Episode 101

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John Rossman is Managing Director at Alvarez and Marsal, a keynote speaker, and an author. John is an expert at crafting and assisting clients to implement innovative and digital business models and capabilities including Internet of Things, marketplaces, and API driven platform business models. He is a sought after speaker on creating a culture of operational excellence and innovation. John has worked with clients across various industries, including retail, insurance, education, forest products, industrial products, and transportation.

John’s notable assignments include The Bill and Melinda Gates Foundation, Microsoft, Nordstrom. and several of the world’s leading retail and insurance organizations. Prior to A&M, John was an executive at Amazon.com where he launched the third party selling platform and ran the merchant services business.

 

 

What you’ll learn about in this episode:

  • Why you need to get really clear on what your future looks like
  • John’s favorite Amazon leadership principles
  • Why you need to be proactive and take action
  • The importance of prioritizing getting to the right answer over getting along
  • Structuring interviews so you find the employees that are actually willing to grow and improve
  • Amazon’s “think big” and why it’s all about experimentation
  • John’s best hiring practices like getting independent opinions before making a hire
  • Strategies for breaking something down to its simplest form
  • How to get your employees to take ownership in your business
  • How to communicate principles in a way that everyone understands they’re the standard
  • How John helps companies figure out their principles
  • The impact having clear principles has on a business

 

The Golden Nugget:

“Being right is more important than getting along.” – @johnerossman Click To Tweet

 

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Speaker 1:

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Agency Management Institute’s Build A Better Agency podcast presented by HubSpot. We’ll show you how to build an agency that can scale and grow, with better clients, invested employees and best of all, more money to the bottom line. Bringing his 25 plus years of experience as both an agency owner and agency consultant to you, please welcome your host, Drew McLellan.

Drew McLellan:

Hey there everybody. Drew McLellan here. Welcome to another episode of Build A Better Agency. Today we’re going to talk about leadership and how that shows up in an organization. You’re going to love my guest today. Let me tell you a little bit about him. John Rossman is currently the managing director at Alvarez & Marsal, which is a global professional services firm that delivers performance improvement, turnaround management, and business advisory services. But John is also the author of a book called The Amazon Way: 14 Leadership Principles of the World’s Most Disruptive Company. In the book, John explores the unique corporate culture of what we all know is the world’s largest internet retailer. He focuses on the 14 leadership principles that he believes have guided and shaped the organization’s decisions and it’s very distinctive leadership culture.

When he was at Amazon, John served as the director of enterprise services where he developed the merchant’s ad program, which is the B2B network that allows millions of sellers to offer products through Amazon. The program that John created now is responsible for over 40% of all the orders that go through Amazon. He also, as if that wasn’t enough ran, that relationships that Amazon had with enterprise clients like Target and Toys “R” Us, Sears and the NBA. I’m really excited to dig into this for you and for me. John, welcome to the podcast.

John Rossman:

Drew, thanks for having me. Great show. I really appreciate it.

Drew McLellan:

Thank you. Let’s dig right into the leadership principles. As you know agencies are in a very disruptive time in their history. I often say I’ve been in the business since I was in my 20s and I’m now in my 50s, and I often say I’ve never seen the rate of change or the pace or the vastness of change in our industry, as I have in the last five years. And if anything, it just seems like it’s going faster. If ever there was a call for leadership skills in a disruptive environment, I think for agency owners that is absolutely today. Your topic and your book is really spot on for our listeners.

As you look at, and I’m sure that you’re doing this too in your current role, as you’re looking at the evolution and change that’s happening in business, how are you helping business leaders and how do you think some of the leadership principles in the book helped business leaders keep up? Because I hear a lot of agency owners struggle with, everything is changing so fast, it’s hard to know what to pay attention to and what’s a fad. How are you helping them focus and keep up with the change?

John Rossman:

Yeah. Great question, and there’s no easy answer to that. I work with my clients, typically large enterprises that are trying to adjust to all sorts of changes also. The key thing that I try to help them with is, from the top level let’s get really clear on what we imagine the future to be or what the program is that we’re going to drive. All too often I find teams, and this can be within a team or with your clients that don’t have in-depth clarity as to exactly what you’re imagining is going to happen in all of the dependencies that are needed to make that change happen. So on one, from the top down, work with them on really getting the clarity on, what change are we going to drive?

