Q&A on Digital Transformation

In August I presented The Challenges of Executing Lean Startup at Scale, generously hosted by Rangle.io in Toronto, Canada. Rangle is the premier digital transformation consultancy, founded on Lean Startup principles and achieving impressive growth – a really great success story. I spent some time with Nick Van Weerdenburg, Rangle’s CEO, discussing Digital Transformation.

Some of the topics covered in the conversation include:

  • Solving customer problems is more important than rigorously following a process
  • The challenges of being on an agile team while working with or being part of a non-agile organization
  • Successful agile transformation requiring a culture change before a toolset change… most organizations get this backwards
  • How to choose metrics that are meaningful to your business

I hope you enjoy the video:

If you watch the video I would love your feedback! Please leave a comment below telling me what you think I got it right and what you think sounds crazy. 

 

Congratulations Successful Entrepreneur: You’re Fired

Most startup entrepreneurs understand that the odds of success are not in their favor… only about 1 in 10 startups will survive. Of course, most startup entrepreneurs don’t believe they fall into the 9 out of 10… a healthy amount of self delusion is required to go down down the startup path in the first place. But there is that 1 in 10 that does make it… and, if you are lucky enough to be the CEO that delivers that success story, the odds are you’ll be fired.

Before explaining why being fired is the most likely outcome for a startup CEO, it’s necessary to explain the startup journey…

Your Mission as a Startup

Investment-backed startups are created to discover scalable businesses, usually by inventing a new product or service that can become a large business, or by creating substantial efficiencies that take customers away from an existing large business. There is no clear, obvious path to doing either of these, otherwise success would be the expectation, not the exception. So success requires reasonable self delusion that you will succeed, as well as experimentation / rapid iteration necessary to adjust to the challenges of discovering the successful business. In practice, this can often manifest itself as the CEO coming in with the crazy idea of the day saying, “let’s try this… can we ship it by tonight?” If you like the excitement that comes from working through challenges with great uncertainty, this process can be a rewarding experience.

Through this process of discovery, a few things can happen. If the company runs out of money before a scalable business is discovered, most likely everybody loses their job, although it is possible that the board still believes in the company but sees execution or leadership as the problem, fires the CEO, and then puts in new money to support a new leader. From the CEO perspective all of these paths lead to the same place… you’re effectively fired.

But wait, Brett… those are failure scenarios… I’m that 1 in 10! I discovered product market fit! I delivered on my mission! I found the scalable business!

You’re probably fired anyway.

It’s Not Us, It’s You

You’ve done something truly amazing… you’ve lead people down a crazy path, likely engaged in some mixture of know-how, magic, luck, skill, and insanity, and came out the other side with a scalable business. It takes a particular type of person to do that successfully.

Unfortunately, that particular type of person is usually the exact opposite of the particular type of person you want growing a scalable business. Growing a scalable business is more about efficiencies and optimization, much less about discovery. That same crazy idea of the day behavior that miraculously lead to discovering the scalable business is exactly what derails the consistency a company’s organizations need, and what customers will expect. As the organization grows, process and management becomes necessary to handle the challenges that come with simply trying to get hundreds of people to work towards the same goal. The needs of operating a scalable business probably contributed to the CEO quitting their previous job and creating the startup in the first place.

The board has a responsibility to driving shareholder value (including their own investment) and, seeing how maximizing the value of the business now requires a different expertise, likely determines that it’s time to get somebody best for that job. It’s possible that the startup CEO has the rare set of skills to transition, or it’s possible that the board will bring in supporting executives to help. In these cases the same end result is usually just delayed.

Of course, getting fired doesn’t happen every time… you can look at examples like Mark Zuckerberg, Drew Houston, Jeff Bezos, and Steve Jobs and, using that healthy amount of self delusion, say “I’ll be like them” (forgetting, of course, the first run of Steve Jobs at Apple). But if you look at all of the companies in the valley that scaled successfully, you’ll find most had the founding CEO “step aside”.

Yikes! How Do I Prevent This?

