015: The Special Dynamics of a Great Team

All right. Hello and welcome again to the Scaling Up Business Podcast. I'm your host and Gazelle's Scaling Up Growth coach, Bill Gallagher. Today we're talking about how to get the best of people, how to develop people. It's a subject near and dear to us, as you could tell from the name of our company is Humanistic Gazelles Coaching. So we start first with people. It's the first of the four decisions. We're talking today with David Hassell. He's a serial entrepreneur and the founder of a company called 15Five. And I think his journey of how he got there and where he started and where he ended up and what matters to him will be of interest to all of our listeners in thinking about how to get the most from their people as well. His software is used by some of our clients and follows right along with the things that we talk about and feel so strongly about. So welcome, David.

Thanks, Bill. Great to be here.

Yeah. So we first met a few years ago through the Entrepreneurs Organization, and you've been a member of that and were a past president and so on and are located here in the San Francisco Bay Area and stuff. But it looks like you got your start on the East Coast.

That's right. Yeah. I started my first business a number of months after graduating from college back in. I graduated in 98 and started my first business in early 1999 in New York City. At the time, I was doing Internet advertising technology. I'd started a company that developed a new kind of online ad format during the height of the dot com boom.

And I'm guessing you didn't love that.

You know, what I loved about it initially was the possibility of creating something from nothing, creating something new. I think that a lot of entrepreneurs are driven early in their careers and getting into the excitement of creating business and doing business and whatnot. But yeah, that's true. After a couple of years, I realized I wasn't really passionate about what we were creating in the world and who we were serving and what we were building, was quite passionate about the process of building the business itself. Rockefeller Habits was a big part of that. I discovered Rockefeller Habits through my work with EO and starting back in probably 2003, which has now become the scaling up methodology. And yeah, that was a big part of what got me excited, working that process and building the company and that. And then also the people aspect of the business was a big part of that.

Well, of course, a common refrain from people that we talk to entrepreneurs who've started a business and they're like, oh, I love my business. But God, the people stuff is so hard. The people are so hard. And you see that the frustrations and the challenges of it often get in the way of their love of an appreciation of people.

Right. And what's funny is I actually had almost the opposite experience and fell into it quite by chance. Actually we were running a very, very lean business. Not in the term that they use it today, lean startup. It was actually lean tight budget kind of business. We had raised some capital to build our initial product and in the midst of building the business, the dot com collapsed. The dot com. There was basically a market collapse and capital dried up and whatnot. We almost ran out of money, had to lay a lot of people off and reinvent ourselves from scratch. At the time we needed to find some very competent engineers to work on what we were working on. There was still some scarcity, it was still challenging to find great talent. And so I had to almost fine diamonds in the rough in order to make it work financially for us. I would find folks who maybe had a gap in their resume or didn't go to the best school or didn't even go to college. And I could see there was something I could see in terms of who they were as people and their potential that I was able to hire them for much lower than market rate and what we could afford and give them an opportunity to grow very quickly in our organization. And I was deeply inspired by what I was seeing was finding these folks who come into our company be given a lot of autonomy and responsibility beyond perhaps what they had before. And within a year or two they were able to leave, making almost twice what I could afford to pay them.

Got it. So you really developed people and developed a company that. That developed people. Yeah. And that made you more efficient across the board. Well, I can think of a couple instances of companies that I've worked with where we had what on paper, you know, resume wise would look very much like a B or C team. And yet when you looked at the way that they were engaged and to the mission and the performance and the flow of the business, you could see that that looked much more like an A team than you might expect.

Right. You have some sports analogies too about that, where you have these sports franchises who will go and try to buy the highest priced star players and they put them all together and they don't necessarily work always great as a team.

For sure you can.

In fact, I remember one guy, CEO that I was talking to years ago and he Had a very attractive.

