What A Management Team Does

Last summer I wrote a post called What A CEO Does. It was a popular post and I’ve seen and heard people reference it frequently. In that post I suggested that the three things a CEO needs to do is set and communicate the overall vision, recruit and retain the best talent possible, and make sure the company never runs out of cash.

Matt Blumberg, the CEO of our portfolio company Return Path wrote a post yesterday talking about the three things a management team must do.

He suggests these three functions:

  • Create an environment for success
  • Nip problems in the bud, or prevent them entirely
  • Exploit big opportunities
  • If you want more detail on each of them, go read the post.

    I particularly like #1. The best management teams create cultures that people enjoy working in. And from that comes great things. I see that every day. As Scott Heiferman said recently “teams win.”



    #MBA Mondays

    Comments (Archived):

    1. @JoeHobot

      Great post, but unfortunately not many management ppl follow some of those rules because of the upper management. Its the reason why some companies rise up and some stay where they are at from decade or two ago.

    2. awaldstein

      “Creating an environment for success” is a career-long topic. Critically important, never ending.I find that start-ups create that environment somewhat naturally during surges of growth. During downturns or the ever going marathon of slower growth, surfacing this to a conscious effort becomes necessary. Necessary doesn’t mean its easy though.

      1. fredwilson

        the ugly adolescent period is one of those times when this is soooo hard

        1. awaldstein

          that’s my experience as well

        2. JLM

          I have often thought that young companies need a “charm school” to get them through the acne phase as quickly as possible and that inexperienced CEOs can benefit from a bit of “boot camp”.I have a fairly exhaustive set of exemplars I have developed over the last 30+ years on such topics as planning, budgeting, setting objectives, performance appraisal, marketing (focus groups, customer satisfaction surveys, mystery shoppers), physical plant checklist, board stuff (subcommittee charters, conflict policies), employee handbooks and the list goes on forever.It is literally a 6′ stack of stuff much of which I have continued to develop and improve over the years. All battle tested and pragmatic.The only thing I have really injected is to ensure all of this stuff is cataloged and you can find a hard copy and an electronic copy instantly.I lent the entire library to a young guy I had invested a pittance with and he used it all skillfully and brilliantly. He said it advanced his work a couple of years not to have to invent much of the same stuff.We had a huge problem when a VC of his — from a very large and reputable firm — “appropriated” the files and started using it throughout his portfolio with VC firm’s logo on it.I was both flattered and irked at the same time but I am not that into flattery, so the vexation won out.Interestingly enough, we had the same corporate lawyer and he went and re-appropriated the information back and scolded the guy for having shamelessly stolen the stuff.I also think that young CEOs should join any of the YPO, TAB, CEO Conf type organizations immediately. They are great peer to peer organizations.

          1. ShanaC

            I really think you should open up those documents. They would be really interesting to read.

            1. walldawg

              Have scanner, will travel

            2. JLM

              Think of whatever you need and I will send you what I have but I will not do a document dump.

          2. fredwilson

            you should put that 6′ stack on the web, like i do with MBA Mondays

      2. Carl Rahn Griffith

        I also see it (CEO role) as a responsibility that should embody the values of Curation.

        1. Nate Quigley

          Are you saying “Curate the Team”? I really like that. Getting the right people in and the wrong people out is the biggest part of “create an environment for success” as others have mentioned here as well. Curate the team is a neat shorthand for that.

    3. Philip J. Cortes

      On point Number 1:We have learned to evaluate tasks based on their intrinsic motivation for the individual they’re assigned to. An example of this is we just recently gave one of our developers a massive algo project because we knew that individual wanted to learn more about that space, and was motivated to join our team because of the potential work he could be doing in it.As a bootstrapped startup, we can’t afford to pay our people market rates, so we have to make sure that almost every task assigned to our people adds to the intrinsic value of working with us – the magic is that we get concrete definitions of what type of work people enjoy doing when we’re hiring, and hire the people we have the greatest needs in. It’s an important win-win, as nobody walks away disgruntled.

