Leveraging the Effective Teams Principle with Tien Tzuo

INTRODUCTION: Welcome to the Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster, and I'm here today with Tien Tzuo. Tien is the founder and CEO of Zuora. Zuora is a subscription- based business that we used for years at Return Path. We're not a subscription model here at Bolster, so we don't use it, but Tien really evangelized the shift in a lot of ways to subscription- based businesses and is believed to have coined the phrase subscription economy.

Tien Tzuo: He did?

Matt Blumberg: So Tien, good to have you here.

Tien Tzuo: Great to see you, Matt. Great to be here.

Matt Blumberg: Yeah. So look, you founded a business and have taken it through its IPO. You're still running it as a company with market cap over a billion dollars. And I know one of your guiding principles of managing the organization is around the principle of effective teams.

Tien Tzuo: Sure.

Matt Blumberg: I love that. That's a principle that we used at Return Path. I think we use it here in smaller scale at Bolster, but would love to hear your top handful of thoughts or suggestions for CEOs on leading a business around the principle of effective teams.

Tien Tzuo: So the whole concept of teams, I don't know that we're the ones that invented it. Of course, it's been a trend that's gone on for the last few decades. I would simplify it that early in the 20th century, the dominant model for scale was hierarchies, the hierarchical teams and command and control systems. And that worked really, really well when information took time to distribute through the organization and you had to have systematic, repeatable processes, scale, all those types of things. And I think with the internet, with all the tools that we have available now in terms of communication and information, that just doesn't make any sense anymore. And so we use a phrase "team of teams" that we borrowed from General Stanley McChrystal, and the whole theme is-

Matt Blumberg: That's a great book, by the way.

Tien Tzuo: It's a great book. And the idea here is it's impossible to know from central command what is actually going on in the field, what is going on with customers, what is going on with the product, what is that experience like? And you've got to empower teams to work together. And more and more of these teams are not single skillset teams, but it's a complex world. So you've got to bring together people, multiple skill sets, engineering skill sets, product skill sets, scale, marketing communications, and they've got to come together as a team to figure it out. Look, I like to preach that organizations have two organizational structures inside their company. The first is what we are all familiar with. Maybe you log into Workday and you look at the tree- based hierarchy, who reports to whom? Who's the manager, who's responsible for comm, for promotions and people development? That's the hierarchical organizational structure. And that still is important. There's a bunch of things that happen, but the way the work gets done is often not reflective of that. The way the work actually gets done is cross- functional teams, where the team members might report to different parts of the organization and they come together for a product feature, to close the books on the behalf of the customer, whatever happens to be. And how do you make sure that the organizational structures and processes are optimized to make those teams work well?

Matt Blumberg: Yeah, no, that totally makes sense. The team of teams concept really, really resonates. So anyway, so what's next?

Tien Tzuo: Well, it sounds really easy, but it's hard to implement even some of the basic stuff. It turns out there's not a place that I can easily log into to see what all the teams are. I kind of have that in the engineering side because Jira, Atlassian, the tools are built around Scrum teams and you have projects and you can see that. But then I pop over to the field side of the equation and who is the account team and who's the regional pod, and you can't quite see it. And so there's a whole bunch of work that has to be redeveloped to help organizations see this second organizational structure and actually focus on that to make it all work.

Matt Blumberg: And where do you do that? What's the tool or process or system for that?

Tien Tzuo: It's a little embarrassing, but I would say most of it is existing in Google spreadsheets and slides and so on and so forth. And so you just got to constantly put that it up there. But if the Workday folks are listening, we have an OKR tool that we use Workboard for, and I thought that's another place that maybe there's an organizational structure that I can build to Workboard that's separate from the organizational structure I have in Workday. So if you're listening, Deirdre, out there, here's a product feature for you.

Matt Blumberg: Okay, what's the next component?

Tien Tzuo: The next component is going to be leadership. So it turns out that a lot of the way we're taught to lead is very much, " Hey, we own the team and we're driving the execution of our team." And that's how you became successful as a first line manager, perhaps as a second line manager. But if you look at this team, the team structure, McChrystal has this great diagram in the books where he's got teams that each team has a triangle, a square, a circle to show that their cross- functional. And the communications of the teams, there's lines everywhere. But then he shows that, well, in the company there's lots and lots of these teams, and we're about 1500 employees. We probably have about 150 to 200 teams at any given time. It's now these teams, there's lines that's crisscrossing across all these teams as well. And so when you have that level of communication and that level of dependency, it's dangerous for any specific manager. Say you're a triangle manager and you got triangles everywhere, a triangle on this team, a triangle there, and they all solid line report to you. One of the worst things you can do is to amplify conflict that's inside the team. And oftentimes there's going to be a healthy source of conflict because you built a cross- functional teams, they bring different expertise, they might not agree on how to get to the goal. And the magic happens when they talk, when they talk and they figure out and bring their respective skill sets together, how to go accomplish that goal, how to take the hill, if you will. Sometimes when there's struggles that they're having and they tell their manager, what I see is now the person in charge of all the triangles is fighting with the person in charge of all the squares, and they really don't know what's going on down in the field. And so there's a style of working where you say... Look, we have a leadership structure of the top called the 75, 80 people in the company, and they have to view themselves as co- leading a team of teams network, which is much more complicated. And you almost have to rebuild all leadership muscles from scratch and teach people how to think in a different way.

Matt Blumberg: Yeah, that is for sure. And probably a good lead into your third tip.

Tien Tzuo: Well, it turns out that it's easy to say this. And so you ask yourself, okay, if the old model of leadership is I have my community control team, I've got my project plan, I've got my Gantt charts, I know my critical path, I know the skill sets, and I'm managing this specific team, and now you're a leader and you're in charge of teams. Each team has a designated leader, but what do you do? And so it turns out that a lot of the work is really around defining the systems and processes and things that you're measuring of making these teams work. How do you design a system where the goals and the role clarity, you imagine there's a team of 5 to 10 people out in the field, if you will. They're all bringing different perspectives. They're all different, bro. Well, who's got the ball on this decision? Who's got the ball on that decision? Where do we have to get buy- in? What are the systems and tools where we have the data that we need that allow us to come together as a team? How did our team work with other teams? What do we have to report up the chain? All those things have to be worked out. And so leadership more and more is going to be about defining a set of complex systems that allow these team of teams to work and operate independently, but also collaboratively and ultimately in an efficient way.

Matt Blumberg: Yeah, no, that's a great point. And usually we do three tips. I think you have a bonus fourth tip, which flows from that one pretty nicely.

Tien Tzuo: That's right. Well, it's really about the systems and processes. And so leadership is more and more about designing systems and processes, including measurement systems and not necessarily embodied in software. I think as software engineers, we all go right to the software, but sometimes a system is a paper- based system, might actually work as a first step, and then you can always automate it later. But systems and processes, I would say is the key fourth tip that's necessary to make all this work.

Matt Blumberg: Yeah, I mean, the bigger the company gets, the more you must have things like that to support it so there's some consistency.

Tien Tzuo: That's right.

Matt Blumberg: And visibility and transparency. All right, Tien, thank you so much for being here today. I love how much of a student you are of the craft of management and leadership, and great lessons for founders of any size and stage.

Tien Tzuo: Great talking, Matt. Enjoyed it.