Archive for the 'Management Principles and Business Ethics of Dan Caruso' Category

zTube will be launched on an internal Zayo Social Network (and perhaps some will find their way to Bear-on-Business).   zTube will feature 3-5 minute clips on topics that might interest Zayo employees.   Examples of  topics are:

  • Why all the Hoopla about Bandwidth Infrastructure?
  • Zayo Bandwidth’s Myopic Focus on Raw Bandwidth for Large Customers
  • Durable Revenue & Unique Network
  • Strategy and Tactics for zCOLO
  • ZEN’s need to focus on Bandwidth Infrastructure
  • Why Salesforce.com is so Important to Zayo Group
  • Pricing Trends in the Bandwidth Infrastructure Industry
  • All the Right Reasons to Work at Zayo Group
  • It is all about the Capital Expenditures
  • Marathon, not a Sprint
  • The Boom, The Meltdown, and the Resurgence of the Telecom Industry

For those of you who are common-sense challenged, the zTube name comes from combining the Z from Zayo with the Tube from YouTube.    :)

Once we get this going, I will encourage employees from throughout the company to submit business-pertinent video clips to post to the site.

So Now What?

  Leave a response (0 so far)
  Subscribe via RSS
  Subscribe via by Email



Employee Communications is extremely important.   The flow of information should be two-way…with the senior team making sure it is doing at least as much listening and learning as they are talking and explaining.

As part of Zayo Group’s Communications Plan, we are rolling out 10-10-10 Sessions.   You might be interested in the origin and history of the 10-10-10 format.  If so, I will provide it here:  I made it up.  So, please bear (no pun intended) with me if we need to modify.

10-10-10 is a one-on-one session.    Senior team members will be invited to participate.   If you are invited and are uncomfortable participating, please let us know.  The sessions will be either with me or with our CFO, Ken desGarennes.  We  spend 30 minutes, spending 10 minutes each on the following topics:

• “What are your career objectives and how can Zayo better help you meet them”
• “What constructive feedback do you have re: Zayo? That is, what do we do well that we should do more of…and what do we need to improve? And what opportunities are we missing?
• “What questions do you have for Dan or Ken?”

For those of you who are math-challenged, the 10-10-10 title comes from 10 minutes on each of the three areas.  :)

Team success and Great Culture are every employee’s responsibility.  These sessions will give many of you the opportunity to provide valuable feedback and perspective.  Please be candid and constructive with us.

So Now What?

  Leave a response (10 so far)
  Subscribe via RSS
  Subscribe via by Email



Last month, Zayo began a regular process for employee surveys.  For those employees who participated, I’d be interested in your feedback.  If you’re up for it, send me an email on what you thought about the survey.   After reading the results, I thought I’d offer some perspective to employees.

First, I want to thank those of you who responded.  The overall response rate was 62%–which I consider good but not great.  I’d like to see us get to 80%+.  The feedback seemed candid and thoughtful, and I hope this continues with future surveys.

Second, I will offer some context on our approach to the survey.  I will comment on survey frequency, survey length, and the level of “sophistication”.

Frequency:  I believe in frequent employee surveys, as it provides an ongoing feedback loop to understand what is on the minds of employees.  As such, I asked that the survey take place monthly, but only 1/3 of our employees are asked to respond each month.  We will look at the results each month, but will tabulate them for each quarter (to address statistical significance).  Each employee will have the opportunity to respond quarterly—which gives each of you a voice to tell us whether we are preserving the positives while addressing the shortcomings.

Survey Length:  I believe in relatively short surveys, so that employees can complete relatively quickly.   My guess is that most employees spent 5 – 10 minutes.

Sophistication:  We did not hire a consultant.  We did not have an off-site to debate questions.  We did not banter around multiple different approaches.   Instead, we decided to throw something out there and, after seeing what happens, make course corrections.   One question started with “How strong…” and the choices of answers were “So So”, “Not Effective”, “Effective”, and “Very Effective”.  This is a small example of how we will modify.   More significant improvement ideas came from the employee survey comments, and we will address these as appropriate.  My main point is this—it is more important that we are instituting a forum for frequent and candid feedback than that we developed a perfect process.

