Page 200 - Free the Idea Monkey

Pay-for-performance cultures: These are companies that
believe in linking pay to key metrics and sharing the data with every-
one so they know exactly where they stand and what it takes to get
ahead. This open-book mentality was unheard of two
decades ago. But today it is empowering growing
companies to build cultures of accountability—an
extreme competitive advantage.

If you spend time with today’s fast-growth
companies, it becomes immediately apparent that
the trend toward open-book management is real and
powerful. VCs love this trend. They are happy to pay for perfor-
mance—it is the basis of their business model. So if I were a VC for
a day, I’d be looking for companies that keep their books open. I’d
never have to worry about my money, because everyone in the com-
pany would be watching it as if it were their own. Jack Stack wrote
a great playbook for this concept based on his own experience. Check
out The Great Game of Business.

Failing forward: To be an innovator, you must be prepared to
fail often. Companies that have demonstrated the tenacity and skill
it takes to make small bets on many failures and then invest on the
idea that works are where we would put our money. They are, in fact,
acting like a VC. Today, as soon as your idea hits the market, some-
one will be copying it. So a company must be constantly innovating
to stay ahead of the curve. VCs are beginning to recognize that this
pattern of—try, fail, learn; try, fail, learn; try, succeed, repeat—is a

critical cultural attribute for successful,
fast-growth companies.

It’s easy to dismiss VCs as greedy
S.O.Bs. But their interest and yours are
in perfect alignment. They want to create
companies that succeed.

185C H A P T E R 1 3