Developing From Manager Into Executive - Step #2
This post is the second in a three-part series where I dig into the most critical personal development areas for Managers aiming to move up into a VP role. Step #2 - Expanding your judgement.
In the first post of this series, I shared the important first step of making your team "automatic" so you have time to branch out and have a bigger impact across the company. By doing this, you earn the right to learn more about the business outside of your team, thus enabling you to focus on the second step in the process of developing from manager to executive— expanding your judgment.
As a leader, decision-making is a big part of your job, as is communicating and leading the company through its execution. To do this, you will need to develop confidence in your judgment and expand your ability to make thoughtful decisions that impact large swaths of the organization.
For new executives, this is a significant change. As an individual contributor, you decided how to spend your time, complete your job, and do great work. As a manager, you led a team and helped them maximize results by imparting knowledge you picked up from being in their shoes.
As you move into a VP position, you will need to make different decisions, such as allocating resources, developing strategy, and working effectively with neighboring teams. It requires a new approach to making decisions that can scale to support your new level of responsibility.
Fundamentally, you shift from making decisions based on your expertise and experience to making decisions based on the expertise, experience, and insight you gain from others (internally and externally).
Three fundamental skills will enable you to make this shift and expand your judgment.
Learning how to listen
Understanding the levers of the business
Developing your decision-making muscle
Learning how to listen
As a manager, you have a limited view of the full environment that impacts the company. As you move into an executive role, it becomes your responsibility to gain a larger perspective and expand your line of sight into what is happening across the company and externally (with customers and the market).
Once again, we find ourselves in the place of "what got you here won't get you there." Your expertise and ability to lean on your personal experience to make manager-level decisions won't enable you to be an effective visionary for the entire company. You must develop a new way of taking in information to incorporate others' expertise and experience.
Where to begin? The first step is developing a process and methodology for gaining insight from others. That means taking a proactive approach to people. Asking simple questions in impromptu 1:1s, such as — "What's going well? What's not going well?" "What is the one thing you would change to improve your team's success" "What do you think we should be doing more of?" "If you were in my shoes, what would you be focused on?"
Great executives are masters at quickly gathering information and turning it into insight. They approach conversations as listening first and speaking second. They develop a smart set of questions that enable them to quickly (in a 20-minute 1:1) gain perspective into that co-worker's world and their view. This is something you will need to develop to maximize your time and acquire the information required to make the best decisions for the larger organization.
For some executives, this approach does not come naturally. Some immature executives believe it is their job to be the smartest person in the room. They often tend to over-reference their previous experience and accomplishments to guide a current situation. This is a mistake.
As an executive, it is not your responsibility to have all the answers but instead discover the solutions. Your ego is your enemy, and as an executive, you need to set it aside. You always have your expertise and experience to leverage as a part of your judgment. But to make the right decisions for the organization, you need more than what lies between your ears.
And so, step one to expanding your judgment is learning how to listen. Learning how to quickly gain insight and switch your mindset from having all the answers as a manager— to having very few answers as an executive but having the confidence to take in others' insight, experience, and expertise.
Ultimately, it is the executive's job to make the right decision, communicate it with proper context (which only comes from a broad perspective), and push the organization forward with confidence.
Understanding the levers of the business
The next building block to expanding your judgment is understanding other organizations within the company beyond your core functional area. What makes them tick? You will need to learn the key levers and principles that drive success in other functions. And as you begin to layer in other groups' metrics and understand trade-offs across the organization, the complexity grows.
Successfully operating a company requires an understanding of the necessary actions to achieve its goals. One must understand the business levers that drive impact and results and effectively prioritize these actions and allocate resources accordingly. One must also understand which metrics move together and which have an inverse relationship. One must be able to predict the impact of a decision, both positive and negative, and the second-order effects. Put simply, companies and markets are complex environments. Executives can not make decisions in a vacuum. They must understand the physics that surrounds the company and the market.
To scale yourself into an executive role, as Keith Rabois puts it, you must "be able to hold the business equation in your head" when making decisions. He elaborates:
"Every business, when it works, is like an equation – X times Y times Z with some weighting. Understanding that equation in your brain, and being able to manipulate the variables, is the key to being strategic."
To start, begin by developing relationships across the organization so that you can enhance your knowledge of other departments and build an understanding of the metrics and principles that exist across the company. This step is a vital part of developing your judgment and empowering you to make decisions on behalf of the entire organization.
Once you understand what metrics matter within individual functional groups and how those roll up into company-wide metrics, you can begin to take a 10,000-foot view of the company and weigh trade-offs in your mind.
Let's look at an example:
Let's say you are a Manager of Customer Success managing a 12 person CS team, and your CRO mentions that the company is looking into ramping its ad spend on Adwords to drive more leads and accelerate new customer acquisition. Let's also say that the CS team's net revenue retention has decreased recently due to the group being under-staffed. Your reaction as a Manager may be that the increase in spending is the wrong move as it will lead to a corresponding increase in churn and therefore should not proceed.
