Can you guess the monthly revenue run rate for the online publishing platform, Ghost?
The answer is $143,931. I’d ask if you guessed right, but if I’m honest you didn’t need to guess, you could have just visited Ghost’s website to find out!
Ghost is one of a growing number of startups that are operating transparently — sharing company data that previously would have been limited to employees and investors. They refer to themselves as an Open Startup, but what does this mean and why would you run a company publicly?
What’s An Open Startup
An open startup is a company that has chosen to publicly share metrics about their company. Normally they share revenue, users, and traffic numbers but in some cases they will even share, logs and dashboards too.
The trend for transparency and openness appears to have been started by Buffer, but now has been adopted by several other companies like ConvertKit, Ghost and Nomad List.
Why Run An Open Startup
Marketing: It’s been demonstrated by NomadList and Baremetrics that publicly sharing statistics can be used for promotion and to increase traffic. Equally sharing a growing user base is ideal social proof for potential customers. That said, being open can work both ways. Low user numbers or revenue could have the complete opposite effect and deter customers from purchasing.
Feedback: Sharing development progress and roadmaps is an excellent way to gain real-time feedback from existing users and potential customers. Monzo has done this very effectively with its public roadmap.
Education: Being transparent about how a company is gaining customers, building a product and making money provides an excellent opportunity to dispel the myths around startups for customers, investors and founders. More public information can also help the industry progress, encouraging others to launch independent companies.
Whether you agree with the Open Startup movement or not, it’s undeniably intriguing to be able to see how companies like Ghost are growing.
I believe opening information previously restricted to a privileged few plays a part in democratising the startup world. I hope to see more companies open their data as I’m sure it can benefit us all.
I’ve long been fascinated by the parallels between sport and business, especially how activities off the field can dramatically impact the results on it. Over the last few years, I’ve been watching the change at Liverpool Football Club with interest. It’s not so much the success that intrigues me but more the change in culture that began with the arrival of manager Jurgen Klopp.
Over the weekend, I listened to a great analysis of Klopp’s leadership on the podcast Eat, Sleep, Work, Repeat. After listening to the show I think there are two critical elements that have supported change at Liverpool and I want to share these with you today.
When he joined Liverpool, Klopp made the point of learning the names of all eighty employees at Melwood the clubs training ground. He lined them all up in the dining hall and introduced them to the players. Klopp explained to the whole group that they all had a responsibility to help each other achieve their best.
Creating a sense of inclusivity and family is critical to the Klopp approach. He works hard to make the players and staff feel valued, which creates inclusive energy that can sustainably engage people.
A study found that 74% of engaged employees believed senior leaders had a sincere interest in their well-being. While in a similar sample of disengaged employees, only 18% felt their managers genuinely cared about their well-being. The study suggests that leaders can increase employee engagement by expressing emotion and creating bonds that unlock better performance in colleagues.
This raises the question of whether engagement is Klopp’s secret weapon to delivering better results on the pitch?
I think the same is happening at Liverpool. By Klopp expressing interest in employees, he is dragging up their engagement and connection to the cause, giving everyone a sense of shared purpose.
We’ve seen how creating connection, engagement and shared purpose can lead to greater success, but this benefit could be quickly eroded without creating psychological safety.
Psychological safety is a shared belief that the team is safe for interpersonal risk-taking. It’s characterised by mutual honesty, honesty of the team with the boss and the boss with the team.
Klopp creates safety by encouraging his team to take chances. He would tell his players he would rather see them shoot and miss, than not try at all. He famously will not criticise technical errors and instead consoles and then encourages players when these are made. Ultimately psychological safety is about letting players know they won’t be blamed for giving everything they’ve got.
Klopp also reinforces psychological safety by how he deals with mistakes. In 2018 Liverpool were beaten 3-1 in the Champions League final after two shocking mistakes made by Liverpool goalkeeper Loris Karius. However, in an interview after the game, Klopp never blamed the goalkeeper. In contrast he complimented him, saying he was a fantastic individual who would recognise the errors.
Although Karius left Liverpool shortly afterward, the way Klopp treated him as a person is to be admired. It demonstrated to others they would always be respected and treated fairly at Liverpool.
If we want our teams to be creative, we can’t punish them for mistakes. Klopp goes out of his way to show that no one will pay the price for making mistakes.
It will be interesting to see if Liverpool can repeat their successes in the coming seasons. Building a self-sustaining organisational culture is a challenge that has eclipsed all but the best leaders. It will be interesting to see if Klopp can prevent the burnout seen at other clubs who have gone through a shift in culture.
Whatever happens in the future, I think Klopp’s success is best measured not by football results but how he is seen as a human. I will leave you with this quote from defender Virgil van Dijk which I think encapsulates Klopp’s success best.
“He is a fantastic manager first and foremost, but he is also a fantastic human being as well. How he handles us as players at the games and outside the games is outstanding. It’s a pleasure to work with him and with all the staff that work at Melwood. It’s an amazing environment to be in. I’m very proud and very glad that he wanted me to play at this beautiful club.”