Candidate for a key sales position. He was all lit up about this guy, but something was wrong and he couldn't quite put his finger on it. We were talking, we were talking about it and he kept telling me about the thing and I said, you know, the thing that I just keep hearing is about what a rock star this guy is. And yet you've talked endlessly about your team, the team dynamic, the team interaction. And that's not a place for a rock star. That's a place for a solid a player, but not a solo act who wants all the attention and all the. You know, there's a difference between say a basketball team, we're watching a lot of basketball lately, and a bicycling team. Right? There's definitely, well, I'm going to lose a lot of people with that analogy. But a pro cycling team, there's a definite star that everybody's focused around who plays a very particular role. And it's not even so good. So then you built that company up, you noticed something about your love of people and the potential to develop people further. And then it sounds like you went on a couple of different interesting, fascinating journeys. How did that develop to where you got to today?

Yeah, so after about seven years of building that company. So one thing I'll just say about that was from a business perspective, I found it was good business. The practice that we had of finding these high potential candidates that may have been overlooked by other organizations and then developing them and then really reaping the rewards as a business owner, as an organization of very high performance at perhaps lower than market cost. On the other side of it, just from a personal aspect, in terms of where I found my fulfillment personally as human being, as a business owner, I found it very fulfilling to have created these kinds of opportunities and see people be able to step into greater levels of performance and success that perhaps even they knew were possible. And I actually just found that deeply fulfilling to myself. So that was the one key learning I took away from that. Now after about seven years, I was pretty burned out from working quite hard at something that in terms of the business itself, I wasn't necessarily passionate about. I took some time off and actually started a kite surfing adventure travel company down in Brazil.

Sounds horrible.

It was terrible living on the beach, bought a dune buggy, kite surfing every day back and forth between Brazil and the US for a couple of years. And I like to joke about how my first business, I was chasing the money, but there was no passion. And my second business was Chasing the passion, but there really wasn't much money. And then I finally woke up one day and said, well, why can't I do both in the interim? I actually started working with a lot of mid market CEOs kind of SMB and mid market CEOs say anywhere from a million dollars in sales on the low end up to all the way up to about 100 million in sales on the high end and doing strategy retreats with their leadership teams. And I did that for a couple of years on and off, working with these teams anywhere from one to four times a year. And it was in that process that.

The outcome, exactly what we do.

There you go. I know that world fairly well. And in that process we come out of these day long retreats really connected to the core values, connected to the purpose of the business, knowing very distinctly where we wanted to take things over the next 1, 3, 5, 10 years and what we needed to focus on in the next three to six, three, six and 12 months. So there's a lot of clarity that came out of that and a lot of passion, a lot of enthusiasm. But when you looked at the teams three or six months or even 12 months later, some of the teams were able to just get at it and hit their objectives and some were just not. But there wasn't very distinguishable difference in the leadership teams who left the rooms. So I got really curious about, well, what is the difference in these organizations between the ones who were able to accomplish what they set out to do and the ones who couldn't. The thing I kept coming back to was it really comes back to team, it comes back to execution and the people who are doing the work. Is there a great culture, is there high engagement? Obviously you need clarity of objectives, but what are the dynamics that create that potential for building a great team? That's when some of the insights came back from my first business about if I was able to take what other people might think were C players and turn them into a players, you know, why couldn't we codify that in a way? Why couldn't we create a dynamic for other companies where the type of attention on learning and growth and understanding where people are at and helping them move progress, why couldn't we make that possible for other organizations? And that's really what about, that's, you know, that's what got me to where I am today with 15 5. And in my, my intention even before I came up with the, you know, before I came across the idea for 15Five and created it as a company went back also to that, seeing that I had about, you know, I really want to be doing something that has meaning and purpose and that can create a really positive impact in people's lives. And I want to build something that's going to create a lot of value in the world as well.

Yeah.

Purpose and profit together.

Yeah, yeah, yeah. Alignment of all that. So what does 15.5 mean?