And then from the bottom up, it’s really instrumenting and putting metrics in the conversation and ownership around those metrics to get the results that we want. I think there’s lots of other things that are built off those Amazon leadership principles, but those are two that I often find really help people move faster and get to better results.

Drew McLellan:

As you think about the principles that you identified in the book, is there one that pops out in your mind as, this is one regardless of business size, regardless of business focus or specifically when you think about how agencies function, because I’m sure that you’ve interacted with many of them, that really is like, okay, this is one of the principles that you have to absolutely be spot on focused on?

John Rossman:

Yeah, well, first I just want to clarify, these are Amazon’s leadership principles. These are published, they’re their principles. I just got to be there at a time when we were really working, like what are the right leadership principles for us and everything? I got to see how they were used-

Drew McLellan:

And how do we actually make them come to life, right?

John Rossman:

That’s right. And so I think the first lesson I’d say is, these principles aren’t to be put on a poster. They’re used in everyday meetings to help make better decisions, faster decisions, drive for better results. And so however you decide to leverage wisdom and common approaches, make sure they’re not inspirational posters, that they’re actually real things that help teams and leaders get to better results. But if I had to pick a couple that I think really impact, I would say leadership principle number three is simplify. Really that simplify aspect of it is the real brilliance of that leadership principle.

That is about, how do we get to the absolute consistent and bare minimum definition or requirement or articulation of what we are trying to accomplish or what it is that I have proposed? All too often it’s easy to talk about things and to write things that are obtuse and are too difficult to understand. Getting something to simple and clear is really, really hard work. It improves the work that we all do. I think that that is a big one on my list. Leadership principle number nine is have a bias for action.

Drew McLellan:

Yeah, I definitely want to dig into that one.

John Rossman:

Yeah. I just think that it takes good judgment and wisdom to know, when is it time to stop analyzing and when is it time to start doing something and create quick feedback loops relative to the results of that. Agencies are in such a great business to create those feedback loops, and so it really is about defining that urgency to get action, but then make sure that you create the feedback loop so you can easily test and refine and make forward progress. I think maybe the last one on your question that I would talk about, is number 13, which is, have backbone disagree-

Drew McLellan:

Yeah. I was going to ask you about that. I think that’s a challenge for agencies. You’re in a creative environment, you’ve got a lot of people who are very invested in their ideas. How do you create a culture where it’s not only okay to disagree and commit, but that you have, I was going to say commitment, but you have the obligation and it’s understood in the culture that it’s your job to disagree on occasion?

John Rossman:

Well, I love that word obligation. That really is how it’s seen across all of these leadership principles. But I think it starts with just like… This is how I coach my clients and how I work with our teams and everything. Is like, I tell them upfront, “Hey, this is how we’re going to behave as a team.” And so when people start understanding the nature of how we’re going to work together and what the game is, that we are going to have robust conversations led with data and customer obsession. But at the end of the day, this is the decision that’s going to be made and this is the decision maker. Regardless of whatever decision they make we’re not just going to agree to it, but we are wholeheartedly going to commit to making it as successful as possible.

And then if we can do that and we create quick feedback loops, we know that moving forward is more important than just continuing to analyze. And so those go together, but what you see so much as the passive aggressive behavior of people don’t play their cards, they don’t really say what they think, and they don’t really buy into decisions. And so it’s much better-

Drew McLellan:

And then they undermine them after the decisions are made.

John Rossman:

And then they undermine it exactly. It’s so much better to have a proactive and honest… There’s a really good book out there right now called Radical Candor. It’s all about this notion of caring enough to be able to really get at the heart of the matter. That’s what it really is about. You have to do it in an empathetic way, but at the end of the day what happens is people prioritize getting along above getting to the right answer. You just have to switch those priorities of being right is more important, and being fast is more important than getting along. And so it’s just switching those priorities helps teams move faster.

