ROO: Return on Openness

It was March of 2001, and after the internet bubble burst, Communispace had very little working capital left.  “Communities” were an alien term to most companies, our prospects were delaying, and we needed to cut costs.

The decision we made next changed everything.  We called all 38 employees into a conference room and sat for 2 hours going through all of our numbers:  our cash flow, the P&L projections, our burn rate, our venture capital commitments, and our balance sheet.  It was clear we needed to lay people off and cut costs significantly.  The task for employees was to understand the number and to come back with their ideas.  We gave everyone 36 hours.

The result was incredible.  Employees came back with 52 ideas:  renegotiate our lease, get individuals from other companies to “rent out” extra desks, ask clients for prepayments in return for discounts, and more.  The biggest idea saved us:  all employees volunteered to take 25% pay cuts in return for stock options.  Our management team was floored.  We hadn’t even asked for that.

Obviously, we made it through 2001, thanks to our investors and to a group of committed employees who believed in the future.  It was a huge lesson for me, and it changed our culture forever.

Quarterly Numbers Meeting

Quarterly Numbers Meeting

I thought about this last week during our quarterly Numbers Meeting, where we continue to lay out our performance and share the details of how we are doing.

As a CEO, I wondered how we ever would do it differently than this.  The process of sharing confidential financial information with employees affirms their importance to our future — and makes managing our performance a truly collective task where the ROO – Return on Ownership – is immeasurable.