What Is A Good Company? A Bad One?

In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally. It is a true pleasure to work in an organization such as this. Every person can wake up knowing that the work they do will be efficient, effective and make a difference both for the organization and themselves. These things make their jobs both motivating and fulfilling.

In a poor organization, on the other hand, people spend much of their time fighting organizational boundaries, infighting and broken processes. They are not even clear on what their jobs are, so there is no way to know if they are getting the job done or not. In the miracle case that they work ridiculous hours and get the job done, they have no idea what it means for the company or their careers…

That’s Ben Horowitz. There is also a discussion about a company called Go, which you’ve never heard of but are about to learn something from:

When I first met my friend Bill Campbell, he was chairman of Intuit, on the board of Apple and a mentor to many of the top CEOs in the industry, including Steve Jobs and Jeff Bezos. However, those things did not impress me nearly as much as his time running a company called GO Corporation. GO essentially attempted to build an iPhone in 1992. The company raised more money than almost any other venture capital back startup in history and lost nearly all of it before selling itself for nearly nothing to AT&T in 1994.

Now that probably doesn’t sound impressive. In fact, it probably sounds like a horrible failure. But I’d met tens of GO employees in my career, including great people like Mike Homer, Danny Shader, Frank Chen and Stratton Sclavous, and the amazing thing was that every GO employee that I’d ever met counted GO as one of the greatest work experiences of their lives. The best work experience ever despite the fact that their careers stood still, they made no money and they were front-page failures. GO was a good place to work.

My favorite test for whether a company is excellent company or not is whether the people who were a part of it go on to do extraordinary things. Think of the Paypal mafia.  It’s not clear to me that GO passes this test.

In the (re)insurance business, there are two Paypal mafias that come to mind: AIG’s actuarial department in the 80s and F&G Re. The top ranks of my business have over the last 20 years been massively over-represented by people with one of these two lines on their resume.

There is also an interesting discussion on HN about a rather controversial passage in the piece. Here’s the setup:

At Opsware I used to teach a management expectations course because I deeply believed in training. In it, I made it clear that I expected every manager to meet with her people on a regular basis. I even gave instructions on how to conduct a 1:1 meeting so there could be no excuses.

Then one day while I happily went about my job, it came to my attention that one of my managers hadn’t had a 1:1 with any of his employees in over six months.

Ben threatened to fire this manager and the manager’s boss if they didn’t fix this in 24 hours. A commenter thought that was harsh and perhaps a bit arbitrary. Another one responded with this:

It’s even worse than that, the people that work for you will make their number one priority not getting fired.

I’ve worked at a company like that before. Management worked hard on whatever problem the CEO noticed last, while doing their best to hide any other problems from him.
As a manager you do much better at aligning everyone’s interests so that your staff does what they want to do, which just happens to work towards the outcome you want. It’s more about gentle course corrections ahead of time than grabbing the wheel from them.

This is evocative to me of the hardest management problem in insurance. In insurance, like in all businesses, there is pressure for companies to grow. In insurance, also like in other businesses, growing by cutting your prices to the point where you lose money is one self-defeating option.

Unlike in other businesses, though, the break-even price for insurance is basically unknowable when you charge it. So you charge something that is probably close and work out differences across time.

This means insurance managers can be a schizophrenic bunch. One day they’re focused on growth, the next day they’re worried that they’re cutting their prices too much to grow profitably. The worst managers expose their employees to the full horror of this uncertainty. The best find a balance and help their subordinates find their own balance.

I’m not sure this criticism is justified in the story, but the lesson still stands: understand your management priorities and be consistent in applying them.

And one of those priorities is that your turf should be a good place to work.

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