047: Roland Siebelink - Balancing Both Innovation and Scale

Are you thinking about how to grow your business with near and offshore staffing, but you're also wanting to make sure that it's reliable, cost effective and really well done? I think docsa talent is the way to go. Here's why. They don't just fill your jobs. They bring integrity, top talent, and a people first approach that's hard to find. I've known the people at Doxa talent for over 20 years now and I say that you can count on them. I have talent. Talk to Doxatant and you won't be disappointed. Go to doxatant.com Bill G. Again, that's doxatant.com Bill g. One more time. Doxatalent.com Bill G. Check it out today. Hello and welcome again to the Scaling Up Business Podcast. I'm your host and Gazelle's business coach, Bill Gallagher. Today we're going to talk all about how to simplify your life, how to focus things as the path to Scaling Up. So we're going to make things easier for you today on the podcast. Today with me is a fellow coach and a dear friend from the Bay Area as well, Roland Sieblink. Hi and welcome to the show. Roland.

Hi Bill. Thank you for inviting me.

Yeah, it's great to have you on. So Roland and I both work in the San Francisco Bay Area, Silicon Valley area, so we have more than a fair amount of exposure. We've both been senior folks in before being coaches in tech companies and Roland maybe more recently than me and we met working with, bringing Scaling up to some parts of a pretty large tech company. So I'm excited to have him here. We're going to share with you some lessons that really apply to all companies, but in particular they have an impact in the, in the tech world as well. And those of you thinking about the balance of innovation and scale, like where that is. So that's, that's really. And, and then that leads to, right. The opportunity to focus in on things. Right. So before we get into all that, Roland, just tell us a little bit about kind of your background and some of the places that you've seen this phenomenon at work. Tell your story a little.

Yeah. So as you'll hear from my funny accent, I'm originally from Europe. I was born in the Netherlands, then went to Belgium to study communication and was very lucky to get involved in the Internet world very early. So I taught the very first Internet course at a public university in Belgium back in 1992, then founded the first website company in 1994. And then started rolling out broadband Internet for consumers as early as 1996. And we were pioneers with that in Europe. Then after I did my MBA in Switzerland in Lausanne, I joined Bluewin, which was the big IPO candidate in the Swiss market also for broadband Internet. And that was an interesting experience because that was just about the time of the dot com crisis. So that IPO got canceled and then we had to turn it around into more of a traditional daughter company of a large telecom company. Did my first startup there in E Mentoring and after a joined an artificial intelligence company that was able to summarize documents within a second so you could upload like a 10,000 page PDF and have a summary of that within a few seconds. Brought that to Silicon Valley. I was the first to move over here and build my network to try and find funding. It's a long slog, but ultimately we got some prizes in terms of the founder showcase and some angel angel competition. Got some funding and sold it to Tagged, which was a small Facebook competitor at the time. Then afterwards I joined Rocket Fuel, which was at the time a fast growing company in the newfound area of programmatic advertising. What I've seen basically in that career is at least three large scale tech companies that started off really small and then grew really fast while I was there. The one in Belgium, I was employee number eight and it was 12, 1200 people three years later. The one in Switzerland was already a little bit bigger, but it also grew from 50 to 300 while I was there. And then we had to cut it down a little bit again. And the one in Silicon Valley, rocket fuel was 100 people when I joined and it was 1,000 people two and a half years later. So I think I'm in a kind of a unique position to see from the inside out what a scale up really looks like in tech in that enormously fast growing whirlwind, if you will, the tornado, as Geoffrey Moore calls it. What I like to say is that this sounds a little bit like seeing a movie in fast forward. The effects of good management or bad management, Good leadership. Bad leadership usually take seven to 10 years before you really see these come to fruition or not in these companies it goes much faster. So you learn a lot more and you see if you take the right decisions now, then you can get much better effects already a year, maybe even a quarter later. And that's what excites me about working with you and all the other coaches on this whole scaling up methodology.

Yeah, it's an interesting process. Right. So the And I think we're all fascinated with. There's lots of talk about innovation and I think what we see, especially in our earlier stage clients, there's often an innovator at the core. Sometimes we call them the visionary. Right. Visionary innovator type mindset. And that person may be strategic oriented, thinking about from the CliftonStrengths talent themes and they may be persuasive. And yet if they just run with new ideas all the time and are chasing new ideas and rewarding new ideas. Right. It can be destabilizing to a company and you can miss the growth opportunity from focusing on that, that core idea. You were talking with me, I remember actually when we first met about a culture where everyone's trying to be the smartest person in the room.

