Building World-Class Teams
Team Sequoia India & SEA
Published April 19, 2021
Building a company with longevity is no small feat. Generally speaking, companies that fail don’t do so because of a lack of ambition or vision, but as the result of poor execution. It takes top-notch talent at all levels to produce reliable products at scale for decades.
There have been numerous books and articles that have described how to manage teams but none to our knowledge that shed light on building world-class teams with very high performing employees. The challenges around building and managing teams of A+ players are unique. It’s a little bit like managing the Golden State Warriors versus a high school basketball team. The coaches have very different challenges. In this document, we discuss the challenges and provide guidance on managing these rock stars and building world-class teams with focus on three factors — people, culture and process.
- People — Hiring A+ players, empowering them to do great work and coaching/mentoring them to become future leaders is necessary for building a great company.
- Culture — Setting a bottom-up culture that empowers people to high levels of excellence, building a strong transparent organization that has accountability, ownership and trust as its core values and that focuses on company first are all very important dimensions that require careful consideration in building a world-class team.
- Process — Relentless focus on understanding, measuring and driving impact by showing a common purpose as well as setting a high bar and driving excellence is important for building a world class organization.
Every company is only as good as the people it employs. To maximize impact, companies need to focus on hiring A+ players. Once that top talent is in the door, it is equally critical to empower them to do their best work and invest in them through mentoring so that they become successful leaders in the company’s future.
HIRING, MANAGING, AND RETAINING A+ EMPLOYEES
Hiring the right people is the most important part of building a great team. Hiring A+ players early on who can be culture carriers must be done thoughtfully. These high achievers love well-defined, hard challenges. They have a great attitude, a strong growth mindset, and are consistently able to come up with creative solutions to hard problems. They also have a can-do attitude and take great amount of ownership and accountability for the work they do. Their drive and leadership inspire others to follow. These A+ players perform many multiples higher than even A players, who in turn perform many multiples greater than B players. In order to build a world-class team, hire slowly and build your organization around A+ players.
“I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1. Given that, you’re well advised to go after the cream of the cream. A small team of A+ players can run circles around a giant team of B and C players.” — Steve Jobs
Managing these elite people poses a very different challenge from managing A or B players. At most times, the person you are managing is much better than you in many dimensions. It is also very likely that they have plenty of options and opportunities with other groups at your company, and at other companies.
These A+ players are in high demand, and most of the time you will need them more than they need you. Therefore, creating an environment where they are challenged, groomed for leadership roles, and given every opportunity to learn is the best way to retain them. Providing opportunities for these special people to work and learn from each other as well as removing roadblock so they can be efficient with their time would help retention. Ultimately, it is crucial that A+ employees trust that their companies are invested in them.
DEVELOPING FUTURE LEADERS
Healthy organizations are ones that have a pipeline of future leaders being groomed within their own ranks. This enables a company to scale successfully by elevating culture carriers with a strong connection to the company’s mission and an understanding of how to get things done. Generally, it’s harder to train people from outside the company for leadership roles, and promoting leaders internally helps to retain top talent as well.
“The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things.” — Ronald Reagan
Developing and mentoring A+ players to become strong leaders is an integral part of building a world-class team. It’s important for managers to spend a majority of their time with top performers, give them exposure to the company’s best leaders, make sure their time is prioritized for solving the highest-impact problems, and set aggressive but measurable goals to challenge them and allow them to stretch and grow.
TRANSFORMING FUNCTIONAL LEADERS TO DOMAIN LEADERS
In the context of building a sustainable, high-achieving organization, it is important to transform the top players from purely functional leaders to domain leaders. In a product team, this could mean transforming a world-class engineer or designer to a product leader. Not only can such a leader solve the hardest design problems, but they can also provide product direction and establish product roadmap and strategy. Another way of transforming people is to help them become subject matter experts in their area and become world leaders in their domain. Careful examination of someone’s interests and skill sets, as well as the available opportunities and long-term goals of both the individuals and the company are all important considerations.
Generally speaking, the more senior one gets in a functional role, they end up resembling a product manager. They wear two hats — the functional leader (making the product succeed by using the team’s functional expertise) and the product leader (helping the product succeed by providing overall guidance on strategy and roadmap of the product). As a result, it is very important to mentor functional leaders grow into product leaders.
LEADERSHIP TEAMS THAT CARE ABOUT EACH OTHER
We have been talking a lot about A+ players, but it’s important to call out that the best-performing organizations are not necessarily the ones with the smartest leaders. They’re the ones with the leaders who love working together. When people love working with each other they are more likely to stay with a company, and consistent leadership is extremely valuable for consistent strategy and execution at all levels. The cost of frequent leadership changes is immense, and strong, happy leaders who thrive on solving big problems together are what make or break a company’s future.