The world is changing at a faster and faster rate. It’s not our perception; it’s a genuine phenomenon that is explained by the networking principles that form the basis of our social systems.
The pace of life systematically increases with population size: ideas spread faster, businesses are born and die more often, and economies continue to grow. This increase in pace follows the Geoffrey Wests 15% rule, which states that if the population doubles then the pace of life will increase by 15%.
Sustaining this growth requires the time between innovations to get shorter and shorter. Significant changes and paradigm-shifting discoveries must happen at an ever-accelerating pace. The general pace of life is quickening but also that rate at which companies must innovate is getting faster and faster!
To see this in action, we only need to look to history. It took humans over a thousand years to move from the Stone Age to the Iron Age but less than thirty years to move from the “Computer Age” to the “Digital Age”.
You can see this same acceleration in the developments of human consciousness. Frederic Leroux’s work defining five stages of social consciousness development demonstrated how the time it takes for societies to shift phase is decreasing.
All of this means that although time isn’t getting faster, the pace of change is speeding up relative to it, driven by the forces of social interaction. It’s the reason we feel life is getting faster and also why companies must find new ways to develop innovations at a faster rate than ever before.
Workplaces have traditionally encouraged people to show up with their “professional” self and to check all other parts of themselves at the door. This strange personality separation can lead us to some pretty bizarre behaviours.
We sometimes forget that our actions at work can have a profound impact on others lives outside of work. And equally, peoples lives outside of work can severely impact their time at work.
We need to create workplaces where people can bring their whole selves, and we understand how our actions impact people holistically. Opening our organisations to wholeness is how we can develop tighter bonds and help each other achieve our true goals.
Over the last eight years, I’ve worked with a lot of different companies as a consultant. One question I’ve asked every company is, ‘what goals do you have?’ and I cannot think of a single one that didn’t mention growth.
I have nothing against growth, but I wonder if it’s always the right goal. Year on year revenue growth has become the default metric of success for most companies but is it possible to continue to grow indefinitely?
To try and find an answer, I turned to Geoffrey West’s book, Scale. It’s a fantastic book, that explains how the universal laws of scaling apply to everything from animals, cities and indeed companies.
West, explains that companies growth is fuelled by profit, the difference between total income and expenditure. Profit generally scales linearly with the number of employees, and mathematically, linear scaling leads to exponential growth. Just what most companies are striving for.
While exponential growth sounds good, it’s a significant challenge. The overall economy is also expanding exponentially, so individual companies need to grow at the same rate as the economy or faster to register real growth.
And here lies the issue. Young companies tend to shoot out the gate and grow rapidly before slowing down as they mature. But as they age and growth slows, they begin to rely on the growth of the market to sustain themselves. If you factor out the growth of the market, most mature companies (over $10 million in yearly revenue) are not growing. They are just floating on the foam of overall market growth.
This is dangerous territory. If these companies cannot keep pace with the growth of the market, they are in danger of drowning. This is why innovation is so crucial for mature organisations. Entering new markets and solving new customer problems isn’t optional. It’s essential if you are to weather the storm, keep your head above water and keep up with market growth.
“The budget is a tool of repression rather than innovation.”
Bob Lutz, Ex-CEO, Chrysler
Every business wants to be a competitive success. We want to build great teams, that can continually innovate to delight greater and greater numbers of loyal customers while reducing costs and increasing revenue. However, for most organisations, this is a dream, not a reality.
This failure is not one of strategy, but of execution. The management model used by most organisations today is not up to the job. It was initially designed to enable central planning and control, but this is now stifling many organisations ability to innovate.
Collaborative funding is a way to change that. Decentralising control of some money allows those closest to the problems to make decisions about they invest collectively. Think Kickstarter style crowdfunding, for internal projects.
The decentralisation of financial decision making provides an opportunity to create a competitive advantage based on releasing the energy and initiative of capable and committed people who have the ideas needed to innovate.
How to Start Collaborative Funding
There are many ways to do collaborative funding, but here I’ll talk mainly about the participatory proposal process. Keep in mind, organisational culture will affect how this works in your company, so take time to think about your current culture and how this practice will integrate with it. With that said, let’s look at how to start the process.
Discovery & Setup
Considering your reason for adopting collaborative funding and how to facilitate the process is essential to avoid issues further down the road. I think there are four key areas to consider:
Scope: Consider what the goal of the funding will be and make this explicit. People will need to understand this to put forward reasonable proposals and allocate money in the best way. The scope will also inform who should contribute money, how much they should contribute and how often.
Governance Model: In your process, who will get voting power over which funds will influence how the funds will be allocated? You need to think about how the funds will be distributed amongst the group, and if you give different people, different amounts, what is this distribution based upon? There are generally three models used, which are explained here.