However, an executive (the CRO) will have done their homework and understand how all the metrics will move together. In this example, they realize that churn will increase— however, an increase in new customer acquisition will balance it. At the same time, CAC (customer acquisition cost) forecasts to decrease as the Adwords channel has shown to have some efficiencies at a larger scale. Finally, the CRO may have a hunch that more Enterprise customers with a higher ACV (average contract value) are coming from Adwords. In the long term, there will be benefits to ramping the Sales' teams ability to work larger Accounts.
This example illuminates the second step to expanding your judgment. By understanding each department's key metrics and the company’s levers, the CRO can run the equation in their head and make the right calls for the company. At the same time, they can prepare the CS team for an expected increase in churn, thus minimizing organizational flailing if it comes to fruition.
One final thought on understanding metrics— an experienced executive understands the difference between a metric and a lever. Not all metrics are levers. Some metrics matter much more than others, and some have an outsized impact. Those are your levers.
It's the leader's job not to let the data make the decisions— but to make the nuanced, tough calls and focus on what matters most for the business. Great leaders can discern numbers in a spreadsheet from metrics crucial to achieving the company's vision.
As Steve Jobs said:
"When you think about focusing, you think, well, focusing is about saying yes. No. Focusing is about saying no."
Startups should say "no" to an overemphasis on metrics and "yes" to identifying the company's biggest levers. This distinction can be difficult, as each manager tends to overweight their department's numbers; thus, the role of the executive.
Developing your decision-making muscle
The third step is learning and developing techniques for making complex decisions, applying your judgment, and turning insight into action. I call this developing your decision-making muscle. Like lifting weights, this muscle grows stronger with use.
As an executive, you shift from making decisions based on your expertise and experience to making decisions based on the expertise, experience, and insight you can gain from others (internally and externally). As the basis for your decisions and judgment changes, your process for making decisions must evolve as well.
Put simply, you will make fewer decisions based on your "gut" or copy/pasting a decision from the past. Instead, you will make more decisions by applying the insight you gain across decision-making frameworks.
This post by First Round Capital shares six different decision-making frameworks proven to work at high-growth startups. It's worth a read.
I'll dig into one framework that instructs a broad approach to executive-level decision-making.
Principles over playbooks and politics
Principles are the core truths and cultural tenets that guide a company. The equation of the company's business and its mission should drive the business principles, and the executive should base their decisions on these principles. The executive must avoid the desire to make decisions based on playbooks or politics.
To be clear, I am not against learning and applying playbooks, which can be copied from the executive team's previous companies or successful peer companies. However, the executive must first understand the principles and environment that led to the building and application of a playbook. What principles made that playbook the right approach? From there, the executive can compare their company's situation and the principles that matter most to them before deciding if/how they should apply the playbook.
Executives must stand up to the "safe" recommendations they will receive to apply a "proven" playbook and challenge people to dive into the principles that initially drove the playbook's success by thinking a couple of levels deeper.
A similar tendency is to make decisions based on "politics" or following a "group recommendation." Startups are not democracies, and aiming to please all parties with each decision leads to weak half-measures and a lack of clarity. Again, this is where the executive must pull the compani’s principles forward and leverage them to make the right decision and communicate the "why" behind a decision across the company.
Taking it a step further, a company must respect the principles that build its culture and drive its mission when evaluating big decisions. Executives must be willing to make the "tough call" when their short-term business objectives are at odds with core principles.
Put another way; executives need to ensure that a company does not lose sight of its mission and positive culture. When leaders compromise to appease those not entrusted with protecting a company's vision and culture, the fault is theirs alone. Instead, the executive must consider the second-order effects on all its stakeholders (employees, customers, industry, community, and society). And be willing to accept difficult trade-offs and make clear-eyed decisions that leave zero space for compromise of what matters most.
These decisions can be challenging because they often involve putting one stakeholder above another or negatively impacting short-term business results. But if the company's principles are clear, the right approach should not be difficult to discern.
This interview with Brian Chesky, CEO of Airbnb, is an excellent example of leveraging principles when handling a crisis and making tough decisions.
Here is some further reading on decision-making at startups:
How Decision Making Evolves as a Startup Grows - Brian Halligan, Co-founder of Hubspot
Thinking, Fast and Slow by Daniel Kahneman
Final Thought
In a previous post, I shared advice on the Journey of Leadership. The transition into an executive role involves developing your voice as a leader and developing confidence in your voice. A vital element is developing confidence in your ability to make decisions. This confidence comes from listening and leveraging others’ insight, understanding the business equation, and having proven processes, an established muscle, for making decisions.
Good luck!