Tips For Early Stage Startup Founders on How To Build A Culture of Accountability

CULTURE EATS STRATEGY FOR BREAKFAST, OPERATIONAL EXCELLENCE FOR LUNCH, AND EVERYTHING ELSE FOR DINNER.

– Bill Aulet

During one of our weekly Monday morning team meetings we were talking about one of the startups in our portfolio . . . Things are going well; the product is pretty good and improving, sales are increasing, revenue is growing etc. It’s preparing to raise a big round within a few months.

There’s one problem . . . Accountability. Things are not happening when they should, people are not doing what they are supposed to be doing. It’s not yet fatal, but . . . A culture of accountability does not exist.

What should they do? The founder/CEO is proposing an approach to solving that problem that I believe is indirect and ineffective. I do not think it will work, and worse I think it will confuse his team and cause resentment and stress the team unnecessarily.

After the meeting, I posted a status update on Facebook asking my friends who are early stage startup founders if they have any nagging questions they’d like me to research and tackle in a blog post . . . A couple brought up team-building, accountability, and culture. One said:

I think organizational building/management/structure, HR, and team building get very short shrift in the startup dialogue, which is a shame. I understand why in the short run, but in the long run I suspect the costs can be high.

– Tayo Akinyemi

I had inadvertently found the topic for my next blog post.

I have some experience with situations in which accountability is a problem . . . Dating back to my days as a student at Connecticut College when I ran two businesses on campus to earn pocket money – one was a newspaper delivery business, the other was a deejay business; I respectively had to hold my best friend and my partner accountable, leading to me firing them for failing to keep up their end of our bargain; and again between 2008 and 2012 when I devoted substantial portions of my time to turning around two companies – in that case I did not have the authority to fire anyone, but I had the authority to hold people accountable and I played an important role in setting and getting buy-in for expectations, and then determining who should be held accountable meeting those expectations we had agreed on. I also had to help the senior leadership of the two companies learn how to build a culture of accountability. In addition I helped my mom and my dad run a number of small business while I was growing up, and since 1986 have discussed management and leadership issues my mom is grappling with as she has grown Summit School from 3 kids in our garage to several hundred pupils in Kano, Nigeria. Holding people accountable is hard, but necessary for organizations that want to grow and accomplish important things.

In this post I will first delve into a general discussion about management and leadership, then I will end with tips on how startup founders might foster accountability.

The intended audience for this article is early stage technology startup founders who have no training or prior experience in management or leadership, but who nonetheless need to come to grips with the basics in order to run their startups effectively. Consider this a launchpad from which one might do further reading and independent study.

If you have not already read my posts on team building you can get caught up on high-performing teams first here and then here, what religion teaches us about culture, and howmanagement skill can enable startups to build an impregnable economic moat.

Fundamental Ideas About Leading and Managing Teams of People

One way to distinguish between leadership and management is to remember that; in the grand scheme of things leadership affects issues that are of strategic, relatively long-term importance to a startup, while management by comparison focuses on issues of tactical, and relatively short-term importance.

Things get confusing in startups because founders, who are really defacto leaders also have to fulfill responsibilities as managers till such a point that the organizational structure has evolved and the distinction is clear.

But what does this mean? Concretely? It means that a manager typically will be responsible for implementing a strategy and vision developed by the leader. Leaders focus primarily on creating a vision, developing a strategy to actualize the vision, and nurturing culture. Managers draw up detailed plans, discuss the plans with the leaders to get buy-in and approval, then they execute and implement those plans with the help of people on the teams that they manage.

Every leader is also a manager, but not every manager is a leader.

What is leadership? The definition of leadership that I find most compelling and applicable to early stage technology startups is based on this quote from John Quincy Adams:

If your actions inspire others to dream more, learn more, do more and become more, you are a leader.