So 15.5. You know, it's funnily enough, it was actually a placeholder name early on, and people kept coming back to me after two or three months, after one conversation, and they remembered it and they remembered the concept behind it. So it. So it stuck. And it's actually, it's the name of a business practice that's actually not mine. It was actually in vogue in the late 80s. Doug Tompkins, who founded North Face and then Esprit in San Francisco, and his friend Yvon Chouinard, who founded Patagonia, were the pioneers of this practice. And they believed that if each person in their organization spent 15 minutes a week reflecting and sharing with their manager a report that takes them no more than 5 minutes to read, they would create this flow of communication. It's almost like the concept of, of agile software development and agile management that we take for granted today. It was kind of not really well known then, but it was really an agile management practice that they had come up with to ensure there was this flow of communication and alignment throughout the whole company. And so the frontline people would share, here are my successes, here are my challenges. This is what I'm focused on. This is where I need help. Here's how I think morale is, those types of things. But they'd share that with their manager in a very lightweight fashion once a week. And then the key insights would then roll up to the director level, the executive level, and to the CEO. Ivan was actually quoted in Inc. Magazine back in 1988 saying this was one of the practices that let him basically take half the year off and go climb mountains and surf while growing Patagonia into the behemoth it is today.

Well, having time off to go surf.

And climb mountains is cool, but it also turns out that CEOs who have some detachment from the business actually run better businesses. Their people are actually empowered to do more and operate more effectively as a team.

Exactly.

Than the micromanager who obsesses and runs people into the ground and takes every decision and has their hand in everything.

And that's what we know. Sure. If you want to use our software and only work half the year and still be clued in. That's one approach. And most people are happy to have a lot more free time from fighting fires and being in reactive mode where they can devote their energy to the areas of the business that they want to as opposed to being derailed into dealing with issues that could have been avoided if their team had handled them or if they'd known about them. That's a big part of what we help with.

Well, I think it's cool and I love bringing some quality and structure to a regular practice of just being in communication. I use 155 just for the CEO coaching piece of our executive team coaching. And so I get a monthly report from my CEOs, I use a 155 report with a partner, a kind of an accountability buddy. And we look at what's going well and not going well every week. So we've got it into all of our clients. Then we have one client, a larger software company with 1,000 people all over the world. And they use 155 across the board to flow information through the company and keep people connected and are quite passionate about it.

That's great.

So how's it evolved? How's it going? What are you seeing from people? What are the examples? What difference is it making?

Yeah, that's a great question. You know, when we started, when we started building it, you know, I saw the power in really just institutionalizing a, what I call an organizational habit. Right. It's kind of like brushing your teeth or you know, doing something that if you just do it all, you know, if it just becomes a habit that you don't even think about, you're going to have greater success if you're actually in communication with your manager about the things that matter week over week, which takes a lot of discipline. If you don't have it either as a habit or have a structure, things just flow really, really well. You know, issues are surfaced and addressed, the right people know about them. When we started it, we just wanted to do that. It was about creating this 15 minute check in once a week. And there's been an interesting shift now in the marketplace that we're experiencing that's underway right now. And that is that companies have finally woken up to the fact that annual performance reviews are not only no longer effective, but they're actually detrimental. For sure. Yeah. And it reminds me of this, you know, there's a, you know, like an old wives tale that talks about this mother who's making this pot roast or something. It's this, you know, this pot roast and she cuts off the ends of the roast and the daughter says, you know, why are you cutting the ends off? And she said, well, you know, that's, you know, because my mom used to do that, you know, let's go ask my mom. And they go to the grandmother and they say, you know, why do you cut the ends off the roast? And she said, well, I don't know, that's what we've always done. That's what my mom used to do. And they go to the great grandmother and they ask her and she says, well, you know, I had this pan, it was only this size, and so I had to cut them off to get the roast to fit in the pan. Right. And so we tend to perpetuate things that are invented in one time, that make a lot of sense in one time way longer than their useful life and only reevaluate them when they start actually causing more trouble than they were worth in the first place. And that's what's happening. And so we're seeing that a number of the large, large companies like Accenture and Deloitte and Adobe have actually ditched annual performance reviews altogether. There's a bit of a gap now in terms of, well, what should we do? Because the original intention was we want to be able to review people and know where they stand in the company's eyes and we want people to be able to grow and improve. And that has to happen more frequently than an annual basis. I don't necessarily think a weekly cadence is the right thing. I think what's actually starting to emerge now, and this is actually what Deloitte has recommended. Deloitte's recommended that we do a weekly check in, a manager employee check in, a quarterly performance snapshot, and then an annual compensation review. So you're taking that old annual practice and you're breaking it off into three components. And as they made that recommendation, it turned out we had already the ultimate weekly check in tool. And so we found ourselves now in the midst of this sea change of companies looking for that particular solution. And so in terms of where we're headed as a company, we've got a little over 1100 customers now and they range in size from small 10 person companies up to 2 to 3000 person teams. And we are seeing the potential for what we can build as really a full fledged platform for team management and employee engagement and alignment. But we believe the weekly check in, that 15 minute check in is the core of it. It's the pulse that keeps people coming back. For example, in addition to just those question and answer that we do, we now have a very lightweight pulse survey. So people answer a question like how are you feeling? On a scale of 1 to 5 and then you can see that graphed across the company. Basically get the mood of the company week to and see if it's trending up or down. Or if you want to see how's the San Francisco office versus the New York office, or how's the engineering team versus the sales team, you can see that. And we've also built in an ability to do peer recognition. We call it high fives, where at the end of the 15 five people can acknowledge other people on the team or the company to say, hey Shane, that was a really awesome webinar you did last week. Or hey Nazar, great job getting that code released, you know, this past week for example.

