No, that title is not a typo…this really is the third installment of what had originally been planned as a two-part post on the topic of rebranding. In follow-up to those initial posts, a question arose about the following line that appears in Part 2: “Create a plan for all the items to be updated in follow-up to the brand launch…This may well be the most often overlooked aspect of rebrands – don’t sleep on the Post-Launch Check-list!”

In an effort to spotlight the value of the Post-Launch Checklist, I’ve included a sample of one here. I hope this spreadsheet will be a useful resource for anyone who is considering, or actively engaged in, a rebranding initiative. I believe the artifact speaks for itself and requires little explanation. Nevertheless, below are a few explanatory comments to share how / why it was set-up and to assist in unlocking the value of this sample Post-Launch Checklist:

• General Intro: This is a redacted version of an actual checklist that was used in a recent rebranding / renaming initiative at a sub-scale B2B SaaS business. It includes nearly 80 tasks, which gives a sense for the enormity of rebranding / renaming a business. For anyone who uses this as a template, please take what applies, delete what doesn’t, and add your own tasks to the spreadsheet. Finally, to protect the innocent, identifying names have been removed wherever possible. Instead, the terms NEW NAME and OLD NAME have been used as placeholders for the business; and individuals’ names have been removed altogether from the columns “Requestor” and “Responsible.”
• Set-up: Critically important to the overall construction of the Checklist is the use of drop-down pick-lists. In addition to playing a large role in increasing data hygiene, these pick-lists play another valuable function -- sorting. These allow a user of the checklist to easily sort / filter on whatever variable is most important at that moment. Whether I want to view the tasks by Department, Workstream, Risk Level, Status, or another variable…it’s easily done. The table below provides a high-level legend of the overall topography of this Checklist, with pick-list items where applicable:

• Timeline: We recommend converting the task list to a “Timeline View.” This is quite handy for those who want to see a GANTT Chart of the project and / or for those responsible for managing a finite set of resources through the busy periods of the rebranding initiative. Enabling such a view is the primary function of the Start Date and End Date columns of the spreadsheet template above.
• It’s Never Over: While the intensity of the post-launch period will taper down, it is never over. Rather, we’ve observed that it’s helpful to conduct an audit of the rebrand / rename initiative at the one-year anniversary of the launch (and annually thereafter). This offers an opportunity to assess where maintenance is required and / or to address the (inevitable) areas where brand guidelines have been improperly executed since the initial launch. For this effort, it's helpful simply to re-purpose this same artifact and to populate it with the newly relevant tasks.

That’s it, other than for me to thank the Lock 8 portfolio company executives who have generously shared their work here – you know who you are! With that, please go forth and use this artifact to great effect.

This is the second of two posts focused on rebranding initiatives in SaaS businesses. Part 1 explored whether / when to consider undertaking a rebrand project. Part 2 will offer lessons learned regarding how to manage such projects with as little pain as possible.

We’ve found critical themes for those entrusted with ensuring successful rebranding / renaming initiatives:

1. Manage the Stakeholders
2. Own the Project
3. Leverage partners

Manage the Stakeholders

As outlined earlier, rebranding initiatives are strategic, creative, and high stakes. Unsurprisingly, they can also be extremely emotional for people. With that in mind, the most under-appreciated and overlooked aspect of these projects is managing stakeholders’ expectations every step of the way:

• Start Senior / Start Small: Although it will eventually be important to garner broad support for the brand direction, it’s best to start small. Working with a close, senior team makes the process go faster by securing early buy-in among execs about “what good looks like.” It also allows the Project Leader to tap this group for feedback and key decision-making. This will be necessary to avoid delays and backsliding later on.
• Build a Coalition of the Willing: To build early buy-in for a rebrand, a cross-functional Brand Ambassador group can work wonders. The Brand Ambassador program gives select employees from across the company an insider's view on deliverables. They are not veto-holders in the process, per se, but it helps bring them along and incorporate their views. They can then credibly advocate for the brand when it's time to launch internally. Be sure that all departments are represented and feel heard. Silos are the enemy of good brand roll-outs.
• Anticipate the Emotion: It's natural for employees to be emotionally attached to the business’ previous brand and / or to have strong opinions about what the future brand should look & feel like. Figure out where the centers of influence are in your company and choose representatives from each of those centers to be involved in the process. Failure to do so runs the risk of a hard-to-manage emotional response from the team later.
• Honor the Past: Make sure to honor the legacy of the previous brand. Emphasizing the years of prior success is crucial. It is also a ton easier to leverage foundational aspects of the legacy brand, rather than starting completely from scratch. Honoring legacy should also be about preserving brand equity where possible. For example, a company may have historically used a bright and "ownable" color. Keeping such a color, but migrating to a more mature shade may be a way of celebrating the past while also keeping with a new identity.
• Expect the Eagerness: New branding can be like catnip for a team whose prior brand had historically underperformed. And, left unchecked, they will inevitably jump to using brand artifacts (logo, type treatments, color palette) in some very “creative” ways. While this comes from enthusiasm, it must be managed to retain the standards and integrity of the new brand.
• Communicate Proactively: It’s easy to get focused internally, but don’t forget about your customers! Communicate the rebrand to your most important clients and partners before it goes public to avoid them feeling blindsided. Remember to rinse-and-repeat in terms of explaining the WHY behind the rebrand (why are we doing this // why customers should care).

Own the Project

With so much attention on these high-profile, company-wide initiatives, flawless project execution is table stakes. Project Leaders (who are typically, but not always, Marketers) need to be bomb-proof in how they manage these projects. Below is a quick-hit checklist of items that Project Leaders should diligently follow:

• Project tracking: Avoid the chaos of multiple spreadsheets! Instead, commit to using a single tracker to keep everything—brand artifacts, roadmap, audit, messaging, rollout dates—in one place to ensure clarity and ease of tracking.
• Schedule management: Establish a project schedule early-on; and update stakeholders relentlessly on changes / interdependencies. There WILL be changes and slippage!
• Buffer time: Always include time-padding in all launch activities to avoid late-night scrambling and snap-decisions. Note: timelines for these projects are generally not well understood. Be extra vigilant to educate on this front.
• Planned interdependencies: Map out and pre-manage the countless interconnected parts of this project. For example, plan for a dip in site traffic when relaunching a website and be prepared to attack that shortfall ASAP with an experienced SEO expert / dedicated person to make edits and optimize the site (whether it be blog posts, case studies, product videos or even PR efforts). Also, be sure to have tracking in place and baseline your old site to mark progress as the new site builds back momentum.
• Approval commitment: Late decisions can have a domino effect on the entire rebrand process—don’t underestimate the need for timely approvals. Treat every round of approvals as a major milestone and impress upon decision-makers the degree to which other stakeholders are relying on their upholding their responsibility in a timely manner. But…the need to make timely decisions always needs to be balanced with taking enough time for proper reflection. Knee-jerk decisions just to keep a timeline can deliver subpar outcomes. Taking time to simmer is well worth it.
• Embargo…THEN Launch: There’s a tendency to want to tease bits of the rebrand – bad idea. Embargo everything until ready to go all at one official launch. Otherwise, you risk confusing the market. The same goes for internal releases. Sure, it’s fine to share the finished brand to the team via a presentation, but no one gets swag or other assets until the launch is officially released.
• Post-launch checklist: Create a plan for all the items to be updated in follow-up to the brand launch. Prioritize mission-critical things (e.g. email domains) over nice to haves (e.g. a properly rendered logo for the internal Google drive). This may well be the most often overlooked aspect of rebrands – don’t sleep on the Post-Launch Check-list!