Absolutely. And I think what people don't realize that the founders personality and their habits and their values automatically start mirroring in the people they hire and how these people start behaving. Because when you have that fast growing a company, often it lacks in structure, it lacks in documentation. Not in the boring process sense, but more in just writing down what are we actually working on this quarter. People are constantly guessing what does the founder want? Today the founder is kind of like the king. And whenever they want something they will say yes, of course, I'll do that right away. And then they just wait until they have a new idea and they drop the first idea so that they can keep going and be the trustworthy lieutenant if you will. But never getting to the point where they start building their own vision for their department, start thinking longer term. It's all optimized for jumping as soon as the founder says jump.

Yeah. I think that when I think both about my clients and then also my own past as CEO, when I had a good operational partner and I let them do their job, we did well. And when everybody chased what I did or it didn't go well because I am an idea monkey. Right. I'm having ideas all the time. And that's destabilizing to a company trying to scale. So sort of knowing and understanding yourself and saying okay, my job is maybe to go work on the futuristic thing. Right. So I think you talked about having. And we know that we read in Scaling up about the idea of having a strategic council that focuses on long term things. But that's different than the core that's figuring out how to scale something.

Yeah. And I do want to say also that this is just one way of dealing with this problem. Right. I don't advocate that every Founder should always become focused on just the long term visionary stuff and that they never get involved in the business. What I'm saying to them is it's a choice you make, like do you want to be actually the head of the operational company? Do you want to be the one that's actually responsible for driving sales and dealing with customer complaints and getting these processes optimized over time? Or if that bores you, then get somebody who likes that stuff. What I don't actually advocate is what happens a lot in Silicon Valley, they let the founder run it, they bring it to series A, Series B. That's when the company really starts scaling and then the investors are kind of waiting for the moment where the founder starts making too many mistakes and they can bring in a friend. As an experienced CEO, I rarely see that work well. And the reason is that many of these CEOs have their experience in very mature companies. But a mature company is a very, very different beast from a scale up. They have assumptions about processes being in place, things working already that really still have to be built. And so what I like to bring founders to is to actually learn and with their team get to a point where they can fulfill those roles of effective management for a scale up without having to replace a CEO just as a matter of course.

Yeah, well, there's a certain kind of CEO that's been through stages that's useful and there's the, there's, well, deciding what the CEO role is. Right. I think that we all have different notions of what that is. It's a lot clearer what the COO role is, but especially in an early stage company, what is the CEO role? So you talked about, you talked about, let's go back to this company in Switzerland where. Take us through that because I think it's a great case study there where they had hundreds of products. Right. But only a few of them and that focus. So take us through that.

Well, the company was called bluein. It was the market leader in the Internet portal business. So kind of in the same niche that Yahoo was at in America at the time. And they also started to offer Internet access. So initially still dial up access. And then they got into the broadband Internet business. They were slated to do an IPO at the end of 2000. Then that got a little bit delayed and then they got caught in the dot com crash. And so after a few delays, they basically had to decide to not do that IPO anymore. The problem was the whole culture had been built about exciting potential investors. So how do you excite investors by having all this growth opportunity, all this growth potential. So they were building new features and new products and basically producing press releases about all the stuff that they would have. And then when they decided not to do an IPO and that the company had to become profitable, certainly we had to look around and see the chaos of 200 products that they had built, with many product managers managing 15 or 20 products, so to speak. At the same time, obviously not very effectively, because when we did a very simple analysis, only 10 out of these 200 products actually made any revenue. All the rest were just freebies or giveaways or things to excite the community with. And on the profit side, it was even worse. There were only two that were making any profit. So obviously we had to cut down that portfolio quite heavily with all the difficulties in change management that entails. There was a slight cut in personnel, but not that much. Fortunately, what happened is it really brought down the focus to, okay, what value are we actually providing in the marketplace? What does this customer want from us? And what they really wanted was that broadband Internet access. I remember, interesting statistic. A lot of the investment was going into that portal and so they had hired journalists and people were writing content. And when you looked at the statistics, it didn't actually look like they had that. You know, they had a pretty high bounce rate. People were leaving that site quite heavily. And it turned out that the only reason why they had so many page views was because they had bundled a browser that automatically landed on that homepage and people didn't know how to switch the homepage. That was the only reason why people were actually coming to that editorial work. But they never actually read it. They always just bounced away within a matter of seconds. That was one major insight. What I also remember, when we tried to put less investment into that editorial team, they said, well, you know, but we know that 90% of the people who view our content are not actually buying our broadband service, our big cash cow. So, you know, this is a great marketing channel to persuade these to buy our Internet access. So that made sense. And so the only thing was I asked him, so who told you that statistic? And everybody said, well, you know, that person. But he now said, mark has told me that. And I asked Mark and Mark said, well, I heard it from Emmanuel and then Emanuel said, well, I heard it from someone in it. I think it was Roger. And so then I asked Roger and it was actually a circle of like seven people. And the last one, Urs, I think was his name. He said, well, Bettina told me and that was the one that had started to tell me, like, go around the circle. So then we're like, okay, so nobody's.