Your gut response as a startup entrepreneur is likely something like, “I’m going to make sure that doesn’t happen to me.” However, I encourage looking at it a different way… this happens, you’re probably going to be replaced, and that’s probably okay. It’s better to prepare for the possibility rather than assume it can’t happen. You may find being replaced is actually be the desired outcome if you prefer building new things rather than optimizing existing ones.

The most reliable way to avoid being replaced is by not giving the board (or anybody else) the power to replace you. In practice this is usually only possible if you don’t take outside investment… venture capital investors will usually take board seats and almost always retain the ability to replace the CEO. The tradeoff you make for getting extra cash to accelerate your progress comes with the price of forfeiting some control.

Assuming you’re taking investment, the best path is likely making accommodations for a transition as part of that investment. Address things like an ongoing role post-handoff (operational and board), vesting of stock, participation in success rewards, and your treatment for liquidity events (acquisition, IPO, secondary offerings). Also account for variations to the plan… while you may want to maintain a significant operating role after a transition, it may be determined that the new CEO can’t be successful while employees still look to their founding CEO hero for direction.

Finally, if you do get to the point where you are being fired after successfully delivering on your mission, make sure you recognize your truly amazing accomplishments… you knowingly engaged in a difficult challenge, with all odds against you, and you were a success. Many people, employees and customers, will be better off because of what you built.

Congratulations.

 

This posting was greatly inspired by over 20 years of stories from many friends that have been founding CEOs, and by Steve Blank’s great presentation, Why Accountants Don’t Run Startups.

 

Have you been a startup CEO and been through this journey? I’d love to hear your story! Please leave a comment.

Leadership Requires Taking a Stand

For reasons I’ll cover in the future, I took a break from blogging. I did not intend to resume this week, and I did not expect that this would be my returning topic, but recent events have been a catalyst for me, and silence wasn’t really an option.

“We must take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented” – Elie Wiesel

I had no intention of covering politics on this blog. In speaking to the importance of leaders taking a stand, the public and obvious failure of Donald Trump was an example that could not be avoided. Further, it would be hypocritical for me to cover this topic without taking a stand myself.

A Leadership Softball

History’s losing flags on display in Charlottesville

Last weekend Nazis rallied in Charlottesville, spouting words of hatred and eventually murdering Heather Heyer. As much as the “Unite the Right” mob wants to claim that they are non-hateful and simply defending white heritage, chants like “Jews will not replace us”, “Fuck you, faggots”, and “Blood and soil” (which comes from Nazi roots), combined with marching under the flags and other imagery of Nazi Germany, clearly reveals the true intent. Describing these people as Nazis is not hyperbole – they are literally marching under the flag that many of our grandfathers gave their lives to defeat.

Denouncing the actions of Nazis is a leadership softball. In my home town of Berkeley, which is frequently (and sometimes fairly) considered socialist and crazy, Top Dog, an establishment that is staunchly libertarian and pro-free-market, fired an employee participating in the Nazi rally. The owner of Top Dog is not a delicate snowflake with hurt feelings, he took a stand against what was morally wrong and backed it up with actions.

In contrast, Donald Trump failed to even take a swing at this leadership softball. His initial comments appeared sympathetic or even supportive of the Nazis, receiving praise from former KKK leader David Duke. In an uncharacteristic two day delay to ensure, “what I said was correct, not make a quick statement”, Trump denounced the Nazi groups, in what appeared to be a forced reading of a prepared statement, days after most leaders (and bipartisan elected officials) took a firm stance against the Nazis. After what would have simply been considered a disastrous display of failed leadership,  yesterday Donald Trump destroyed what little credibility he may have garnered, when he effectively backtracked on his condemnation of Nazis, and seemed to equate our founding fathers to people that committed acts of treason waging war against the United States.

The Nazis in Charlottesville were largely Trump supporters, so Donald Trump making a clear and decisive statement against these hate groups may have come at a cost of losing some of their support. If you assume Donald Trump was simply attempting to remain neutral, the lack of a commitment against something so obviously anti-American (Nazis), was largely interpreted as support for the hate groups – this interpretation was echoed by politicians from both sides of the isle and from the hate groups themselves. After Trump’s impromptu shit show on Tuesday in which he doubled-down on his “many sides” to blame, it left little doubt where he really stands, although he still hasn’t displayed the leadership to clearly define his position.

