General Management — Rob Thomas

Whenever you see a successful business, someone once made a courageous decision. - Peter Drucker

In many things you do in life, there is an owner’s manual. Fix the sink; start by reading the manual. Learn to write code; take a course. In short, there is a path for beginners. Anyone can get started and their growth is typically only limited by their curiosity, passion, and commitment to practice.

In the business world, many jobs do not have a manual: an easy path for beginners. There are mentors, blogs you can read, and the occasional relevant course. But there are no consistent instruction sets. The only reliable approach is find someone who does what you want to do well and copy them.

I recently spoke to a class of aspiring General Managers. These are skilled executives, that want to run all aspects of the P&L (in this case for a software business). I forgot to ask them, but I suspect none of them are walking around with an owner’s manual. I think I owe them, and the group that comes behind them, and the group behind them, a view into what I think works.

I have read as widely as possible through the years, observed some of the best, and taken many notes. Also, I have made countless mistakes. With that, here are my suggestions for new/aspiring/current leaders. I hope it is applicable beyond software, but enterprise software was in my head as I was compiling these thoughts.

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Setting Direction

1. Your primary job is to set direction and align people with that direction. This requires conviction and courage.

Discover the 3 things that are working, and double down on those things.
Discover the 3 things that are not working and stop those things. Ruthlessly. It will make some people unhappy.
Identify the 2-3 new businesses that you need to be in, that you are not in today. Start building. If M&A is an option, consider that to compress the timeline. If partnering makes the most sense, do that.
Know your one indelible, must-win battle. Put your best person in charge of that.

You have to assume that nothing will happen unless you incite it to happen. Over time, that will change, but it probably will not be the case on day one.

2. Growth comes from building, partnering, or acquiring. Have an intentional strategy, on paper, for each. Build/acquire for things that you have to own. Partner for things that are complementary or expansionary, but not something you have to own. Partner with the leaders or disruptors, not the laggards. It is unlikely you can create momentum where it does not exist. Any caveats in a due diligence report or partnership agreement will be forgotten the day the deal is signed. Focus on risk management, not risk explanation.

3. Always know the top 5 business priorities for you personally to spend time on, on both a quarterly and annual basis. If your platform for change is 20 things, it will fail. You need a few simple, yet profound moves.

4. A great management system reduces churn and ensures the most important things are getting done. Be very thoughtful in how you establish a management system and then stick with it. Every time you change it, or do not use it, you are jerking your team around.

5. If you don’t have an intentional strategy to motivate your team, then you will not have a motivated team.

6. You own strategy and execution. GM’s that are focused on just strategy or just execution will not achieve their potential. The magic is in the balance.

7. You need a minimum of a 3-year strategy. Thoughtful and intentional moves. Constantly changing will kill you and the team.

Sales and Marketing

1. You have to have messaging/ground-game that anyone can understand. Everyone should know what you stand for and why you exist. And be able to tell that story on their own. Therefore, simple=better. Once you have this, it has to become a propaganda campaign. No rest until everyone knows it. This is ultimately about giving your sales team confidence.

2. Call your sales plays. Fewer is always better. Choose the plays that have a market pull vs. requiring a push. Do not abandon them until you have proof they are not working.

Think about how your plays differ by region. It is hard to think that the same plays are relevant in London and Manila.
Understand when your plays will run out of steam. If you wait until the numbers turn south, you are too late.
Understand the problem that each play solves and the compelling value proposition that your sales team is telling.

3. Know your differentiation. Ensure that all of your executives know it too. If you do a client meeting without talking about it, that is a missed opportunity.

4. Figure out sales coverage. You may not need face-to-face coverage in every country. You probably need digital coverage everywhere and you probably do not have it. What quota have you assigned to business partners?

5. Obsessively measure and manage the volume of deals. Every month, every quarter, across key products.

Understand which are gaining volume and which are losing and why.
Look at deals per sales rep. Note: a 10% increase in productivity at this level is profound.

6. Is your issue creating pipeline (typically coverage related) or developing pipeline (typically skills related)? Many do not take the time to assess this fundamental. Remember, demand generation is what you do when clients do not know what they want. If they know what they want, and you have insufficient pipeline, then you have a value proposition, product, or sales issue. The GM must know which one it is.

7. Is sales/marketing linkage happening at a field level? If yes, at what level? First line manager level? How do you know?

8. Briefing centers drive mindshare. What is your strategy in briefing centers?

9. Creative deals with partners are an underrated offensive move. Restricting use or function is a great way to build footprint, while you are reducing the expense of the partner. A classic win-win.