Next, I want to stress how important it is to take to heart the survey feedback.   This burden starts with the heads of each of the business units, as they will see all the results and the written feedback.     Each business unit will share the quantitative results with their teams and will also summarize the written comments.  My guess is the results will cascade throughout the organization.  As you hear the feedback, please keep the following in mind:

  1. A lot of the results are positive.  Let’s focus on these as well as the constructive comments.  By calling out the positives, employees are telling us what good things they see and that these are important to them.   Let’s not take these for granted but, instead, let’s build on them.
  2. Many of the comments are constructive.  Some of these should be acted upon with a sense of urgency.  Others are probably better to put in a “wait-and-see” / “monitor” bucket.   Zayo is a very new company, and we will hit speed bumps and pot holes.  I know we hit several in 2009; with the benefit of hindsight, we probably could have avoided some of them.   At the pace we move, we know we will hit more.  The key is how quickly we recognize them and whether or not we learn from them.  The survey feedback should help us learn, so long as we reflect on the feedback and interpret it appropriately.

Finally, I want to highlight the profound opportunity we all have to shape the Zayo culture.  We are a brand spanking new company.  Lots of us have worked together before, but we have done so across many different companies such as Citynet, Onvoy, FiberNet, Level 3, MFS, ICG, etc.   Our time together at Zayo is just beginning.  As you fill out the survey or as you review the results, ask yourself what you can do to help make Zayo a great place to work.  Also, please consider that Zayo is really four autonomous companies.  Though Zayo Group as a whole will contribute to each group’s culture, the culture of the business units will diverge.  This is healthy and I encourage this.   This should be empowering, in that every employee should have a greater influence over the culture that is relevant to them.   I encourage each of you to exploit this empowerment by building on the positives and ferreting out the negatives.  If we all pitch in, we can make Zayo one of the best places to work in all of telecom.

Remember, at the end of the day, our job is to make a great return for our investors.     This is impossible if our customers aren’t enamored with the service we provide them—hence, a “customer first” attitude is entirely consistent with recognizing our responsibility to our shareholders.  Finally, and extremely importantly, employees are the key to satisfying both customers and investors.  For Zayo to excel, its employees must feel appreciated, respected, fairly compensated, accountable, and empowered.  Let’s use the launching of our employee feedback process to reflect on Zayo’s most valuable asset—its employees.

So Now What?

  Leave a response (0 so far)
  Subscribe via RSS
  Subscribe via by Email



By guest blogger John Scarano a.k.a. Johnny Scannns

Thank you for the opportunity to share these thoughts with you via posts to Dan’s blog. This is the last of 5 parts of my inaugural blog series. This has been a great learning experience. You should try it (posting blogs).

A couple weeks back, I had the opportunity to present the Zayo story to the shareholders of one of our major equity syndicate members. Thus far in this short series, I’ve offered thoughts and preparation leading up to and the key messages of the presentation to Investor #6 and their key shareholders. Today’s topic: So what did I learn?

Sadly (and embarrassingly), I did not really appreciate the importance of the essential requirement to ‘make money’ until fairly late in my own career. Certainly, I’ve been fortunate to learn and experience and be accountable for nearly every aspect of the competitive telecom business at various companies. And of course it is simple; our for-profit business is just like every other for-profit business. It’s about making money (oh—did I just repeat this again?)

The point to me on this score is that as long as making money remains our chief goal, then all necessary supporting elements logically fall into line. We cannot make money without happy (i.e., well serviced) customers. We cannot have happy customers without investing in our network and services properly in order to maintain high quality services. We cannot deliver these customer requirements steadily without treating employees with respect and fairly with regard to remuneration. It is a virtuous cycle if managed properly, but the shareholder is at the top.

I fret that investment bankers or accomplished business persons who read these posts will laugh heartily about how naïve I sound. Nonetheless, my observation is that the “operators” who work in or manage businesses like Zayo’s tend to not be formally trained in banking or in the importance of managing a business FOR profit. As a result, they often overlook what might seem so obvious. I believe that most Zayo folks understand these concepts at least generally and over time will cause our overall performance to improve as we embrace them more. A metronome-like beating of this drum cannot hurt. It takes time to absorb fully. And I welcome Zayo folks (or anyone) to chime in and support or to challenge.