Taking a Clear Stand

It’s necessary for leaders to take a clear stand on issues that impact their organizations, both to act as a beacon for what is expected for the organization, and to enable people to leave the organization if it is inconsistent with their own values.

A good way to test whether a company is committed to its cultural values is looking at how the company acts when holding to those values comes at a real cost. Similarly, leaders should be judged by their actions as they face adversity… are they willing to make personal sacrifices to maintain their integrity and live by their values.

In 2015, as CEO of IMVU, I made the decision to not allow the confederate flag in IMVU’s products. Some customers reacted unfavorably, some directed hostile remarks at me, and customer service received complaints. There was also some impact resulting from customers that had purchased or sold the products. I had expected all of that. And as much as I value freedom of speech, ultimately the value of IMVU being an inclusive community for millions of customers outweighed the impact of eliminating the emblem representing a war waged on the United States to defend the right to own humans. My actions were not big and bold, they were simply doing what I thought was the right thing given the values of the company and its community.

Regarding Donald Trump’s failed leadership, six business leaders have stepped down from presidential advisory councils, citing their own values as the primary motivation for distancing themselves from Trump. These leaders have clearly taken actions consistent with their personal values, and did so at a cost, as Trump quickly attacked and belittled these leaders the moment they stepped down. Those remaining on the presidential advisory councils may not explicitly support Trump’s defense of hate groups, but their continued support of him as a leader acts as an enabler, and casts doubts on their values or the ability to act consistently with their values. Trump’s top economic adviser Gary Cohn is reportedly ‘disgusted’ and ‘appalled’ by Trump’s responses this week, yet plans to remain in the administration, implicitly supporting Trumps behavior. Gary Cohn, who was born into an Eastern European Jewish family, continues to support a man that can’t denounce Nazis – as a citizen (a member of the US organization) I draw the conclusion that Cohn values tax reform and deregulation above what I would consider a non-starter, supporting somebody that can’t condemn hate groups.

Live Your Values

An organization’s culture and values are just pleasant little phrases in the employee handbook unless the organization reinforces the values in all actions, especially in tough times.

As a leader, if you are unwilling to state a position consistent with your values or sacrifice to take actions supporting those values, you don’t actually hold those values, or you are not a leader.

 

Firing People Respectably

Firing people is perhaps the most unpleasant responsibility that comes with being a manager.  I’ve read many articles on “the right way” to handle firing, but my experience has taught me every case is different, and even following the best advice can result in a challenging interaction.

I’ve created guidelines for myself that feel fair (this is how I want to be fired), and I accepted that firing is unpleasant for everybody involved, so it’s ultimately about making the best out of a shitty situation.

My guidelines come from the perspective of a culture I want to see in a company, not the legal perspective (which tends to err on the side of corporate protection over recognizing the human components).

Guidelines for a Firing Manager

My guiding principle, be respectful, helping the employee retain their dignity, drives these guidelines:

  1. Always remember you’re firing a person, not a resource.  In almost every case being fired is an emotionally painful situation, and being mindful that you are firing a person, with feelings, fears, and personal responsibilities that will be compromised as a result of job loss.  People react unpredictably in emotion-filled situations.  As the firing manager it is important to be respectful through the whole process and be balanced in responses to the other person’s (re)actions.
  2. Don’t get into a detailed discussion.  A common pattern is the person being fired will want to get into the details about the decision to fire.  The firing discussion should be efficient (there is nuance in balancing not being insensitively fast vs. dragging out the pain).  The manager should absolutely provide a high-level explanation, and the next steps (ideally the company has a standard document that explains the issues that will be important to the employee), but the person being fired is very unlikely to actually hear a detailed discussion – they are too emotional to process it.  If a person being fired wants to get into details, I suggest scheduling coffee the following week, giving them enough time to figure out what questions are really important and getting past the initial shock so they can be receptive to the answers.
  3. Never discuss individual details with others.  When a person is fired, other employees frequently want to understand more details.  It can be tempting to want to bring others into the loop or calm an underlying “am I next?” fear they may have by sharing the details, but it is disrespectful to the person being fired (it’s also probably a liability for the company). Instead, have a culture that is transparent about the process (why and how) people are fired, while never discussing an individual’s specific situation.

