On management, culture, responsibility and so much more.
I sighed when a fellow founder recommended I read Ben Horowitz’s The Hard Thing About Hard Things. I thought it’d be another book full of theoretical self-help fluff from a person who has never done what he is preaching.
Turns out I was wrong.
Horowitz’s book is a management bible for growing any company. I wish I’d read this book before founding my first business. His advice would have saved me from making costly mistakes.
Here are the top seven lessons from his book with instructive examples on how to apply them.
Don’t Protect Others by Whitewashing Facts.
It’s in our human nature to protect people who depend on us. This behavior is helpful when raising a child. Yet, it might be counterproductive for startup management.
I fell into the protection trap early in my entrepreneurial career. Back then, I conducted the user tests for our new app. We didn’t follow the Lean Startup approach. The product was ready. But our potential customers weren’t.
I listened to harsh criticism. Testers did neither understand the app’s navigation nor find the functionalities they were looking for.
Yet, I felt the urge to protect our CTO. I used positive framing to sugarcoat the negative feedback. I thought he couldn’t handle the hard truth.
By keeping the hardest feedback to myself, I prevented the product team from building a better application.
When you don’t share the hardest obstacles, your people can’t build a better business.
Horowitz advises us to be brutally honest with our employees. Honest conversations lead to trust. Besides, the more people are aware of hard obstacles, the more brains can start building solutions.
“In any human interaction, the required amount of communication is inversely proportional to the level of trust.”
How to apply this lesson:
Share everything you know about a challenging situation. Be both brutally honest and transparent. Don’t whitewash facts.
When you share uncomfortable facts, tell your team you have the company’s goals in mind. Growth is about tackling the hardest parts.
Always Put Your People First.
With investors in the neck, it’s tempting to prioritize profits over people — particularly when things don’t go well. When your ship might sink, you might go over lives to protect it from going down.
Yet, we should never lose sight of our moral compass. When Horowitz’s company was fighting for life and death, he still focused on what mattered. He put people first.
He was between sign and close of company saving acquisition talks. John Nelli, former CFO, would not have transferred to the new company. Meanwhile, he was diagnosed with cancer.
From a profit perspective, Ben should’ve stuck to the initial plan and let John go. He didn’t owe his CFO anything. Yet, he accepted the healthcare costs and thereby prevented John’s family from bankruptcy.
This lesson teaches us to always focus on what matters in life. You should always put people first. Thereby, you’ll not only stick to your moral compass and do good in the world but also create loyal employees as they know they can trust you.
“Take care of the people, the products, and the profits — in that order.”
How to apply this lesson:
Listen to your people with open ears and open hearts. Be generous with your words and actions. Care for your employees’ families and show understanding when anyone is facing tough family circumstances. In this way, you create a company culture of loyalty and trust.
Look for Things You’re Not Doing.
You defined and communicated your vision to your team. Your people know their KPIs and focus on execution. The entire team is on track, and you’re working hard.
Your business might be so focused that you overlook one important thing, and you no longer see the wood for the trees.
To avoid this common issue, Horowitz suggests asking one powerful question. This question invites out-of-the-box thinking and keeps different perspectives involved.
In every meeting, he’d ask: What are we not doing?
“Ordinarily in a staff meeting, you spend lots of time reviewing, evaluating, and improving all of the things that you do: build products, sell products, support customers, hire employees and the like. Sometimes, however, the things you’re not doing are the things you should actually be focused on.”
How to apply this lesson:
Make it a habit to ask in every meeting, “What are we not doing?”. You’ll shed light on the necessary tasks.
By asking this question, you’ll give your team a creative thinking space. To involve all meeting members, ask them to write down their ideas. Then, do a quick round of sharing all thoughts.
When you find different people giving similar answers, you know what should move on your list.
Create a Culture That Enables Free Information Flow.
According to Horowitz, free information flow is critical for the health of your business. It’ll allow you to learn about negative news before it’s too late.
Yet, many company cultures discourage the spread of bad news, so the knowledge lay dormant until it was too late to act. By being judgy or nurturing fixed mindsets where mistakes are viewed as failures, employees won’t share bad news.
Create a culture that encourages openness and sharing struggles and challenges. Your feedback system shouldn’t punish employees for getting obstacles into the open.
“A healthy company culture encourages people to share bad news.”
How to apply this lesson:
Thank your colleagues for sharing difficult things. Avoid choleric reactions. Be okay with people revealing a problem without offering a solution.
Show gratitude when an employee tells you something you don’t want to hear. Remember, it’s better to know about critical turning points too early than too late.
Don’t Put It All on Your Shoulders.
As a founder or CEO, you feel like you must know it all. You think you should have a solution to any problem. Yet, this thinking is flawed and will harm your business.
By taking too much responsibility on your shoulders, you restrain your people from problem-solving.
Instead of keeping the hard things for yourself, allow your team to join you in brainstorming for solutions. Give the challenge to people who can not only fix the issue but who are also intrinsically motivated to do so.
“You won’t be able to share every burden, but share every burden that you can. Get the maximum number of brains on the problems even if the problems represent existential threats.”
How to apply this lesson:
Call an all-hands and tell your employees what’s the block in front of you. Share the problem with all details and then get the team mastering to build a solution that can help your business.
That’s why you hired your team first — making your company win. By not putting it all on your shoulders, you empower your team.
Take Action on Negative Indicators.
When I learned our new users grew by 38 percent beyond the average growth rate, I strategized about the next growth steps.
Who would we hire next? Should we increase our budget for marketing campaigns? I jumped into taking action.
Entrepreneurs have a bias for taking action on positive news. We love to act on promising information such as unexpected customer growth.
On the other hand, when things don’t go as planned, we tend to blame it on the rain. We find alternative explanations for the bad results and wait it out instead of taking action.
“Almost every CEO takes action on the positive indicators but only looks for alternative explanations on the negative leading indicator.”
How to apply this lesson:
When one of your teams didn’t reach their KPIs, don’t sit it out. Instead, focus on figuring out what happened and how you can improve it for the time to come.
Which numbers or people can give you a detailed explanation about what happened? What should your team be doing differently to overcome this obstacle the next month? Take action on negative indicators.
Set Up Employee Training Structures.
When I suggested my co-founder, we set up a training program; she replied, “There are so many decisions to make, customers to win, products to improve that we can’t prioritize training right now.”
Many founders argue that putting a training program in place will take too much time.
Yet, no investment will yield to higher interest rates than investing in your people. Training will improve productivity in your company.
Moreover, when your best people share their most developed skills, your company culture will improve more than with any team-building event.
“Being too busy to train is the moral equivalent of being too hungry to eat.”
How to apply this lesson:
Teach a course yourself, for example, on management expectations. Select the best people on your team to teach other courses. Make training mandatory.
Horowitz suggests teaching can also become a badge of honor for employees who achieve an elite level of competence.
Moving Forward
As with all business advice, pick the lessons that apply to your situation. Focus on the principles that make a difference in your company.
- Be brutally honest about hard things.
- Always put your people first.
- Regularly ask, “What are we not doing?”
- Embrace the free information flow.
- Share your burdens with your team.
- Take action on negative indicators.
Without application and action, the best business lessons are worthless.
If you, however, apply one principle at a time, you’ll realize how these small decisions accumulate and lead to changes in your company.
Now the only question is: Are you ready to do the work?
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