Leverage Partners

Sub-scale SaaS businesses typically look outside of their organizations for assistance on a rebrand / rename from creative experts. The success of a rebrand depends on a productive working relationship with these valuable specialists. A few points to help that collaboration go smoothly:

• Trust Them: Any partner worth their salt will bring rigorous processes, fresh perspectives, new ideas, and bold brand options for your consideration. Give your partner room to ply their craft; don’t micro-manage. Feedback during a rebrand should center on brand strategy, not design execution. Aim to guide the “why,” leaving the “how” to the creative experts. If you find yourself saying things like, “I’d like that line to be thicker,” just…STOP!
• Be Accountable: The best thing you can do for your partner is provide clear, timely, consistent feedback, with one voice on behalf of the company. Your feedback can make or break the project; take that responsibility seriously. Conversely, exposing your partner to multiple different / conflicting points of view will typically result in a worse end product (you’ll get a camel, not a horse). Take the time and make the effort to get internal stakeholders aligned BEFORE providing feedback to the partner.
• Educate Them: Don’t expect your creative partner to understand your business or end-market. Commit to educating them on your industry, competitors, and trends. This is an investment worth making; it enables your partner to understand the ethos of your brand, not just what colors and fonts you might like.
• Blend Art and Science: Remember that you are relying on your partner for ideas and execution – not project management. That is your job. The blend of art & science also encompasses things like preserving SEO as you build a new site, and ensuring your vendors are thinking through practical matters like the impact of SEO loss with the new navigation. The blended expertise of your vendors will give you a better outcome, and may even educate your vendors for future work. In these ways, you must endeavor to blend art and science.

On a parting note, it is worth flagging one more key behavior in support of successful rebranding initiatives – always remain open to possibilities. When organizations are open to taking risks with new directions, bold departures from the past, and creative ways to envision their brand, they tend to make thoughtful brand decisions that drive impactful business results.

Conversely, being closed-off from considering options tends to be self-limiting. This stifles creativity and yields sub-optimal results. This is what happens when businesses:

• Refuse to even explore the possibility of a rebrand / rename
• Play it safe by shying away from design choices that feel uncomfortable
• Set the bar too low in terms of imagining a brand they can uniquely OWN

I’ll close with this quote from one of our portfolio companies that executed a highly successful rebrand and rename:

“We reluctantly agreed to the name exploration, but we weren’t convinced we’d get a winner until the first round of suggestions was presented. While many were not right for us, the possibilities were evident. We later admitted to each other that we didn’t actually think we’d change the name until we had that emotional response to the first round. We are so glad we gave it a shot.”

Good luck, everyone, it’s worth giving it a shot.

For Professor Minerva McGonagall, Sirius Black, and Remus Lupin (all of Harry Potter fame), shape-shifting comes naturally. For the rest of us, it’s difficult to contemplate altering any aspect of our persona, let alone completely recreating our core identity. For SaaS businesses, changing how they show up in the world can pose an even greater challenge. And yet, undergoing a rebrand can be well worth the effort. Helping companies to rebrand is a core element of Lock 8’s approach to value creation in B2B SaaS businesses; and we’ve helped more than a dozen businesses through this process.

The following two-part post will share observations from these initiatives, with the goal to remove some of the mystery and risk from rebranding SaaS businesses.

• Post 1: provides background and addresses the strategic question of whether and when SaaS businesses should consider undertaking a re-brand. It will:
  • Distinguish among brand / branding / brand refresh / rebrand / rename
  • Identify signals that point to the need for a re-brand
  • Highlight strategy as a prerequisite for a rebrand
  • Outline when to consider a full business rename
• Post 2: gets tactical by offering tips & tricks aimed at lowering the pain and increasing the joy from re-branding projects. Those tactics center on three themes:
  • Manage the stakeholders
  • Own the project
  • Leverage your partners

Brand / Branding / Refresh / Rebrand / Rename:

To start, let’s clarify some seemingly similar terms:

To oversimplify, “brand” is the totality of perceptions held in people’s minds about a business or product. This sentiment influences how customers / competitors / prospects / partners / employees / investors feel about your offerings.

“Branding” is the process through which companies try to shape their brand. According to Primer, good branding is good story-telling. Companies should aim to 1) control their narrative (if you don’t define your brand, a competitor will), 2) emotionally engage (make a promise to your audience that sets an expectation and delivers on it) and, 3) be consistent (inconsistent impressions will water down your narrative and create barriers). Collectively, these branding efforts include, but are definitely not limited to: refreshing a brand, rebranding, and renaming.

Echoing what Huddle Creative helpfully describes in this post, a “brand refresh” is limited in scope. Refreshes typically involve small tweaks to brand elements, such as logo design, brand guidelines, and marketing materials. This post does NOT overly concern itself with brand refreshes.

A “rebrand” involves a more comprehensive overhaul of the company’s identity, or even an entirely new identity. A rebrand has relevance to all aspects of a company, including its mission statement, core values, product framework, positioning pillars, brand promise, and others; it represents major refinements to a business’ brand positioning and messaging. We wouldn’t expect to undertake a rebrand more than once every ~5 years.

Lastly comes the rename. In our view, a rename is the whole enchilada. It includes all elements of a rebrand, plus the major step of renaming the business. Needless to say, this is not for the faint of heart; and it should happen seldom.

Given the obvious complexity / cost / risks associated with all of the above, it is well worth examining the question: How to know whether and when your SaaS business needs a rebrand…or a rename?!

Signals: Confusion & Misalignment:

A sure sign that a rebrand is in order is when there is confusion about your company in the market. Sometimes people misunderstand what your business does, and nowhere is this more evident than at trade shows. While working at a SaaS business that was generically named Intelliworks, the most frequent question I heard at our booth was, “Now, what do you guys do again?” Also, pay attention to people’s body language at conferences; even without words, you’ll learn a lot about your brand and whether it warrants scrutiny.

Even a clear brand can be unhelpful. A brand should help small-scale SaaS businesses punch above their weight. Conversely, when prospects think you are smaller than you are, it’s a problem that shows up as unnecessary friction in the sales process. This is exactly what’s happening when prospects ask how large your company is, or demand to see audited financials, or fixate on what will happen if you go out of business. These are clear signals that you may have an opportunity for brand improvement.

Finally, it’s worth examining how well aligned your brand is to the market you strive to serve. Are your core brand values and voice out of line with the values of your target audience? To what degree is your company's branding outdated? How much of a competitive edge does your brand identity provide? Depending on the answers to these questions, a rebrand could be in order.

