

  • http://bothsidesofthetable.com msuster

    Thanks, Giff. And sorry we missed each other in NYC. Next trip – I promise. re: 1-on-1's – couldn't agree more. It takes time but pays huge dividends. I feel the same with founders. I often like to have the first meeting 1-on-1 vs. bringing associates or other partners. I like time to build the relationship, which is harder to do in a group meeting.

  • http://bothsidesofthetable.com msuster

    Silos aren't good and obviously contain a negative connotation. But the reality is that in practical terms silos begin whenever you create any structure. So for me the big issue is how to incentivize and encourage people to work together. I'm sure we're likely aligned on this but just choosing different terms.

  • http://bothsidesofthetable.com msuster

    Nice!

  • http://bothsidesofthetable.com msuster

    Thanks for the suggestion. I'll try to incorporate into an upcoming post. Remind me if I don't.

  • http://bothsidesofthetable.com msuster

    Thanks, Phil.

  • http://www.hypedsound.com jonathanjaeger

    I agree. The part that resonated more with me is the section on understanding aspects of other people's jobs within your company (e.g. knowing the difference between MySQL, Oracle, and Postgres databases). Maybe it could also lead into a discussion about having empathy for employees in your company whose jobs you can't exactly replicate yourself if you don't have the proper skill set.

  • SD

    this is an excellent post… dipping =good, skipping = toxic…that said –

    I would suggest that pulling top junior talent up to work on special projects (with the knowledge and permission of that person's manager) can be very useful in certain circumstances.

    It helps to identify and stretch junior level employees, and to give top talent exposure at a more senior level than they otherwise would. This is much different from “skipping” but it does show a certain healthy irreverence for “heirearchies”.

  • http://bothsidesofthetable.com msuster

    Good addition – I like it. Thank you.

  • http://asalesguy.com Keenan

    I like that, you could call it lifting.

  • SD

    I have observed that companies often build informal organizations around “new hills to climb” (new customers, new products, new businesses, etc.) –

    While the formal organizations are around business units or functional expertise, the informal, project-based organizations allow healthy companies to break down silos, while respecting people's specialties and expertise.

  • http://neuromantrice.wordpress.com/ neuromantrice

    Nice topic, nice article!

    Some projects require *fast* decision making though, when spending too much time digging into the details could lead to failure.

  • Bernie Daina, Ph.D.

    Skipping and dipping — you are sooo right. But there are some “catches.” The late Dr. Elliottt Jaques, an organizational psychoanalyst I had the privilege to study with, proved that organizational hierarchies work best if the manager-one-removed (MOU) has good communication with the reports of his/her direct reports. (Jaques' easiest book to read is Expectative Managerial Leadership, with Stephen Clements, Cason Hall Press) So, it's for communication purposes, insight useful trying to equilibrate the impact of his/her subordinate managers (“Gee, why are all of Al's reports trying to transfer to Cindy? is it because Cindy gives higher marks and is more generous with bonuses?”); to be a court of last resort; to help judge how the intervening managers are doing; to gain context for what's going on closer to the ground, etc. But you are right, as Jaques insisted, the purpose is communication, not tasking.. Management by Walking Around (across levels) is a disaster. Communication BWA is useful! Only the direct manager tasks those subordinates, and a higher-level manager tasking them undermines the direct/intermediate manager. Moreover, since this arrangement repeats itself in a parallel way down the hierarchy, it helps ensure that the growing or large organization is more intimate than otherwise. Another consideration: In almost 30 years of consulting to executives. senior teams and investors, especially in emerging-growth companies, I have found that the tricky thing is for the higher-level leader to be mindful that a simple question can derail prioritizes of a subordinate two or more levels removed. The CEO, or any exec, is perceived as a powerful figure. A CEO can walk by a cubicle, sneeze, and the workers there then abandon their assigned tasks and start building a tissue factory. For this reason, it's always best to keep the intervening manager in the loop. Communication, per se, between MOU and people two levels down in the hierarchy, should be accepted a normal and welcome. Obviously, there are certain additional protocols when the MOU is approached because the intervening manager is perceived as abusive, unfair or harassing. Regards, Bernie Daina, Ph.D., Consulting Management and Organizational Psychologist, go2daina@aol.com 303-596-6640

  • Bernie Daina

    sorry for typo, Jaques book is Executive Managerial… (Bernie)

  • http://twitter.com/doran_joe Joe Doran

    Great description of the subtle diference in a dip vs skip. The word dip is one directional – down. My experience is you need to reach up 2 levels as well. Especially as a start up CEO so you get a better feel for the mindset and issues your investor brings to the table. In a corporate setting it is just like getting to know what your boss' boss want to make sure you aren't playing telephone.