Actually telephone and the telephone business. Exactly.

When we actually tried to measure it, 98% of the people who visited the portal were already customers of that product. So the whole argument was based on loose sand, actually.

Yes. How about that?

It definitely was a good learning in terms of dig a little bit deeper. Maybe the fact that I was originally trained as a journalist helped a little bit there.

Well, I saw this recently. Somebody was talking about how goldfish have an attention span of 7 seconds and human beings and are mobile devices and it's all bs, but it was getting tremendous play and it fit right into a preoccupation that people always have with new technology. Oh, this new technology is messing with us. And then some pseudoscience reported by somebody and then referenced around. But there's no study, there's no. That data on the goldfish is nonsense, right?

Absolutely. And so we can talk a lot about the whole fake news phenomenon going on, but sticking with startups and scale ups. What I really learned from this episode was every startup has to build hype around their product. That's the way you recruit people, that's the way you get investors to buy in. The problem is that at some point in time, people start believing too much of that hype themselves and they start taking business decision not based on what's real, but on based what they think is the case. That's when often these businesses go off track. So a big component of what I try to do with my clients and as you do with yours, is get them to be realistic. Again. It's fine to have your compelling story for the outside world, but at least inside your business, get real, get real results, get real measurements, and also learn as a management team to talk truth to each other rather than to just prove that you're all drinking the Kool Aid.

Yes. So I think we're pointing to something here that's interesting and that's this difference between innovation, for gee whiz innovation sake, and just because we're on that thing, and then innovation that solves a problem. And sometimes the key innovation is a business innovation or it's about that. And it comes sometimes from having your back against the wall. I think about one of my, a couple of my big innovations were when it looked like my business was about to fail, right? And then I let go of things that didn't work. I focused on things that did work. And we had a immediate scale up. Right. And that kind of drill in. Now, it wasn't innovation in the traditional sense of creating some gee whiz new groundbreaking thing. It was about focusing on the places that work. That's a different sort of a category of innovation. Yeah.

And of course, if you're looking at an early stage startup, their essential business model is to excite investors with future potential, which gets their capital and then they can do whatever they like with that capital. Within broad limits, of course. Which means that often their processes are tremendously inefficient. I've seen examples of companies that are already at the level of 500 to 1000 employees where you would expect them to have developed quite efficient processes already. But where, if you track the sales order through the delivery and through billing and you wanted to see how many times does this get sent back? Only 1% of the sales orders actually made it all the way through that cycle without ever being sent back for corrections or, or modifications. And that is, as people who know the leanworks know, that there's a ridiculously low rate in terms of process efficiency. Normally you would expect to be somewhere around 80% of things flowing through without any modification. And it's allowed because they just keep exciting investors and try to get more funding out of that. At some point in time, that model starts breaking down.