Strategy as a Pre-requisite:

When embarking on a rebrand, it’s important to remember that it is as much a strategic initiative as it is a creative one. The best rebrands bring to life a robust company-level strategy. Any thoughtful rebrand will build on a foundational company strategy with reinforcing elements such as a codified brand promise, brand personality traits (expressed and implicit), and brand tone & voice. All of this strategic rigor precedes any creative work(!).

If a SaaS business is fundamentally re-visiting and re-thinking its strategy, it is likely also worth considering a rebrand. Conversely, if it lacks clarity about its product vision or target audience or core differentiation in the market (as examples) – or if the business is satisfied with the status quo – wait! You should almost certainly delay a rebrand until you have alignment among key stakeholders on strategic direction.

One way to test whether a rebrand initiative is starting at an appropriate altitude is to pose initial questions that start with “Why?”

• Why are we even considering a rebrand?
• Why will a rebrand increase our ability to fulfill mission and execute strategy?
• Why will a rebrand benefit our clients, and why should they care about it?

Unless there are compelling answers to these questions, stop right there; a rebrand may simply not be worth the effort. Quite often, though, these initial screens signal a need to dig-in further on a potential rebrand initiative.

The Whole Enchilada: 

Given the seriousness of renaming a business, we believe there are only three core reasons to change a company's name:

1. Growth: If the company name impedes a business’ ability to grow, that’s a problem worth solving. This can occur when a company name is closely associated with one industry; and / but the business then aspires to expand into other verticals (or sub-verticals). Names can also close off customers of a certain size. I was once part of a business that catered to the SMB market. Its whimsical company name worked well for that target market; but it was a limiting factor when the business strived to move upmarket to larger enterprises.
2. Legal Opposition: In our experience, company names can be an unending source of legal issues among businesses fighting over trademarks. When these cannot be easily resolved, sometimes renaming is the least unappealing option forward.
3. Reputation: Let’s face it, smoothly scaling SaaS businesses can be challenging. If the company has historically struggled to deliver – perhaps via problematic releases, highly publicized implementation issues, or customer dissatisfaction – a rename / restart is worth considering.

Outside of the above scenarios, though, the cost and interdependent risks of renaming are often too high to consider.

Hopefully this has provided some strategic guidance around rebranding / renaming initiatives. Please check back for Part 2 of this post, which will dive into tactical lessons learned for how to successfully manage such projects.

I’ve posted a few times about tools for SaaS CEOs (including here, here, and here). A related question people ask is what books new CEOs can read to support their learning and development. I have a go-to answer to that question, which references a long list of our team’s favorite business books. But I’ve become increasingly uncomfortable with such a blanket response to what is almost always a more targeted question (something about swatting a fly with a sledgehammer).

Because time is our most valuable commodity, life is too short to read business books that are only tangentially relevant to a specific skill we’re trying to develop or a challenge we’re trying to tackle. With that in mind, this post is intended to provide a more nuanced and actionable set of book recommendations for aspiring SaaS CEOs. To do that, it leverages Lock 8’s CEO Developmental Rubric (explained in detail here, with a summary image immediately below). What follows is a set of book recommendations that map directly to the eight core disciplines outlined within the CEO rubric, and a quick comment on why each book is well worth the investment of time to read.

DESCRIPTION	ELEMENTS
Team Building / Leadership	Build leadership team Empower ICs / Practice self-reliance Foster culture of learning / growth / performance Plan for future-state
Vision and Strategy	Articulate vision Lay-out strategy and tactics Consider and mitigate complexities Inspect and adapt
Execution / Time Management	Hit the plan(s) Enforce operating cadence Optimize team time Focus on priorities / avoid distractions
Communication	Communicate with intentionality Balance views Listen relentlessly Seek coaching / incorporate feedback
Analysis	Leverage data Generate insights Build instrumentation Focus pragmatically
Learner / Owner Mindset	Approach issues openly Commit to CEO craft Seek broad understanding Hit spending plan
Resilience	Confront the brutal facts Remain focused Ruthlessly compartmentalize Maintain your humanity
Creativity / X-factor	Innovative ideas Ideas in action Action into advantage Advantage into value

1. Team Building / Leadership:
   • The Culture Code: The Secrets of Highly Successful Groups by Daniel Coyle
     • Why It’s Worth the Investment (“WIWI”): “We all want strong culture in our organizations, communities, and families. We all know that it works. We just don’t know how it works.” This book demystifies how to build strong, winning cultures by sharing real-world examples from many different arenas. This is a must-read for any people-centric leader.
   • The Five Dysfunctions of a Team by Patrick Lencioni
     • WIWI: First, this book is old-but-gold. It’s also super-short, so it’s easy to bang out in one night. And please don’t be put off by the book’s seemingly negative title; this parable-style guide offers a simple but elegant framework that will strengthen even the highest-functioning teams. Just be prepared to confront some uncomfortable mistakes that most of us have made along the way on our leadership journey.

2. Strategy Alignment and Vision:
   • Turning the Flywheel: A Monograph to Accompany Good to Great by Jim Collins
     • WIWI: Again, this one is a super-quick read – under 40 pages total. But it is packed with strategic value. Collins offers a pragmatic and easily actionable approach to strategy. “Flywheel” shows how disparate strategic elements fit together to create irresistible momentum. This tiny pamphlet is indispensable for CEOs looking to drive organizational alignment, clarity, and focus.
   • Inspired: How to Create Tech Products that Customers Love by Marty Cagan
     • WIWI: This is one of those books that is worth reading not just once, but every year or so – there are new learnings every time. Some might quibble that this is a book about product management, NOT about Vision and Strategy. I’d counter that for SaaS businesses, building successful product organizations that discover and deliver software that customers love is THE critical element of strategic alignment. This book is the best I’ve ever read on that topic.
   • Honorable Mention: The Crux: How Leaders Become Strategists by Richard P. Rumelt

3. Execution / Time & Resource Management:
   • Leading Change by John P. Kotter
     • WIWI: This book lays out clearly, and with rigorous supporting research, the 8-step process that has been proven to consistently work in terms of delivering successful projects, plans, and change initiatives. Any leader with a change agenda should learn and follow these steps. When initiatives have veered off-course (as they inevitably do), it is because I’ve botched or skipped one or more of these steps. Seriously.
   • The First 90 Days: Proven Strategies for Getting Up to Speed Faster and Smarter by Michael D. Watkins
     • WIWI: An indispensable guide for new leaders who wish to succeed in their expanded role…and who are willing to invest time and effort to do so. But this is more than just a book about managing a transitional on-boarding period. Rather, it helps leaders establish lasting credibility and execute over time to deliver substantive long-term value.
   • Honorable Mention: Predictable Success: Getting Your Organization on the Growth Track - and Keeping It There by Les McKeown

4. Communications
   • You're Not Listening: What You're Missing and Why It Matters by Kate Murphy
     • WIWI: If you buy the argument from this prior post, a critical role of the CEO is as the Chief Conversation Officer. You can’t have good conversations if you aren’t listening. Murphy makes an extremely compelling case for why we all (and especially leaders) need to stop talking and start listening; and she provides useful guidelines for improving in this critical and surprisingly-difficult-to-master skill.
   • Language and the Pursuit of Leadership Excellence: How Extraordinary Leaders Build Relationships, Shape Culture and Drive Breakthrough Results by Chalmers Brothers and Vinay Kumar
     • WIWI: This book was recommended to me by a world-class communicator, Robert Morton. Reading it was like a cheat-code on some of the practices that make him so consistently effective. But be prepared; unlike many of the books on this list, this is a meaty project that demands commitment.

