One of the most common challenges for tech leaders is to start managing other managers, especially those who are older or with higher domain expertise. For a manager of individual contributors, their role and responsibilities are much more hands-on. They're aware of all of their team's projects and, to enable each individual to do their best work, often dive into priority management and code reviews. They might even have some time to code and, let's be honest, do some micromanagement on high priority projects. So how could managing managers be any different? The transition to managing managers is much harder than the transition from IC to management, precisely because it appears so similar. Now that they have to manage other managers, managers can't keep track of all the projects, don't have a direct relationship with individual contributors and now have to teach others how to become good managers and hold them accountable for it.
Over the past years, I worked with a lot of startup founders and venture capital investors and attended several startup board meetings. These interactions helped me realise that great investors were often using the same "management style" to help companies outperform objectives while giving room for executives to roll out strategies and action plans. So if executives are managers, that makes investors managers of managers. What if we could apply the (great) investors' management style to the management of other managers and even projects?
Startup boards and corporate governance
While there isn't a clear consensus on the performance of venture capital-backed companies, empirical studies have shown that the involvement of venture capitalists in startups' strategy development is of significant importance (e.g. MacMillan et al. 1989, Fried and Hisrich 1995, Fried et al. 1998). While the executive team deals with the day-to-day decision-making within the company (strategy, budgets, goals, tasks, compensation), it's ultimately the board of directors (founders and investors) that has the legal governing responsibilities for the company's decisions.
Because of these legal implications (on top of their shared goal of increasing shareholders' value), board directors need to be sufficiently involved in the company's operations, while having little interactions with the executive team and, most importantly, being an investor in many other companies. That means that because investors have a minimal amount of time to dedicate to each company in their portfolio, they have to establish a trust and control partnership with executives, without getting into the specifics of each project. Said differently, how can you bring value to a company by dedicating just a couple of hours per quarter?
In a balanced investor-executive partnership, the CEO usually presents the company's vision and strategy to the board of directors and, if accepted, transforms this strategy into measurable objectives that will serve as a monitoring tool for assessing the company's performance during board meetings. The investors' job is then to :
- Challenge the company's strategy and objectives (are they ambitious enough, are they realistic, are the underlying assumptions sound…)
- Monitor the company scorecard to assess previous performance and identify potential threats and opportunities
- Provide coaching, connections and resources to help the executive team overcome a specific challenge. Most large venture capital firms now have operating teams on payroll to help executives across the entire spectrum of company building.
From the boardroom to the meeting room
Like CEOs, team leaders have strategies and manage budgets, goals, tasks and compensation. So if managers of managers started behaving like investors, their job would consist of:
- Challenging their direct reports' strategy and objectives, instead of handing them down
- Monitoring each project's (or each team's) scorecard, instead of pulling out metrics themselves, getting into unnecessary details or assessing results based on gut feeling qualitative factors
- Coaching their direct reports into achieving objectives, instead of telling them what to do or just putting pressure without helping them
As you can see, these actions move away from the hands-on management style that is often embraced by engineering managers.
The main idea behind this framework is to avoid getting into "the how": team leaders equipped with the right skills can find the best way to reach an objective. They're even able to devise their own team's strategy based on a mutually agreed vision. Like Steve Jobs used to say, "it doesn't make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do."
Portfolio management instead of roadmap management
Managers manage teams, but they also manage roadmaps. What if we could also apply investor management to roadmap management? After all, when choosing to work on a project (or a feature), managers essentially allocate (limited) resources to them, the same way investors allocate money to companies.
Venture capitalists typically deal with a massive asymmetry between the money they can invest and the number of seemingly good deals available (most VC firms review 1000+ deals per year for usually less than ten investments). To get funded, founders have to pitch a compelling story, show strong metrics and have a working prototype. After that initial investment, they will usually solicit new capital every 12-18 months, each new round of funding determined by achieving the milestones promised in the previous round.
Similarly, managers typically deal with a massive asymmetry between the resources available and the number of seemingly useful features to implement. But for some reason, product owners don't always pitch compelling stories, show strong metrics or have working prototypes. And projects don't necessarily get broken down into smaller projects that will be prioritised only after reaching predetermined milestones.
I believe you got my point by now 😉 By acting like investors, managers could introduce a fairer system of prioritisation, taking into account many factors, on top of the original idea or the push from sales. Product owners would become more empowered (though with more effort to pitch projects). Managers could take more bets on smaller projects.
In summary
- By adopting the management style of great investors, managers of managers can scale themselves while empowering their direct reports
- The three activities of the manager/investor are: challenge, monitor and coach
- Investor management can also be applied to roadmap management, considering projects like portfolio companies
Additional resources
📝 Board of Directors and Corporate Governance | GitLab Handbook
📝 Startup Boards | Mark Suster
📝 Chief Executive Officers, Top Management Teams, and Boards of Directors: Congruent or Countervailing Forces? | Catherine M. Daily (Purdue University), Charles Schwenk (Indiana University) - 1996