August 17, 2011
I’ve been thinking a bunch about the power of feedback loops recently, ever since my wife sent me this very interesting Wired piece by Thomas Goetz. Effectively designing and implementing accountability and feedback loops is an enormously important and powerful tool of organizational management. And it’s something that early stage companies don’t often give enough thought to.
Sales teams have always had it pretty easy in this regard – the feedback loop there is time-honored, simple and straightforward – commissions. Management wants the sales team to sell more stuff. So they pay them a piece of every sale. Sales guys want to make money, and they know how to do it. They’re often said to be “coin operated.” Show them the money, and they go to work. It’s simple.
But startup managers frequently ignore the importance of creatIng effective feedback loops for other parts of the organization, where the outcomes might not be quite so objective or, at least, are not as public and obvious.
I’ve seen a couple of really effective implementations in recent weeks of very public feedback loops that I thought were worth sharing. First is from our portfolio company TxVia, which has built the leading platform for managing transaction processing in alternative payments (prepaid debit cards, peer-to-peer payments, etc.). The platform that these guys maintain processes tens of millions of dollars of transactions every day, and the clients who sign up to work with TxVia are literally betting their business on the company. If TxVia goes down, the business of their partners goes down. It’s high stakes stuff.
The operations team at TxVia had been struggling a bit, and while client downtime hadn’t yet been an issue, management was worried that the team wasn’t sufficiently focused on the importance of their task – keeping a payment system relied on by millions of consumers around the world up and running. So they came up with a simple and very effective means to make the impact of the work the team was doing very clear. The head of the ops team ordered a few large computer monitors, hung them on the wall around the office, and set them up to show a simple running tally of that day’s transaction volume. The numbers were big, and they moved up fast. It was a simple, stark reminder of just what was at stake for that ops team. No longer were they doing a non-specific task, trying to keep a system up for the sake of keeping it up. They could see the stakes every minute. And lo and behold, it worked. The team has renewed focus, is motivated, and their performance is better thane ever.
The second, and even simpler example, I saw a couple of weeks ago at NYC tech accelerator program DreamIT. Like most of these accelerators, the setup at DreamIT is beehive-like: a big open room full of tables, with teams of 2-8 people crowded around them. There’s nowhere to hide in that environment, and the teams really get to know each other, help each other, and there’s a sense of shared mission in the room.
The companies in accelerator programs like DreamIT are generally engaged in 10 week sprints to make enormous progress. Business models can change dramatically over the course of a few weeks as the result of early product feedback, market testing, and guidance from mentors. I’ve seen teams in these programs accomplish more in a week than larger startup teams can pull off in a month.
Mark Wachen and the guys at DreamIT NYC have gone a step further in encouraging an accountability-driven, high performance environment, and it’s a brilliant example of using a very public feedback mechanism. When you step off the elevator into the big, open DreamIT offices, staring you in the face is a whiteboard with the names of every DreamIT company written down the left side. On the right side is space where each company records their next milestone and target completion date. These might be product releases, business development deals, or key hires. Whatever is most important to the company at a point in time, it’s written up on this whiteboard for everyone to see – visitors and resident co-founders alike.
For each individual team, this drives a serious raising of the stakes around achieving each milestone. You can’t just quietly miss a deadline anymore. And for the group of teams as a whole, it gives them all a public sense of each other’s goals and promotes a very supportive environment where achievement of those milestones is publicly celebrated. The teams I spoke to at DreamIT love the shared awareness of their goals and the environment the constant reminder of those goals create.
Two great examples of very simple, very effective feedback and accountability mechanisms. The sorts of things that every startup – or any organization, for that matter – would do well to give more thought to.
I’d love to hear more examples of startups driving this sort of accountability – let me know what you’ve got.