Labcast: 360 Degree Reviews for CEOs
Firas and John discuss why these reviews are valuable, the logistics of implementing a review process and the lessons learned from this exercise.
Corey O’Loughlin: This is Labcast. Insights and ideas for the expansion-stage senior manager, hosted by OpenView Labs.
Thanks for joining us for this episode of Labcast. Today we’re joining a conversation between OpenView’s Firas Raouf and John Greathouse, partner at Rincon Venture Partners, a venture capital firm investing in early-stage web-based businesses and co-founder of RevUpNet. He also manages the site infoChachkie.com.
This podcast is on the topic of 360 reviews for early-stage CEOs, a really interesting topic. We hope you enjoy it.
Firas Raouf: John, thank you very much for joining us. I guess we can go straight into it. So I guess people hear about review of a CEO and they think something is wrong and the CEO is in trouble. So maybe some thoughts on why does an early-stage CEO need a review.
John Greathouse: Yeah, so I think you’re right, and I think that’s one thing when you’re performing these kinds of reviews you have to continually be cognizant of and continually remind people that this is really coming from the right place. It’s not an issue of a problem that we’re trying solve. It’s an issue of trying to give the CEO and maybe another founder or two in the company some feedback so they can grow.
For me, I really enjoy this project, because I had not been reviewed formally since probably 1994, literally. I was always a senior executive, a gunslinger sort of Wild West entrepreneur, and other than the odd comment you get, obviously you get some feedback, but I never got a formal review, because no one ever had time to sit down and really evaluate and who would have done it? It would’ve had to have been a board member. So I thought, I know that I would’ve appreciated this sort of review as an entrepreneur. So I was motivated to see if I could give a substantive review to the founders at the company that I worked with. I think in the end, hearing all of the feedback, including from the staff people as the founders, I think we did a good job.
Firas: It seems to me that an early-stage CEO, of all people, really needs a review, because just by definition a CEO is a very lonely position.
Firas: It’s responsible for quite a broad set of functional responsibilities, and it could be a first time CEO who’s a founder. Any thoughts on that?
John: No. Absolutely, lonely is the operative word there. I think you have lots of acquaintances and no friends sometimes. You have a lot of people that you’re accountable to and no one that you’re accountable to. So I think being able to get a filtered set of responses, clearly you’re not going to get honest feedback if you walk right up to somebody in the hall and say, “Hey, I’m the CEO. Your job is in my hands. How do you think I’m doing?” Even the most honest person in the world is going to be reticent to deliver it with both barrels. But having someone in the middle, and if you can get their trust, I think I was able to gain the trust of the senior executives and I lived up to that trust, that what they tell me will be confidential as to source and I will do what I can to mask the source, but I’m going to give as unfiltered feedback as I can to the CEO, because the CEO in this case actually was asking for it. He wanted to know, “How am I doing? And the best people to tell me how I’m doing are the people that I work with every day.”
Firas: Right. Right. Well, maybe that’s a good lead-in to the next question, which is, who reviews the CEO?
John: Well, in the instance that I just went through, I was tasked by the board to be the point of the arrow, and so as an outside board member I led the review. But the review itself was actually, for the most part, conducted by the CEO’s subordinates. So it was his direct reports, and we even cast a wider net. We threw in a number of people that didn’t directly report to the CEO, but certainly had a big impact on the company. We felt like we were trying to kill two birds with one stone. We were very interested in giving the CEO actionable feedback that they could use to improve their performance, and we also gathered information on the health of the company’s culture and how we could improve on the health of the culture. It’s a growing company. We’re adding a lot of employees. It was a bit of sanity check on, “Do we still have the culture that we think we have?”
Firas: And did you also include feedback from board members? And how does that work?
John: In this review, it was indirect at best. I would say the lion’s share of the review was directly from subordinates. I think if I were to do this again, and I actually wrote a blog entry on the process including, I think, the mistakes that I made, that’s probably one area where I could have incorporated additional feedback. This particular board, there’s one board member representing the investors and then there’s myself and the two founders. So it didn’t lend itself to gathering a whole lot of data from the other board members. If we had a larger board, if we had more independent board members, then I think that would have been a direction I should have gone.
Firas: Well, maybe speaking of process, maybe you can walk us through the process and how it was conducted and then how did it turn into actual feedback.
John: I started with a survey, so just a written survey. It was a bit arduous. There were a lot of questions. We actually reviewed two people, the founder and the CTO, which I would not recommend doing in the future. I think you should focus on one person at a time. So I started it with a formal written, and I really didn’t let these guys off the hook. I told them I don’t want yes/no answers. If you’re going to criticize something, if you’re going to give negative feedback, which I encouraged, I want it supported by examples. I don’t want just cheap shots. Everyone lived up to that, so I got lots of example. I got lots of annotation.
