303 Software and Commitment Friction
In my first meeting with Matt Jaffe and his company, 303 Software, everyone looked visibly shaken. The shop was in horrible shape. The sales pipeline had emptied. They only had a couple of projects to work on and several projects were over budget. They were unable to make payroll without getting a personal loan.
Matt had gone away from the business for about a year or so to start another venture. Through talking, we discovered that 303 Software had no commitment or accountability in his absence.
The software developers were coming in the crack of 11 a.m. and leaving at 2 or 3 p.m. There were video game breaks at lunch that extended past the hour. There were picking and choosing what projects they wanted to work on. Anything that was really difficult or challenging was the new guy’s problem. People were taking way too much time off, like 60, 70 days a year or more.
There wasn’t a lot of commitment in evidence while Matt was gone. His lack of commitment to leading the company while pursuing another venture had infested the entire organization.
The first step was to get them to see how bad the company really was. The second step was to determine who was really with them and worth saving—who wanted to leave and who wanted to stay because they believed the company was worth saving.
Let’s have Matt tell the story from here:
We’re software developers, by nature we’re problem solvers, and we think that if we can’t solve the problem, then nobody else can. So it took me quite a bit of politicking and lobbying to get my team on board with the idea that we needed help, that we weren’t going to solve the problems ourselves, and that we needed to make a big change.
This was a 10-year-old company, and although I was still the owner, we’d launched another business about seven years ago that I left to run. I had been head-down running this new start-up, and hadn’t paid enough attention to what was happening at 303. Everyone was doing whatever they felt like doing; people were setting their own hours. There was no management, accountability, communication, or ability to measure things objectively.
We had a really tough meeting where Chris introduced his “No BS” approach, and that was what we needed because a lot of the team here was in denial. We didn’t need to talk about feelings and interpersonal relationships. We needed to execute on something quickly, and Chris’s no-nonsense style, “Here’s the truth, now deal with it,” was exactly what we needed. He asked really penetrating questions that made the executive team get a little defensive, until one person got very real and honest about everything we had been avoiding. That person pointed out the huge failures and gaps in what we were doing, and from that point on the meeting changed. We realized that we needed help in keeping the team honest and focused on the problems in front of us that weren’t being addressed.
Chris put our numbers on the board and said, “You guys are basically screwed right now. You’re in a terrible situation, on the brink of going out of business.” Nobody but me had been saying that up to that point. Until that first meeting with Chris, people were still papering over the problems, being Pollyannaish, and not really facing the truth. But once we’d sat down with Chris, his temperament, personality, and ability to cut through all the BS helped us admit and confront the magnitude of the problems we were facing.
We had hired a sales executive who turned to be a really good salesman in terms of what he said he could do for the company, but in executing did nothing. He showed up for one of our meetings 20 minutes late and Chris dressed him down in front of the whole team. That moment was a turning point for us. That was exactly the kind of straight talk we needed at the company. The sales executive didn’t take any responsibility; he complained about how mean Chris was. We decided to let him go. Chris showed us how to cut the chords rather than hang onto people and it made the company much better.
After everyone was no longer in denial about how dire the situation was, they knew some really big sacrifices had to be made. They had a much larger staff than they needed and, after further digging, I found that a great majority of these people weren’t very good. Matt was still hesitant to let anyone go even though their very survival was at stake. I told him that they were going to have to let go four or five people in the next week or the company would be going out of business in the next month. That’s how serious it is.
They followed my advice and that began the company’s turnaround. Here’s Matt again:
When we started working with Chris, we adopted a formal structure to evaluate whether we needed to make a hire. We didn’t have that before. We also instituted checkpoints and deliverables for every quarter; now we know if somebody’s actually executing on what they say they’re doing. This made it very easy to see that our sales guy wasn’t performing because we could evaluate him in terms of our criteria and values. When it came time to deliver the quarterly “rocks,” which are big targets that Chris helped us identify, he also fell short. Before we worked with Chris, we would have muddled around and had circular conversations and not been able to come to a decision about letting him go because we didn’t have the criteria to make a decision.
That was something huge Chris introduced into the company culture: evaluating if we have the right person in the right seat, if that person is adhering to the values of the company, and if that person is delivering. Now we have a system for holding them accountable for their work, which we never had in the past. Now everybody at the company is working in the same headspace.
Chris’s systems also helped us to get really good at not making personnel decisions personal. If somebody’s not happy here, it’s a lot easier for us to say, “You’re not happy, we’re not happy, you should be happy and find that happiness somewhere else.”
Today, a year later, 303 Software is a transformed and revitalized company. They had three or four core people who thought the company was special, that it could be saved and needed to be saved. That core stuck with the company through its transformation and is still there. They’ve turned over the entire company except for the owners and those three or four core employees.
The number of employees is actually pretty similar to a year ago, but instead of having a dozen C and D players, they now have a dozen A and B players.
They’ve completely restructured their sales funnel. Now they’ve got demand generation. They have a new government contracting division to do business with the world’s largest clients. They have made changes in every part of their business.
The problems that plagued 303 Software in the past can never happen again due to the controls we’ve established. The company now engages its employees. Every week they take a confidential survey that allows them to speak more truthfully without fear of retribution.
In the past, fear of retribution watered down any criticism and prevented the truth from being told. Now they can put out fires much more quickly.
A crisis that began with an uncommitted leader has been resolved by a renewal of commitment, from the top down.