10. A rule of thumb in software: you have to improve coverage to improve revenue. What is your intentional plan to improve coverage?

Building the Team

1. The best teams are built by starting with a blank sheet of paper. The blank sheet of paper forces you to think about the roles and skills you need, to deliver on the direction you have set. Once you have your blank sheet filled out, then, and only then, you should start thinking about specific people.

2. Obsess over people. Getting the right people in the right roles is the most important thing a GM does.

3. Develop or hire a leadership team that works at your pace, wants to work together, and brings complementary experiences. Diversity is critical.

4. Ensure there is low communication overhead within your team. Straight talk is efficient.

5. Coach, don’t criticize. Communicate. Tell stories.

6. Hiring and training are equally important. What is your intentional plan for both?

7. Software starts with product. Therefore, you will need an engineering and offering leader that you are having to slow down vs. constantly having to prod to go faster.

8. People will ultimately do what you incent them to do. GM’s must spend time thinking about compensation and incentives.

9. The primary tool you have for developing your team is feedback. Ensure you have the right ratio of positive-to-negative feedback.

Allocate Capital

1. Your primary responsibility is to decide how to allocate investment.

In a broad sense, that means how much you spend in marketing vs. sales vs. products. In a narrower sense, that means how much you spend in one product area vs. another and how much of your sales investment goes to partners vs. direct vs. digital.
Know your ratios. What % of revenue is spent on SG&A vs. marketing vs. development vs. design, etc. Everything intentional, nothing on auto-pilot. And, then connect this to your go-to-market strategy. For example, if you are spending 95% of your SG&A on direct sales, yet 50% of decisions are made by influencers (like GSI’s), then you will not succeed.

2. Investment means risk. But, if you are not making thoughtful investments, and hence not taking risk, you will not reach your potential. There is zero chance that everyone will agree with the decisions and tradeoffs you make. Welcome to leadership.

3. What markets are you building for? Are they large/growing markets or markets in secular decline?

4. Now that you have allocated your product spend, what is your process for product selection? What will you build that is new, what will you slow investment in, and why? Will you emphasize attracting new clients and serving the existing?

5. How will you ensure product experience is excellent? Clients are really only valuing simple and easy at this stage. Over time, they will want rich features and scalability, but you will not be at the table if you were not simple and easy at the start.

6. Investing is always about the long term. So, look at the 3-year CAGR on products, not just YTY.

Allocate Time

1. You have to do the things that only you can do. The rest is about delegation, empowerment, and holding people accountable.

2. In a rough sense, your time allocation should be:

25%- clients
25%- products
25%- partners
25%- operations

Check your calendar for the last month and see how you are doing.

3. I do not mention talent in the time allocation. Why not? Because that is a ‘100% of the time’ role. It never stops and you should never rest on this topic. Always be recruiting.

4. Your job is to make decisions. Therefore, whenever a problem or situation presents itself, either answer it in real-time or, if more complex, ensure that someone on your team owns the resolution (and knows the timeframe). If you do not do that, then you personally become the owner, which will never scale.

Seek Understanding

1. If you primarily interact with the executives closest to you, you will quickly lose market perspective.

Talk to sales representatives. Perhaps establish a counsel of sellers to listen to them. If you are talking to sales executives or first line managers, then you are getting a filtered view of what is happening.
Talk to external parties to broaden your perspective. Venture capitalists, private equity investors, and analysts (to name a few), all offer a view that you will never get inside of the company.
Talk to clients, outside of the context of a project or sales pursuit. Just listen to what they are doing, how they are spending their time, and what is bothering them. Understand their problems. They will tell you what you need to know.

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In the book, The Maverick and His Machine, Thomas Watson says that he was always struck by 2 things in IBM:

1) The need, over and over again, to take bold action.

2) Teams will always try to pull in different directions. The leader must ensure alignment.

That is timeless advice.

There is an intangible aspect to great General Managers that I have observed, that I would sum up in one word: scrappiness. This is the best description of scrappiness I could find (from Alex Banayan):

Never forget this: Growth comes from innovation and marketing. You have to assume that nothing will happen, unless you, as the leader, instigate it to happen. Then, to ensure it gets done, find the Third Door.

Lastly, read these books:

The Outsiders
How to Measure Your Life
Crossing the Chasm
Financial Intelligence
The Essays of Warren Buffett
The Challenger Sale
High Output Management
The Opposable Mind

Thanks for reading.