Yeah. Well, in getting ready for the show, you talked about the notion of what got you here won't get you there and the need to continually evolve that playbook. It's not necessarily about throwing some new stuff in it, but about honing all of that. And as I've seen in our work together and in our work with clients. Right. There's this. One of the key things that we do, usually not right in the beginning, but as we get along the way a little bit after we've laid in some foundation, we start to look at process accountability. So what are the core processes with a company? Like let's go from the quote to cash and let's look at that flow through and it's very related to some of the work we do in cash as well. So we look at the cash conversion cycle. So we're investing money and we're going through the. And we find in establishing an owner for a core process that spans departments or functional areas and a couple of KPIs, we're looking at what's the outcome and then what are the places that it breaks along the way. Right. So there we can do like Pareto analysis 80, 20 or waterfall graphs and start to figure out what's wearing this thing down.

Right, absolutely. And I'm with you there. I also, after having laid up a little bit of foundation about functional accountability, accountability and who does what, the next step is not to actually keep focusing on those functions, but on how they work together. It's amazing when you start trying to map out the core process of how does this business deliver value. Value chain is a different way of talking about that. People don't even agree on what the business is trying to do and who is responsible for what, what is the handover. And often just mapping that out and understanding the failure rates or the drop offs between those can provide tremendous value for the business. Even in tech businesses in particular. It's not just enough anymore to have that one technological innovation and expecting that to drive all the value. In the beginning it excites investors and yes, you can get started with it, but over time you need to be competitive on the overall process for your customer. Salesforce obviously a great example of a scale up that did really well. Their innovation in the beginning was just let's not install software on the PC anymore. But ultimately what they really competed on was on the maintenance cost being far lower. And that was their 10x advantage, which really came from understanding the full value building process in the eyes of the customer. Am I competitive with my software license cost? In the beginning, yes, they were undercutting these guys, but over time they actually went above the license cost because they understood it's on the maintenance that my customers save all their time and money and I'm unbeatable there.

Well, and you're also pointing to a kind of a core strategic idea that we use for companies to get their 10x advantage. We call that the X factor today. And of course all the work in scale up really started with the Rockefeller habits. And if you look back in the Rockefeller habits, John D. Rockefeller, as he entered the oil business, looked around and he was like, oh, one of the key things that I could control is the transportation costs for the fuel. So he locked up contracts and he, he gave himself a massive advantage over the competitors. Now there was certainly controversy about whether that was kosher legal or not, right? But, but he did it and it gave him advantage. And I think that in the example, right. So early SaaS companies said, wow, you know, getting shipping, installing, updating software is a pain. If we just host the thing, then you don't have to build a server and you don't have to whatever. But then they start to discover something else. They've got a lock. So somebody who's on your hosted app in your environment. Right. That's a whole different kind of relationship with that customer.

Yeah. And you start discovering other, you know, frictions that you can take out. For example, the whole sales process for installed software is a highly, highly costly process with a lot of persuasion, takes months and big committees and RFPs and stuff like that. Whereas most SaaS companies just say to an employee, just try it out and it's free. Or it's just $5 a month. You can expense it and you can invite your co workers. The IT department comes in as an afterthought when they actually need access to the security permissions or they need to be able to add employees. That was a giant source of friction that they just took out. Another example that comes to mind is the whole API access, where suddenly integration between systems becomes a matter of just pressing a button and adding your credentials. Not giant integration projects of the likes like Siemens or CS or other companies that you have to custom program.

So we're going to pull back to broaden for everyone. We're not just speaking about the tech world, we're really talking about everything. So there's a place of initial innovation and there's a place for ongoing innovation, really going into new markets and new customers, but understanding how to reach more customers, how to do a better job executing. Focusing on the core of the business is more the realm of not the visionary founder or CEO, but often more the CEO that's going to extend stuff. So sometimes the visionary founder will take a CEO role and then sometimes they'll just go off into product development or some other area. But then the whole like execution and scale lives with another kind of a mindset, right? Yeah.

And I think very successful companies in Silicon Valley have proven that model. So in the Google case, of course, Larry and Sergey got a CEO formally above them, like the adult supervision, as they used to call it in those days. But when you read Eric Schmidt's books and his interviews, it was very, very clear it was their company. And he was basically just there to bring in the boring old business stuff and a little bit of a. Of a cover in a sense. One generation later, when looking at Facebook, Mark hired Sheryl to really take care of the sales side and call her coo. She is the COO of Facebook so that he could focus more on the product and engineering. But he's definitely not just gone off somewhere. He's still very much in charge as the CEO, but Sheryl taking care of the business Results and making sure that everything just works allows him to then look a little bit further ahead, see what is next down the pike. Without that, I'm pretty convinced they would have missed the boat on mobile and would have seen one of their competitors take over.