Reasons for Firing

The reasons for firing an employee generally fall into three categories: performance, role eliminated, and violating the company relationship. Each impact the person being fired, other employees, and possible outcomes differently.

Performance Problems

When an employee is under-performing it is their manager’s responsibility to make that employee successful and, if that fails, fire the employee. An employee’s performance should be a regular discussion with their manager, and missing expectations should be made explicitly clear, along with clarity around the exact expectations and a plan to improve.  If the improvement doesn’t happen, the firing discussion should be more of a final conclusion to the mutual recognition of the problem, with both parties aligned on the shared data.  My rule is, “if the employee was surprised they were fired for performance reasons, this is a failure of their manager”.

Role Change

The role change scenario is one where the company’s requirements or constraints have changed and an employee is no longer appropriate for the role.  I’m including layoffs / downsizing in this category (not being able to pay people is a constraint).  A commonality in these firings is it includes qualified, successful employees.  This is the one firing scenario where additional insights into the decision can be shared with other employees, as the decision is not about an individual (but be sure that the role change is the real reason for the firing, otherwise it will eventually result in distrust from employees).

A role change specific to an individual feels the most personal for the person being fired and can be hardest for other employees to understand. The message of “great for previous role, wrong skills for what the company needs going forward” is easy to say, harder for employees to process, often because a good employee will be leaving, and many employees won’t have the insights into the need for the change (or may simply disagree).  The best analogy I’ve been able to come up with is sports teams, where a great player may be traded to make room for a player that has different skills that make the team better as a whole (as in Moneyball, where trading stars for players that just got on base resulted in a better team).

When a role change is impacting many people (typically driven by financial situations or discontinuing a product / service), explaining to the people impacted can be more comforting than when it is a single role, since the reasons don’t feel as personal (make no mistake, for the people being fired the impact will feel very personal, it just won’t feel like they were individually targeted).

Violating the Company Relationship

Every company has it’s own unique culture, principles, rules, and expectations in the relationship with each employee, and between employees.  I’ll use “don’t steal” as an example, since I this is probably a common deal-breaker even in the most toxic environments.

When there is a violation of the relationship, the employee needs to be fired, otherwise the company is signaling that it isn’t an actual expectation of the relationship, or perhaps worse, that enforcement is selectively applied. In this firing the employee should not be surprised, however an employee willing to violate the relationship in one dimension is likely willing to double down and deny their responsibility in the situation. Unfortunately, this is one of those nobody wins outcomes that, as a manager, you simply need to get thorough it, look for the learning opportunity, and move-on.

A particular challenge in this type of situation is the inability to offer an explanation to other employees, especially if the violation was concealed. Using the stealing example, the company could have liability is disclosing the violation to others, so employees just see somebody fired for no apparent reason.  As recommended in my guidelines above,  if your company has a (trusted) transparent culture around how and why people get fired, many may infer that it was either a performance problem or violation, which a better outcome than the firing feeling random.

Management Failures

Employment is a relationship, and the manager and company have to acknowledge their responsibility in the failed relationship, both in why it failed and the importance of properly handling the failure.

Passing the Buck

If there are other existing opportunities where the employee could be successful at the company, that can provide a solution that is both a win for the employee and the company.  However, since firing is so unpleasant, managers should be challenged to understand if they are diverting the problem to somebody else or do they really feel the employee is best for the opportunity.  Ask the question, “if the employee didn’t work here but was applying for the new opportunity, would you hire them?”  If the answer isn’t a confident, “yes”, the manager is likely passing the problem to somebody else. Another red flag is the creation of a new role for an employee that would otherwise be fired… in almost every case I’ve experienced, this is a manager avoiding a tough (and necessary) decision.

Performance Improvement Plans

Performance Improvement Plans (known as “PIPs” in HR speak) are formal documentation explaining the employee’s performance problem, the expectations, a process to improve and a success evaluation date. On the surface this is all great – issues that should have been discussed in 1:1 meetings. When used as a tool with the intention of making the employee successful, PIPs can be really helpful in providing clear expectations.

