Bob Sutton, who wrote perhaps the only business book with a title a family newspaper cannot reprint, The No A**hole Rule, has gone decidedly more tame with his latest work. Scaling Up Excellence, released Feb. 4, is the Stanford professor's look at the challenge of sharing good practices, growing new business lines and scaling the size of a successful startup. Co-authored by Hayagreeva "Huggy" Rao, also a professor at Stanford, the book draws on examples from companies like Facebook and Kaiser Permanente to examine how great organizations spread and scale what really works.
Sutton says that while the book hasn't gotten as much mainstream attention as his prior book, it has led to more talks with executives at big companies such as Pixar and General Motors. "No one ever wanted me in their company to talk about The No A**hole Rule," Sutton says.
I caught up with Sutton by phone earlier this week while he was in New York. Our conversation has been lightly edited for length and clarity.
Q. Tell me how the idea for the book came about, and how long it took you to write.
A. Huggy Rao and I did this executive program at Stanford's d.school called "customer-focused innovation." In the process of that, we kept having this situation where people would say, "Gee, we have a little bit of customer-focused innovation, but how do we spread it further?" Then they would use the word "scaling," and everywhere we went we’d hear it. A colleague in the education school said, "Oh, that’s like the hottest topic in education."
Then, since we’re in Silicon Valley startup land, we’d use the word scaling and people would all get excited. So we realized there was something there. There are so many books that have the word leadership or innovation in the title, including some with my name on them. We couldn’t find a major business book on scaling.
Our goal was essentially to write a book for leaders or team members who are in the middle of trying to spread something good further. To me, that’s what the book is about: You’ve got something good, and you want to spread it to more people and more places. It's a core leadership skill to be able to do that. Maybe you know how to do something good, or you know where there’s a pocket of excellence in your organization, but how do you make it happen so it spreads quicker? We framed this question in that broader way about five years ago, maybe longer.
Q. The book's title would seem to imply it's geared toward how to grow small companies into big ones without losing what makes them great. Yet that's not really the focus of the book, is it?
A. When people hear the word scaling, it means different things to them depending on the kind of organization they’re in. When you say it to people in education, what they tend to think is, "How do I spread a program or some sort of new set of skills across a bunch of schools?" I did a bunch of work with state supreme court justices. What they were trying to spread and how they would use the word scaling was basically how to share a set of practices to make civil litigation more efficient. In hospitals, what scaling means is using those with life-saving practices as mentor hospitals to convert others.
Q. One of the concepts you introduce in the book is the "Buddhism-Catholicism Continuum." What does that have to do with business?
A. In academic literature, there’s lots of stuff about whether you should allow local customization or insist on complete perfect replication — where you do things everywhere exactly the same. In the early days of the Stanford d.school, we were sitting around with the venture capitalist Michael Dearing. He asked: As we're scaling up the school, are we going to be Buddhists or Catholics? It was an analogy, of course. Would we be "Catholics," where whatever we do in one place we do in the exact same way everywhere? Or would we be "Buddhists," flexing for different populations and different cultures?
One thing I would emphasize is we believe it’s easier for companies to go from "Catholicism" to "Buddhism" than the other way around. If you start with a template or a known model, and you test it in different places, you can see what works and what doesn’t. But if you go in with an anything-goes mentality, it’s actually messier. It’s harder to tell what’s working and what isn’t.
Q. What were some management practices you discovered in the process of writing the book that stuck out to you?
A. We were quite fascinated with what Chris Fry and Steve Greene, who led software development at Salesforce.com, were doing. [Both are now at Twitter.] They had an internal job market where they wanted to make it as easy to change jobs within Salesforce as it was to go to a competitor. They would have an open period for a couple of weeks where anybody in the company could switch to another team. What they would do to encourage discussion is have a job fair, and every team would stand there with a poster board and talk about their team and what they did.
People would often find a better fit through the process, and would stay with the organization longer. Something like 15 to 20 percent of the people would switch teams per year. They were pretty clear that if everybody keeps leaving your team, it’s not a good sign about you as a manager. And from a scaling standpoint, you’re having self-propelled reorganization. Fry had this great line: "The purpose of hierarchy is to defeat hierarchy." What he really means is the purpose of hierarchy is to defeat bad bureaucracy.
Q. What does the research tell us about the right size of teams?
A. Psychologist Richard Hackman's research showed that once you hit double digits, you have a really bad problem. You spend more time coordinating group activities and less time doing the work. A good guidepost is seven people, plus or minus two. Think about when you go to dinner with 10 or 11 people — you can't really have a conversation. Something starts happening when we get beyond eight or nine.
What happens when companies scale is they think if they add more and more people to teams, they'll get more done. But more hands do not make light work. You end up doing more and more coordination and getting less and less work done.
Q. What’s the biggest mistake leaders make when trying to scale the size of their companies?
A. The biggest mistake they make is they try to go too fast. If you look at Google and Facebook, they are both interesting in the amount of effort they put into who they hire. It's that notion of slowing down now to go faster later. Sometimes you have to make short-term sacrifices to fuel long term growth.
Another big mistake is to try to spread what we call "a thin coat of peanut butter" around, but you don’t actually change anything. What you need is to have a true pocket of excellence, a place where something is really working, before you spread it. It takes a lot of patience to spot sometimes.
Finally, one thing we saw over and over again, when it comes to spreading and sustaining excellence, is that the first order of business is to get rid of the bad stuff. Pick your flavor of badness: anything from laziness to incompetence, corruption, inaction, silence or perverse incentives. Nip it in the bud. When that doesn’t happen, it’s very difficult to spread excellence.
Q. There’s a lot of debate over whether the founder should go or stay as companies scale up. Where do you fall on this debate?
A. This is an age-old question. My perspective is when it comes to growing a very focused organization where people have a common set of beliefs or mindsets, it’s amazing in the history of business how useful it is to have the founder around. Unless the person or team is fundamentally incompetent or ill suited to be a leader, as we saw with the guy from Groupon who said he wasn't cut out to be a CEO, it’s pretty hard to beat.
My buddy Michael Dearing, the venture capitalist, has funded 80 companies. He’s interviewed more than 3,000 founder teams. He likes to look for the person who believes there’s something special that’s going to happen. They tend to be people — and maybe Larry Ellison is an exception — who didn’t really want to talk about making money. Making money was a side benefit to realizing their dream.
Q. What are the critical leadership traits needed for organizations in growth mode?
A. The specific trait that you must have when scaling is the ability to make and sustain connections among people. At its heart, to me, scaling is this ability to connect and cascade ideas. That’s really a skill that's different than just having a vision. This doesn’t mean everyone on the team has to have that skill. I’m not sure [Facebook CEO] Mark Zuckerberg has that skill. But I’m sure that [Facebook Vice President of Product] Chris Cox has that skill, and he has been by Mark’s side the whole time.
The other thing I would say is you have to have patience, combined with a restlessness that things are not good enough, all at the same time. It's almost paradoxical. Finally, regardless of whether you're the nicest or nastiest person in the world, you need to be somebody who, when things are screwed up, can deal with it and not let it fester. You notice it, and you deal with it.