- “Technology companies live and die by talent. That’s why when people talk about the talent wars…when you see the best people migrating from one company to the next, it means that the next wave has started.” “Really in technology, it’s about the people, getting the best people, retaining them, nurturing a creative environment and helping to find a way to innovate.” “I definitely think what drives technology companies is the people; because in a technology company it’s always about, what are you going to do next?” “It’s really wonderful to work in an environment with a lot of smart people.” “I realized in all the cases where I was happy with the decision I made, there were two common threads: Surround myself with the smartest people who challenge you to think about things in new ways, and do something you are not ready to do so you can learn the most.” Among the most common themes in my series of posts is exactly what Marisa Mayer identifies in these quotes. It is not possible to be successful in business without great people. Great people attract more great people in ways that are mutually reinforcing creating a positive feedback loop. Whether great people are arriving or departing is something a CEO must make a top priority. Marissa Mayer, through “talent acquisitions” and otherwise, has clearly been very focused on improving the talent base at Yahoo. Marissa Mayer understands that in a technology business, when a fire alarm goes off, the most important assets of the business leave the building. Lee Iacocca once astutely said: “I hire people brighter than me and I get out of their way.” Jack Welch has similarly said: “The essence of competitiveness is liberated when we make people believe that what they think and do is important – and then get out of their way while they do it.”
- “Every organization has a drawback. There are some companies that go back and forth between a functional and divisional organization. In the end, it doesn’t matter. It’s important to know what those drawbacks are and work around them. But you shouldn’t spend too much time reorganizing.” Anyone who has worked at a big company has experienced reorganizations. The classic move in any reorganization is between a divisional organization and a functional organization. Each organizational structure has certain benefits and drawbacks. For example, in a divisional organization, each group within the company is responsible for its own each product(s) as well as its own profit-and-loss results. GE is often cited as a classic example of a divisional organization. Supporters of the divisional organization argue the structure creates clearer accountability for results and less dependencies on other groups. If a functional structure is adopted, each group is organized by function(s). Supporters of a functional organization argue that the system prevents a “warring tribes” culture in which groups fail to cooperate. They also argue that when products must be tightly integrated, functional structure works more effectively. Motorola of 20 years ago is often cited as a company where a “warring tribes” culture was actually encouraged by management. Apple is often cited as an example of a company with a functional organization. Marissa Mayer isn’t saying don’t ever reorganize. What she is saying is that: (1) a CEO and their board should carefully chose a structure and not be jumping back and forth between functional and divisional choices and (2) once the structure is chosen, the CEO’s task is to exploit the strengths of the structure chosen and “work around” the weaknesses.
- “I don’t know a lot about genetics, but I understand some of it and I think that what you really want are the genes that are positive to hyper-express themselves in culture. Take the elements of fun, take the elements that are really motivating and inspiring people, and amplify them and ramp them up. And take some of the negative genes that are getting in the way and shut them off, and figure out what’s causing those and shut them off… When you’re coming into a company, and you know you have to do a transformation, what you really want to do is look at the company and say, ‘Okay, here are the parts that the company does well. How do we get those genes to hyper-express? The genes that are getting in the way, how do you turn those off?’” The importance of culture is another theme in this series of blog posts. Mayer’s analogy to genetics is a great one when thinking about culture. Culture is something that when done right is almost automatic, as is the expression of a gene. A culture that has gone off the tracks is a genuinely hard problem to solve. Bill Gates said once that he admired what Lee Iacocca did at Chrysler since turning around a culture is such a very hard thing to do. For the same reason Warren Buffett once said “turnarounds seldom turn” a CEO who wants to create cultural change must put a lot of effort into the process and deserves applause if they do it successfully.
- “The interesting thing about being CEO that’s really striking is that you have very few decisions that you need to make, and you need to make them absolutely perfectly. …you can delegate a lot of the decisions, but there are a few decisions, and sometimes it’s not obvious, that you need to really watch, and that can really influence the outcome. [As a CEO you must watch] for those decisions every day wondering to yourself, ‘Is this one of them or is this one where it doesn’t really matter what the decision ends up being?’” “Eric Schmitt would always say this very humbling thing that’s really true, which is that good executives confuse themselves when they convince themselves that they actually do things. He would say, look, it’s your job as leadership to be defense, not offense. The team decides we’re running in this direction and it’s your job to clear the path, get things out of the way, get the obstacles out of the way, make it fast to make decisions, and let them run as far and fast as you possibly can.” Marissa Mayer is making two important points here. The first relates to the importance of a CEO setting a direction by making a small number of pivotal decisions. The second relates to making sure that people have the freedom and resources necessary to get things done. Someone I really admire who has been a senior executive for decades puts it this way: “I think far too many people think ‘management decisions’ or ‘leadership = decisions’” – I agree. If the CEO is constantly dropping down into the organization and making decisions for people, processes inevitably bog down, the CEO inevitably makes many poor decisions since he or she is not close enough to the situation and the teams involved become dispirited and less confident since they are being second-guessed.