      1. fredwilson

        That is very smart

      2. Tereza

        I always ask people at the start — this includes interns — let’s write the resume line item(s) you wish to have when this experience is over and you walk away.It confirms that we’re on the same page as we’re kicking off, aligned needs.Plus they know you’re very willing to help them get wherever it is they want to go….provided your needs are met. Sets up a two-way social contract.As we do interim reviews I use it as a reference. Allows us to discuss very tangibly what it means to have achieve such-and-such resume line item.And if/when they leave I feel like we have the same story on what our joint experience was.It’s very simple.

    4. Tom Labus

      #1 is crucial. That includes getting rid of bad hires as soon as you realize your mistake. Tony Hsieh says bad hires cost the company #100m over time.

      1. fredwilson

        Firing is hard but way easier when you realize you are doing the team afavor

        1. mike gilfillan

          The challenge is identifying the “bad” hires. When we took on VC money in ’98, we started hiring some “professional management” only to find out that more than a few with high profile resumes had not the inclination to actually get things done. They could “manage” a process, but with mostly bigger company experience, they did not have the skills to create or achieve the three things you identified (and in some cases, actually caused the opposite).A good or even great manager coming from an established company can be a big drain in the start-up environment. Start-ups need lots of doers, not schmoozers — and learning how to quickly spot the difference was one of the biggest lessons I learned as a young founder/CEO.

          1. PhilipSugar

            The big difference at big company life versus small is that at big companies you manage the incoming work, at small there isn’t any incoming work, it better be you initiating outgoing work or nothing gets done.

        2. FAKE GRIMLOCK

          BEST WAY FOR SOLVE PROBLEM AM GET RID OF IT. THAT INCLUDE EMPLOYEES.ONLY PART HARD AM WORRY MORE ABOUT FEELINGS THAN WIN. YOU NOT IN BUSINESS FOR NOT HURT FEELINGS. IN BUSINESS FOR WIN.

      2. JLM

        You do not really fire anybody, they fire themselves.If you have a competent job description, have set SMART goals in writing and have conducted fair and open performance appraisals comparing ACTUAL performance to the job description and the goals — then the person fires themselves.I have not fired a lot of people — except for turnarounds when I have fired people like a chum chopper — but I do spend a lot of time writing job descriptions, refer back to them to update them, require written SMART goals and review them quarterly and have a fairly intense performance appraisal system which uses the same structure as the job description and goals — then I always, always, always answer the following two questions in the performance appraisal:Could this person be terminated for unsatisfactory performance in the next 12 months?Could this person be terminated for unsatisfactory performance in the next 3 months?When I answer either of those questions YES, then they either straighten up or ship out.When I answer either of those questions YES, a good person immediately wants to know what they need to do to prevent being fired. That can be a constructive dialog if you want it to be.But I guess that when you have a good 15-page job description which means you have really thought about it; and, you have 5 strategic goals; and, when you have a 5 page performance appraisal form and spend a couple of hours talking about the subject — including compensation — you will have a good employee more often than not.There are no easy answers. It takes time and you have to risk being a bit overcommunicative but it pays a great dividend in the long run.

    5. andyswan

      This is good. I like the “three swing thoughts” approach to business roles. Gonna have to think about mgmt role a bit more, but these are definitely a good start if not right on.One thing I’ve really started to notice at the startup level for companies is the value of a flat organization. People just do what they’re great at. You hire doers that want to do, without being told by someone else what to do. People that do a great job get paid more for taking on more and impacting more.One of the big advantages of startups is that there isn’t really time for intricate hierarchies of management and divisions, etc. Leave those to the big companies, where you get 17 people in a room trying to avoid making a decision that puts their career at risk.In a hierarchical structure, people necessarily rise to their level of incompetence. In a flat startup, talent rises to its level of maximum competence by simply taking on more and more and leading that which he/she is great at.

      1. PhilipSugar

        “17 people in a room trying to avoid making a decision that puts their career at risk”That is a great comment. I was going to email you privately “consider that one stolen” but I lost your address.I do use that line a lot when you hear a quote that sums things up like: clients make partners, you get to yes by finding no’s, etc….but I did not want to set off a shit-storm.

      2. Fernando Gutierrez

        Regarding being flat or hierarchical, when does a company starts to have a management team? sometimes I see three people businesses full of CxO titles and I can’t avoid thinking about who really works there.