5. Analysis / Quantitative Assessment:
   • Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke
     • WIWI: My colleague Tim Blomfield calls Annie Duke “an American hero,” and I agree. This book nails the situation that CEOs face every day (they never have all the facts) and the analytical approach that enables successful CEOs to navigate this world of gray. It also provides valuable tools that CEOs can use to make better decisions, avoid counterproductive biases, develop truth-seeking habits, and remain calm and compassionate in the process.
   • The Visual Display of Quantitative Information by Edward R. Tufte
     • WIWI: This book is essential for any CEO, but particularly those who are anxious about leveraging data to manage their board of directors. Telling stories with data is a developed (not innate) skill for most of us; and this book can help anyone improve in this realm. You can present data in many ways; this helps execs make the best choices to accurately and understandably present the story they’re trying to tell.

6. Learner / Owner Mindset:
   • Mindset: The New Psychology of Success by Carol S. Dweck
     • WIWI: This may be the least surprising book on this list. Millions of people have already read it, and with good reason. The truth is that CEOs are wrong more often than they’re right; it’s important to make peace with this fact…even to embrace it. This book made that possible for me. It is no stretch to say that it fundamentally changed me both as a leader and just as a person trying to navigate through a world.
   • It’s Your Ship: Management Techniques from the Best Damn Ship in the Navy by Captain D. Michael Abrashoff
     • WIWI: Scaling any organization relies upon leadership…and followership. Many “pacesetter” leaders conduct themselves with impressive discipline and productivity; but they sometimes fail to empower others to think as owners, act with agency, and make decisions in service to the greater good. “Ship” offers a case study and digestible “how-to” to aid aspiring leaders in this crucial area.

7. Resilience
   • The Hard Thing About Hard Things: Building Businesses When There Are No Easy Answers by Ben Horowitz
     • WIWI: This book bucks the trend of obsessively celebrating huge success stories. Horowitz offer hard-earned wisdom from a world that SaaS leaders know well – one where adversity is everywhere, and the best available option is merely the “least-worst” one. I read this book during one of the toughest stretches of my career…and it was invaluable in getting through the hard stuff. Far more so than the countless success stories one finds every day on LinkedIn and the trade press, this book gets what CEOs are going through…and helps them do it. Plus, there are amazing quotes from hip-hop artists sprinkled throughout.
   • The Courage to Be Disliked by Fumitake Kogo and Ichiro Kishimi
     • WIWI: Being a CEO is often a lonely and isolating endeavor. They are responsible for balancing the needs of multiple sets of stakeholders; and leaders that seek to please everyone please no one. Through an engaging dialogue format, this book offers an introduction to Adlerian philosophy, which advocates living a fulfilling life without worrying about the past or future. CEOs certainly require intellectual and emotional courage; and this book provides tenets in support of remaining brave even in the face of powerful opposing forces.
   • Honorable Mention: How to Think Like a Roman Emperor by Donald J. Robertson

8. Creativity / X-Factor:
   • The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success Outsiders by William N. Thorndike
     • WIWI: This chronicles the achievement of a collection of legendary CEOs, each of whom had an undeniable “X-Factor.” They were fiercely unorthodox; and they delivered astonishingly impressive returns to investors. But this is far more than a hero book. It introduces the concept of CEO as capital allocator and offers both encouragement and examples around how thinking differently can yield massive results. This is a valuable counterpoint to many of the arguably more traditional books on this list.
   • Seeing What Others Don’t: The Remarkable Ways We Gain Insight by Gary Klein
     • WIWI: “Eureka!” moments don’t come exclusively from spontaneous inspiration. We can also program for optimizing insights. This is a fun book that talks about when and how this occurs.

We recently spent a full day onboarding a new, first-time CEO for a recently acquired B2B SaaS business within our portfolio. After a grueling 7+ hours of orientation that was maniacally aimed at preparing this leader for great success, the new exec asked an incisive question: “That’s all helpful…but what are the “epic fails” you’ve observed by people in my position?”

What follows are 8 of my own “epic fails” as a first-time CEO. Yes, back in the day, I somehow managed to mess up in every one of these ways.

Lock 8 Partners works with numerous portfolio company CEOs, and I’ve seen similar challenging situations – OK, “fails” – re-emerge in some form or fashion. But, having personally botched these situations as a CEO myself, I hope to help our portfolio company leaders avoid such pitfalls.

Luckily, when caught early, I don’t believe any of these are truly fatal, or even a legitimate “fail.” Providing they are identified and corrected relatively quickly, it is just part of the process of becoming a seasoned and savvy chief executive.

Okay, enough set-up. Here’s the list:

1. Thinking More = Better: As a first-time CEO, I was desperate to prove myself; and prior experience had convinced me that doing “more” was doing “better.” Like most execs, I had been rewarded in the past for taking on more (and more) responsibility, initiating multiple projects, and frenetically crossing things off the to-do list.
   
   As CEO, that approach was dead wrong. Doing more and more as the leader — and asking the organization to follow-suit — just created confusion, exhausted people, and generated organizational turbulence.
   
   As a first-time CEO, “focus is your friend.” Fewer, well-executed initiatives are almost always better than many scattered projects. At Lock 8, I know that successful first-time CEOs remain humble in their initial ambitions and keep things simple until they’re really on-track.
   
   
2. Blindly Following the 80/20 Rule: I felt like it was my job as the CEO to get things 80% of the way to completion, and then rely on others to “bevel the edges.”
   
   By assuming everyone would just “get-it” once I advanced things to the 80% mark, I created the biggest barrier to leading change, particularly when it came to establishing the foundational elements on which the business would be built over time. Such foundational “big rocks” include codifying the product vision, setting the strategic operating plan, defining target market prioritization, and articulating the brand promise.
   
   There is a compelling argument for CEOs to flip the 80/20 rule on its head: engage your team to complete 80% of the work, and then you handle the remaining 20%. In any case, these efforts need to be driven to completion, with the CEO codifying them into easily understood artifacts, and repeating-repeating-repeating the message to all stakeholders.
   
   
3. Always Listening to the Board of Directors: Wait…what…isn’t it the job of the CEO to listen to the Board?! Yes, well, sort of, but not always.
   
   The problem is that board members often offer ideas with great intent, but often without having full context or a complete picture of a specific topic.
   
   When my board members made suggestions, they were intended as just that — things for me to consider. But I took them as gospel, and as high priority directives. I really, really wanted the Board to like me!
   
