Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Gerry Langeler
Official communications channels are wonderful, but back channels are precious. This is true whether you are a VC investing in a company, a company manager with a department to run, or a sales professional trying to land a major account.
What is interesting is that the sales professional probably has received formal training in the care and feeding of back channels, while VCs, CEO’s and VPs probably have not. For sales people, Strategic Selling Skills classes share a common vocabulary: “coach”, “champion”, “technical buyer”, “economic buyer,” “gate keeper”. The coach and sometimes the champion are key contributors to any complex sale getting closed.
Those of us who invest in or manage enterprises need to develop a similar cast of characters to help us “sell” the organization on our chosen direction, and to not be “blocked” from understanding exactly what is going on.
As an investor, our primary communication channel into portfolio companies is the CEO, with perhaps a formalized “side channel” to the CFO. Most of the time, those channels are sufficient for us to know what’s going on. But, more often than we’d care to admit, we need to triangulate into the company through a different set of eyes. This is especially true if something goes wrong at the CEO level. Having an open, trusted back channel into the rank and file can save the company from serious problems, and save us millions of dollars.
The challenge is to have the back channel work exactly the right way. You don’t want to cut the legs out from under the CEO, and you don’t want a culture to develop of “if we don’t like where the CEO is taking us, we can whine to the VCs.” On the other hand, you don’t want the company to be driven over the cliff while the rank and file see it coming, but never speak up.
The key is to develop personal connections below the CEO where people feel comfortable talking with you, understand that they can periodically share things in confidence if needed, but know that you are not going to run off and act on every little comment. In many ways, I find I have to project the image of “write-only memory.” You can feel free to tell me anything, and I won’t violate the confidence, but don’t expect me to do something in real time about it.
My experience is the only way this works is via an old approach I value called “the triangle of trust”. The three vertexes on the triangle are: history, self-disclosure and time together. First start with time together – you need to spend face time with the rank and file. It may be through company social events, or wandering the halls after board meetings, or some connection outside of work. That provides the opportunity for self-disclosure. Once rank and file employees hear you express your appreciation for them and their ideas, and that you certainly don’t have all the answers to their business, they begin to see you as a person rather than a scary board member. Then you’ll have the opportunity to receive little tidbits of insight. Once they discover that they took that risk, and you didn’t go running to the CEO and get them in trouble, you will have set the stage for the big revelation down the road, should one ever be needed.
One interesting thing to watch for is how the CEOs of the companies react once they understand that you are developing these back channels. Some welcome it, essentially saying they value that openness and they trust you to handle the information appropriately. Some CEOs are threatened by it, and will go the extreme of getting the word out that employees should not talk to those wandering board members. Needless to say, the former category of self-confident CEOs are the ones where the back channel is rarely ever needed, while the latter are signaling that it may be needed sooner than you realize.
So, use the triangle of trust to develop rank and file relationships, and use those relationships to maintain a good watchful eye on the organization. It will pay off – trust me.