So we like to say that the routine that the habits set you free. John D. Rockefeller was a highly disciplined, self controlled kind of a man. And many of the people we work with are not. But by embracing the framework of scaling up and the rock habits and companies and the people within them actually sort of get to chill out. You do annual planning. We have a core of strategy work that is really what you need to develop thoughtful strategy. It's not over complicated, it's not that hard to do. It's maybe hard to do the first time, which is why we recommend a coach. But if you watch videos and you listen, you can do it on your own as well. Coach makes it easier. A coach simplifies. A coach brings some outside perspective, helps you see what you can't see as quickly. And then, so we get that defined. Then we do annual planning, then we do quarterly updates. We focus the team on the number one thing. We keep the team healthy. We establish good metrics and dashboards. We run through the weekly and the daily huddles. Right. I was working with another tech company two years ago and they were all excited. They'd been, they'd done a number of acquisitions. They had an ambitious plan for scaling up and. But they felt like it was hard for them to embrace the scaling up thing, especially with offices in multiple countries and time zones. And all the executive leadership did not want to participate in the daily huddle. Right. They're like, they all off want to be the people off developing things and innovating and forging new ground. And they really gave pushback in particular on the daily huddle to the CEO and he's like, hey, Bill, what do I tell these guys? And I said, well, do you remember what the top three complaints were of everybody in the beginning, why we started this thing? He's like, yeah. And one of the top three was after all these acquisitions, it's just like silos, you know, the company we acquired in Columbus is still the company in Columbus. And the, you know, and so they, they're like, they're different. I'm like, so silo is your key complaint and you can't be bothered to talk to each other for 15 minutes a day?

Exactly. Yeah, it's very common. And I worked with another company that had a little bit that Same phenomenon of where you say the methodology is good for other people, but not for ourselves. Right. So obviously that doesn't work.

One methodology, one company. There are different things that we do at every level. Right. There's a lot of things that middle managers and the lower ranks can contribute, but they are definitely looking for the vision, they're looking for the values they want the things that the founder's DNA to come through. Yeah.

And I think that's why I really like the terminology of the four decisions. Because why are they decisions? Because I found them, I often portray them as the foundational decisions or the leverage decisions. It's the few decisions you need to take and clarify so that other people can then work with those and make their own decisions on the basis of that. It provides the boundaries by which you set other people free. It's not just the rhythms that set them free, but also within this framework, you can decide by yourselves. Often we ask clients like, okay, what do you think you're actually scaling up? What is the one dimension you need to scale up? Is it just staff or is it revenues, or what is it? And often they're, they're having trouble getting anywhere beyond revenues and staff. We often get to a point after some discussion, what we really need to scale up is the number of good decisions the company can make. Because every customer has their own issues, every segment needs a certain way of approaching them. And so as a company, if you can scale up your decision capacity and not have everything stuck in a bottleneck like, okay, this is waiting for executive approval, or we don't quite know how to deal with this, set up a meeting for that, then the company can be far more responsive and faster in the marketplace and capture that larger market.

Yeah, well, I think you point to something. So our four decisions give us a diagnostic framework as well to go and look in on a company. And I was talking to, I didn't end up working with this client much in the financial sector. And they were like, we really just need to get good at top grading and, and scaling our people and the people side because we're good to go. But when I drilled into it a little bit with them, I realized there's nothing unique or distinct about their strategy. So they're just trying to throw weight behind something. Well, if you're just trying to like out, leverage everybody else, but you're a early stage company, you don't have the resources, you don't have the might to do it, so why bother? And he didn't like the idea of having to go back and look at purpose values. Bhagavan core customer, brand promises, you know, the heart of our strategy. Yeah, but if you get those things focused, then attracting people is easier.