After this presentation experience, I cannot be happier that I have conveyed the views discussed in these posts repeatedly and will not soon stop doing so. We have chosen to work for our shareholders in order to make them money on the investment they have entrusted to us. We as employees and managers had better do a very good job. It’s that simple.

By the way, not-for-profit institutions and charities are so valuable and necessary for our society (and economy) to thrive. Please do not assume that because I talk about making money that I suggest this is all that matters in life. I am happy to talk about my own involvement in these things one day, but then I would have to create a competing blog, and… well… we already have one of those at Zayo!

In closing, it is always enjoyable to learn (and re-learn). Investor #6 (and all of Zayo’s investors) are extremely disciplined, thoughtful and conservative in their approach to managing their (and their shareholders’) money for a good return on this money. Our job is to do the same for them for the portion they have entrusted to us to manage. Pretty simple.

Thanks for your time reading these posts. And thank you, Dan, for the opportunity to do so, and for your own clear guidance which I believe is reflected by these posts. However, I am hopeful there will be no comments. This way, if I have harmed your readership volume, you will no longer ask me to post again. (Just joking of course)

So Now What?

  Leave a response (1 so far)
  Subscribe via RSS
  Subscribe via by Email



By guest blogger John Scarano a.k.a. Johnny Scannns

I am day 4 into my inaugural 5-part blog series. The topic is a presentation I gave a couple weeks back to the shareholders of one of Zayo’s private equity investors. As I prepared for the presentation, I reflected on what we are doing at Zayo and I thought it might be helpful to share these reflections with others. As an added benefit, Dan can take a week off of blog-writing and maybe do some real work for a change. :)

Today, I will offer the key messages I sought to deliver in the presentation:

1) Zayo is profitable – we make more money than we spend – by choice. That is, our capital program is enormously discretionary. If we chose to reduce investments to extend the reach of our network on behalf of our customers, we can and would return meaningful cash flow to our investors;

2) We are experienced – our leadership and working level teams have a track record of successfully navigating complexity while remaining focused on key priorities. We are able to conduct M&A and the resulting integration efforts while maintaining double digit organic growth; and,

3) We accomplish these things by way of our owned and operated bandwidth infrastructure operating platform. Bandwidth demand into the foreseeable future is unwavering. Barriers to entry are high where unique network exists. Remaining disciplined regarding how we invest our shareholders’ money, whether for inorganic or organic growth purposes will continue.

Assuming I successfully conveyed these messages, I would re-assure the investors of our investor that we are good custodians of their money.

So Now What?

  Leave a response (0 so far)
  Subscribe via RSS
  Subscribe via by Email



By guest blogger John Scarano a.k.a. Johnny Scannns

Thank you for the opportunity to share these thoughts with you via posts to Dan’s blog. This is the third of 5 parts. Thus far in this short series I’ve offered thoughts leading up to the presentation to Investor #6 and their key shareholders. So how did I prepare and what did I learn?

The format for the overall presentation was for two of what are currently a dozen or so ‘portfolio companies’ to be featured with 20 minute presentations. The 100+ sized group in attendance included the entire Investor #6 partnership and support team members (about 20 people) as well as the representatives of most of the firms who have invested their money with Investor #6.

As an aside, the night before the presentation I and the CEO of the other featured business and several of the specific team members of Investor #6 had a dinner together. The CEO of the other featured business had presented many times to this same audience previously. He is a very accomplished and trusted business leader. He did not hesitate one moment when I asked his advice for the key message to deliver – “tell them how you’re going to make them money” he said. He followed up with, “what else matters?”

With prior guidance from our sponsors, I knew that it was important to present background about our industry before presenting the focused Zayo Bandwidth Infrastructure oriented business plan and status. This way there was context before diving in. And, to be sure (for those of you who know me), it was very tempting to talk in great detail about all that has transpired in our industry over the last 100 years and at Zayo in just the last two years.

Of course, the preparation objective, which was confirmed by the experienced CEO, was simple: tell them how you’re going to make them money. After all, isn’t that what really matters to shareholders and to the shareholders of shareholders?