Drew McLellan:

In a lot of agencies you’ve got multi-generations working together, and in many cases one of the things I hear a lot of agency owners talk about is that they struggle giving constructive feedback to their younger cohorts. It seems like that’s a super sensitive issue. When I’m looking at the principles and I read, they do not compromise for the sake of social cohesion, I think in a lot of cases that’s a very real struggle for agency owners to create a culture where everyone has, if you will, thick enough skin to take criticism of their ideas or take people pushing and pulling on their ideas. How do you create that or when you were at Amazon, how did you encourage and create that kind of an environment so that people’s feelings weren’t hurt or that people didn’t powder, as you said, do the passive aggressive thing when you’re having a discussion?

John Rossman:

Yeah. I think to some degree it’s testing people out and it’s setting expectations around this. Oe of the things I do is, when I’m interviewing somebody, I’ll give them critical feedback relative to the interview and everything. I oftentimes interview people multiple times and then the next time that I interview them, I see if they make an adjustment, and how did they feel relative to getting that type of direct, constructive feedback in an interview? It helps me really see like, “Hey, is this person truly here to grow and to improve? Or is that just they want that but they aren’t willing to hear the straightforward suggestions that are going to help them do that?

There’s a lot of techniques. I think asking questions is super important. Demonstrating things and practicing things together. Like, hey, this is how this conversation needs to go, let’s practice that conversation. I have a partner that I’ve worked with and we practice together when we’re going to be having high stress or high impact conversations with a client, we’ll practice that conversation together. And so he can give me feedback, I can give him feedback and that’s how we’ve gotten much better at it and stuff. And so there’s lots of different ways you got to get to it, but it starts with just like, are we committed to getting better? If we are, there’s only a couple of ways that it’s going to happen and that’s by getting real feedback and hearing it, reacting to it.

Drew McLellan:

Well, that’s a really great point. It’s not just that there’s an environment that is conducive to disagreement and really pushing each other to a better idea. But it’s also about everyone having the skills when they are the one doing the disagreeing or the correction, that they do it in a way that the recipient can receive it with some grace, right?

John Rossman:

Trying to do things one-on-one and not embarrassing. All those things are super, super important. But all too often things just get pushed to performance reviews and they never get addressed. You don’t hear about it until it blows up and stuff and that’s the worst possible outcome.

Drew McLellan:

Well, I think a lot of agency owners, I’m sure no one listening, but other agency owners, I think they struggle with having those tough conversations so they put them off, they put them off, they put them off and then something is the straw that breaks the camel’s back. And then again, back to our passive aggressive, they explode. And then they wonder why people don’t take that well.

John Rossman:

That’s exactly what happens.

Drew McLellan:

Yeah. One of the other challenges inside agencies is, as agencies, the stuff that agencies make gets marginalized because in theory anybody can make the thing, whatever it is. Agencies are really trying to position themselves as strategic partners and thinking bigger. Talk about some of the ways that at Amazon, you guys, one of the principles is think big. I think agencies always have to be thinking big on both their own behalf, but certainly on their client’s behalf. How did you foster that and how did you encourage and teach that inside the organization?

John Rossman:

Well, it all starts with the customer at Amazon. I think that’s the simplest way to really evolve businesses is truly build customer empathy, understand much broader than just how you’re trying to serve them, what their challenges are, what their goals are and try to incorporate as much of that empathy into your work as possible. That will also give you ideas on how you can serve them in a broader way. And so it drives for both better delivery or operational improvement of what you’re doing, as well as will give you ideas and insights into how to serve them better. And then the think big is really about always having a vision, but how do you execute it on very short cycles? How do you increment your way to it, is really the skill set.

Although it’s super important to have a big vision and to articulate that and work at that, it’s really like, how do you approach that in an agile manner and undertake steps to get there and experiment what works and what doesn’t work? And so the think big is really about experimentation and not limiting what you might be in the future, but you have to take small steps to get there.