   Dropping everything to make requested alterations to a report, network with some referred associate, or research a prospective adjacent market meant I often sacrificed the one thing the Board truly cared about: driving long-term enterprise value in the business. It took too long for me to learn how to filter ideas from real directives - and how to politely, but firmly push-back when I felt that remaining single-mindedly on-task was in our collective best interest.
   
   
4. Not Listening to the Board of Directors: Hold on…this is a total contradiction from #3! Yes, it is.
   
   Another mistake that I made as a first time CEO was expecting the board to always give me clear directives. Good board members rarely lay out guidance in stark absolute terms. Rather, their input is often nuanced and subtle, appropriately leaving room for interpretation based on reality on-the-ground.
   
   Unfortunately, failing to recognize this nuance and missing important warning messages is a big mistake. For example, when a particularly thoughtful board member calmly - but consistently - raised concerns to me about our progress on a major product initiative, it didn’t faze me. It should have. In the end, we completely turfed the product release— a big setback for the business.
   
   It’s not the Board’s job to micro-manage the business …and certainly not to pound the table about their views on tactical issues. The CEO’s job, however, is to listen closely, intently — aggressively even — to the shared observations and expertise, no matter how its shared, and act accordingly.
   
   
5. Getting Caught Speeding: As a new CEO, I wanted to immediately establish my credibility as a quick decision-maker.
   
   In their first days on the job, new CEOs tend to get asked for all kinds of things (e.g. approvals for new headcount, raises, bonuses, pet projects, etc.). Although it’s tempting for them to say yes to these, it’s a trap — a speed trap.
   
   It’s far better to exercise patience, more fully understand situations, and act in due time. Any incremental spending I approved early-on almost certainly meant less budget to deploy later. And the reality of taking a hard line was that my ability to make more informed decisions only grew with time.
   
   
6. Not Taking Vacation: Seriously…this was a gaff. I thought I had to be the hardest worker on the team. And that meant grinding like a machine for my first year+ in the big chair.
   
   Predictably, I got burned out, became less sharp, missed easy wins, and (most notably) lost my problem-solving creativity. Eventually I took a vacation, but only after being prodded to do so by an attentive Board member (see #4 above).
   
   After sitting on the beach for a week and recharging, the good ideas started to return. I came back with a new go-to-market approach that fundamentally improved our performance — one that was sparked by the needed rest. Athletes, artists, and performers don’t run themselves ragged before their biggest events - they practice self-care. New CEOs need to do the same.
   
   
7. Choosing to Suffocate (or Suffer) Alone: When I experienced a severe cash crunch during my first CEO gig, it felt distinctly like I was suffocating. In many ways, cash is the oxygen that SaaS businesses need to survive. I thought that I could singlehandedly “Excel model” my way through the crisis.
   
   My instinct to lone-wolf and suffer alone was exactly the wrong approach. What eventually breathed life back into the business was inviting input from experts, and empowering others to craft and contribute to the solution.
   
   When stuff goes wrong — and it inevitably WILL go wrong — avoid the toxic temptation to go it alone.
   
   
8. Expecting Perfection: I became a CEO based on my expertise as a go-to-market leader. Much of my identity as a leader was rooted in confidence that I could teach others the function I knew so well.
   
   By extension, I felt I needed to know how to do ALL jobs as well as, or better, than everyone else. An impossible task. I set myself up for failure and ensured that I could never admit my shortcomings or my vulnerabilities to anyone. This was most humbling. Perfection is not the goal; it is the enemy.
   
   CEOs do not need to be better than everyone - they simply need to nurture an environment/culture/business conditions where everyone else can be their best.
   

Quick closing: Hopefully these can serve as a safety beacon, helping others to avoid them. These remind me of so many other lessons learned that I may have to compile another list!

In part one of this series I discussed why reference checks rarely help small-scale SaaS businesses with high-stakes executive hiring but rather how they are crucial to executive success once on the job.

It’s a (dirty) little secret that reference checks have often times become perfunctory CYA exercises — tedious for everyone involved.

Reference calls don’t need to be a duty to be endured. Rather, they can become a valuable super-power with just a bit of re-framing and execution.

This approach begins with: “We plan to hire this person. How can we best set them up for success? What can we do / what should we know to ensure they are in the best possible position to crush the role that we plan to entrust to them?” We already discussed the “WHY” and “HOW” in part one – now let’s look at the “WHAT” and “WHAT ELSE”:

WHAT… specific reference check questions should I ask?

The questions that work most effectively in the approach we take aren’t radically new or inventive. Rather, they’re short and straightforward – and open ended. They include:

1. “How do you know the candidate?” Note: This can be mistaken as a mere set-up question; but a reference’s description of their work with a candidate can be quite enlightening and lead to multiple follow up questions.

2. “In the CEO role, what responsibilities will they be naturally great at doing?”

3. “In the CEO role, what responsibilities will be further outside of their comfort zone?”

4. “We believe successful CEOs benefit from having complementary thought-partners on their Leadership Teams. What is the profile of the ideal thought-partner / second-in-command for this person?”

5. “How would you advise me, as board chair, to best support this person’s success as CEO?”

6. “Being a CEO is hard; circumstances will unquestionably be challenging. But people don’t get to this role without being resilient and being good at hiding when they’re having a bad time. What should I be looking for that will tell me when they are having a bad day or becoming run-down / frustrated / underwater? Importantly, how should I and others intervene in a way that fully supports and in no way disempowers them in these situations?”

7. “If you were to work with them again, what would you cover at the outset in order to establish the most productive working relationship possible?” Please note, this is NOT the boring old question: “Would you work with this person again?” References will always say yes to that; and we won’t have learned anything new. This alternative question asks what that person would do differently vis-à-vis the candidate if offered a total do-over. I want the benefit of that informed do-over - but I want it in our very first go-around with the prospective CEO.

8. “What else have I not asked that I should have? What else do you think it’s important for me to know to help the CEO optimally execute on this opportunity?”

You can see how these questions will easily fill a 45-minute video call.

WHAT ELSE…is crucial to know?

There are a few final, but important, points that bear mentioning:

Know before you go: If you are no longer using reference checks to actively decide whether to hire someone, then it’s critical to properly vet candidates in other ways. It is your responsibility — not the references’(!) — to get to the necessary level of comfort with the finalist. In our case, we have designed a comprehensive process for doing so. In no way can this be compromised or underemphasized; and these posts certainly don’t argue for shortcutting that.

Frame, frame, frame: For this whole approach to work, two things need to be made abundantly clear at the outset of a reference call: (1) WE HAVE ALREADY DECIDED TO HIRE THIS PERSON (the implied message being: your job is not to convince me do so…it is to help me make them successful). I usually try to make a joke of this point: “We are excited about making X person the CEO of one of our portfolio companies, and unless you tell me they cheat at cards, we are already planning to do so.”

(2) The reference needs to have a well-informed picture of what we are looking for in a CEO. I tend to spend the first ~5 minutes of every reference call pre-emptively setting the stage by explaining our investment strategy, our history, and the specific characteristics we seek in our leaders.