This was the cold shower. What cash investors of any sort care about is that we make them money. How we get there is interesting but not entirely relevant (to them). Crass? Calous? Perhaps. But what else matters? Think about the stocks you yourself have sold for a loss, do you care why there is a loss? You care that you trusted someone (or some entity) to deliver a benefit to you, and this benefit was not delivered. Pretty simple.

Having taken to date nearly $260M of our shareholders’ money to manage on their behalf is the burden we at Zayo bear at this time.

So Now What?

  Leave a response (1 so far)
  Subscribe via RSS
  Subscribe via by Email



By guest blogger John Scarano a.k.a. Johnny Scannns

Thank you for the opportunity to share these thoughts with you via posts to Dan’s blog. This is the second of 5 parts following the introduction post (part 1).

Two weeks ago, I had the opportunity to present the Zayo story to the shareholders of one of our major equity syndicate members. In this Part 2 of my blog series, I will share my thoughts leading up to the presentation:

As Zayo’s employees know, the Zayo business unit leadership teams hold monthly all-employee meetings with our teams. The Zayo Bandwidth meetings tend to follow a fairly consistent format.

We provide a summary level and deep dive financial review. We discuss various key factors that have enabled our success to date such as pending acquisitions, sales performance, installs performance, service maintenance, etc. We are open about feedback, results, progress against plan, good and bad. We solicit for questions in advance of our meetings and we open the calls to questions during the meetings.

Additionally, we hold once weekly a sales, installs and service maintenance meeting with all service delivery personnel as well as all management team members across Zayo Bandwidth. We are a geographically distributed team which is nimble and adapting to the way our customers need us to support them. These consistent discussions have helped bind us together as we have evolved.

At the top of most of these meetings I find myself almost instinctively presenting the ‘state of the business’ in a snapshot form. Periodically, I have begun offering the simple view that there are two types of work environments – for profit and not for profit. Either we work for a cause—as do educators, government employees, charities OR we work for a return for our shareholders.

And this is the point. As a for-profit enterprise, we at Zayo work for our shareholders and they expect a good return on their investment. This is our top priority.

Specifically, we work for our private equity shareholders. These shareholders in turn raise money (typically) from wealthy individuals or a wide range of institutions such as endowment funds or insurance companies who seek a return on their money diversified from their other investments. These parties all TRUST US to work for THEM to make money.

By the way, were we publicly traded instead of privately held, should this trust in us offered by more distributed shareholders be handled any differently by us? Of course not.

And yet, ironically, I have offended people at times having heard feedback after having relayed the points above. I have been told that I am ‘crass’ and ‘callous’; that I am ‘all about the shareholders and by extension, not the employees’. And other things I should not write.

Frankly, I have ignored this criticism as naïve, and have continued to repeat and provide context for this key message. These points above were my own key thoughts leading up to the presentation to our shareholders of shareholders.

So Now What?

  Leave a response (1 so far)
  Subscribe via RSS
  Subscribe via by Email



By guest blogger John Scarano a.k.a. Johnny Scannns

Dan, since you have asked me only ~10,000x to make a post to your blog, and as I had the opportunity to present the Zayo story to the shareholders of one of our major equity syndicate members (I’ll refer to them as Investor #6) earlier this month, it seems a near perfect time to make the inaugural entry.

The rationale is simple. Firstly, I am tired of you asking me to make a post. Secondly, it is not often that one has the opportunity to speak with the shareholders of your shareholders directly – yes, the people who are directly affected by how well or how poorly we manage their money. I wish that everyone at Zayo were able to have the privilege. This experience is like taking an ice cold shower (in a good way), forcing one to reflect on what really matters.

I’ll relay the thoughts going through my own mind leading up to the event as well as some take-away thoughts. This way, I am hopeful to remind our entire Zayo team (and others) of what matters the most -> turning a good profit ultimately to the individuals and institutions (and their representatives) whom have trusted us enough to fund our thesis and business operations which, in-turn, enables us to take care of our customers and remunerate our employees for delivering results.