Drew McLellan:

Yeah. One of the beliefs that I think is so challenging for agency owners right now in the current hiring environment, is that hire and develop the best. And so you had talked a little bit about that you do multiple interviews with folks. Are there some best practices that either you brought to Amazon or that you bring to your current job around this idea of attracting, hiring, and keeping the best talent? Because I think the principle is spot on. I think it’s pretty tough to have a world-class company or world-class agency without world-class employees.

John Rossman:

Yeah. Well, I think on the hiring front, the biggest mistakes get made when you’re hiring in a hurry. Like, oh, I got to get something done. I need somebody to do this and everything. And so I think realizing if you’re interviewing and if you’re hungry, you’re anxious to get somebody on board, you just need to realize that’s when you’re at the biggest risk in hiring mistake. And so I always ask myself in my consulting business now, which is very similar to an agency business, is if I didn’t have work for that person to do over the next whatever period, month or two months or whatever, if I was hiring to the bench, would I still want to hire them? If the answer’s yes, then I know, oh, this is a great person. But if I’m hiring because I’ve got a specific project in mind for them, that’s a warning sign that you’re hiring hungry and you might be acting short-sighted.

That’s, I think the thing to recognize in yourself when you’re hiring, is like, am I hiring in a rush, or am I hiring with the right patience. At Amazon, they have a role that really helps compensate for that and it’s called the bar raiser role. The bar raiser is somebody that’s outside the team and their primary evaluation criteria is, does this person raise the bar in this general job classification or skill category? And so they don’t have the pressure and they’re independent to the team and they can veto, their answer has to be, yes. It’s not a consensus thing. If the bar raiser says, no, the answer’s no, no matter what the hiring manager says. And so it really helps manage that issue around teams hiring because they’re hiring in a hurry versus hiring somebody that’s going to be great for this job and for the next 10 jobs.

Drew McLellan:

Yeah. That’s an interesting concept. That would absolutely… I mean, talk about a different lens of looking at that perspective employee. I don’t have to work with them day to day. I don’t have a project that’s on the line if we hire or don’t hire them. Talk about purely being able to look at them from a cost benefit analysis, if you will, that’s a unique role to play.

John Rossman:

Yep. Absolutely.

Drew McLellan:

Yeah. For agency owners, who obviously probably may or may not have the staff to do that or [inaudible 00:18:49] a lot of agencies, everybody’s work touches everybody’s work. They certainly could have a trusted advisor or someone else step in and play that role.

John Rossman:

Exactly. I’ve been asked by clients and by friends to interview people just to get an independent opinion on them and stuff. [crosstalk 00:19:07] you reach outside, get an independent opinion, is I think maybe the goal on hiring.

Drew McLellan:

When you serve in that role, what questions do you ask to decide if they can and will raise the bar?

John Rossman:

Oftentimes when I’m asked to do that, it’s for pretty senior role. With senior people, I think it’s one thing to go like, are they qualified? Do they have the skills? But what I usually end up focusing on is, what are your motivations? Motivation alignment is as important as skill alignment and things like that. And so I typically find myself when I’m being invited into a team that I don’t have all the detailed background on, and I’m not going to live with the decision per se, going forward, is I really try to understand what’s their motivation. Because oftentimes you’ll find a poor alignment to what this candidate’s motivation is versus where the hiring manager or what the role is going to take them towards. That’s where I help the situation.

Drew McLellan:

Well, the assumption is probably if they’re down to their last couple of candidates, probably both of them have the hard skills to do the job. It’s really more about you’re right, the soft skills.

John Rossman:

That’s right.

Drew McLellan:

Yeah. I want to dig into… I want to go back to one of the very first principles that you mentioned, because I want to dig a little deeper into the invent and simplify. But first let’s take a quick break and then we’ll come back and talk about simplification.

If you’ve been listening to the podcast for a while, odds are you’ve heard me mention the AMI peer networks or the agency owner network. What that is really is it’s like a Vistage group or the EO group, only everybody around the table owns an agency in a non-competitive market. As a membership model, they come together twice a year for two days, two days in the spring and two days in the fall. They work together to share best practices. They show each other their full financial so there’s a lot of accountability. We bring speakers in and we spend a lot of time problem solving around the issues that agency owners are facing. If you’d like to learn more about it, go to agencymanagementinstitute.com/network. Okay, let’s get back to the show.

