Ben Horowitz, the former CEO of Opsware and now-successful venture capitalist, has a great post on management debt. He offers a slightly deeper explanation in his excellent book – The Hard Thing About Hard Things.
I have been thinking about management debt over the past few months but didn’t have a term for it. I am now able to put the word into context and would like to share some of my lessons.
Management debt is when a leader or manager (I will stick to “leader” for simplicity) takes a call that works better for the short term than for the long term. Any such decision is equivalent to the leader taking a loan for a short term pleasure and will require the leader to pay it back with interest. The rates of interest on certain kinds of management debt are really high. In his blog post, Ben details 3 situations where he’s seen management debt –
1. Putting two in a box – Trying to keep two talented folks in his company during a reorganization by making them co-heads.
2. Over compensating a key employee when she has a better job offer because she is key to a current project.
3. No performance management or feedback process – leading to surprises when things don’t work well.
I haven’t managed a billion dollar company and, while I am sure my experiences don’t compare to those of Ben Horowitz, I have found myself guilty of using management debt multiple times without realizing it on multiple projects. And my lessons are as follows.
I. Define culture early – it is hard to change. Culture is set by a set of principles that defines your approach to work. This needs to be defined really early or things get really messed up down the line. One such example is a project I’ve lead for nearly 3 years – when we started, we took a scrappy approach towards getting things done. I figured that the focus ought to be to just get results and we’d find time later to define how we’d like to do it better. So, we took nearly a year to define our values, ways of working, etc., and just kept the habit going. And, you know what? 1.5 years later, we still haven’t gotten past our scrappiness. Heck, we don’t even know what our values are.
The extent of the damage is evident because another member this team and I are also part of 3 other project teams and we behave differently in those. Culture is powerful and is hard to change once it is set. I am still not clear how to solve the problem with the culture issues in this project – clearly, I’m still paying the interest on my management debt.
2. Create a 6 month feedback process. I’ve worked on projects where there was an attempt at weekly performance management and then run projects with no performance management. I find that a 6 month feedback process is reasonable and important. 1-3 month feedback can work okay on short engagements but feedback systems shorter than that become carrot-and-stick systems in my view and don’t give people enough time to get comfortable. If you think this is hard to do in a busy day job, I can assure this is harder when you are working on a project(s) in addition to your day job on weekends with limited time. That said, it is important. Else, you are just taking on more debt. And, I have learnt that the interest on this one is costly.
3. Create a list of management principles. As I’ve been thinking about 1 and 2, I’ve realized that what I am missing is a list of management principles. I have an implicit list but it’s clearly not been enough to provide clarity. These management principles will help you stay true to your goals and will ensure you are firm and insistent on the right things. Once you have these principles defined, don’t compromise.
I am going to explore this topic in greater depth over the next few months. More to follow on setting culture, designing feedback processes, developing management principles, and the like.