Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at firstname.lastname@example.org.
Q. Our company is tripling in size and I’m looking for advice on how to revise our leadership team and determine if we should create a separate leadership body now that we are bigger. Also, what kind of decision-making structures should we employ to adapt to our next stage of growth?
-Founder of a Series C company
Congrats on being in this place. It sounds as if the flywheel is spinning. Good for you for thinking about all these pieces.
First, let’s talk about the idea of creating a separate leadership body. As you grow, it makes sense to consider this change. It can be unwieldy and even ineffective when exec teams become too big. It’s understandable you want to break them down into smaller groups. I suggest these entities be no more than 20 people. When I was at eBay, we had two of these groups, one called “executive staff” and one called “senior staff.” Every quarter we nominated someone on the senior staff to go to the exec staff meetings and report back.
While there’s good reason for dividing leadership entities, you can’t just say, “Poof there’s another body!” and think that will solve the issues. Every entity has to have a purpose, rules and guidelines. Ask yourself, “What is its purpose of this new leadership body and what are you going to use them for?” “What will you bring to them?” You also have to determine who is in charge and create agendas so that everyone knows what to work on.
Now, let’s get into decision making. It’s great to have models and guidelines for how people make everyday decisions. I use the RACI (Responsible, Approves, Consulted, Informed) model, which clearly articulates who does what. I mentioned RACI in another Dear Founder letter, and I will get into more detail here to address your situation. I have used this matrix for many years at big companies, where it helped clarify roles and responsibilities in cross-functional teams and projects. We use it today at the Webb Investment Network to determine everything from who owns the final decision on investments, to our PR strategy. It’s become such a part of everything we do that it’s now shorthand.
The first step in this model is to clarify what the decision is and when it has to be made. Write it down. Then, you employ RACI, an acronym that delineates the necessary stakeholders in a decision. This outlines the person who is:
- Responsible. Who is the owner? Who sets the strategy? Who will decide? Ideally this should be one person, but it can be two. Remember, decision-making needs to be pushed down to the lowest competent level. If that’s not done, it means you are not delegating enough. Worse, it means that you may be running a monarchy.
- Approves. Who will ratify or veto? This is the person who delegates the work to the “R”.
- Consulted. Who will be affected? These people do not have the right to make the decision, but you have the obligation to get their input before the decision is made, and you want to know what they have to say.
- Informed: Who has to be informed about the decision? Always err on the side of informing too many people rather than too few.
This model can help to make decisions faster and implement them more effectively because it helps to put aside internal bickering (which is often due to uncertainty about who owns what) and get on with the task of decision making. This model helps provide role clarity, which can often be a source of tension. It will eradicate confusing debates and help codify roles without having emotional battles.
As you scale, it’s also important to remember that the best decisions do not come from a majority vote or from a single authoritative voice. They are the result of something more balanced. The RACI model allows decisions to be made collaboratively, with the input of several voices and all the necessary data—but ultimately the answer is determined by a single decision maker who was tasked with this responsibility.
Ultimately, successful decision-making isn’t just about speed or outcome—it’s about empowering others to make the best decisions. As you continue you grow you will have to look at delegation and determine when you should let go more. You and exec staff should look at every decision and ask if you should have made the decision or could someone else make it. It feels good to make decisions, but it’s even more rewarding—and more sustainable and scalable—to have other people capable of making the right decisions for team.