Exactly. And you know, I'm sure you've got the same experience as I have had with some of my clients. The initial idea that the client wants to talk to you for, you know, the thing that they're missing is almost always not the real root cause. Right. Because the real root cause is going to be a blind spot. And so by definition, they don't know what's actually bothering them. If they think they need help with strategy, it's going to be people or it's going to be execution. If they think they need help with execution, it's going to be strategy. If they need help with cash, it's going to be people almost always. And that's why I think being disciplined and always focusing on these four dimensions at the same time and seeing where you can make most impact is really important.

So two things I think really help to what you're saying. One is the coach. A coach or an advisor. If you don't have a coach, you can't afford a coach. Then some other advisor, some outside perspective. I like to say again and again that we'll never know who discovered water, but we can be sure it wasn't a fish.

Exactly.

And you in your business can't see the water you're swimming in, but the coach or an advisor or some trusted friend or a peer or somebody from outside will point things out to you. And that's one place to reveal a blind spot. Right. The water is the blind spot to the fish. The other is the process. So when you go through a scaling up process, you work through the flow of meetings that we do over a couple of years with clients, your blind spots start to get revealed to you. We start in with a management team in the world of strategy, asking them questions about core customer and brand promises. And the management team says whatever they say. But then we send them out to talk to their customers and they come back with different things. They come back with, huh, well, what you thought was number one is number three or even below that, what you thought is the most important thing and what your customers told you is actually kind of distinct from that. Or they used different, different words and so on. So that process or the coach or the advisor reveals what you struggle, what takes so long to see on your own.

Yeah. This reminds me also, you know, I work mostly with mid stage tech companies. They are often having the problem that they're losing momentum. And of course, you know, when you're a tech company, you're having all this having the dependence on VC money, you know, losing momentum is a matter of life or keeping momentum is a matter of life and death. And then what I notice is there's this interesting phenomenon that typically the founder is still the one that everybody looks to to solve everything. There's even a story of a company a while ago now that had a sagging stock price and somebody launched a JIRA to the CEO, like JIRA being a task in a task management system, like, okay, bring up the stock price probably was his job, but. But still, what I wanted to say was that founder, CEO is under such stress that they're always looking for the one silver bullet. And so then they will suddenly invest in a big sales training program and it doesn't give the results. And then they will invest in like process optimization and it doesn't bring the results. And one after the other, there's always a new silver bullet. And after three or four or five attempts, of course, they undermine their own position because it's simply not working. Yeah, I always tell them, in line with what you were saying, the silver bullet is the playbook. It's not any one of the elements of the playbook. It's a half the playbook. Right. And to be disciplined about catching all those different parts of the process in your management habits.

Yes. So we're running out of time. So let me just let folks know that if you haven't read it yet, go read the first 1720 pages, read the introduction, the overview section of the Scaling up book. You can find that. You can download that on our website. In our growth kit, we include that. You can also find it online. Or if you've got the book, go back and read that section. See kind of the totality of all of this. So there's people, strategy, execution, and cash. And these things work together over time. If you'll want to get more info on Roland, I'll put the link in the notes, but it's scaleupally.com podcast so we'll have the link to this as well. You can find this podcast on itunes, Stitcher. Wherever else you go to find your podcast, you will find our video tutorials, YouTube.com billgallagher of course, we have a blog@scalingupbusiness.com and that growth kit is a free download. Includes the intro and overview of the Scaling it book, plus instructions on how to run your first meeting yourself with your team. If you're not yet ready for a coach, of course we'd love to help you find a coach and we can't take many ourselves, but I know hundreds of coaches. So if, if, if you'd like some advice on how to choose a coach or why, it'd be my great pleasure to talk to you. So drop, drop us a night comments here or, or send us a note through our website@scalingupbusiness.com the last thing to tell you is that Roland and I, because we're both in the Bay Area and we're both sort of tech minded folks, frequently we'll do workshops together and if you're listening to this when it first comes out, we've got a workshop coming up that we'll be doing together in the Bay Area. So go register quickly there while space is still available in that you'll find, you'll find a link on our page there scalingupbusiness.com you'll find a link to the latest workshops right there.

So in May, right bill?

Yeah, May 18th is our next one in San Francisco and then we'll have others throughout the year. So we usually put the next dates, they're not, you know, not continual. But find info on, on the website for that. So if I don't see you sooner, I'll see you at the work shop. It was great to have you in the podcast today Roland.

Thank you so much for inviting me. It was a pleasure, real pleasure.

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