Lessons learnt from “The Hard Thing About Hard Things” by Ben Horowitz
These are the ideas that resonated the most with me. Most of it came straight from the book, but I reordered and added some pieces and bits so it was more clearly without the context provided by the book.
On managing yourself
Managing your own psychology
Don’t let the crowd influence your thinking. Social pressure can make a 70%-30% decision look like a 51%-49%. Get data and inputs from who you trust, incorporate them into your mental map, and them decide based on what you think is right.
The right thing is most of the times the hardest thing. In programming we all know that creating a technical debt (borrow time by writing quick and dirty code) is not worthy as you will have to eventually pay it back, with interest. But be aware that there are also management debts that you may be creating without noticing:
- Example 1. Putting two in the box — two people sharing decision making and accountability.
- Example 2. Overcompensating a key employee because she gets another job offer.
- Example 3. Not creating a solid performance management or employee feedback process.
How to deal with “The Struggle”?
- Share it with others (share all you can at least)
- There is always a move (because the game is so complex, like the three-dimensional chess)
- Play long enough and you might get lucky
- Don’t take it personally
On managing you team
Train your people
Train them to perform their functions better (functional training) or to be better leaders. Also, train them on areas not-so-close to their functions such as negotiating, interviewing, finance, etc — they will be probably going to use it in your company anyway. These are the benefits of training your people:
- Productivity. Training is one of the highest-leverage activities a manager can perform.
- Performance management. If you don’t train your people, you establish no basis for performance management. As a result, it will be sloppy and inconsistent.
- Product Quality. You set the standard while teaching.
- Employee Retention. Reasons why people quit (apart from $):
- hate for managers: they were appalled by the lack of guidance, career development and feedback
- they weren’t learning anything
Be transparent about your company’s problems
- It builds trust
- The more brains working on the hard problems, the better.
Build a culture that rewards people for getting problems into the open where they can be solved.
My take on this is that managers, C-level executives and CEO’s must all come from a place of abundance and really accept that mistakes are part of the process. Only saying out loud and printing posters on the wall won’t create that kind of culture, as employees will eventually connect the dots and realize what happened to “that guy that brought up the problem 3 months ago”. You should be the example.
- Be authentic
- Come from the right place ( you want them to succeed )
- Don’t get personal
- Don’t clown people in front of their peers
- Feedback is not one-size-fits-all (your tone should match the employee’s personality)
- Be direct, but not mean
- Feedback is dialogue, not a monologue
- Practice. Do it every time. As CEO, you should have an opinion on absolutely everything (forecasts, plans, presentations, comments)
Free-form meetings for all the pressing issues, brilliant ideas, and chronic frustrations that do not fit neatly into status reports, email, and other less personal and intimate mechanisms. Ask questions, help them express themselves. Ideally, this should be done once a month with every employee.
The accountability VS Creativity Paradox
In other words, when should you blame who has failed after taking a high risk opportunity?
The difference between being mediocre and magical is often the difference between letting people take creative risk and holding them too tightly accountable. When in doubt, consider this:
How senior is the person?
How hard/uncertain was the original task/idea?
Was the original risk the right one to take?
The Right Way to Lay People Off
- Once the decision is made, don’t delay! (So the word doesn’t spread with the wrong message)
- Be clear in your own mind about why you are laying people off.
- Train your managers. They should do it themselves. They should explain the motive of the lay off, be clear the employee is impacted and that the decision is non-negotiable. Also, they should be fully prepared with all details about the benefits and support the company plans provide.
- Address the entire company (the message is for the people who are staying)
- Be visible, be present.
On leadership and the various types of CEO you can be
“A good leader is defined by the quantity, quality, and diversity of the people who want to follow her.”
So, what attracts people to follow a leader?
The ability to articulate the vision. Role model: Steve Jobs
The right kind of ambition. Role model: Bill Campbell
The ability to achieve the vision. Role model: Andy Grove
These are some Andy Grove quotes that show us his knowledge about the changes companies have to go through in order to achieve success:
“A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”
“There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment — and you start to decline.”
“Stressing output is the key to improving productivity, while looking to increase activity can result in just the opposite.”
CEO types: Decision Makers VS Organizers
- Ideally, be both
- In most companies, the CEO is a decision maker surrounded by organizers
- A c-level executive will perform better if he can play the organizer at the executives team’s meetings and as a decision maker for their functions.
CEO types: Peacetime CEO VS Wartime CEO
Be aware that management books tend to be written by management consultants who study successful companies during their times of peace.
Andy Groove books teach you how to manage in wartime.