The dark side of PIPs is when they are used as an HR cover your ass maneuver, in which the employee’s fate has already been decided but, because of risk or liability, there is a desire fore the company to have ample documentation around the termination. Don’t do this.  When a firing outcome has been determined, fire the employee.  Dragging-out a process or giving false hope is disrespectful, and arguably cruel.

Learning from Failure

A firing may not reflect a failure, it might actually be the best decision for the company and perhaps even for the person being fired.  However, all firings can be an opportunity for the company to learn and improve its processes. If it was a new employee, try to understand how the interview / hiring process could have identified the issue.  With longer-term employees, look for training opportunities (for the employee or management) that could have resulted in a more successful outcome.  Understand when the firing should have happened and what should be done next time. Since firing has such a big impact to both the employee and the company, there is value in continually improving the process to reduce or avoid any firings that could have been saves.

Have you been on either end of the firing process and have suggestions for improving how it gets handled?  Please leave a comment!

More Things You Don’t Know About Stock Options

I’ve generally found that every time I have dealt with stock options I’ve learned something new, and usually in somewhat painful ways.  It’s one of the few areas where I actually hope I’ll someday understand every aspect and stop learning, but changes to how options are handled and complicated (and changing) tax laws promise to make stock options a topic that will never be mastered.

In my most recent experiences, I learned a few things that I don’t seem to be common knowledge, even by many people that have been in the stock option rodeo for a long time.

Companies Can Outlive Their Stock Plans

The stock options granted to employees, directors, advisors, or other parties are done so pursuant to a stock plan that is typically created around the time of incorporation.  When one receives an option grant, the grant will reference the stock plan and a copy of the plan should be made available to the recipient of the grant.  These stock plans have a lifetime, with 10 years being pretty common, and the ability to exercise options typically expires with the stock plan.

And for what I’m guessing is more than 99% of Silicon Valley companies, the 10 year life of the stock plan is irrelevant because, within 10 years the company most likely fails or has a major restructuring of the cap table (making the options worthless), gets acquired, or goes public (resulting in some conversion or liquidity of the options).  In almost every case the stock options either get flushed down the toilet or become liquid within 10 years.  But, there is a less common scenario… a company substantially increases in value and remains private and independent, celebrating 10 years and outliving the initial stock plan.

In this situation, most people granted options under the original stock plan need to exercise or forfeit their stock (there is typically a way to handle current employees as a new plan is adopted).  And, that’s the big gotcha.  When granted stock options, a lot of people will chose to not exercise their options until there is a liquidity event, so they don’t risk any up-front expense and only purchase when they can immediately sell the stock for the gains (this strategy eliminates up-front risk, trading for a less favorable tax liability later, assuming the company doesn’t fail).

So let’s put some numbers behind this… Ned joins the advisory board of a startup company during the seed round and gets 100,000 options valued at $0.01 (one cent) each, so Ned can purchase these 100,000 shares for a total of $1,000, but doesn’t do so at the time of the grant.  Against all odds, the startup does well, survives 10 years without a liquidity event and the shares are now worth $1.25 each – 125x return!  Ned gets a call and is told that the stock plan is about to expire and he must exercise his options or lose the grant.  The good news is, $1000 to get $125,000 in stock is a pretty good deal.  However, that purchase is going to be a taxable short-term gain of $124,000 (10% – 39.6%, depending on Ned’s total taxable income, so up to $49,104 to be paid in taxes).  But, the company is still private so there is not necessarily a market where Ned can get liquidity, so in rough numbers Ned just spent $50,000 in cash to buy $125,000 in stock that can’t be sold – that doesn’t sound all that bad, but there are a lot of factors that prevent it from being an easy decision.  Another big rub for many is, instead of the company getting the money from the stock purchase, it goes to the government.

While there are plenty of stock option scenarios that present a similar dilemma,  the stock plan end-of-life scenario is unique in the lack of flexibility – even if the company and grant holder want to find a solution, there isn’t a clean way to update paperwork or give extensions for exercising at the end of the stock plan’s life.

