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January 22, 2022

where to set the standard

It's late January. Many companies are not done with their annual planning, others are thinking about revising them in the face of market turmoil and lack of clarity on investor sentiment. Founders and CEOs are asking themselves, where should I set the standard?

I have done 1,000s of references on leaders with their former reports over the last decade. The leaders who have had the most loyal followings are inevitably demanding. Great people crave high standards, high performing teammates, personal growth, a sense of urgency, and winning. That combination is a deeply satisfying and fun experience. Never have I spoken to a strong startup hire that was grateful to a former leader for shielding them from long-term reality, allowing them to operate within a bound of comfort. Many times, I have talked to someone who said, "this person asked something of me that felt crazy, but we made it happen together, and I am proud and forever grateful to them."

CEOs are often afraid of making their team afraid. Afraid of standards that are so high people will opt out, afraid of admitting the competition is a real threat, afraid that the existential reality of how hard startups are will scare people off, afraid that something the company is doing is subpar, afraid of missing the plan and being accountable to the board. It's a competitive market out there. The great resignation is happening. If we ask reps to deliver this, they'll go somewhere else. If we expect this of our engineers, they will opt out, and we don't have enough capacity as it is. If we fire people that do not want to meet those standards, other people will get stressed out. Leaders are afraid of this, because recruiting is hard, and so they sandbag, saying they'll "revise up when they have more confidence."

It's not the board that will kill you. A good board is in the boat with you. What can they do, besides fire the CEO? If you have mediocre execution, it's the market that will kill you. Technology markets are rich with smart, ambitious people, capital and competition. If you do not have the highest standards for your organization, you are taking an enormous risk. The long term risk of this asymptotes to 100%. You should be afraid of someone who is more ambitious than you.

The natural instinct of most organizations is to be reactionary, incremental and unfocused. There is organizational gravity that continually lowers standards to the point of lowest friction, and to take less risk. It is extremely uncomfortable to push against this organizational gravity, to commit to do things when we don't know how we're going to achieve them.

But maintaining high standards and fighting incrementalism is perhaps the single most powerful thing a leader can do. It is a contagious habit, when deployed in parallel with the right internal reward system for risk-takers and owners, and continually being willing to take the risk of a smaller, needle-moving team, instead of a company full of passengers.

Be honest with your teams on the existential threats your company faces and the reality of your ambitions. It will build trust, and it will put your teams on offense. Don't lower the bar and run in a low gear. It's the biggest long-term risk you can take, because the risk of the company losing is 100%.