        1. andyswan

          I’m going to keep things as anonymous as I can here….but I know two guysthat started what turned out to be a billion dollar company. Their titlesat the end? “Customer Service” and “Technologist”.People will manage what they are capable of. Let their gravity determinethe org chart.Key to this philosophy is always, always hire “best available talent”.

      3. JLM

        One of the elements of organizational genius is what you said — keep the damn organization as flat as possible. Starvation flat. Ribs showing through your T-shirt flat.Every layer adds a 10% dilution to the purity of the mission, vision and values until at some point nobody knows why they are there and what they are doing. Or who is really in charge.In every turnaround I have ever done, the first thing I have always done is to strip out layers of management. And secondarily, clearly define the difference between line and staff.Once I got rid of 5 layers of management. The line managers blossomed into killers because they suddenly understood what I wanted — mission, vision and values.Every Thursday at 2:00, I fired another layer of management.They could hear my voice and they knew I was paying attention. They also got the idea that disappointing me was not a great career choice.It also creates wonderful reporting and you can pivot on a dime.Today with e-mail and electronic automated reporting, you can run anything with 2-3 layers of management at the absolute worst. Anything.

        1. FAKE GRIMLOCK

          IF CAN FIT PROJECT IN HEAD, NO NEED MANAGER. IF NOT FIT IN HEAD, NEED EXTRA HEAD. THAT HEAD ON MANAGER BODY.FIRE MANAGER ONLY WORK WHEN PROBLEM LESS COMPLEX THAN SPACE IN HEAD. NOT EVERYONE HAVE THAT KIND OF PROBLEM.

        2. Kyle Comeau

          I work for a company with 2300+ employees. As a fluke-ish result of several re-orgs, I report to the president of my division.It’s been feeling a bit too flat.

          1. JLM

            Haha, “flukish” – “flat” you would have to be a fisherperson to get that pun. Intended or not, funny.Do a real good job and then steal his job?

        3. Dave W Baldwin

          It is amazing how many cannot figure out that the 2-3 layers is the most needed… period.

      4. Dave W Baldwin

        This post is a keeper. The problem regarding those 17 people will become a big one this decade due to how much salary is wasted on those that stack irrelevent paper.So many younger to middle age people will not adjust to the fact the businesses offering high salaries to bureaucratic professionals will fail.

    6. Matt A. Myers

      Some of the starting team members I will hire? They’re already willing to help me and have been helping without pay. It’s then when you know they’re passionate and care. They’re amazing people I want to have around and in my life anyway – I will feel so privileged when I can help subsidize their living.

      1. andyswan

        right on.

      2. FAKE GRIMLOCK

        HAVE TIME TO DO THINGS FOR FREE SOMETIMES SIGN OF NOT GOOD ENOUGH TO DO FOR MONEY.THIS SERIOUS CONSIDERATION FOR STARTUPS. BEST PEOPLE NOT SITTING AROUND WAITING FOR PROJECT TO HELP ON, THEM BUSY MAKING MONEY. WHAT YOU WANT FOR TEAM, BEST PEOPLE, OR ONES THAT NOT THE BEST?NOTHING WRONG WITH BUILD TEAM FROM VOLUNTEERS. BUT BE AWARE OF DRAWBACKS.

        1. ShanaC

          This is why there needs to be a balance between money and the passion. I know tons of people who burned out on both.

          1. FAKE GRIMLOCK

            IT TRUE.ME, GRIMLOCK, WORK ON SIDE PROJECTS PLENTY TIMES. MINDSET FOR FUN PROJECT ON SIDE != FULL TIME PROJECT.ONE NOT TRANSLATE TO OTHER. HAVE DIFFERENT CONTEXT, MOTIVATION. UNDERESTIMATE THAT EASY TRAP FOR FALL INTO.EVERYONE WISH THEM FIND GENIUS WORK FOR FREE, BUT IT FUNNY, ME NO SEE GENIUS HORSES RUNNING AROUND EVERYWHERE.

