Avoid Indigestion: Be Like Elon
Indigestion sucks. If you experience it after a big meal, it’s usually no big deal — just pop some Tums. Well, what if your company is experiencing it? In this series's first essay, we talked about why the COO title was just a fancy name for indigestion doctor. The COO is tasked with eliminating the indigestion that comes with doing too much. In this part, we’ll cover how to avoid indigestion from the start and align your company to hit major outcomes.
Elon Musk’s Tesla is a case study on avoiding indigestion and focusing on big goals. Lots of entrepreneurs talk about wanting to change the world, but very few cogently articulate their plans for doing so. Take Tesla’s 2006 Master Plan.
Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options
Their master plan provided a clear roadmap for executing against their big vision, and the intermediate steps give a series of big goals that lever up to their world-changing vision. We should all aspire to be so clear, but in my experience, most startups figure out a big vision but forget to focus on the intermediate steps and end up failing before they can reach a critical impact.
Cascading Plans for the Win
To be more like Elon you need to create a series of cascading plans to enable your business to meet its lofty vision.
Start with the Future
Have an amazing vision for the company. It’s not enough to have a vision, it needs to be inspiring, achievable, and most importantly marketable. Having an inspiring vision might be the biggest cheat code in company building -- it attracts talent, motivates when times are tough, and helps to build credible brand loyalty. Your entire team needs to be aligned around what the vision is and equally important what it is not. After initial product market fit, it’s worthwhile to spend considerable time crafting the vision and educating the team on it.
Multiyear Mission
Jim Collin’s nailed it when he described the Big Hairy Audacious Goal (BHAG) concept in Built to Last:
A BHAG (pronounced “Bee Hag”) is a powerful way to stimulate progress. A BHAG is clear and compelling, needing little explanation; people get it right away. Think of the NASA moon mission of the 1960s. The best BHAGs require both building for the long term AND exuding a relentless sense of urgency: What do we need to do today, with monomaniacal focus, and tomorrow, and the next day, to defy the probabilities and ultimately achieve our BHAG?
To avoid indigestion and confusion, you should clearly define the BHAG for your organization. It should be ambitious, achievable, concrete, and inspiring.
I’ve found that the BHAG is best coupled with a narrative for how you’re going to get there. Start with the end goal and have each member of the leadership team create a “Future History” where they craft a narrative about what it takes to hit that vision. Done well, that future history can serve as an inspiring artifact for your organization and a natural forcing function for eliminating potentially distracting work.
Annual Process
The annual planning process should serve as the stepping stone to your BHAG. What do we need to do this year, to get us closer to our BHAG. The tension should always be on how we can go faster and get better results sooner. The annual planning process should be about budgets, it should be about the plan to get results. With this in mind, I’m a fan of the Koch Industries model:
“Instead [of budgets], Koch uses “plans” for each year, sketching out revenue, costs and profits it anticipates, mainly used so executives can better plan acquisitions. Managers aren’t judged on how closely they adhere to the budget — just on whether they expand their business.
“The difference is that many companies go to painstaking detail on every line item in their budget in an effort to, I’ll say, predict the future,” Robertson said. “What we determined is that we weren’t very good at predicting the future. So why do we want to spend an inordinate amount of time trying to?”
Too often the annual budgeting process is an exercise in false precision. Managers stress over individual line items instead of focusing on making their business work. Done well the planning process should take into account desired outcomes and work backward from there. What do we need to do in order to hit our goal? Accounting and Finance shouldn’t be cast aside, as they should facilitate some of this process and help enable tradeoffs and constraints across the business. The output of your annual planning process should be: 1) What you want to accomplish and 2) Key initiatives and projects to get there. Both items will often translate into written and spreadsheet work (quantitative and qualitative) for consumption and integration.
How should you do annual planning? I’m a fan of offsites. It’s great to get the key stakeholders away from the office and into a ritual of thinking deeply about the business. Offsite needn’t mean overnight, just a fresh location and a focus on aligning on the plan.
Quarterly
The quarterly planning process is the most essential operational rhythm in most B2B companies. David Sacks outlined a fantastic methodology here for how your key teams should operate slightly off-cycle from each other in order to effectively amplify their efforts. If you’re a leader at at a B2B company you should copy his model. My only addition here is the goaling associated with this. Too many small companies spend too much time in clunky Objective and Key Results (OKR) processes.
OKRs are best for product teams that need ambitious objectives. Your entire company does not need OKRs, individual managers don’t need OKRs. You need solid product level objectives that individual contributors can relate to. The most important part of OKRs is managing against them by translating the Annual and Quarterly planning processes into actionable initiatives and work.
Like the Annual Planning process, the quarterly process creates the opportunity for a kick off and recap ritual. As a leader you should consider investing in a half day or full day offsite to mark the new quarter and institutionalize learnings from the last one
Bi-Weekly or Weekly Sprints
Sprints are the unit of time where work gets done. The job of your managers are to design six two week sprints to hit and beat the OKRs. This is where you dial in the operational tempo and cadence. Pile on work and increase tempo to get more done, dial it back a bit to recover. The best managers have a good sense of what it means to redline (push it to the limit) and how long their teams can do that.
Some teams might default to weekly sprints. This is more common on sales and marketing teams that need both a lot of coordination and active management. Weekly sprints are best when the task maturity of the participants are lower or the cost of failure is higher. That being said, it’s easy to switch from weekly to bi-weekly.
Putting it All Together
Lots of startups focus on what they need to do now, but don’t tie their actions to a longer term vision or goal. Without doing so, it’s nearly impossible to tell if you’re tracking towards your vision. By aligning on the long term mission and vision and coupling that with a compelling BHAG (through the Future History) you can inspire your team to achieve great things.