And that then goes to.

The high five is seen publicly.

So the high five is actually seen by the recipient. If it's private, typically they're public. And then it actually goes up into a feed that the entire company gets to see. So we have clients who are putting these up on big screens or feeding them into Slack, which is one thing that we can do. And so those are the pieces that we're doing now. And then the next piece is actually layering in goals or okrs or rocks, depending on what you call them, depending on the methodology you follow into the 155 to create alignment. Because if you have somebody checking in on a weekly basis, being able to. A lot of people will set these quarterly objectives at the beginning of the quarter and then we try to keep track of them. And at the end of the quarter we assess did we hit it or not. The problem with that is that by the time you do the assessment, there's no chance of actually changing it or influencing the outcome. It's kind of like doing accounting after the fact versus accounting every day to see if you're on track with your budget or not.

Getting those rhythms right is critical, as we all know. You've got to.

It's one thing to have a great off site set some plans annually, semiannually, hopefully quarterly, but you cannot maintain even a quarterly focus on something.

You've got to get down to one.

Or two week check in on things and ultimately you've really got to do some kind of touch point every day. But what you do every day is not the same thing. So what you do once a week, once a month, once a quarter have all got to be different things that all tie together.

Exactly. And so we want to be, we're looking to build that, that weekly check in touch point with your people that ensures that all of the most important issues are being surfaced, that you're soliciting great ideas, that your team knows about their quarterly objectives and are able to communicate what's on track and what's not and where are the risks. Right. And then eventually, as we continue to progress, building out a quarterly performance review that takes the information from the past 13 check ins and lets you very quickly assess and provide feedback about how did those last 13 weeks go four times a year. So that's a little bit of the vision and direction we're going into now.

Awesome. What do you think is when a company investigates something and gets started with something like this, what do you feel like is critical and where do they typically go wrong?