    7. Tereza

      Someone told me about this TED video last night and it enriches this topic. It’s called “How to Start a Movement” and it’s about the importance of someone he calls “the first follower”.Essentially, the first person doing something completely new + different is just a weirdo. when someone joins him (or her!), it validates and gives shape to what’s happening. You now have the seed of a movement. This gives permission to the next person, and the next, and then you have a tipping point.Also, interestingly, it’s the Fast Follower who’s the true leader. This person institutionalizes + codifies “how things are done”. He was the first person who saw and recognized what was going on. That’s pretty hot!I can see how/why angels + VCs want to see the team. It’s very much a validation that the startup is part of a movement….and not just some weirdo dancing alone.http://www.ted.com/talks/de

      1. Tereza

        ack — embed fail. posting link.

        1. Philip J. Cortes

          Tereza – I completely agree. Influence is essential for the founding team.

      2. FAKE GRIMLOCK

        ONE DANCING GUY CRAZY. TWO A MOVEMENT. ADD HOT CHICK, IT A PARTY.

        1. ShanaC

          so so quotable.

    8. baba12

      Wonder if many people work at Goldman Sachs for those three reasons or is it more about the money and what people will be willing to do for it.I wonder where principles/ethics/values fit into the equation for a management team to espouse and define as acceptable or unacceptable practices.If Management states, teams should do whatever it takes to close the deal even if it means compromising with ones principles and values I would have a problem working in that team. Success measured by the dollar metric has been a major reason why so many established companies have compromised on principles and values.I wish this CEO had added that to the list for a successful management team.After all only MBA students take a course in ethics, we engineers generally stick to working with laws of nature not human nature.

      1. PhilipSugar

        At Goldman its all about the money.You don’t see Matt say anything about the money.Its usually one or the other, if work is your life. (the majority of people just work a job)I’ve observed in life you see people work where its all about the money, or its all about the job.It should be no surprise that for those where it is all about the money, those are the ones that require the most pay. Think about iBankers and Lawyers. They go in it for the money looking to retire early.That has always seemed to be a miserable existence to me. I’d ask people at school and they’d say, I’m going to spend two years on Wall Street working like a dog miserable, then go two years to B school to recharge, and then I’ll work my ass and retire when I’m forty (which gets pushed out). Damn that seems to be a shitty way to spend your life, and holy crap if the money part doesn’t work out, wow, that must be crushing.That is why I worry when I see people that think, I’m going to put in a huge effort and do a start-up and make a boatload of money and retire. Its about the journey not the destination. If it blows up but you’ve had a great time, you’ve had a great time. If it blows up and you had a miserable time, now you’re even more miserable.If it happens it happens. True story: Jeff Weiner, CEO Linkedin and I were sitting on a couch in my fraternity house. He was looking at offers and asked me what I thought. Tons of pressure to go with the iBank offers, he asked why I didn’t (in my program the iBanks were all over us) I told him the above…he went to Warner Brothers.

        1. JLM

          Whores — even well dressed and well groomed whores putting on airs about sailboats, country clubs, art collections, faux charity impresarios, imagined good works and beach houses — are just whores.You don’t love a good whore for their art collection. They are all about base utility. They have to be used to generate revenue. Even well dressed ones.No amount of money can substitute for a soul. Most people have not spent 10 minutes in the last year thinking about their soul.There is a limited number of tacos you can eat at one sitting and almost all accumulations of money in excess of that amount are meaningless.The greatest wealth one can possess is the good opinion of men whose opinions matter; and, your Momma.No Airedale puppy ever inquired about your net worth before deciding to lick your face and wag its tail at you. And that is pure love.

          1. fredwilson

            damn that’s goodand true

          2. Carl Rahn Griffith

            Amen.

        2. fredwilson

          “you don’t see Matt say anything about the money”so trueand the best pitches we get from entrepreneurs don’t say anything about the money eitheri can’t think of an investment we have made where the founder mentioned exit strategy in the meetingbuild a great company and the money thing is the by product. it is never the product in a great company.

          1. JLM

            Now that is an insightful and educational comment. I would not have thought that to be the case. Thanks.