On hiring, promotions and job titles
For helping you with those tasks, you will probably want to get it right on the guy running you Human Resources. Here is what to look for:
- World-class process design skills
- A true diplomat. They will work directly with the managers to get quality up and only escalate to the CEO when necessary
- Industry knowledge. Be up to date with compensation, benefits, etc
- Intellectual heft to be the CEO’s trusted adviser (in holding the managers to a high quality standard)
- Understanding of the things unspoken, which comes from having a lot of empathy with those around.
Together, you will eventually have go through the following topics:
Hire senior people or promote internally?
Hire senior people when the job position benefits from a lot experience and outside knowledge. Sales personal is a good example where it is usually worth getting help from the outside. Hire for strength rather than lack of weakness.
Promote internally when inside knowledge will make the execution of the job easier and more fluid. Tech teams will benefit from leaders who knows the code base well and the strengths of each person.
Promotions done right
- For each level/title, give a extremely crisp definition not only of its responsibilities, but also the skill required to perform the duties. Example: “should be a superstar recruiter — as good as Jenny Rogers”
- Promotions should be leveled across groups. Example: hold a regular promotions council and tell everyone how this council will make decisions.
Highest titles possible (Chief Snacks Officer) or lower titles (manager instead of Senior VP)?
It depends on how much your company relies on titles to attracting talents. Titles not only increase status but also salaries in the employees next ventures. If you are Facebook and can attract many talented people to work as managers, you will probably have less problems with handling people’s egos.
Measuring Executives Performance
Your system to measuring executives performance should include:
- Results against objectives
- Management (building a strong and loyal team)
- Working with peers
Measuring metrics and how it will affect the system
To get things right, you must recognize that anything you measure automatically creates a set of employee behaviors. Once you determine the result you want, you need to test the description of the result against the employee behaviors that the description will likely create. Otherwise, the side-effect behaviors may be worse than the situation you were trying to fix.
Every time you change something in any system, you are in fact taking it off balance. As it goes back to equilibrium, watch if the new overall state of the system is better or worse than before.
On how to minimize politics in your company
“It’s often the least political CEO’s who run the most ferociously political organizations.”
Minimizing politics often feels totally unnatural. It’s counter to excellent management practices such as being open-minded and encouraging employee development.
- Hire people with the right kind of ambition (“we”/“team” prism type of people) — ambition for the company’s success with the executives own success only coming as a by-product of the company’s victory. (while interviewing, look for people who describe their past experiences through these prisms)
- Build strict processes for potentially political issues like:
- Performance evaluation and compensation — well-structured, regular performance and compensation reviews
- Organizational design and territory — Don’t let rumors leak, don’t say nothing until you’ve made a decision. Once decided, execute the reorganization immediately: don’t leave time for leaks and lobbying.
- Promotions — have a formal, visible, defensible promotion process
As CEO, you must consider the systemic incentives that result from your words and actions. While it may feel good in the moment to be open, responsive, and action oriented, be careful not to encourage all the wrong things.
On scaling a company
“If you want to do something that matters, then you are going to have to learn the black art of scaling a human organization.”
Problems that emerge when scaling:
- Common knowledge
- Decision making
Accept that you will lose ground (bureaucracy), but you will prevent your company from descending into chaos.
How to scale:
- Organizational Design
“Organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts.”
The best way to make people communicate is to make them report to the same manager.
How to design the organization:
- Figure out what needs to be communicated. List the most important knowledge and who needs to have it
- Figure out what needs to be decided. Maximize number of decisions under a given manager
- Prioritize the most important communication and decision paths
- Decide who’s going to run each group. Optimize the organization for the people doing the work, not for the managers
- Identify the paths that you did not optimize. Don’t ignore them entirely, build a plan for mitigating them
How to design the processes:
“A process is a formal, well-structured communication vehicle.”
- What is it output?
- How will you measure each step?
- Engineer accountability into the system. Increase the visibility of the process owner performance.
Be mindful of your company’s true growth rate as you add architectural components.
For the best piece on how to create processes, read the first chapter from “High Output Management” by Andy Grove.
The scale anticipation fallacy
“There is only a great executive for a specific company at a specific point in time”
Predicting whether an executive can scale corrupts your ability to manage, is unfair, and doesn’t work.
Random quotes and ideas
- Constantly ask yourself: What am I not doing?
- Take care of the people, the product, and the profits — in that order.
- When design your culture, be provocative enough to change what people do every day (use shock values) . Example: Desks made out of doors in Amazon stressing their commitment in only spending money on what brings value to the customer.
This book is great and it is full of ideas that can be implemented in your own company. In the first three chapters Ben tells his whole breathtaking history from founding Loudcloud until when he sold Opsware to Hewlett-Packard. I hope this book summary serves you well. If you still wish to read the full book, you can get it from amazon here.