Well, I think the first thing is where most people typically go wrong is actually thinking that they can just bring in a tool and it's going to solve their people problems. There's a mindset shift that's much more powerful. Even if you just have the mindset shift and don't even bring in a tool or if you, you know, and 15th of May be one of a dozen tools that you might want to evaluate. Right. The mindset shift that I've seen that can cause really a profound difference in the outcome of a company over a number of years is understanding that human beings have an innate drive to learn, grow and become their best selves if they're given the right environment. Right. So the analogy I often give is that of like a, you know, a pine tree. You know, pine tree grows really well up in the Sierras, right. In high altitude in a forest of other pine trees as an ecosystem. Right. And it has a certain mix of sunlight and water and snow and nutrients and all these things that if it's just there, it's not like you need to coach the tree or anything. It's going to grow into its potential. You take that same tree and you plant it in the middle of the Sonoran Desert and it's not going to do so well. The tree is going to die. I think where a lot of employee development philosophy and employee management philosophy goes wrong is they're too focused on the individual and they're not focused on the ecosystem. And one of the ways to, you know, one of the models that I often go back to is looking at Maslow's hierarchy. Right. So Maslow was very astute in saying that, you know, we have certain human needs. Most human beings have These needs and there's an order to them that when you know, at the bottom we have, you know, physiological. If something's wrong with our physiological needs, we don't have enough water or we can't breathe. You're not going to be worried about your higher order needs. Like you know, whether you have love or belonging, you're going to be dealing with that like if you're in the midst of a heart attack, right? So you know, most people's physiological needs are taken care of. The next is your safety needs, right? So the next tier up, do you have enough money to pay your rent, to eat, to, you know, commute, to work, to buy clothes, all those kinds of things? Again, most companies pay enough money that the safety needs are met. But that's usually where organizations stop, right? The next two levels are about your love and belonging, feeling like you're connected, like you're part of something, and your esteem, your self esteem, your esteem of others. And a lot of companies inadvertently cause problems by not having their awareness on that. So if you create a culture where people are feel like they're accepted, right where you've got like tribe, right where you have like with that high fives thing that we do, the pure appreciations and the pure recognition, it creates this, wow, I'm really accepted here. It helps build self esteem. Now in terms of the esteem needs, having an awareness that someone needs to be in a position where their unique strengths are aligned with the work that they're doing and they're given enough opportunity to grow. So there's enough stress beyond their capacity, but not enough stress that puts them into distress. There's kind of like a range there. It helps to build their confidence and whatnot. When all those things are taken care of, people naturally move into this place that Maslow called self actualization, which is characterized by two things. It's characterized by growth and contribution. Imagine if you've got an organization where people, you've created the right environment for people to move into that and that they're focused on growth and contribution inside your organization, it can transform everything. And if those needs are not met, people will be focused on trying to get their needs met. A lot of companies, you know this concept of stack ranking, for example, where the GE used to do, where they stack rank everybody in the company and they'd fire the bottom 10%, right? That put a lot of people's safety needs at risk. So rather than doing their best work and focusing on contributing to the company, so much energy goes into am I going to Cover my butt and try to save my job. Right? And that's counter to probably to what the company most needs. So that's one kind of part of the shift. The other part is we inadvertently have this language that's really a holdover from what I think a holdover from the Industrial revolution where we talk about people as resources or assets. So you hear it in just human resources. Or we say people are our greatest asset. If you look up the definitions of these words, if you look up the definition of resource, it's anything that can be used to transform into value that in the process may be consumed or made unavailable. We're basically saying we want to bring people into our company, we want to extract as much value as we can from them until they've been consumed or made unavailable, that is burnt out, and then we're going to replace them. Or an asset is something that can be owned and controlled to create value, which to be honest, most people aren't really inspired about that prospect of being an asset. So one way to think about it is to say, look, I've got this group of human beings, let's say I have a hundred person company. And if I'm using this language, if I'm thinking of them as my resources and my asset, I'm thinking about how can I get as much as I can out of these people before they're expended and it's guaranteed, you're not going to have the results that are possible if you take the mindset that, wow, I've got 100 human beings who have much greater potential tomorrow than they do today. And that Same group of 100 human beings could be producing 25, 50% or 100% more a year from now. If I invest in their learning and growth and development, and if I create the environment where I don't even have to do that much because they're naturally going to step into their own growth and contribution. So that's the mindset shift that I prescribe and I work with companies to take on. And it actually just starts with a simple but not easy shift in yourself, in that you actually genuinely have to care about the people in your organization. You actually generally have to care about their success and their future. Not even in regards to what you can get as a business owner in your company, but if you take on the frame that I actually care about your growth as a human being and your success as a human being, whether that means you're with my company for five or 10 years or in a year from now, what's best for you is to move on to another opportunity. If you take that stand with your people and they know that that sets up a, an enormous amount of potential for loyalty because people really feel that and they get that. They're like, wow, this company and this leader really is looking out for me. I'm going to give my all to this company and to that manager. Right. So you get the gist.