Please stay with me. I’ll break this posting into 4 subsequent parts:

1) My thoughts in general leading up to the presentation

2) Preparation, the audience and the cold shower

3) Key points of the presentation

4) Closing thoughts

Thanks for the opportunity to make this inaugural post. Two achievements result: 1) you’re hereby officially off my back, and 2) another perspective is presented (and I hope taken to heart and mind) on our key business priority – our shareholders (and theirs). Frankly, these thoughts may come off as naïve, particularly to our investors. I hope that, instead, what is gleaned is an adjacent and related perspective to yours (Dan) into the guts of not how but WHY the Zayo sausage is made…

So Now What?

  Leave a response (0 so far)
  Subscribe via RSS
  Subscribe via by Email



Yesterday’s post focused on 2b of my Management Ethics.

“Financial performance should be tracked and reported in a clear and unbiased way”

I focused on the word “Performance”, which implies more real time activity than the word “Results.” How are we performing? It is a continuum of what results were posted for last quarter as well as the leading indicators that foreshadow what to expect in future quarters.

Today, I want to focus on one other subtle point on the inclusion of this 2b Principle. I use both the words “tracked” and “reported.” Financial performance is the data of business. It is like the box score in baseball. How many hits? How many runs? Who won the game?

Principle 2b emphasizes first management’s responsibility to “track financial performance.” In discussions with investors, I try to leave aside all the subjective accolades about how hard everyone is working and what a great job we are doing. Instead, I focus on numbers. Specifically, I focus on those numbers that “track financial performance.” And I try to do it in a clear and unbiased way. And then I report these numbers to our investors open and honestly. If, as a result of this process, the company is doing well, then we take the time to celebrate success and reward employees. If not, we deal with the ramifications.

What if the clear and unbiased tracking and reporting of financial performance suggests the company isn’t doing all that well? This is why the responsibility is included as an ethics principle. The baseball manager might not like that his clean-up hitter has a .280 on base percentage (non-baseball fans–.280 not good for OBP), but the manager deserves to know it. Maybe his player needs some extra batting practice. Maybe he should be pushed to a lower spot in the line-up. Maybe he is just in a slump and time will self-correct. Maybe, the player needs to be cut from the team. My point is this: whatever the ramification, hiding the data is not the answer.

Make sense?

So Now What?

  Leave a response (0 so far)
  Subscribe via RSS
  Subscribe via by Email



It might seem odd that “Financial performance should be tracked and reported in a clear and unbiased way” is embedded in an ethics principle. Is it not commonplace that companies follow this principle, as every company has to abide by GAAP.

Only seven or eight years have elapsed since the collapse of Enron and Worldcom. These companies followed GAAP. In fact, they “knew” GAAP so well that they found ways to use GAAP to deceive their investors. Were they clear with their financials? Were they unbiased? With the benefit of hindsight, the obvious answers are shouts of No and No.

Sarbanes-Oxley, also called SOX, was to fix this. Did it? My less-than-educated guess is that it helped a fair amount. However, the Great Recession of 1999 provides plenty of examples of public companies who were anything but clear and unbiased in their reporting to shareholders.

SOX, by holding CEOs and directors personally liable for bad deeds, has inspired many companies to simply cut back on their public reporting. They comply with SOX, but they do so with providing the minimum amount of information possible. As a CEO of a company with IPO aspirations, I understand where these companies are coming from. However, I am also a CEO that wants to share with my investors a clear and unbiased view of our financial performance. Accomplishing this, without bringing on undue exposure, will be an ongoing challenge.

The way I view SOX is that it has raised the minimum standard for acceptable reporting—and it has raised the stakes for failing to comply. However, simply complying with SOX does not mean that my Management Ethics Principle 2b is satisfied. To understand why, let’s focus on the word “Performance”. Why was “Performance” used instead the word “Results”. There is a subtle but all-important difference. Results implies a backward-looking activity. What did the company accomplish last quarter or last year? GAAP, by the way, is all about how to account for results.

“Performance” implies more real time. How are we performing? It is a continuum of what results were posted for last quarter as well as the leading indicators that foreshadow what to expect in future quarters. If “financial performance is tracked and reported in a clear and unbiased way”, investors should have information to better ascertain the value of their investment.

So Now What?

  Leave a response (1 so far)
  Subscribe via RSS
  Subscribe via by Email



Recent Comments

Categories