Kennet recently had the benefit of hearing Mark Leslie speak at a private dinner to approximately 20 CEOs of bootstrapped technology companies in Silicon Valley. (See Return Leader: Mark Leslie for his story)
The talk “How I made 44 quarters" is on the surface a discussion of the merits of consistently hitting your numbers, but HOW Mark achieved his success was insightful, thought provoking and quite motivational. Attached is the presentation and a few key takeaways.
1) CEOs should think about current year results as largely unchangeable with the exception of modest tactical adjustments. Why? It takes time to train and develop sales people, implement marketing programs, and execute sales cycles and even longer to develop growth initiatives such as new products and markets. As a result, Mark suggests the current year plan is better used for two goals: build a culture of success and trust among the team and with shareholders through a conservative forecast that will be realized. Focus on driving sustainable growth in years 2, 3 and 4 from current year investments. Building sustainable growth is a multiyear process. Trying to drive aggressive growth in the first year creates lots of adverse issues: missed forecasts, stuffing pipelines, and borrowing from future quarters. This bimodal view of future planning is helpful for CEOs: long term growth objectives with near term achievable results. (see “Speed of Trust”)
2) Use your team to set your current year forecast. Your VP of Sales may try to give you a low number so they can exceed their plan so get them to give you a realistic number by:
a. Making sure they know their forecast is not the beginning of a negotiation: build trust with the VP of Sales
b. Create a direct link between all department budgets to the forecast. The lower the forecast, the fewer resources for the current year and future growth.
c. Tie the VP of Sales economics to company goals such as EPS or contribution margin
3) Set sales goals such that 70% of the sales teams meet or exceed their numbers. Set the corporate goal so that the total of those 70% results exceeds you total company revenue plan by 20%.
These points highlight a general approach that Mark has to management that he calls a collaborative CEO style. He contrasts this with a Proprietor CEO who tends to be more prescriptive and creates a culture with worlds emphasizing “I” and “mine” versus “we” and “ours”. (see “Breakthrough Company”) Mark sees collaborative CEOs as stewards of the company with executives and employees developing and owning key initiatives including setting the forecast and achieving the results. This style and success culture worked well for him: it enabled him to hire the best and brightest talent, to give them autonomy and to have them embrace the mission of the company. For Mark, the CEO’s role is to help the employees succeed (culture of success) realizing personal achievement and satisfaction while building long term sustainable growth to meet the shareholders objectives. (see “Drive” and “Tribal leadership”)
It's interesting to note that Marks’ “be generous” life view of management is reflected in his activities since he left Vertias. He now teaches at Stanford School of Business sharing his lessons learned as a CEO with MBA candidates and with CEOs at events such as this dinner. Thanks Mark!
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