This scaleup’s book club took off after it gamified readingJuly 13, 2020
The underappreciated scale-up entrepreneurJuly 19, 2020
By Sunny Vanderbeck
Every CEO has a high-capacity leader on the team who isn’t being fully leveraged and appreciated. They probably also have someone else who just isn’t cutting it, and they’ve been avoiding a tough conversation about that. Both problems likely amount to a significant loss of potential, so we have developed a tool called “Red, Yellow, Green” to help you better tap the potential of your existing team.
Red, Yellow, Green is a blunt instrument, but it’s vastly better than doing nothing. This exercise will take every leader in the company through a simple, straightforward conversation about where they are and what has to happen going forward. You’ll get more from your high-potential leaders, put your solid performers on a path toward excellence, and resolve your ongoing issues one way or another. Once you have these key conversations, you’ll wonder why you didn’t do it sooner.
Prep Step: Print out your org chart
This is an on-paper exercise, and it’s important to use a physical printout of your org chart because you will get a different result if you try to do it in your head or on the screen. (We learned this the hard way.) Include anyone who either manages people or owns a function such as HR or sales. Include a maximum of two layers. Next, get out some colored markers or sticky notes.
Step 1: Identify Green
Scan your chart for anyone who will be fully capable in their current role when the company doubles in size. Those are your stars, and you need to treat them accordingly. Mark these names with green. You’re looking at a list of your future leaders and change agents.
Tips for Finding a Green
Even in the face of adversity, a green delivers results, not excuses. A green is a self-taught quick study who has an eye for opportunities and sometimes prefers to ask for forgiveness rather than permission. They have a vast capacity for learning and a desire for extraordinary outcomes. Technical qualifications and experience don’t figure into this assessment. You’re looking for drive, motivation, and agility in the midst of change.
The Green Conversation
Your greens have more capacity and capability than you are accessing now. When you sit down with a green leader, it is to tell them how awesome they are. Let them know that because of the promise they are showing, you are about to load them up with more responsibility and more opportunity to grow.
Continue to challenge your greens by giving them special projects and work at the boundary of their capabilities, both to grow them and to create value for your business.
Step 2: Identify Yellow
Of the remaining names, which of these leaders is fully capable at the company’s current size? Mark these people with yellow. That’s right—they’re fully capable, but they’re yellow because the company is growing and these people will be left behind if nothing changes.
Tips for Finding a Yellow
A yellow has mastered the particulars of their job and meets all of the standards required of them. They are reliable and deliver whatever is expected right on time. What separates a yellow from a green is that a yellow might stop at good enough. Their work is rarely extraordinary, but usually sufficient. They also have a harder time with change because they have found a comfortable groove that works for them.
The Yellow Conversation
Tell your yellows that they are doing a great job and you appreciate it. Assure them that you want them to continue to be as great at their job as the business grows, and explain that this means they will have to be more capable as a leader with each passing year. If the company is growing at 15% a year, this leader needs to grow his or her capability by 15% a year or the company will outgrow them. Sit down with your yellows for constructive conversations to draw up personal and professional development plans that will build their capacity and capability, keeping pace with the company’s growth.
Engage regularly with your yellows’ development plans. Questions to ask: How have you developed yourself into a better leader? What leadership lessons have you learned over the last six months? Where would an extraordinary outcome make the biggest difference?
Step 3: Identify Red
After separating your greens and your yellows, there will always be some left over. These are people who may have been fully capable when the company was half its current size, but now they are falling behind. There may be a story in your mind about why these people are still with the company, but we aren’t looking for reasons. Mark these names with red.
Tips for Finding a Red
A red may be someone who entered the company as a yellow but was left behind as the business grew faster than they did. This exercise is not about reds being bad or lazy people—they may never have received the leadership from you that they needed to thrive. Some reds survive on relationships, not on results. It’s crucial to step in here because reds have an effect on the business well beyond their failure to handle their own responsibilities.
The Red Conversation
Sometimes all you need to go from red to yellow is clarity in expectations. Make sure your reds understand their roles so thoroughly that they can play back to you what success looks like. These are performance conversations with timelines on them. Be open to the idea that this isn’t working, and if they want to stay in the role, they have 90 days to turn things around. Leave your reds with clarity about what has to change and how they are going change it.
Check in often on the recovery plan. Redirect your reds to enter yellow or exit the business as appropriate.
On the Margin
For people who fall on the border between two colors or whose performance is inconsistent—green one day and yellow the next—it serves both them and the organization for you to round down to the lower tier. A borderline conversation is about consistency. Let your yellow/green fence- sitters know that you see their capability and capacity, but you can’t yet rely on them to deliver extraordinary outcomes every time.
For red/yellow borderline leaders, tell them you see the signs that they can meet expectations, but without more consistency, it will soon become clear that the company has outgrown them.
You Can’t See Everything
After you mark down your own assessments, ask your one or two most trusted leaders to do the same exercise by themselves. They will see things you can’t see, and you will have confirmation about the issues that need addressing. When you compare notes, you may find there is a green or two whose great work just doesn’t reach your layer of the organization.
In about the time it took you to read this article, you could have an assessment of where you really stand and some clarity on how to do one of your most important jobs—helping your leadership team be the best versions of themselves.
Sunny Vanderbeck is managing partner at Satori Capital.