Don’t delegate: Some companies relegate responsibility for reference calls to HR or even an administrative function. We don’t do that. As board chair, I do all our CEO reference calls. And, in turn, portfolio company CEOs do references for their Leadership Team members.

Consistency Matters: It is not important to ask every one of the questions listed above for each candidate. But it is crucial to ask every reference for a candidate the exact same set of questions. Only in this way can you begin to observe helpful patterns in the various responses to the consistent set of questions.

Sharing is caring: Diligently write up the notes from these calls - and share them. Share them with other BoD members; it really helps the board know how to engage constructively with the CEO from the outset. I even recommend sharing the notes (redacted if necessary) with the company execs whom the CEO will be leading. My experience is that these notes get the executives excited to work with their new boss. And they certainly help everyone gel quickly.

And, finally - the best reference call is a great recruiting call: Over time, I’ve learned that the same people whom we are excited to hire as CEO often have impressive and ambitious former colleagues as references. On many occasions, reference calls eventually morphed into pre-recruiting calls for other roles or companies in our portfolio. A number of these have even resulted in our eventually hiring those references into important leadership roles. Opportunity lurks everywhere if you are willing to see it.

High-performing Leadership Teams may be the most critical element of successful B2B SaaS businesses. And in my experience, the alchemy that creates transformational team performance is something that is forged through great intent and shared experiences over time. Spoiler alert: this two-part post is not at all about that.

Rather, it is about what comes before that. Recruiting excellent leaders and setting them up for maximum success is one of our primary objectives. The way we do that is by conducting comprehensive reference checks after we’ve made a hiring decision.

Our strategy demands that we hire dynamic, up-and-coming leaders for our portfolio companies and support them in doing their best work. Reference checks are a surprisingly critical step to ensuring post-hiring success for everyone.

In this first part, I’ll share the Why and How, and in the follow-up, I’ll cover the What / What-else of driving real value and getting real insight from references. Note: we focus heavily on recruiting new CEOs, so that will be the lens; but the points also equally apply to other executive roles.

WHY…are reference checks even still useful?

Here’s a (dirty) little secret about reference checks: they rarely help small-scale SaaS businesses with high-stakes executive hiring decisions.

Rather, they more often help small-company boards (and / or hiring teams) increase their conviction about someone they’ve pretty-much decided to hire anyway. In this context, reference checks become perfunctory CYA exercises — tedious for everyone involved. Now…if that is true (and some may disagree), then why bother doing them at all?! Exactly

Framed differently, however, reference checks are extremely valuable. I’ve found they are less helpful in candidate selection, and far more useful in ensuring a smooth on-boarding and transition. They also give existing company stakeholders (specifically: board members and other Leadership Team members) a shared understanding of how best to work with their prospective new colleague/exec. That painstaking up-front work accelerates on-boarding and helps streamline necessary forming / storming / norming / performing / adjourning among the senior team. In short, it is totally worth it.

HOW…do I perform this type of reference checks?

On the surface, they’re only modestly different from traditional, standard-issue reference checks we’ve all experienced. There’s an important difference though, including:

• Taking place over a video call: This is much better than audio-only, and sometimes requires a bit of insistence with busy references who may want to multi-task. This is for a CEO position after all.
• Lasting for at least 45 minutes: This length can surprise people; but as noted above, we’re discussing a senior executive. That can’t be done in 15 minutes.
• Requiring and checking with four key references:
  1. Someone the CEO candidate reported to for a meaningful period.
  2. Someone who reported to the candidate for a meaningful period.
  3. Someone who was a lateral peer with them for a meaningful period.
  4. A “wildcard” (someone who can provide additional insight into capabilities and leadership style). These can vary widely beyond work colleagues and have included best friends, pastors, and others.

The more substantive differences is how the meeting is framed (remember, it is a 45-minute video call). What does that look like?

• It absolutely should NOT focus on: “Should we hire this person?”

Rather, it explicitly IS: “We plan to hire this person. How can we best set them up for success? What can we do / what should we know to ensure they are in the best possible position to crush the role that we plan to entrust to them?”

This slight re-framing completely changes the tenor of the conversation.

It ceases to be a formality where the candidate is framed in only the most flattering light. Instead, it evolves into an opportunity for them to share genuine insights about their former colleague to help them thrive in the most-important step of their career.

In the second part of this post, I’ll cover what specific questions to ask to achieve this and what else is crucial to know.

Previously, Part I of this post introduced an artifact that Lock 8 Partners uses to support the learning & development of portfolio CEOs. We refer to that artifact as the CEO Development Rubric (CDR), and its purpose is to codify expectations for SaaS CEOs around their unique role and responsibilities. The CDR is comprised of eight core disciplines that we believe CEOs must develop and deliver for their orgs. For review, the disciplines are bulleted below (see Part I for full write-up).

1. Leadership

2. Vision & Strategy

3. Execution / Resource Management

4. Communications

5. Analysis

6. Learner / Owner Mindset

7. Resilience

8. X-Factor

Part II of this post seeks to explain how the CDR gets used, in service to helping CEOs advance their professional development and perform to their full potential.

First, it’s worth unpacking why the CDR is needed at all. The answer relates to the singularly important role CEOs play in the outcomes of their organizations. If CEOs perform well, so too do their organizations. Period. And yet, many boards of directors treat exemplary CEO performance similarly to how the Supreme Court once defined obscenity — it’s difficult to define, “…but I know it when I see it.” Likewise, it’s easy for CEOs to be overwhelmed or confused by the never-ending supply of how-to advice (a.k.a. “fad diets”) flooding their inboxes every day. In either case, the stakes are too high to simply allow CEOs to chart their own course and then applaud or critique the outcome. Instead, we try to remove the guess work by clearly defining the behaviors that we’ve observed will help CEOs to be most successful. Thus, the CDR.

Next, it is important to recognize that the CDR does not / should not stand on its own. Rather, it is one of many tools aimed at collectively fostering performance accountability and constructive self-reflection among CEOs. Accompanying the CDR, the other artifacts are:

CEO Support: Per comments above, there is too much at stake to let even highly intelligent, highly motivated first time CEOs “sink or swim.” For this reason, Lock 8 invests heavily in support initiatives for CEOs. Because…if we are going to ultimately want to hold CEOs accountable to a set of outcomes and standards of behavior, we first need to give them a fighting chance to succeed. The slide below highlights some of those support initiatives.

2. Company Goals: Each business goes through a rigorous process to establish thoughtful, balanced, measurable (SMAT) annual objectives. These goals provide the ultimate report card for the CEO and the business. Achievement of these Company Goals is how variable compensation is earned; and all team members’ bonus comp is tied either directly or indirectly to goal attainment. Company Goals are critically important in terms of assessing / rewarding CEO performance. But they are admittedly not super-helpful from a professional development perspective for the CEO. Hence…

3. Performance Discussion Document: The Performance Discussion Doc (PDD) is the key artifact supporting semi-annual performance reviews of the CEO. As in most things, the hope here is to keep things simple. The mechanics of the PDD are as follows: the CEO and the Board Chair each independently write up a set of bullets in response to three core questions regarding the prior six-month period:

· What went well?