All right. I am back with our guest, John Rossman, and we are talking about John’s book that focused on Amazon’s leadership principles and how you apply those. Earlier in our conversation, we glossed over a little bit, the principle of invent and simplify. I think when I look across the board at agencies that are really bringing great strategy and they’re really communicating really complicated marketing messages or product messages down to its simplest form, that’s quite an art.

John Rossman:

It is for that type of business as it is for lots of other circumstances too. People, oftentimes they don’t want to really do the work at getting something to as simple as possible and as clear as possible.

Drew McLellan:

Yeah. In the culture at Amazon, how did you help people recognize when maybe they were a step or two shy of truly simplifying something? Or how did you guys check and balance that? Because I think in a lot of agencies they’re moving so fast, they may think they’re distilling it down to its simplest form, but in reality they probably could go down a notch or two.

John Rossman:

Well, there’s lots of little things that you either recognize or that you’re looking for in the work. Oftentimes what I do is, I just read things out loud. It’s amazing when you read things out loud, how differently they come across than when you’re just reading it in silent. And so that’s one of the things, if I’m reading something and I’m like, okay, this isn’t quite, it’s like let’s just read it out loud. I’m typically dealing with longer narratives than short messaging and stuff like that. And so that is an important technique that helps recognize, when don’t I have alignment or things completely tied out relative to communications.

Drew McLellan:

When you do that, do you typically find that you’re crossing off sentences and paragraphs as not really absolutely necessary in this communication?

John Rossman:

Yeah. All of that. It’s extra, especially like extra words you find words like very are just completely non-value [inaudible 00:24:03] and they just add weight. And then oftentimes you just haven’t written it from the customer’s viewpoint. Like step me through this in a logical way. What people typically do is when they present it, they typically present in that right order. And so oftentimes I’ll read something and I don’t quite get it. It’s like, what are you trying to say there? And then they really get at what they’re trying to say. It’s like, well, that’s what we need to write here. In my business, oftentimes we’re working with clients on some type of improvement.

It’s amazing how bashful we get about writing out direct constructive criticism when our clients have hired us to give them constructive criticism. And so we dance around things. I was like, no, man, we got to go right at the heart of the issue and say things really simply because obviously if this was a simple situation or simple problem to address, they wouldn’t be hiring us to come in and help them fix it. And so we got to get right at it and be forthright and fact-based and honest about what we’re finding here.

Drew McLellan:

Yeah. In the side of my business where I’m doing consulting and coaching of agency owners or agency teams, I’m a firm believer that they’re paying me for my candor. And so to sugar coat it doesn’t really help them because it’s hard for them. If they have to figure out the nuance of what I’m saying it’s hard for them. I always will say to them, “We have a tough conversation to have. We’re going to do it with love and respect, but I need you to be ready for some very candid feedback.” I think you’re right. I think we tend to, what I call weasel word, our stuff.

John Rossman:

That’s right.

Drew McLellan:

It’s interesting to me, and I see this in agencies work all the time, when they speak, whether it’s for themselves or for their clients, they’re able to really wrap themselves around the right voice and the right tone. But the minute they got to write it down, it gets more formal and a little more rigid oftentimes.

John Rossman:

That’s right. The other thing, if you’re going to write direct comments, is you’ve got to be right, you got to be able to support it. And so oftentimes people won’t want to go directly at it because they really haven’t done the diligence. They really don’t have the facts to be able to support it. And so, well, I’ll go like, “Well, what you’re really trying to say is XYZ. Do we have evidence to support that? Well, no, we don’t. Well, that’s what we have to do, is we have to have the right evidence to support that observation.” And so sometimes willingness not to make a direct observation or direct comment is evidence that we don’t have the facts to be able to support it. Okay. Well, we got to get to a few facts to be able to support that observation.

Drew McLellan:

Yeah. We have to have the stories to tell or the antidotes or the data so that when they go, “I don’t think that’s true,” we are ready to go. “Well, here’s three ways I can show that to you.” Yeah.

John Rossman:

That’s exactly right. “How many times