To be a little more specific Kevin Kruse and Dr. Travis Bradberry define leadership as ” . . .  a process of social influence which maximizes the efforts of others toward the achievement of a greater good.”¹

In order to become an effective leader one must uder the difference between a leadership model, a leadership philosophy, and a leadership style.

A leadership model is a practical framework that helps a startup founder develop into a competent and effective leader. A leadership model answers the “What?” question.

A leadership philosophy is a values-centric framework about how a startup founder should behave, and the sources from which the founder can derive power as a leader. A leadership philosophy answers the “Why?” question.

Lastly, a leadership style focuses on the reality of how a startup founder fulfills the responsibilities of a leader. A leadership style answers the “How?” question. This is an important issue, because effective leadership rests on authenticity . . . Obvious incongruence between a budding leader’s personality and choice of leadership style is one of the quickest paths to catastrophe.

In the context of an early stage startup, the leader’s tactical goals center on leading the team from one milestone to another. The leaders strategic goals center on guiding the startup through discovery, and ultimately to helping the team navigate its way to becoming a company.²

What is management? According to Mary Parker Follet; “Management is the art of getting things done through people.” Similarly, Harold Koontz says “Management is the art of getting things done through and with people in formally organized groups.” Lastly, Henri Fayol says “To manage is to forecast and to plan, to organize, to command, to coordinate and to control.”

Management is an ongoing process of producing results against pre-existing budgets, forecasts, targets, tactical and strategic initiatives through teams of people, and measuring performance with an eye towards continuous improvement.

I think it is worth reiterating that the function of leadership and management do not always have to be embodied in the same individual, though in the context of an early stage startup it is almost inevitable the the founders function as both leaders and managers.

The Psychological Contract, Theory X, Theory Y and Theory Z – Cliff Notes Version

The psychological contract is a set of tangible and intangible expectations, beliefs, feelings, and emotions that govern the relationship between an individual and that individual’s employer, manager, and leader. The most important aspects of the psychological contract are based on mutual trust and respect.

I like the Iceberg Model approach to thinking about psychological contracts because it depicts quite clearly my belief that the most salient aspects of effective leadership and management are intangible and hidden from view.³

I believe that there’s no repairing the relationship between a team member and that individual’s manager or leader if one party believes that the psychological contract has been violated.

Theory X is a management worldview that can be described as militaristic, or command-control-and-punish. Theory X managers subscribe to the belief that people hate work and cannot be relied upon to work responsibly towards meeting tactical goals. As such they need to be motivated through the threat of imminent punishment.

Theory Y is a management worldview that is the opposite of Theory X. Employees can be relied upon to apply self-direction, creativity, and a take-the-initiative attitude to solving problems faced by organizations and teams. There is no need for threats of punishment.

Theory X and Theory Y arise from Douglas McGregor’s work, and were popularised in his book The Human Side of Enterprise.

Theory Z arises from the work of William Ouchi, and combines MacGregor’s Theory Y with Japanese management concepts. It places an enormous amount of trust in the individual. It assumes and expects that individuals will demonstrate  commitment and loyalty to the team and the organization. Ouchi explained Theory Z in the book Theory Z: How American Management Can Meet The Japanese Challenge.

On Accountability

In Four Tips for Building Accountability, Rosabeth Moss Kanter says;

The tools of accountability — data, details, metrics, measurement, analyses, charts, tests, assessments, performance evaluations — are neutral. What matters is their interpretation, the manner of their use, and the culture that surrounds them. In declining organizations, use of these tools signals that people are watched too closely, not trusted, about to be punished. In successful organizations, they are vital tools that high achievers use to understand and improve performance regularly and rapidly.

Based on my experience, and Prof. Kanter’s article, here are a few tips for startup founders who are grappling with this issue for the first time.