There is a very easy way to avoid this early on… if Ned exercised when he received the grant, he would have paid $1,000, the fair market value for the stock, with no tax consequence, and 10 years later he would already own that stock, now worth $125,000 (but still not liquid).

My best advice (worth everything you just paid for it, so consult a lawyer or tax expert before following it) is to exercise as early as possible, especially in a startup where the stock barely has value.  Your time is the most valuable thing you have, so if you’re willing to bet on the startup by investing your time, you should be willing to bet some cash, too.

Most Job Seekers Don’t do the Math

At this point in my life I’ve overseen more than a thousand job offers, and one aspect that surprises me is how frequently prospective employees don’t ask for the information necessary to understand the value of the stock options offered as part of their compensation package (sometimes as a very material component of that package).  I’ve had conversations where job seekers told me another company offered them twice as many options as I was offering (seeking more from my offer), but they didn’t know the total options in either company or recent valuations, so they didn’t understand the percentage of ownership (if you’re offered 1 share of Berkshire Hathaway or 1000 shares of Apple, you’ll make $117,000 more taking the Berkshire Hathaway).  Seeing so many people not doing this math has lead me to joke that my next company will start with one trillion shares of stock so that I can offer more stock than every other company.

Employees not understanding this component of their compensation creates an interesting challenge for an employer… I believe companies should help employees understand the value of stock options and the various nuances of how options work.  However, I also believe that it wastes a limited resource to provide stock options when an employee doesn’t value them.  I like everybody to have a stake in the outcome of the company, but options should be weighted so they are the most valuable to the recipient, and other forms of compensation should be used when options are not valued.

If you’re interested in the details about understanding stock option compensation and what questions to ask when comparing offers, there are some detailed guides I reference below.

Small Business Stock Capital Gains Exclusion

Another (very pleasant) surprise I learned about was Section 1202,  which excludes from gross income at least 50% of the gain recognized on the sale or exchange of qualified small business stock (QSBS) that is held more than five years.  The latest amendment to Section 1202 provides for 100% of any capital gain (up to $10 million) to be excluded if the small business stock was acquired after September 27, 2010.

Section 1202 is surprisingly not well known – four Bay Area tax advisors I contacted were unaware of it when I referenced it.  Fortunately it was mentioned in Piaw Na’s book, An Engineer’s Guide to Silicon Valley Startups, where the talented and helpful Chad Austin discovered it and shared the knowledge.

I won’t go into details, but if you sell startup stock that you held for 5 years, this can be a material tax savings for you.  This is yet another reason to exercise early, since you need to hold the stock, not the options.

Great Resources for Learning About Stock Options

If you’re looking for a comprehensive overview of stock options – I suggest the very excellent Introduction to Stock & Options by David Weekly, or the also very excellent The Open Guide to Equity Compensation by Joshua Levy and Joe Wallin.

 

 

Did I get it wrong?  Is there another stock option gotcha that I missed?  Please leave a comment!

Interviewed on #ModernAgileShow

I recently had the pleasure of being interviewed by Joshua Kerievsky on the #ModernAgileShow, where we talked about a lot of my experience working at IMVU, ranging from the early days of Continuous Deployment (without all of those fancy automated tests or cluster immune systems) to changes in experiment systems and challenges of building a culture where people feel safe.  I also provide some insights into the sausage making of The Lean Startup.

In the interest of accuracy, my title in the video should be “former CEO of IMVU“.

For more information about Josh’s work to setup agile processes and cultures independent of a specific framework, check out the Modern Agile website.

On a semi-related note, Josh mentioned that the original video of Timothy Fitz presenting on Continuous Deployment at IMVU: Doing the impossible fifty times a day was lost as the result of server corruption…. if anybody happens to have a local copy please let me know – it would be great to restore this historic presentation for the Interwebs!

 

Being a Great Engineer != Being a Great Engineering Manager

I just read Google’s Quest to Build a Better Boss, describing “Project Oxygen”, which analyzed Google’s performance and review data to determine which characteristics are most important to being a successful manager at Google.  This was summarized into eight key success behaviors and three common pitfalls.  The big surprise?  Google “…found that technical expertise — the ability, say, to write computer code in your sleep — ranked dead last among Google’s big eight.

