I discovered David Sacks on the All-In Podcast late last year along with the other Besties and through the pod realized that he has a ton of SaaS operating experience, with COO roles at Paypal and CEO roles at Yammer. I then discovered a post on setting up an operating cadence that he wrote on SaaS which I found helpful and I thought I’d post here for future reference along with some quick takes.
First – the problem he addresses is misalignment between the key functions of an organization. This is most common in scaling startups but I’ve also seen it in smaller divisions of large companies as well. In his own words (with a scaling startup in mind):
These new levels of hierarchy create a feeling of compartmentalization and disconnect in the organization. Meanwhile, a lack of leadership for some functions creates a sense of disorganization. Disconnect plus disorganization equals chaos. Ironically, the better the startup is doing, the more chaos there is. This is one of the few startup problems that growth doesn’t solve — in fact, it’s caused by growth.David Sacks
The solution that David prescribes is to set up a quarterly calendar, or “cadence” that bakes in the major milestones of the key functions of the company – Sales, Finance, Marketing, and Product. The end result is very close alignment around company goals and better end outcomes.
The experiences that I’ve had trying things like this have been mostly contained to Product and Engineering with Agile transformations. The pattern I have seen is product and engineering operating on an “agile” calendar, which means there are no dates and no commitments to deliver anything. I’ve led transformations to quarterly goals and commitments using quarterly reviews as the forcing function, while pulling in other functions (Sales, Marketing, Finance) in as stakeholders to those quarterly reviews.
The challenge I’ve run into is that the quarterly alignment then stops with Product and Engineering – the push for alignment doesn’t result in any real commitments from Sales or Marketing on compensation plans, targets, or marketing events. This means that the alignment is, practically speaking, limited to product and engineering, which is still a huge improvement, but still not a complete recipe for great outcomes and other execution related benefits other than alignment.
The key insight from this post and something I’ll definitely be trying in the future is to try to tie the quarterly commitments from product and engineering into quarterly commitments from marketing, finance and sales. Sacks suggests that Product and Engineering should actually operate on the same “system” and so that seems like the best place to start in terms of snapping things together. Also, if Sales and Finance operates on a fiscal calendar then probably Product and Marketing should not operate on the same system.
A step by step:
First decide your fiscal year. It’s going to be December 31st or January 31st. That will decide your fiscal quarters. Second, snap your sales plans to the fiscal quarters. This will determine when quarterly closings, SKOs, and Board meetings occur. Third, schedule a marketing event in the middle (second month) of each fiscal quarter. Fourth, plan your product cycle to hit those event deadlines.