Process: Before you begin funding projects, you need a way to keep track of money, proposals and progress. Ensure everyone involved in the process understands how it will work and where they can see the funded projects. Transparency is key to success as it will take time to build trust in the process. I would recommend looking at tools like Cobudget to bring this transparency and make it easier to facilitate collaboration.
Onboarding: Do not underestimate the importance of a clear invitation to participate in the process. Money can be a sensitive issue for people, so make sure people feel safe and are not intimidated. Consider the behaviours you want to encourage and those you want to avoid and try to design an onboarding experience with those in mind. It’s also a good idea to document this onboarding process as you will need to onboard new team members in the future. There is an excellent example used by Perspectivity here.
Proposals & Funding
Now you’re setup, and people are on board all you need are proposals to fund. The quality of proposals will play a large part in the success or failure of the collaborative funding initiative, so don’t leave the process of proposal generation to individuals.
Why: What problem does the proposal aim to address? What: How will you solve the problem? Who: Who has the problem, and who will solve it? Budget: How much will it cost? Timeline: When will you deliver outcomes?
Once proposals are submitted, ensure you communicate them well to funders. Creating engagement with the proposal is as much part of the work as creating it in the first place.
Once you have proposals successfully funded the hard work starts. Funders and the wider organisation must receive feedback as the work takes place to build trust and provide visibility of how people are spending the money. A few ways you can give this feedback are:
Send regular email updates to funders.
Hold regular open showcase sessions.
Have a central progress sheet to track all funded proposals.
When reporting progress, ensure it is balanced and represents both the successes and the challenges, the more transparent you are, the stronger the culture around collaborative funding will be.
Collaborative funding is still a relatively new concept for many companies, but with the right governance, it can be beneficial, especially for funding innovation activities. Companies such as Outlandish and Basecamp have enabled more significant innovation by reducing barriers to internal funding. I would be interested to hear from others who have done the same or have decided to adopt collaborative funding after reading this post.
Last week, I tweeted this in response to Marty Cagan’s recent article on Product vs Feature teams. My comment seemed to resonate with some people, but it’s very generic, so let’s explore this topic in more detail!
What are Organisational Paradigms?
An organisational paradigm is a stage of development determined by the perspective, point of view, or world-view of an organisation. This perspective dramatically affects the way of working within the company.
In his work on organisational development, Frederic Laloux defined five paradigms, red, amber, orange, green and teal, that describe the major stages of organisation development. For the sake of simplicity in this article, I’ll focus on just three of them:
Amber: At this stage,organisations strive for stability. They have clear roles and ranks within a hierarchical structure. Leadership is command and control with stability and order enforced through rules and processes. Innovation is not encouraged, and competition is viewed with suspicion.
Orange: At this stage, organisations see the world as a complex machine whose inner workings can be investigated and understood. Leadership changes from command-and-control to management by objective generally focused on competition, innovation and performance.
Green: At this stage, organisations strive for harmony, tolerance and equality. They usually keep a hierarchical structure but focus on empowerment to lift motivation and to create great workplaces.
Many governments and large organisations today operate from either the amber or orange paradigm, and this has a significant impact on their ability to manage product teams.
Why do Product Teams Require a Different Paradigm?
Empowered product teams are cross-functional; measured by outcomes, and empowered to find the best way to achieve the results they have been asked to achieve. These teams must be allowed to make decisions and take responsibility for them, yet in many organisations, product teams are not empowered to do this.
The reason these teams lack empowerment is ultimately down to the paradigm the entire organisation operates within. I believe it’s impossible to have genuinely empowered product teams within organisations that work at either the Amber or Orange paradigm because the leadership model is based on principles that contradict the trust, autonomy and collective responsibility required to enable teams.
How Can Organisations Shift Paradigm?
Consciously or unconsciously, leaders put in place organisational structures, practices, and cultures that make sense to them and their way of dealing with the world. As far as we know, there aren’t yet any organisations that have evolved beyond their leader’s stage of development. A switch in paradigm requires leaders to either pull the organisation toward their stage of consciousness or push it back to a previous paradigm.
To demonstrate how leadership can shift the organisational paradigm lets look at an example from Reinventing Organisations.
Let’s say I am a Product Manager who naturally operates hierarchically, telling team members exactly what to do and how they need to do it. Now imagine a new leader arrives who urges me to empower the employees that work for me. Around me, I see other product managers giving their teams decision making power. Then at my quarterly review, I receive feedback from my team telling me how well I’m doing on empowerment and how much they enjoy working in this way.
Within a dominant context of culture and practices, my management skills and behaviours will likely shift. The environment has pulled me up, and perhaps, over time, I will genuinely integrate into that paradigm.
To have genuinely empowered product teams, I believe you need organisational leaders that operate from a paradigm that encourages autonomy, self-management, collective ownership and, above all, trust.
In many ways, having leaders that could create an environment suitable for product teams is actually about creating a product organisation. Undoubtedly, this is a much more significant undertaking than relabelling delivery teams as product teams, but ultimately, it is essential if you want to gain the value that comes with a genuine organisational paradigm shift.