· What went badly?

· Where should the CEO focus over the next six months?

This no-nonsense approach ensures that CEOs receive direct, consistent, and constructive feedback. But, like Company Goals, the PDD has developmental deficiencies. While it is great for fostering healthy discussions about a CEO’s actual impact on the business, it fails to provide the CEO with a clear picture of what best-in-class performance looks like. This is precisely the role of the CDR — to serve as a complement to these other resources by offering a specific, concrete, digestible summation of the highest priority behaviors CEOs should seek to exemplify.

Finally, the application of the CDR is modeled exactly on the Performance Discussion Doc. The CEO and Board Chair each independently rate / write-up of how the CEO recently performed against the CDR rubric; and then they have a direct, dispassionate, constructive discussion about their views. In this way, the CDR is certainly an assessment tool…but it is first and foremost it is a developmental aid to CEOs.

To finish where this started, all CEOs (not just 1st time CEOs) need support in order to execute on their massive mandate on behalf of their organizations. And no single artifact or process is up to the task. Rather, it takes a village.

· Support Initiatives: help the CEO build required skills and capabilities

· Company Goals: establish the scorecard to assess CEO and organizational success

· Performance Discussion Document: fosters a discussion about the ongoing, on-ground reality

And…for us, the CEO Development Rubric (CDR) is the missing piece that rounds these all out by clarifying a vision for the specific behaviors that will best position the CEO for success.

More for New CEOs (2 of 2) was originally published in Made Not Found on Medium, where people are continuing the conversation by highlighting and responding to this story.

This blog has focused extensively in the past on the topic of first-time CEOs within small-scall SaaS business. This post made the case for hiring first time CEOs; this piece shared tips for screening / selecting those CEOs and how to support their transition to chief executive; and this one offered tactics around leveraging formal appraisals to optimize CEOs’ performance. The following 2-part post aims to pick up where those others left off. Specifically, it addresses CEO performance and how to thoughtfully assess and enhance it. We’ll tackle this topic in two parts.

1. Part I introduces a framework that summarizes for aspiring CEOs the seemingly infinite demands that chief executives face. The purpose of this bit is to help CEOs clearly understand “what good looks like” in terms of performing this critical role on behalf of their organizations.

2. Part II shares how Lock 8 Partners leverages this framework in conjunction with other artifacts to help our portfolio CEOs develop and perform. Part II is directed toward board members or anyone seeking to bring out the best in CEOs — by both holding CEOs accountable and prioritizing their professional development.

What follows is text pulled from an artifact we call the CEO Developmental Rubric (CDR). It is one of the frameworks we use to evaluate and provide feedback to CEOs. The CDR seeks to dispel whatever pre-conceptions incoming first-time CEOs may have about their new role…and to clearly outline precisely what is expected of them in that seat. Those expectations span eight core disciplines, each with supporting themes and explanations. Below are those disciplines / themes / summaries:

Leadership: Build Leadership Team / empower individual contributors / practice self-reliance / foster culture of learning, growth, & performance / plan for future-state

The CEO surrounds themselves with high-caliber LT members and actively works to foster cohesion / collaboration / independence / inter-reliability among this “First Team.” In turn, the CEO and LT recruit / develop / empower individual contributors that strengthen the team and advance attainment of company goals. The CEO lives and models the company values and establishes a culture and environment where others feel safe and motivated to do the same. The CEO proactively considers the org’s future-state and engages in succession planning to maximize org effectiveness and minimize the impact of transitions or organizational surprises. Finally, L8 CEOs strike a balance between developing the team and / but also being self-reliant — they are long-term builders, but also action-ready doers…and they are comfortable rolling-up their sleeves to get things done individually and alongside their teams.

Vision and Strategy: Articulate Vision / lay-out Strategy and Tactics / consider and mitigate complexities / inspect & adapt

The CEO articulates and codifies a clear, concise, compelling Vision for the company and where it is going…and shares that effectively with stakeholders, particularly the internal team. The CEO lays out specific Strategies and Tactics by which the company can successfully execute that Vision and achieve well-defined / broadly understood Objectives. The CEO considers the deep complexities of these tasks amid the dynamic / nuanced competitive environment in which the company operates. The CEO remains steadfast on the Vision but regularly reconsiders / re-calibrates / adjusts Strategy & Tactics in a timely manner to an ever-changing operating landscape.

Execution / Resource Management: Hit the Plan(!) / enforce operating cadence / optimize team time / focus on priorities & avoid distractions

Through discipline and rigor, the CEO ensures that the business just “gets things done.” Specifically, the company can be counted on to consistently attain its stated Company Objectives (Hit the Plan!). The CEO establishes organizational focus on these Objectives and implements an operating cadence of daily / weekly / monthly / quarterly / annual activities that optimizes the business’ most precious resource — people’s time. The CEO prioritizes the most impactful initiatives and ensures that others do the same. The CEO avoids distractions or endeavors that detract from the company’s resources and ability to get things done — both in the immediate and longer terms.

Communications: Communicate with intentionality / balance views / listen relentlessly / seek coaching & incorporate feedback

The CEO communicates with purpose and ensures that the organization does likewise. The CEO communicates intentionally and proactively with all stakeholders in form / tone / substance / frequency / altitude that is targeted and specific to each audience (those being: Market / Clients / Team / Shareholders / Options Holders). The CEO communicates credibly with the board of directors (BoD) in a way that fosters BoD engagement and impactful discussions. The CEO calibrates communications to ensure a realistic view and one that balances optimism / pessimism and that avoids “hope as a strategy” in favor of “confronting the brutal truth.” The CEO receives communications at least as well as they transmit. The CEO actively listens to all stakeholders, seeking always to learn new perspectives that can benefit the business and themselves. The CEO seeks / accepts / incorporates feedback from a broad range of stakeholders and proactively closes the loop on suggested points to explore.

Analysis: Leverage data / generate insights / build instrumentation / focus pragmatically

The CEO leverages available information to inform a thoughtful, fact-based, data-supported view of the situation and opportunity. The CEO synthesizes data to formulate second-order insights and hypotheses regarding where the business needs to go. The CEO takes a long-term view toward instrumentation, with a “patient-but-ambitious” understanding that small-scale SaaS businesses frequently need to build systems and processes from the ground-up and over time to support the desired-state of business analytics. The CEO is pragmatic in terms of ruthlessly focusing on metrics-that-matter and avoiding the “noise vs. signal” problem of looking at too many metrics that overwhelm business leaders and under-impact the business. This same principle applies to frequency of metrics review — the CEO regularly examines metrics but avoids “living in the numbers” at the expense of seeing the big picture for the business or engaging authentically with others.