I then took the written feedback, and then I spent at least an hour in person with most of the respondents. A couple of them I had to do it by phone just because of travel restrictions on their schedules. But, for the most part, I then sat down after having reviewed their responses. I had a number of follow-up questions, because in some cases the written document I think is a little intimidating. People feel like, wow, this is going to be around forever, and they’re a little more careful. So if I sensed that somebody was holding back in a particular area, that’s what I used the in-person meeting for, was to probe a little deeper and say, “Hey, you mentioned this, but I’m just wondering, how did it manifest itself day-to-day? What are you seeing that prompted you to write this?” And that was very effective, because I found that after the first few minutes, people really opened up to me and I started getting just some really valuable and actionable information from the in-person meetings.
I then took all of the responses. So now I’ve got written responses and these verbal responses that I wrote notes associated with. I took all of that information and then I created a series of PowerPoint slides, which attempted to summarize the responses for each question. So we had lots of questions. There were well over 20 questions in total. I broke the responses into negative and positive. So, for instance, if there was a question about the CEO’s leadership capabilities, I would have a slide or two of all the positive responses, because I didn’t want to use this as a beat down session. I wanted the CEO to see that his team really respects him and likes him. But I also knew that if I only gave positive feedback, that this would just be a rah-rah session and nothing really substantive would come out of it. So I had a slide of positive responses, and then I had a slide or two of negative responses. When I mean negative, I mean constructive criticism, where people were saying, “Hey look, he’s a great leader, but here’s what I would rather see him focus on as a leader.” Or, “He’s a great leader, but sometimes I see him do the following.”
So I then summarized all of that information, forwarded it to the founders, gave them some time to digest it. I made it clear to them this is not about making someone wrong. I don’t want to have a meeting with you guys as a follow-up and spend the meeting talking about why these assertions aren’t valid. They are valid, because they were made by people we trust. That actually worked really well, setting that foundation of saying, “Look, the next step is not to try to invalidate these responses. The next step is to understand why someone would say this. Why would somebody have this perception? If we don’t agree with the perception, we need to address why they came up with it, not the fact that it’s an invalid perception.”
So I then sat down with the founders. I reviewed the responses with them. They were very thoughtful in their response. In fact, I think they really took it to heart. They internalized the issues.
Then the last step, and this is where I really think it all came together. I think if I had just stopped by reviewing the responses with the founders, it would have been worthwhile, but I think it would have only been worthwhile to point. By bringing in the senior team, so it was all of the people that I’d gathered responses from. I had the two founders sit in the back, basically listening. I didn’t want them to drive the meeting, and we went over a much abbreviated version of the responses. So I basically gathered two slides that I thought encapsulated the most meaningful points of feedback, and I said, “Guys, here’s what the collective feedback was. Let’s talk about it a little bit.” That helped the founders get further annotation as to what was working and what wasn’t working in their lives.
Then , and this is where again where I think it really culminated nicely, I had had the founders rank the top 12 tasks that they spend most of their time on, right? They had a dozen tasks, and I had them prioritize them. I then asked the team to prioritize the tasks, and we came up with very different results. So, in other words, the founders thought that these 12 items were the most important, and in case of both founders, the senior team said not all of those are the 12 most important things you should be working on.
Firas: Got it. How was it received by the founders?
John: Very positive. I sort of anticipated a little bit of pushback and defensiveness and, “Hey, that’s not really true.” I got none of that. I really got a set of very positive reactions. In some cases, I got, “Wow, I didn’t realize that was a problem.” But in most cases, the response I got was, “Yeah, I know I need to do that better. I know I don’t focus on that enough. I know that’s a weakness of mine.’ So that was good. I think it was good reinforcement that people they trust were really legitimately trying to help them do their job better, as opposed to trying to tear them down or cause some sort of negative friction by taking cheap shots anonymously. We just had none of that, and the founders’ reactions, I think, were in accordance with that. They really saw this as a positive process that they valued.
Firas: So to wrap up very quickly, if you were advising somebody who’s going to do this next, what would you say?
John: I would say limit the number of written questions. I had far too many. There was some repetition in my questions. So I would say spend more time up front honing your questions a little bit. Don’t try to evaluate more than one founder at the same time. I found that people got confused in their responses. They were talking about Founder A on the form that really geared to Founder B, and I had to sort of unwind some of that, which was just less than optimal. So focus in on one person.
Definitely ask the founder to rank their top tasks. I did it on four criteria, basically competency, impact, near-term impact, and desire to do those tasks. Because you’re often going to find that the things the founder wants to do aren’t necessarily the things the founder should do four and five years into their venture. This is a nice, sort of gentle way to encourage them to let go of things that they enjoy doing, but are not appropriate for a founder of a 50-person company to be doing.
Firas: Great. Well, John, we really appreciate you sharing your wisdom on this and look forward to our next podcast.
John: Thank you so much. I appreciate it.
Listen to more podcasts from the OpenView Labs team.
Hint: You have to look beyond the website or pricing page.
Gross margin documents the business your product is building, yet it’s often tucked away in a financial update while a medley of product metrics enjoy the spotlight.