It's great because a couple things I hear in what you're saying. One is that people are not a system of diminishing potential who as you use them, lose more and more potential until they're expired. People are active living things that can be developed to have greater and greater value in an organization. And by providing connection, belonging, security, communication, you can begin to move people up. And of course some folks have taken leadership classes and things with me in the past and, and I've often espoused starting at the top and going to what people actually care about, the things that would show up in their self actualization state. And I've often argued that the interpretation of Maslow is wrong, that the opportunity is to actually start at the top and then other kinds of things get handled in the process. If I talk on something that really inspires me and empowers me, there's an awful lot of people who will help me deal with other kinds of things that I've got to deal with in terms of survival and belonging. Interestingly, that totally ties with both the work that we do in coaching companies to scale up and by other authors who you'll know as well, like Simon Sinek. Start with Y. He says that the best companies really begin with a conversation about why, about what they really care about, but what matters to them. And in our work in developing strategy and helping companies grow, we start with purpose, right? If not the first thing or very early on, purpose and values are high, high there. And all of those things go to what people actually deeply care about, purpose and values. When you connect with that and your software, just by giving people a voice on a regular, consistent basis and a feedback loop where they can be heard by the people that they work with and for and in turn be recognized.

As such as contributing human beings, valuable.

People, you begin to create a dialogue that has people be known and has people collaborate better. And so there's a lot of power in that that goes far beyond, hey, we've got a simple thing that lets people tell us what's up. Right?

Exactly. And that's it. It's having that frame of Mind that we're going to support our people in doing their best work and we're going to listen to where they're struggling and provide support and then using a tool to make that efficient and easy.

The other thing that I liked in what you said is that you talked about how the pace of doing an annual review is insufficient. And I often thought people would come begging me for their annual review. It's because what they were really saying is, look, it's for me to get a raise now. And I'm like, you know, you're doing a fine job. What's this obsession with the annual review? And in fact, I was being stupid because what they really wanted was their raise and they wanted that on an annual basis, which didn't have a lot to do with their merit or growth or things like that. It was like, okay, it's time. And none of that's particularly healthy. So I think it's really great. If you actually cared about people, though, deeply and new people, then firing people who weren't performing also would be easier. And that's one of the things that managers often struggle with to the detriment of their company. And those people in the largest context of their lives, and trying to make it easier for someone and spare them pain will keep people in environments and in roles that they're never going to win in. And that does a terrible disservice to the team, to the enterprise, and to those individuals who are in a place, an environment, a role that doesn't play to their strengths, that isn't going to give them an opportunity to grow. So when you really get interested in all that thing, you actually also get good at letting people go.

That's right. That's absolutely right. Or finding another role for them. Right? Yeah.

Or if you're big enough and you've got the right. Yeah. Often there's often a place to move them where, oh, like, oh, you're really great at that and you're not so great at that. And somehow you just ended up in this other business, but you actually are great with relationships and not so good at closing. So let's have you in a different role.

Yes, exactly.

Right, beautiful. Well, this is super helpful. So we're going to put a link to the software in the show notes. It's 15:5.com number 15:15.

And then f I v e dot.

Com the number's 1:5. Then f I v e dot com we'll put that also in the show notes. And anything else we should link to or point to.

No, I think that's probably good. We have a great blog if you're interested in any of these concepts and what I think is the next generation of management. You can also follow me Personally on Twitter DHassell D H A S S E L L awesome.

All right, so we'll throw the blog. We'll throw your Twitter handle and a link to the software and the stuff and and let people go play with it and see what they can do. When introducing it with folks, we always try to start with a pilot group or someone and then figure out what the right rhythms are, what the right questions, tune it a little bit before we try to get everyone engaged in something unless your company is particularly small. But let's gear it up for success and move through that way so we encourage folks to check it out. Thanks for being with us today. This is super helpful. Great conversation. Love hearing the evolution of your journey and starting to combine your purpose and profit all together.

Great. Thank you Bill. Appreciate it.