Companies are Like People
They need rhythms like we need our heartbeat
For many of us, start-ups are exciting environments full of adventure, constant change, and uncertainty. That being said, even adrenaline junkies also need certainty at times and the same is true in start-ups. In our experience, the primary source of certainty in companies is well-organized, consistent rhythms that define a heartbeat and architecture of the company. Here, we share the rhythms that we successfully leverage in our start-ups for planning, meetings, retreats and reviews.
Every year, we create a plan for the next year (including objectives for the next three years). This planning process evolves as the company matures, but to start, a single day planning session is typically sufficient. A week before the planning session, we send out the following questions to participants:
What should the company’s top 3 to 5 outcomes be for the next 3 years?
What should the company’s top 3 to 5 outcomes be for the next year?
What revenue targets should we achieve in the next 3 years and year?
What product/service milestones should we reach in the next 3 years and year?
What marketing outcomes should we achieve in the next 3 years and year?
We ask each participant to submit their answers to the CEO (or whoever is leading the planning session) and for the CEO to organize these answers (including his or her own) and share with the group at least a day before the planning session. Also note that hiring and financing are not top outcomes to start this process, but rather derived outcomes based on what we want to accomplish in growing revenue and building and marketing our product.
With this preparation in place, it is now possible to set a clear agenda to establish outcomes based on the points of agreement, and to flesh out and seek alignment on the points of disagreement. We strive to make this planning day fun, high energy, interactive and engaging. The more passionately and whole-heartedly we embody our plans and outcomes, the more likely we are to achieve them.
We begin by seeking alignment on the top 3 to 5 outcomes for 3 years. This will typically include a revenue number (and number of customers), an overarching product or service outcome, a marketing outcome, a financing outcome, and a hiring outcome. Then we identify our 1 year outcome for each area. Finally, we identify our 1 quarter and 1 month outcomes for each area. Thus, we have a short-term and long-term roadmap that guides the company towards its most important achievements.
It is also important to note that in a well-organized team, each outcome will be the responsibility of one person (and their team). A thoughtful CEO defines clear areas of ownership and accountability for each member of the team and facilitates identification of distinct outcomes that each member of the team can be measured against. At the same time, a healthy team collaborates to support each other in accomplishing each of the outcomes regardless of who is directly responsible.
With all that in a roughly 2-page document, we distribute it to everyone in the organization who was not in the planning meeting. We then ask each team (in the week to follow) to break down the more specific outcomes that must happen over the next month, year, and three years to achieve the overall company outcomes. If any major discrepancies arise, those are surfaced quickly to reconcile in a shorter follow-up leadership session.
We have seen this simple process for annual planning work for organizations from a founding team up to massive high-growth companies with thousands of employees. The only thing that varies is the amount of time required (from a week to a month) to coordinate across teams.
We redo this process once per quarter (using the same 3 year and 1 year outcomes with small modifications based on learnings in the most recent quarter). Due to the clarity of long-term objectives from the annual planning, this quarterly process is faster and for a small organization often takes only a few days of preparation time for participants, half-a-day for the actual planning day, and a few days of debrief for the rest of the team to convert the new quarterly outcomes into outcomes for each team or department.
For monthly outcomes, we simply use our existing weekly meeting rhythms described below to report on and create our new monthly outcomes. Again, this is a relatively rapid process given that we already have clear quarterly outcomes and it is simply a matter of tracing backwards to what must we accomplish in the next month in order to achieve our quarterly outcomes.
At the start of a company with just the founders and perhaps a few early employees, we have two simple meetings with everyone: all hands and 7x7. For each meeting, one person is the owner responsible for keeping things on schedule and ensuring follow-ups are recorded. A second person is the energizer responsible for coming up with creative ways to maintain high levels of energy (jumping, dancing, stretching, singing, etc…) throughout the meeting at scheduled energizing activity times. These roles rotate weekly and are assigned as the last step in the meeting to give the owner and energizer time to prepare for the next week’s meeting.
First is an all hands focused in the business (tactics, day-to-day, blocking and tackling) lasting no more than two hours, ideally 90 minutes. Each person reminds the team of the annual outcome he or she is responsible for, the monthly outcome in service of that longer term outcome, and the weekly outcome committed to the week before. That person reports on the progress and if it is a win, we celebrate, and if it is a miss, we reflect on learnings for the next time. Then we set the next week’s outcome. This is collaborative and typically takes 5-10 minutes per person. After all outcomes are reported on and set for the next week, there is a window for 15–30 minutes of discussion on hot topics needing to be addressed imminently.
