About the author:
Michael Jaconi is the Co-Founder and CEO of Button, the mobile commerce optimization platform used by most leading retailers and publishers to increase the revenue they see from their creator and affiliate strategies. Jaconi formerly served as the CEO of Rakuten Loyalty and Executive Officer of parent company Rakuten. Jaconi has been a lifelong entrepreneur, and he currently serves on the Board of the Billion Oyster Project – one of NY’s fastest growing non-profit dedicated to educating underprivileged youth and restoring the health of NY harbor.
When I started Button almost 10 years ago, times couldn’t have been better. The tech sector was booming, investment dollars flowed, and the dismal economy of the Great Recession was mostly in the rearview mirror. But nothing lasts forever. Today’s choppy market for startup financings and exits is case in point. In response, CEOs and team leaders are scrambling to adjust their management philosophies to align with the principles of lean operations.
At Button, however, running lean isn’t anything new. It’s been our mantra from the beginning. So, I’d like to share four guidelines I have followed to implement and maintain a lean operating model at my company, applied across four dimensions:
- people
- finance
- culture
- decision-making
1. Hire Carefully, Then Invest in Development
Lack of discipline often manifests first in hiring. Too often, managers hire people without a clear purpose, objectives, and accountability for the role. When a downturn raises scrutiny on their headcount, those same managers may realize too late that not everyone is fully productive. Without rigorous discipline in hiring – and a policy to act quickly when an employee is underperforming, founders often are surprised at how low their company’s productivity actually is.
Once you’ve hired the right team, invest in their development. This may include coaching, mentorship opportunities, or asking your employees what they need to thrive. Encourage your employees to teach classes where they share their knowledge with colleagues.
Additionally, consider conducting quarterly “pulse checks” to monitor the morale and health of the workforce. Ask yourself, “What effect do our decisions have on people downstream?”
Finally, don’t forget about yourself — turn to your board members, advisors, and other founders or CEOs for counsel when you need it. Some of the most valuable lessons I’ve learned throughout my career were from brief phone calls with my mentors.
2. Control Expenses, Even in Good Times
Use your annual planning to define the coming year’s expenses. Your managers should have the freedom to use their resources as they best see fit, but you must emphasize that they’ll own the results and be accountable for their decisions.
Your managers should have the freedom to use their resources as they best see fit, but you must emphasize that they’ll own the results and be accountable for their decisions.
Of course, your leadership team will need to adapt to market and business changes, but budget discipline should be the default. The pandemic forced many of us to flex “expense discipline” muscles we didn’t know we had — and it also taught CEOs that they should do a rigorous review — line item by line item — with each expense owner at least twice a year. Those reviews are the best way to uncover potential savings for the company.
Following the pandemic, we reduced Button’s expenses by nearly 60 percent from our 2019 levels. Despite that cutting, we have managed to achieve record year-over-year revenue growth in multiple years, triple revenue per employee, and achieve profitability. Our business is much more valuable as a result of the hard decisions we made.
In the good times, some entrepreneurs, myself included, fell victim to the mantra “growth is all that matters.” But if you’re building a business that will require a longer time horizon to achieve your desired outcome, profitable growth, albeit somewhat slower, is the best strategy. It ensures a durable business when the “good times” come to an end.
One more point, cultivate productive relationships with your vendors. Trust me, I am not one to bludgeon vendors unfairly, as I’m a vendor to many, but I have found that proactively requesting price breaks has been an effective strategy for Button. I often say to my team, “There is no harm in asking, and if you don’t, you’ll never know.”
3. Establish a Culture That Encourages the Entrepreneurial Spirit
The leadership team can’t be everywhere, but you can establish “the entrepreneur’s mindset” across all parts of the organization. When you’re committed to lean operations and maximizing efficiency, you know the ROI on your investments because you always question desired outcomes, scrutinize the cost of achieving them, and review the actual results.
The leadership team can’t be everywhere, but you can establish “the entrepreneur’s mindset” across all parts of the organization.
Button has a culture where everyone we hire is expected to operate like an entrepreneur with limited time and resources. Every employee is a part owner of the business who has adopted that mentality in their decision-making. What’s the minimum investment we can make to establish the validation we need? What’s the lesson we’re seeking to learn? Is there a way to do this cheaper, faster? These are the questions we ask in all the things we do — and we make every effort to reward and encourage this behavior across our teams.
One hiring tactic I love is looking for people who are ambitious enough to say they want to be the best in the world in their given role. It sounds egotistical to some, but if you find someone who legitimately backs that statement up with work ethic and drive, then you’ve found a 10xer , someone who brings 10 times the value to their company.
I often call a former Buttonian, Stephanie Mardell, my best hiring decision. She said she was going to be “the best people leader in the world” and every step she took with Button was her getting closer to that reality. She helped infuse Button with a culture that has been celebrated.
Lastly, your company values should reinforce your commitment to running a lean business. Button’s four value pillars are Learn, Adapt, Grow, and to do so with Speed. By orienting our method of operating to speed, we established a new approach to growth. Our pace of play enables us to win while staying efficient.
4. Make Decisions Logically, Not Emotionally
Intuition can inform a strategy or influence where you make a bet, but it shouldn’t go much further. Rely on empirical data, not the philosophical musings or intuitions of your leadership team alone. Before the pandemic and our shift in operating styles, my leadership team and I would have circular discussions on topics that couldn’t be answered without data. Or worse, we’d default to talking about topics where everyone’s opinions were safe because nobody could be wrong. It was such a waste of time. I’m sure the CEOs reading this will understand what I’m saying.
The lesson: let the data tell the story and try to make plans before you execute. Any scenario has many possible outcomes. Try to plan around those scenarios at the start of any project, initiative, or product motion. Since the start of Button, we’ve been pretty good at setting success criteria. What we’ve done much better at, though, as we’ve matured and as I’ve grown as a leader, is setting kill criteria.
From the start, identify what both success and failure look like. You have to be rigorous and unemotional to know when to stop something that isn’t feeding the business.
From the start, identify what both success and failure look like. You have to be rigorous and unemotional to know when to stop something that isn’t feeding the business. If progress can’t be made by a certain time, then as the great Kenny Rogers says, you need to “know when to fold them.”
Sure, it can be hard, because people are inclined to stick to their ideas and not write off the investment. But you must apply logic and data to your decision-making. Don’t waste a dollar because you’ve already invested a dime.
Efficiency Will Serve Your Business in Good Times and Bad
Remember, no path is linear. Every company faces challenging times, even if reading the tech press sometimes makes it feel otherwise. The lessons I learned in the hard times have transformed me into 10x the entrepreneur I was before and enabled me to lead Button’s adoption of lean operations. I hope the lessons I’ve shared above help you apply these principles in your business.