- “Product management really is the fusion between technology, what engineers do – and the business side.” Striking the right balance between “the business side” and “what engineers do” is a core function of the CEO. The focus of my own career has been on what Marissa Mayer calls “the business side.” But if everyone limits their scope to just one side, the business is going to have a huge problem. I’m a fan of this Mike Maples, Jr definition of a business model: “The way that a business converts innovation into economic value.” To make this happen you need strong talents on both the business and technology sides, but at least a few key people need to understand how to link the two sides. Call these people spanners or whatever, they perform a necessary and even critical function. As an example of Marissa Mayer understanding this need and taking action to create a class of people who can span the two sides, she was the founder of Google’s Associate Product Manager Program. Wired magazine wrote once about this innovative program as follows: “Google would hire computer science majors who just graduated or had been in the workplace fewer than 18 months. The ideal applicants must have technical talent, but not be total programming geeks — APMs had to have social finesse and business sense. Essentially they would be in-house entrepreneurs. They would undergo a multi-interview hiring process that made the Harvard admissions regimen look like community college. The chosen ones were thrown into deep water, heading real, important product teams ‘We give them way too much responsibility,’ Mayer once told me, ‘to see if they can handle it.’ ” This sort of cross disciplinary training is invaluable for both businesses and the individuals involved since the skills learned can help a company avoid “man with a hammer syndrome.” The best solutions always involve tools and approaches from multiple disciplines.
- “The beauty of experimenting … is that you never get too far from what the market wants. The market pulls you back.” “If you launch things and iterate really quickly people forget about those mistakes and they have a lot of respect for how quickly you build the product up and make it better.” “Innovation, not instant perfection. ..when we launch something people immediately say, “Well, it’s so rough it’s not very good”. …But the key is iteration. When you launch something, can you learn enough about the mistakes that you made and learn enough from your users that you ultimately iterate really quickly? I call this my Max and Madonna theory. We look at, like, Apple, Madonna. They were cool in 1983, they’re still cool today, 2006, 23 years later. And that’s really amazing to look at, and people think of them as very innovative and very inventive. How do they do it? And the answer is, they don’t do it being perfect every single time. You know, there’s lots of mess-ups along the way. Apple had the Newton, Madonna had The Sex Book. There’s been all kinds of controversies and mistakes made. But the answer is, when they make a mistake, you re-invent yourself. And I think that’s ultimately the charge that we have, is to launch these innovations and then make them better.” Marissa Mayer has a “New Product Development” class on Udemy. The syllabus notes: “Marissa Mayer, Google’s Vice President of Search Products & User Experience, by which the company bases its decisions. Google’s approach is the take the guesswork out of product design, from functionality to shades of color, and they believe in the science of well-monitored and frequent A/B testing.” Marissa Mayer is talking in this set of quotes about the iteration process that that I wrote about in my post on Eric Ries and Lean Startup. In that post I explained that there are tradeoffs involved in a lean process, and the right choice depends on the nature of the business, the opportunity and how much cash is available. Applying the scientific method to business can reap big rewards. As an aside, readers of this blog know that I recently wrote a post on Bill Murray who starred in the greatest movie ever created on A/B testing: Groundhog Day.
- “When you can make a product simpler, more people will use it.” “When you see that notion in a product where you’re just like ‘wow this helps me do something I didn’t think I could do or helps me do something I didn’t think I could this easily; that’s the mark of a great consumer product.” “I think a great product is something where you see an acute user need and you solve it in a way that is frictionless and beautiful. You really hope there’s an element of personality and delight there. But I do think it’s identifying the need and then finding an easy way to solve it. Sometimes you can solve it straight and head on….sometimes you solve it in an interesting way….sometimes it’s about innovation, sometimes it’s about coming at the product very much head on, but it’s really about having an eye for design and eye for the user need. How to not get in the users way. How can you just help someone immediately get something done especially if they’re doing something every day, multiple times per day, you really want it to be something that is easy and fast and simple with nothing in the way.” There is no doubt that what Marissa Mayer describes is hard. And that some people are better at this process than others. And that a very small number of people are savants in creating great products. And that some people create great products “once in a row.” I would also add that there are way more strikeouts than tape measure home runs in this process. And that the results are very often winner take all. It is tricky stuff. Most things fail. The products that do succeed, regardless of whether they were created by skill or luck, or a measure of both, move society forward.