Learner / Owner Mindset: Approach issues openly / commit to CEO craft / seek broad understanding / spend like an owner

The CEO consistently demonstrates two important, and somewhat contradictory, mindsets — that of the “Learner” and the “Owner.” The CEO assumes a Beginners Mind, approaching issues with genuine curiosity, openness, and commitment to learning. The CEO brings a strong appetite for advancing their craft of becoming the best leader / CEO they can be. The CEO also behaves like an owner of the business — seeking to understand all aspects of it, but with a healthy appreciation that they cannot possibly be / do all things. The CEO also acts as the owner in terms of financial stewardship. They treat / spend company resources with prudence / frugality, but also with a willingness to invest and take calculated risks to optimize long-term value of the enterprise.

Resilience: Confront the brutal facts / remain focused / ruthlessly compartmentalize / maintain your humanity

Being the CEO of a small-scale SaaS business is hard. Very hard. There is always more to do, and almost never enough resources to do it. The CEO is frequently confronted with new, often unpredictable crises, for which there is rarely infrastructure or a roadmap to assist the CEO in navigating. For these and so many more reasons, the CEO must remain resilient, unflappable, unsinkable. They must consistently demonstrate what is commonly referred to as “grit.” And they need to channel this type of resilience into the DNA of their organization. All of this must be accomplished while maintaining credibility among the team and demonstrating empathy, so as not to be perceived as overly rigid or unsympathetic to the challenges the team collectively faces.

Creativity / X-Factor: Innovative ideas / ideas into action / action into advantage / advantage into value

The CEO brings something extra to the business — innovative product ideas, contrarian vision for the industry, best-in-class domain expertise, innovative solutions to process challenges, ground-breaking ways to optimize resources, highly differentiated ways to position / sell the company versus competition — anything that creatively provides the business with a difficult-to-replicate advantage. This X-Factor can take countless forms, and it can be the difference between good versus great businesses and for strong versus exceptional leaders.

Although the responsibilities of CEOs truly are overwhelming, we’ve found that these eight disciplines encapsulate what we at Lock 8 hope CEOs will bring to the SaaS businesses in which we invest. I’ll go into more detail in Part II of this post on the mechanics of how these concepts get applied. But hopefully they stand on their own as a focus-producing resource for aspiring, first-time, or even veteran CEOs.

More Tools for New CEOs (1 of 2) was originally published in Made Not Found on Medium, where people are continuing the conversation by highlighting and responding to this story.

Within our portfolio’s cohort of SaaS CEOs, budgeting consistently ranks among the most challenging aspects of their jobs. This led to a recent post on this blog which argued in favor of now as a good time of year for SaaS businesses to examine previously un-budgeted expense items. That prior piece prompted a broader review of general budgeting processes, and provided a reminder of another simple but effective tip to help make budgeting less painful for SaaS CEOs.

First, let’s take a minute to recap why budgets are important for small-scale SaaS businesses, even those that are bootstrapped or that operate without a formalized board of directors. Most importantly, budgets serve as sense-makers for businesses. They quantify in specific terms whatever qualitative plans exist for the business. We generally codify initiatives and objectives in an annual Strategic Operating Plan, but these artifacts go by many names and can range widely in form. In whatever form your plan exists, a budget double-checks whether that plan is feasible and properly funded. It also helps enforce alignment of resources across the team and around that plan. Finally, budgets help businesses translate their inevitable idiosyncrasies into a set of universally understood measures (e.g., revenue, expenses, Rule of 40, etc.). In short: budgets = good. The problem is that budgets can be excruciatingly difficult to nail down, particularly for CEOs who may not have deep financial training (which, in the world of small-scale SaaS, is more the rule than the exception). For those typical CEOs, a persona-based approach to budgeting can help.

Wait…personas?! Aren’t those what our Marketing team uses to identify ideal customer profiles? Well…yes…but they can also help crystallize roles relating to the budget process. Specifically, no matter the composition of your team, someone will need to fill the following roles / personas in the budgeting process:

1. The Leader: This person is running point on the entire budgeting process, making sure that the right people are involved in the right ways at the right times. Although this has some tactical project management aspects to it, the CEO is best situated in small-scale SaaS organizations to serve in this role as the budgeting Leader. This is also the person who ultimately has last say on the numbers.

2. The Sensei: This person is a step removed from the budgeting activities and can provide a broader perspective about both the budget process and the actual work product. This person should offer a top-down view on what “Good” looks like — both in terms of the budget output itself, as well as how a given year’s budget supports the multi-year narrative of a company’s financial story. The Sensei is often a board member(s), but it doesn’t need to be. In particularly small SaaS businesses, this might reasonably be an outside advisor, accountant, or consultant.

3. The Model Master: This person is responsible for building, maintaining, and ensuring the accuracy of financial spreadsheet model that usually serves as the backbone of a budget. This person “owns” the (typically) Excel files and builds bottoms-up revenue and expense models. This often takes the form of a “three statement model” which adds a balance sheet and cash-flow statement to the omnipresent profit & loss statement. This Model Master is usually someone in a Finance role, but it can also be an outsourced expert who assists smaller businesses.

4. The Historian: This person has valuable institutional memory. The Historian provides context and empirical data from the past to inform future-looking forecasts. This is a lot more about subtle nuances in the business (e.g., sector seasonality, observed customer payment trends over time, sales cycle statistics) than it is about the headline numbers of a budget. This person is rarely the loudest voice at the table; but their voice is one that should be carefully considered.

5. The Water Carrier: This person is responsible for making material parts of the budget come to fruition. The Water Carrier is also the person / people who carry the quota that will turn the plan into reality (usually in the form of sales and (eventually) revenue). Unsurprisingly, the Water Carriers inject a dose of reality to budgets, particularly when The Leader and the Sensei get overly optimistic / ambitious. This person is usually the head(s) of Sales and Marketing, but can vary across different roles depending on the business model. Unlike other personas mentioned above, this person is almost never a consultant or part-time team-member.

We’ve observed that each one of these personas plays a critical role in successful budgeting processes. If even one of them is missing, it can throw-off the process and drive imbalances and gaps. Importantly, this does NOT mean that there needs to be exactly one person for each of these personas. In smaller companies one person may end up filling two or more of the roles outlined above. For instance, the CEO is often not only the Leader, but also the Historian. This tends to work just fine. The only thing to really avoid is violating the so-called Ghostbuster Rule (“…Don’t cross the streams!!”). Specifically, it’s quite problematic to have one role “moonlight” into someone else’s domain. The prototypical example is the CEO who decides that they want to suddenly dip into and out of the model when the mood strikes them. Don’t do that…it would be bad.

The Ghostbuster Rule

I’ll close with one last framework that can be quite valuable in the budgeting process: RACI chart (R = Responsible / A = Accountable / C = Consulted / I = Informed) can be great for clarifying which position in the org is responsible for what. Hopefully the example below is self-explanatory.

Sample RACI Chart for Budgeting Process

As valuable as the RACI is, though, we’ve observed that its utility is limited unless specific conditions are met. Rather, we find that it’s important to nail the personas above, before a RACI makes much sense to anyone.

In sum, personas aren’t just for Marketing anymore…they can definitely help make budgeting less challenging for all.

Budgets Again // aka: Personas — Not Just for Marketing Anymore was originally published in Made Not Found on Medium, where people are continuing the conversation by highlighting and responding to this story.