Ask questions, ask more questions, and then ask even more questions. What seems blindingly obvious to the manager or the leader may not be so obvious to the individual team member responsible for executing the assignment and delivering results. The key to asking questions is to ask lots of them both before work begins, as well as while the work is in process, and after the project has either failed or succeeded. Before work starts leaders and managers need to be certain that their audience has internalized the message that the leader or manager wanted to convey. This ensures that there’s complete alignment of the leaders understanding of the “Why, What, When, Who, and How” they have tried to communicate and that this is understood by the team, as well as by individuals within the team.

Praise publicly, chastise and reprimand in private. While it is important to get work done in the near term. It is also crucial to build individual team members’ self-sufficiency and effectiveness over the medium- and long-run. It is very hard to do this if people feel humiliated in the presence of their peers, especially since the person experiencing the humiliation will often have a strong belief that they are being treated unjustly and unfairly. Note that this belief often bears no relation to “the facts” as the manager or leader might interpret them. For accountability to work people have to feel safe discussing difficult issues, and collaborating with one another to tackle and resolve issues that may feel difficult to discuss. However, if the focus is on learning how to become more successful as a team and as individuals on the team respectively, things become a lot easier. As Prof. Kanter says “The goal is to solve problems, not to hurl accusations or tear people down.”

No pencil, no pad? Poor performance is guaranteed. Take copious notes. In my experience things on the accountability train start falling apart when there’s a high degree of ambiguity. There’s an inexplicable tendency to assume “everyone knows what I mean” or “they will understand what I expect” without clear, direct, and succinct communication from the leader/manager, or worse “they will see that those doing the right thing are progressing and so they too will start doing the right thing.”

Leaders and managers who adopt that approach are failing the most basic and fundamental test of their ability to lead or manage a team. In my opinion it is a sign that they do not want to feel the responsibility of setting clear expectations and dealing with what that process entails. Perhaps they think of themselves as “friends” with the members of the team.

Be that as it may, the founder/leader/manager must communicate expectations, break big goals down into more specific and unambiguous tasks, and provide guidance about expected deadlines and desired results. Shying away from doing this is a red-flag. Inevitably, there will be problems down the line.

Taking notes is one way to ensure that nothing is miscommunicated, or that something that was communicated is not overlooked or even forgotten. I believe leaders and managers should take and share notes about their thinking related to the team’s work. I believe team members should take notes too . . . As time progresses, comparing notes, filling in gaps and making corrections is one way to avoid miscommunication and misunderstandings . . . An important step in the journey towards a culture of accountability.⁴

Landmarks in A Culture of Accountability: Excruciating Clarity⁵

In order to foster accountability the leader/manager must be clear, and must obtain confirmation that the audience “gets it.” The five necessary ingredients for building a culture of accountability are;

• Clarity of expectations – does the team understand what the desired outcome should be?
• Clarity of capabilities – does the team have the resources to meet the expectations it has created for itself?
• Clarity of measurement – does the team understand how its performance will be judged?
• Clarity of feedback – does the team understand that lines of communication should remain open in both directions in order to avoid surprises at the eleventh hour? Does the leader/manager understand that it is necessary to check in periodically and often about progress towards the goal?
• Clarity of consequences – does the leader/manager have clarity around what must happen if the preceding 4 conditions have been met and yet the outcomes fall short of the expectations that the team has set for itself? The crux here is that the leader/manager has to be honest and sufficiently self-critical in order to ensure accountability traps do not keep arising “out of nowhere” . . . Under the worst circumstances some individuals have to be let go, but that is life.

Conclusion

Navigating the treacherous waters between launching a startup and becoming a company is hard work. That work is made exponentially more challenging by failures in leadership and management. It does not have to be that way. To make it easier it helps to build a culture of accountability.

Further Reading

• High Output Management – By Andy Grove
• Only The Paranoid Survive – By Andy Grove
• The hard Thing About Hard Things – By Ben Horowitz
• HBR’s 10 Must Reads on Managing Yourself
• HBR’s 10 Must Reads on Leadership
• HBR’s 10 Must Reads on Managing People