This is not a surprise to me and supports what I have come to believe after years of engineering management – being a great engineer does not necessarily prepare you for being a good manager.  This is not to say that great engineers can’t also be great managers, but the process many companies use of taking their best engineers and “promoting” them to management is flawed.  In many cases, it leads to a company losing a great engineer and gaining an ineffective (or worse, harmful) manager.  Many companies compound this problem by creating career ladders that effectively force engineers to choose between a career ceiling and a management path.

There are many characteristics that I see in successful managers.  First and foremost, good managers have to always be working to ensure the success of the team and their individual reports.  Success goes beyond just getting projects and tasks done – it also means helping their individual reports understand their strengths and opportunities for growth.  It requires taking a real interest in where each person wants to go in their career and creating opportunities for them to reach their goals.  Good managers need a lot of block and tackle type skills to unblock people and ensure they have an environment that helps them remain productive.  Good managers encourage growth for their employees by giving direction when needed but empowering them to try (and sometimes fail) in the interest of helping them learn and improve.  Of course, good managers must also be proactive about confronting tough issues and addressing performance problems to maintain a high-quality team.

Those characteristics are not necessarily the same characteristics necessary to be a great engineer.   It is not uncommon to see great engineers also be really great mentors and solve problems (beyond just engineering) in creative ways, but it is not typically their focus.  Also, the way they work is typically different.  Most managers have a tremendous amount of context switching during their day and need to make themselves available and interruptible to unblock others – this can be highly detrimental to an engineer that typically pays a high cost for context switching and getting back into the flow.

Another critical characteristic of good managers is knowing how to get problems solved.  This is very different than knowing the solution to a problem. The manager adds value by unblocking their report, not by being smarter than their report.  Many times I see very technical employees go to a much less technical manager with a technical problem.  While the manager may not be able to solve the problem directly, they can usually identify the steps (and people) required to get a solution.   This is where I see many organizations make mistakes when looking for managers – they assume that a manager can’t manage engineers if she is less technical that the engineers in the organization.   As an example of how this can manifest itself, at my company we were looking for an additional engineering manager and the bar was set pretty high based on the performance and 360 feedback of our existing manager – engineers thought he was great.  The engineers interviewing the candidate used the exact same very technical questions we use to identify great engineers.  The candidate did not do well.  In the wrap-up meeting I asked if they had ever needed their great manager to to answer these types of technical problems and the response was, “no – we have really solid tech leads for that”.  We quickly adjusted the engineering manager candidate questions to stop looking for successful engineer skills and instead identify manager skills that make other engineers successful.

For most of my life I have had the privilege of working with some truly exceptional programmers (far better than myself).  It did not take long for me to realize that the value I could create for each company as an engineer was much less significant than the value I could create by ensuring that other (better) engineers were effective and successful.  However, some companies make management the only option for career progression, which encourages great engineers that are passionate about coding to switch to a role for which they are less passionate and probably less capable (yes this is a generalization and I apologize to the truly amazing individuals that are both deeply technical and exceptional managers).  More companies should have parallel career ladders that allow engineers to remain with their hands on the keyboard and heads in the code while obtaining a career level as high (or higher) than management positions.

On a side note, one of the things I really liked about Project Oxygen is the approach of using data to analyze business processes.  I find that many companies that are data driven and have a deep understanding of their customer metrics many times don’t have the same understanding of how they work and what make them (in)effective.  We regularly collect data at my company and use it as an input to redefine how we work and constantly benefit from that evaluation.

Here is a summary of Google’s findings from Project Oxygen:

Here are the 8 top behaviors of managers in order of importance:

  1. Be a good coach
  2. Empower your team and don’t micromanage
  3. Express interest in team members’ success and personal well-being
  4. Don’t be a sissy: Be productive and results-oriented
  5. Be a good communicator and listen to your team
  6. Help your employees with career development
  7. Have a clear vision and strategy for the team
  8. Have key technical skills so you can help advise the team

Here are an additional 3 manager pitfalls:

  1. Have trouble making a transition to the team
  2. Lack a consistent approach to performance management and career development
  3. Spend too little time managing and communicating