As the company grows, this all hands meeting splits up into multiple separate weekly meetings: a leadership meeting for the leaders of each team in the company, an all hands with all members of the company (and leaders reporting on the outcomes only), and individual team (and later department) meetings. Each meeting has roughly the same structure as above with a different scope.
We also commit to having only one day of the week (Monday) with regularly scheduled meetings so that the rest of the week can be uninterrupted by recurring meetings. This means that particularly for leaders, Mondays are very busy days full of meetings, but for individual contributors they can count on the rest of the week to get things done.
Second is a 7x7 meeting focused on the business (constant and never ending improvement in every crucial area of the business). Please note, this meeting is inspired by attending Tony Robbins Business Mastery and using the strategies he uses to run his 50+ companies. In short, there are seven areas of our businesses that we must constantly improve in: our business map, innovation, marketing, sales, financial and legal analysis, optimization, and creating raving fan customers. Over the course of a year, we run seven cycles rotating through each of the areas (one per week).
The 7x7 meeting is not the time to focus on the day-to-day happenings in the business, but rather to step back and think strategically about how the the business can for example do a better job marketing to customers in value-added ways that capture their hearts and minds with a compelling story. This is the time to be reflective, brainstorm and explore both incremental steps and radical new ways to push the business forward. Needless to say, a lot more could be written about this given that Tony spends 5 days and nights on it.
Every year we hold at least one blow-out retreat (appropriate for the stage and financial position of the company) where the whole team gathers in one awesome location for at least three days for team bonding, fun activities, time outdoors and an opportunity to connect outside of work. Favorites have been destinations that feature skiing, hiking and beaches, but of course each company has a different culture. During this retreat we also often include leadership development opportunities with expert facilitators and coaches. This type of retreat is realistically needed every six months for remote teams.
In addition to annual retreats, we hold quarterly off-sites that are single day events focused on personal growth and not in the office. This can be a public-speaking training, a meditation facilitator, a bootcamp or a combination of whatever activities most appropriate for the team’s needs at that time. If at all humanly possible, we ensure that all remote team members attend.
At least once a month we take the team out for a fun dinner as a group.
We do two separate types of reviews every year: performance reviews and compensation reviews.
Performance reviews are facilitated by a tool such as Simple Improvements or Lattice. These typically have four components: self-review, anonymous peer-to-peer reviews, anonymous feedback from employees to their manager, and a review of each employee by their manager. All the questions are customized to our culture, values and approach to management. Nothing should be a surprise in these reviews as weekly one on ones and two on ones are happening (to be described in a different post) in which that feedback should be already being communicated regularly between all teammates.
Performance reviews are not the time to deliver brand new major criticisms based on months of harbored resentment, that should be done face to face as issues arise throughout the process of collaborating. Instead, this is an opportunity to summarize the discussions that have already been happening between employees and managers or between teammates about how they appreciate each other and ways they see room for improvements.
Our implementation schedule for reviews looks something like the following. In the first quarter of the year, employees complete peer-to-peer reviews and anonymous feedback to managers. In the second quarter of the year, employees complete self-reviews and managers complete reviews of employees. Then q3 and q4 repeat the cycle.
We also believe that manager reviews of employees should be discussed by a group of managers before being delivered. This minimizes manager bias and provides an opportunity for the manager to get feedback from other managers who likely interact with the employee as well. Thus we hold bi-annual meetings of the managers to check that we are all rating in a consistent fashion and holding common standards across the company.
Compensation reviews coincide for us with the bi-annual self-reviews and manager reviews of employees. We use compensation scales to maintain an objective and market-based approach to rewarding the team for their performance. In another post, we will describe this system in detail, but the short version is that we always strive to pay better than market (when accounting for salary, equity and bonus) in order to attract and retain the best talent. By reviewing every 6 months rather than annually, we also ensure we continue to promote individuals who are making exemplary contributions.
In the same meeting of managers focused on performance reviews, managers also present compensation adjustment and promotion recommendations and receive feedback from other managers. Again, this ensures an unbiased and objective process across the company based on our uniform compensation systems. At the same time, it is important to find ways to reward outliers appropriately and our systems for compensation recognize this.
This architecture for organizing the various annual, quarterly, monthly and weekly heartbeats of our companies has served us well across planning, meetings, retreats and reviews. We hope it helps you as you build your company.
Prime Movers Lab invests in breakthrough scientific startups founded by Prime Movers, the inventors who transform billions of lives. We invest $1mm-$3mm in seed-stage companies reinventing energy, transportation, infrastructure, manufacturing, human augmentation and computing.