Setting a bottom-up culture that empowers people to high levels of excellence, building a strong transparent organization that has accountability, ownership and trust as its core values and that focuses on company first are all very important dimensions that require careful consideration in building a world-class team.
BUILDING A BOTTOM-UP CULTURE OF EMPOWERMENT
Building a bottom-up culture that empowers people to drive the product from the ground up is the only real, sustainable way of building a long-lasting company. Cultivating a bottom-up culture of empowerment — with the right levels of oversight — brings out the best in people and fosters creativity. Ensuring that there are tools and processes for information flow and a high degree of transparency in communication are key components of a good bottom-up culture.
A top-down culture will lead to fewer leaders, a service-oriented culture, less trust in the company and will decrease the potential of the company. Top-down cultures generally do not lead to empowerment of employees as people are told what to do and play a service to the people in leadership. Generally, this leads to top talent feeling lower levels of ownership and accountability. As a result, they do not become leaders that drive innovation and change.
There is no room on a great team for people who act entitled. It is important to build a culture where people are thinking about what they can do for the company above all else. The best companies have this guiding principle: company first, organization second, team third, and individual last. As a guiding principle, every employee needs to embrace the company-first culture. This is especially true of the senior management team. If employees at lower ranks perceive that the senior management are not company-first, it is very hard to build trust in the company.
BUILDING AN ENVIRONMENT OF TRUST
If people do not feel that they can trust company leadership, it is impossible to build a world-class organization. Top talent will simply leave, and the company will be left with people who are relatively optionless. It is paramount that trust is built at all levels of management.
Trust can be built in many ways — leading by example, open and transparent communication, building strong personal relationships, ensuring that strong actions and decisions are taken when needed, promotions and recognitions are merit based etc. However, trust is the hardest thing to build and the easiest thing to lose. As the teams grow in size and the manager is further removed from the people on the team, it become very hard to build great direct relationships or spend time with people on the team. This makes it harder to build trust or even retain trusted relationships.
When people think you care about them and will do the right thing for them, they focus on work and creating impact and don’t have the stress of managing their careers. When they feel cared for, they are able to trust the system.
DIVERSITY OF IDEAS AND PEOPLE
Another aspect of culture-building that touches upon building trust is diversity. Diversity (of gender, race, etc.) is very important for the success of every company, in large part because diverse experiences create diverse ideas. It is also important to encourage diversity of opinions and ideas. The strongest teams are the ones where people can freely express their ideas and the best idea wins. In many companies, the ideas of senior people win out over the best ideas. This spells disaster.
Fostering a safe and encouraging culture in which one can acknowledge mistakes and express their opinions without fear of judgement is crucial to facilitate learning and setting the norm for taking accountability.
Relentless focus on understanding, measuring and driving impact by showing a common purpose as well as setting a high bar and driving excellence is important for building a world class organization.
It is relatively easy to build a world class team with a small number of employees. It is very hard to scale this when the number of employees get larger. The primary hindrance to hiring and retaining top talent is two-fold: competition (better talent may move to earlier-stage high potential startups) and accidental hiring of weaker talent (who in turn hire even weaker talent). As a result, even a successful company of a thousand employees would not have just A+ talent. (see below quote by Steve Jobs)
“A players hire A players, but B players hire C players and C players hire D players. It doesn’t take long to get to Z players. The trickle down effect causes bozo explosions in companies.” — Steve Jobs
Scaling efficiently also requires presence of visionaries, strategists, and operators in the company. Visionaries can dream and create the vision for the company. They can also clearly articulate how the world is trending, how products are changing, how people are behaving, and how the company’s product and mission ties to the vision. They also develop and articulate the right strategy required for the company’s success. They lean heavily on the second group of people, strategists, to help create the right strategy to succeed. These few dozen strategists continuously evolve the company’s direction based on both internal and external insights. Thirdly, for a company to be truly successful, it needs excellent operators to follow through on these goals and roadmaps. These operators execute and build a great work culture to ensure that products get built at the highest quality in the timeliest manner with the minimal number of employees.
STRIVING FOR EXCELLENCE AND SETTING A HIGH BAR
Scaling shouldn’t come at the cost of quality performance. Throughout the process of scaling and building teams, for an organization to perform at the highest level, there needs to be a culture of high performance. People need to be striving for excellence in everything they do. If every person has a clear understanding of what excellence looks like and holds themselves and each other to a high bar, strong company performance will follow.
Striving for excellence is dimensional. Someone can be great with verbal communication but poor with written. With self-awareness and coaching, employees should focus on their strengths while making sure that their weaker areas for development are not a liability. It is impossible to be great at everything, but we can definitely get better on things that matter by setting a high bar.
“Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit.” — Aristotle
Also important in striving for excellence is a culture of competing with oneself rather than competing with others. Competition between people can erode trust and create a toxic environment over time. A culture of feedback, self-awareness, and competing with oneself creates an environment where excellence and setting a high bar are valued.
FOCUS ON IMPACT
Even if you build a great team, hire A+ players, and build the right culture, if you are not focused on driving impact, then the team will not be high-performing. The most important thing is for everyone to be working on the most important problems for the company and aggressively prioritizing their time toward impact.
“If we want to have the biggest impact, the best way to do this is to make sure we always focus on solving the most important problems. It sounds simple, but we think most companies do this poorly and waste a lot of time. We expect everyone at Facebook to be good at finding the biggest problems to work on.” — Mark Zuckerberg
Impact can generally be broken down into three categories: moving a metric, influencing a product or business, and influencing a process. While these are not mutually exclusive, they serve as good ways to measure impact.
When a team has a specific goal, for example, reaching a monthly active user (MAU) goal, and when a team member identifies creative ways of increasing MAU and can execute them, then they are creating impact (moving a metric, in this case). When you are able to set a roadmap that is changes a product’s direction, you are also creating impact. For example, through deep exploratory analysis, identifying that focusing on SMS notifications on Android in India would help increase the monthly active users, would be impactful (influence a product change). Furthermore, when one is able to identify innovative ways of automating and scaling, more can be done with less. This leads to impact by influencing a process change.
We also need to ensure that people are rewarded based on merit and impact. Without the right incentive system, it will be hard to drive home focus on impact.
Above all, to encourage people focus on company first, it is important to build a sense of inclusiveness, a sense of “we” within the organization by creating a common purpose. This common purpose is accomplished by having a strong mission, a goal — or a common set of beliefs or values — that ties everyone. This helps people align on what to do and why, as well as improve decision making.
“Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.” — Andrew Carnegie
THINGS TO CONSIDER
Do not sacrifice quality for quantity. Most companies sacrifice quality for quantity. They incentivize building larger organizations rather than smaller, high-impact organizations. Instead, incentivize people to have greater impact per capita (i.e., have the fewest number of people and do more with less). Also, incentivize people to set a higher bar that will improve the quality of work and to scale their work through process.
Doing interesting work is not impact. Impact is achieved through actionable work. Interesting insights do not necessarily lead to impact. It is very important to ask the “so what?” question to every piece of work. In general, understanding the levers you have and the actions you can take needs to be tied to the insight to make it actionable.
Motion is not the same as progress or impact. People tend to conflate being busy with making progress and having impact. One needs to have unwavering focus on impact and cut out all the busy work that does not lead to impact.
Always hire exceptional people. If you have interviewed someone exceptional and you are a fast-growing company, then always hire that person. Do not worry about whether you have the current scope for the person. More opportunities always open up, and it will be very hard to find someone exceptional. Exceptional people are the scarcest commodity!
Invest in top talent. Managers should spend a disproportionate amount of time with their A+ players. They will be able to scale your company and organization in ways that others cannot. Many managers spend way too much time with weaker members of the team largely because they want to uplevel them, and they don’t spend time with rockstars because they don’t need help. However, developing A+ players helps those players grow faster and grooms them to become the future leaders of the company.
Limit hiring external senior people to critical roles that cannot be easily filled internally. It is better to promote people from within than to hire externally where possible. Being a strong culture carrier is best learned by growing up within a company. Moreover, as a company becomes larger, the hard truth is that decisions gets made by building strong relationships. In a merit-based company, these relationships are made by repeatedly delivering impact. Finally, it also builds trust in a company when an employee knows that they have a great opportunity for career advancement when they see people promoted from within.
Hire slowly. It can be tempting to hire fast to meet the needs of a fast-growing company. However, a larger company requires larger overhead, and generally there is a compromise of quantity over quality. The tradeoff on quality becomes harder to reverse as the company becomes larger.
Do not hire people that feel entitled and the no asshole rule. We are always tempted to hire someone really smart and sometimes discount the negative effect they may have on building a happy team. Bob Sutton talks about the unpleasant behaviors and the damage it costs to the workplace. It is also very important to have a culture where people are thinking about what they can do for the company rather than what the company can do for them (feeling entitled because the are deserving of more).
- Be smart about hiring and build an organization around top-tier talent.
- Empower that talent through a culture of ownership and transparency. Invest heavily in them as the company’s future leaders.
- Set high standards of excellence and prioritize doing the most important things so that every person has a measurable impact on top-line goals.
This column was previously published on Sequoia Capital’s Medium publication, here.