Lessons Learned - The Hard Way
Recently, while cleaning out an old laptop, I came across some class notes I took at Stanford 9 years ago. One of them was from a class called "Entrepreneurship and Venture Capital", and the instructor was Eric Schmidt, the then CEO of Google. In his last class, he gave a talk on the most important managerial lessons he learned in his career, which, in typical Eric style, was funny, direct, and included many complex ideas described in simple words. I transcribed as diligently as possible
I recently posted raw, unedited notes on Twitter, and based on the feedback, most folks seem to agree that these are as relevant today as they were almost a decade ago. Here they are again for those who might not have seen them, or for the ones who reached out and asked for the raw notes so they could share with others.
Lessons Learned - The Hard Way Eric Schmidt, E&VC Final Class
About Management Culture:
• You get personal leverage through delegation and empowerment, along with inspection. • Hiring defines a company. Review every job offer every time. • Managers (or teams reporting to a manager) should never have the unilateral authority to hire people. • Major decision should e made in large groups, by two joint owners. • Be careful about goal-misalignment; goaling drives behavior and conflict. • Social groups of workers moderate bad behaviors of individuals. • Meet and find the best decision; drive this to be the consensus. Don’t compromise below the best. • Organize the company around the people whose impact is highest. • Measure everything and ask for the supporting data behind everything. Beware of managers on power trips; watch out for “I'll just fire them.”
• Offices should be designed to maximize energy and interactions, not for isolation and status. • Employees care more about passion and success than about money. • Where there is success there is envy. • Learn something new so that you can remember how hard it is to learn. • Understand the employee always has a choice. • All people should work on more than one thing. • Nothing gives you more leverage than hiring a fantastic employee. • People care more about what their peers think than what their bosses think; use this. • Diversity is your best defense against myopia. • There is a fine line between arrogance and self-confidence. • Arrogance is inversely correlated with age. Some harden, however. • Employees want to be paid and treated fairly and to feel that they are appreciated and respected.
About Being A CEO or Leader:
• Run a company for the long term; CEO’s goal is to build a 20-year durable institution. • Spend 80% of your time on where the next 80% of your revenue is going to come from. • Demolish a Culture of Fear. • There is never enough communication inside a company. • Sometimes you act, sometimes you wait, sometimes you ignore. • Make sure you would work for yourself. • Trust, but verify. • Publish notes for every meeting (ed: for example, these :-) ) • Repetition does not spoil the prayer. • Be brutal to people who violate the basic interests and threaten company. • Engineers add complexity, marketing adds management layers, sales adds assistants. Manage this. • Instead of laying off the bottom 10%, don’t hire them! • Run the management training program yourself, and be good at it.
Managing the Business:
• If something is growing then it's good and gets more resources and if it's not, starve it. • Share objectives and performance and snippets weekly. • Promotion should be a peer review process, not a top down management decision. • Individual contributors understand the details of their business areas much more thoroughly than management. • The most important attribute in an organization is its ability to get out of the way. This is also true for managers. • Flat organizations increase information flow and empower employees. • Organizations need to concentrate on value, rather than costs. • Trust is your most potent weapon. Never squander it. • None of us is as smart as all of us.
• Every move you make is watched by the employees. Think before you act or speak. • Every employee is alert to management hypocrisy. • Teach something so you can learn it. • You learn more by listening than talking. • The consummate management skill is betting your future on the efforts of other people who are so much better than yourself. • Leadership requires passion – if you don’t have it, get out now. • Culture is set by the top of a company, once set very hard to change. • Tell the truth, be humble, bank goodwill for a rainy day. • Solve over-management by maxing out direct reports per manager. Solve under-management by setting the right culture.