      2. PhilipSugar

        I thought about this some more as I drove.If all you care about is the money, you don’t want to have a great work environment for the employees.Sounds crazy, but here is my logic.1. If all you care about is the money you are going to attract a lot of people that share your belief, they’ll be exceptions but they’ll be few.2. You can make a lot of money two ways: building something (which is not guaranteed and requires sacrifice) or having a big pyramid scheme. Not an illegal one mind you but one where you have a pyramid and as you go up you take a share of the money from those below you. This has been going on for thousands of years, its why people love org charts, if I’m above you I take a cut from you.3. There is no incentive to make life good at the bottom. There is actually a dis-incentive. Pay them well or promise them a dream (that’s why I don’t like hiring people that ONLY dream about hitting the option lottery) but beat them like a rented mule. Their increase in output goes directly into your pocket. Sure you are going to burn some out, but you have to because pyramids get smaller as you go up. There is going to be fighting and the strong (in this case ruthless, self centered, political) will survive. You get a distillery of assholes becoming stronger as they rise.

    9. paramendra

      One dude I met recently who just raised money said building a team was harder.

      1. fredwilson

        way harder

    10. NS47

      Management is the production of acceptable results with-in known constraints and conditions whereas leadership is all about changing the order of things.A founder usually starts-of as a leader, see’s an opportunity to disrupt/monetize a market, inspires others to join-in his vision, struggles and finally makes it. So when does he stop being a leader ?..or should he ever stop ?@fred, when should your startup ceo act more like a manager than a leader ?

      1. JLM

        Management has three basic themes —Making a plan incorporating specific measurable objectives or goals.Allocating precious and limited resources in support of that plan.Measuring success v the plan and adjusting the plan to the revealed reality.You can write a book about each of those individual topics but every business failure I have seen has had a blind spot about one of those three things.Management is different than leadership. Beware the leadership cult which pays little homage to management talent. The big secret — you have to be both a great leader and a great manager.Managers have subordinates and subordinates have to be informed, motivated and incentivized.Leaders have followers and followers want to follow someone they perceive as having a better plan than their own plan and have to be inspired by the ethos of the leader himself. I want to be like Mike even if I am 5’2″ and 290 lbs. Mike makes me believe I can be just like him.No hill was ever taken from an entrenched enemy by management.No army was ever cared for solely by fierce leadership. You have to have clean underwear and dry socks. Great leaders are the last guys in the chow line.

        1. fredwilson

          i agree with JLM, you need both. you can get away without the manager skills early on, but over time you need both to be a great CEO

        2. NS47

          Agree, you need good management to complement great leadership. One without the other is neither synergistic nor sustainable.I also believe leadership is what DRIVES the change whereas collaboration (between them) POWERS the change. You need both to succeed in this day and age.

      2. fredwilson

        as the business grows, you need more manager skills, but the leader thing is critical at all times.

        1. NS47

          would it be fair to say, a great ceo is a visionary with good operational ability ?

          1. fredwilson

            yeah, send me some of those!

            1. NS47

              On my way…the address is 915 Broadway, right ? 🙂

            2. fredwilson

              yes

    11. FAKE GRIMLOCK

      GREAT LEADER HELP PEOPLE SUCCEED. BAD LEADER COMMAND THEM TO FAIL.

    12. Satish Mummareddy

      After a few iterations of building great teams, here is my current understanding of the requiremements to create an environment that good people like to work in:1) Challenging Work: It is just easier to wake up every day and come to work when you are working on an interesting problem. large companies hire people who have already done the job before. If you have already done the same type of job before, it is not all that challenging. At that point you are coming to work for other reasons like a larger pay check or getting a brand name on your resume etc. But at a startup you always have to hire someone “who wants to punch above their weight class” as Mark Suster likes to call it. I have the patience to coach people. So I look for fundamental knowledge, problem solving skills & motivated people (people who have something to prove are always more desirable) and help them reach higher than they would have in any other company. :)2) Fairness: Most people just want their manager to be fair to them in: a) compensation/evaluation (relative to the current team), b) quality of work (in a company there is always less desirable work that has to be done for the company to be successful, so you need to make sure that is spread around so that there aren’t people who are stuck doing the unsexy work while others do cool work), and c) cover for taking risks. d) And finally, they expect their manager to apologize to them when he/she screws up.3) Opinions being heard: People want their opinon to be heard even though that might not be the path the team chooses. They want a chance to sell the team on their vision and to have a discussion about it.4) Team of competent people: People want to work with other people who they can learn something from and who pull their own weight. If you build a team of great people, people show up with more energy every morning and recharge themselves by hanging out with other people in the team. If you have a bad apple, it drains the rest of the team’s energy. As a manager you need to make sure you correct your mistake when you make one in hiring as soon as possible.