- “You can’t have everything you want, but you can have the things that really matter to you.” “Innovation is born from the interaction between constraint and vision.” “People think of creativity as this sort of unbridled thing, but engineers thrive on constraints. They love to think their way out of that little box: ‘We know you said it was impossible, but we’re going to do this, this, and that to get us there.” “Constraints can actually speed development. For instance, we often can get a sense of just how good a new concept is if we only prototype for a single day or week. Or we’ll keep team size to three people or fewer. By limiting how long we work on something or how many people work on it, we limit our investment. In the case of the Toolbar beta, several key features (custom buttons, shared bookmarks) were tried out in under a week. In fact, during the brainstorming phase, we came up with about five times as many “key features.” Most were discarded after a week of prototyping. Since only 1 in every 5 to 10 ideas works out, the strategy of limiting the time we have to prove that an idea works allows us to try out more ideas, increasing our odds of success.” Many of my own formative years were spent in the wireless business. One things I learned in that business is that almost everything has tradeoffs, and that there are constraints everywhere. As an example, “Shannon’s law, which basically defines how much data can be sent over wireless links, considering the amount of spectrum, number of antennas, amount of interference, etc. To increase capacity could increase the amount of spectrum, or you could also increase the number of antennas, as done with MIMO (multiple input multiple output) or utilize small cells.” In my way of thinking, MIMO is a classic example of engineers facing the sort of constraint Marissa Mayer talks about (e.g., laws of physics are laws and not guidelines) and nevertheless innovating. As Sir Ernest Rutherford, the famous New Zealand physicist once said: “We haven’t got the money, so we’ve got to think!”
- “We believe that if we focus on the users, the money will come. In a truly virtual business, if you’re successful, you’ll be working at something that’s so necessary people will pay for it in subscription form. Or you’ll have so many users that advertisers will pay to sponsor the site.” “If you’re really successful and you get used a lot, there’s usually a very easy and obvious way to figure out how to monetize it.” This approach to business model creation is founded in optionality. I have written about optionality many times in this blog series. You want to find situation where an investment has a small potential upside and a massive potential upside. The optionality-based thesis in this case is: get unique users and data about those users, and the odds are excellent that a way can later be found to a profitable business model (or a sale of the company which needs to play defense). This process can work in a spectacular fashion but can also fail both in a spectacular way and in quiet obscurity. This business model development based on optionality process works best if the business happens to have a moat. Extrapolating the Google experience to startups is not fully applicable or realistic, since Google owns the AdWords platform and startups can’t easily use new services as loss-leaders to feeder into something like that which has a moat.
- “There’s a myriad of different places that ideas come from, and what you really want to do is set up a system where people can feel like they can contribute to those ideas and that the best ideas rise to the top in sort of a Darwinistic way by proof of concept, a powerful prototype, by demonstrating that’s it’s going to fill a really important user need, and so on and so forth.” Marissa Mayer has worked hard to stamp out a “not invented here” mentality when it comes to ideas many times on her career. She believes systems to float new ideas and filters that enable truly worthy ideas to be acted upon are essential. This is particularly hard to do once a company reaches significant scale. Her Udemy class includes this description of her views on ideas: “Both the enterprise and the end users are better served by a culture that revolves around rewarding great ideas, rather than the self-promotion of getting others to acknowledge the contributions of an individual. Marissa Mayer… believes that if you fill a room with smart people and give them access to information, brilliant ideas will flourish, and the need for a strict management hierarchy dissolves. A platform for the free-form sharing of ideas promotes an open culture and a flat organization.”
- “I think threats are always opportunities…and I think the opportunity for us is to focus on the users and innovate.” There are two important ideas at work here. First, most positive most things in life have a negative flip side. I have a friend who likes to say about these situations arising in business: “You can’t eat ice cream all the time without getting fat.” I will avoid the ever-present and often debunked reference to Chinese characters having double meanings. You may have encountered a version of this saying in an episode of the Simpsons: Lisa: “Look on the bright side, Dad. Did you know that the Chinese use the same word for ‘crisis’ as they do for ‘opportunity’? Homer: Yes! Cris-atunity.” But the essence of the story is true. In engineering and life, there are often inevitable tradeoffs. And one of those tradeoffs is that what is most challenging is usually a huge opportunity. The other important point that Marissa Mayer is making here is that she is focused on innovation which benefits users. There are many types of innovations but not all of them benefit users. If they are not reminded of this engineers can often end up working on innovations that to do not translate into customer value. These innovations that do not benefit users may be quite interesting problems, but they do not drive the business forward.
- “We have this great internal list [at Google] where people post new ideas and everyone can go on and see them. It’s like a voting pool where you can say how good or bad you think an idea is. Those comments lead to new ideas.” Mayer discusses her approach to this opportunity in some detail in the Udemy Class linked to above. At Yahoo, she has launched an effort known as “PB&J” which is designed to rid Yahoo of dysfunctional “processes and bureaucracy and jams.” Yahoo has created online tools to collect employee complaints and voting process which that stack rank PB&J problems so they can be addressed in an order which will produce the greatest impact. One consistent theme of these twelve quotations is that great ideas do not only come from the top of company management. As was specifically noted above, the job of a CEO is in no small part about clearing the way so other people in the business can get things done.