      1. awaldstein

        Well said.I like to think that when you are directing not managing your team you’ve hired the right people.

      2. mike gilfillan

        Completely Agree. Everything you said was echoed by my team as the reason they liked working at a start-up.

      3. Scott Jacobs

        Regarding #3:Sure, their opinion gets heard… But it isn’t a democracy. When you make a decision, their job is to say “You got it boss”.

        1. Satish Mummareddy

          I agree that it isn’t a democracy but it isn’t a dictatorship either.Leadership is about creating a vision/plan that people will CHOOSE to follow. If people believe your vision they will follow you even when they disagree with SOME OF THE DETAILS of accomplishing the vision.You need to sell people on the direction you want to move. If you can successfully sell your vision to the team moves with full force. If you dictate they will drag along slowly until they lose motivation and quit at some point or you have to fire them.

          1. JLM

            The choices in business are not the extremes — democracy or dictatorship. They are somewhere in the middle — perhaps a consultative but enlightened autocratic framework.I take a formal annual Company Survey — anonymous — and pose a number of questions to everyone with the typical ones that you would expect but also a number of very tough ones.Don’t do this if you have more than a few employees and have a thin skin. You will not enjoy it.Are we on track?If you were President, what would you do?What do you think I need to know that I do not know?Who is our MVP and why?Who is a poseur and a fakir and naif and why? Remember this is anonymous.What were the most bone headed things we did in the last year?Is your compensation fair?Again, don’t do this unless you really want to get better as the President. I once closed down a company because of something someone said to me in a Company survey — “you are smarter than to keep this division open given the magnitude of the losses or maybe not.”It was exactly the advice I needed. I got rid of it the next day.

            1. Satish Mummareddy

              I agree.I would like to think that I built a culture of honesty in my team. So when I did ask for feedback on my performance, they did give it to me like it was. 🙂

            2. JLM

              I am sure you are a prince of a guy but there is a reason why democracies use a SECRET ballot. The anonymity of the survey may serve to bubble up something which might otherwise go unsaid.Why not get the full undiluted and unvarnished answers to the REAL questions?If you want to get better, you have to get the full dose of constructive criticism. But only if you REALLY want to get better.Otherwise just go through the motions.

            3. Satish Mummareddy

              I should have done it anonymously. 🙂 Didn’t think it thorough at thatpoint. My only gig as a manager has been at a small company (that spun outof a research lab) where there was no process for a 360 degree review. So Istarted to do it informally with my team for my own benefit. I’ll give anonymous feedback a try in my next turn at the wheel.

    13. Neil Braithwaite

      This post has been very informative.However, after many years in management, I have a good handle on what a management team does.But as a start-up founder, it’s assembling the right team that has me standing at a cross road.Without the necessary funding, I am finding myself limited to those willing only to consult, but not commit full-time and long term to the project.That, in and of itself, puts a severe limit not only on the talent I can attract, but the advancement of the project.So with my bootstraps getting pretty frayed and weak, how about a post sometime soon addressing this issue?

      1. fredwilson

        maybe some guest posts would be good

    14. Wills Hapworth

      I think Daniel Pink on TED (and in “Drive”) has a great outlook on creating an environment for success and motivating your teamhttp://www.youtube.com/watc…

    15. ShanaC

      Something I realized as I was reading the post:Really really amazing leaders will cause you to grow in other ways. it is an effect of growing through your work- some people never push it further to help people figure out how it personally affects their workers and can change them into better people.

    16. Jvc

      I found the clarity of purpose in “What a CEO Does” and similar focus in “What a Management Team Does”; however, the missing post that can confuse an organization is missing: “What a Board of Directors Does.”

      1. fredwilson

        i need to write thatthanks for the prompt

    17. heif

      i stole the “teams win” line from john doerr

      1. fredwilson

        and i stole it from youwho will steal it from me?

    18. Kevin Taylor

      One common failure is over-focus on # 3, at great expense to # 1 and # 2.

    19. fredwilson

      i will add that to my list. i am starting to realize that MBA Mondays, like this blog, has no logical ending other than my ending