Magazine Article | June 1, 2018

Lessons From The Leader Of $180 Million MINDBODY

Source: Software Executive magazine

By Abby Sorensen, Executive Editor

Mike Mansbach was hired as the president of MINDBODY in June 2017 to continue propelling this publicly traded business management SaaS company forward, and he's doing so by focusing on alignment, growth strategies, and purpose for 1,300+ employees.

Dopamine and serotonin. Those chemical neurotransmitters are the KPIs Mike Mansbach wishes he could measure when he takes stock of MINDBODY, the software company he helps lead. It’s a befitting response for the president of a business management software platform built for the health and wellness industry. “There are no perfect metrics to measure success,” he says. “Directionality is more important. I have yet to see a perfect measure of employee satisfaction or team happiness.”

Much has been written about MINDBODY’s recent acquisitions, its new dynamic pricing model, and its investors. And if you want an insider view on its financial trajectory, just go to the investor relations page on the MINDBODY website and look at its filings, quarterly earnings reports, or stock information. None of that explains how to keep a team of more than 1,300 people pulling in the same direction, though. To do that, Mansbach let Software Executive peel back the curtain to show how this $180 million software company ticks.

He doesn’t claim to have a playbook to share when it comes to leadership strategy. He can’t possibly have regular sit-downs with each of MINDBODY’s employees. Mansbach explains, “There is no single methodology or model to create clarity. What matters is a company’s intent to build values and be aligned and its willingness to invest in the process. It’s important to make outcomes clear and measurable — to define the narrow set of priorities that above all else will accelerate us to our purpose.”

MINDBODY’s values, growth strategies, and purpose- driven culture can help software companies of any size understand why alignment is equally important as the code you deploy.

ALIGN YOUR TEAM WITH YOUR PURPOSE
It’s easy to be on the same page when a software company is in startup mode and every employee knows each other. At that stage, the org chart is relatively simple, new hires can be handpicked to fit in with the team, and all-hands meetings can take place in a single conference room. MINDBODY is far from its startup days. Since it was founded in 2001, the company has grown to more than 1,300 employees. Keeping that many people in sync and aligned toward common goals isn’t so straightforward. “Most companies do a pretty good job with a mission statement,” Mansbach says. “It’s a bunch of wordsmithing. You’ll end up with something that you like for a while or don’t like for a while, and then you’ll move on. Attaching that mission statement — or purpose — to the work you do is an exercise that has enormous value for any company.”

Mansbach summarizes MINDBODY’s mission statement in 12 words: to “help people lead healthier, happier lives by connecting the world to wellness.” But what does this actually mean for the engineers? Or the sales team? Or the HR department? Mansbach cautions against assuming everyone within the organization fully understands the company’s purpose and how their role is aligned with that purpose: “It’s a common misconception that people understand how the work they do directly impacts their company’s mission or purpose. They’d love it to — and it is hard work.”

Customer-facing roles are easier to align with mission and purpose. Sales and customer support are classic examples. Those teams interact with users on a daily basis and can see firsthand how the software is solving real pain points. In MINDBODY’s case, sales and support literally have a more direct role in connecting people to the world of wellness. For the people coding all day, it’s not as easy to see how their work correlates back to the company’s mission of helping people lead healthier, happier lives. What does shipping an update have to do with the world of wellness? Well, according to Mansbach, a great deal. “Code is central to customer experience — can a client book a class or appointment the way they want to? Can a business easily process a customer’s transaction? If a company can answer these questions and then look at the frequency of use or measure the value of that product experience in another way, you can then relay those metrics back to those responsible for writing code and building product. If the result of writing code is a platform that people use, then it’ll be easier for customers to offer more wellness services to more consumers.”

The same line of thinking applies to other internal functions like an HR team. MINDBODY’s software platform is built, sold, marketed, and supported by people — and each person in those functions benefits from an environment of coaching, growth, and employee happiness. The more people love working for the company, the longer those people will stay, the more depth of expertise and leadership they’ll acquire, and the more they’ll be able to help customers and users benefit from using MINDBODY’s software in the world of wellness. Those are some of the ways the HR team can understand its role in the company’s purpose.

“For every function, there’s an opportunity for every person in a company to get married to the outcomes of the business,” Mansbach says. “Very healthy companies with deeply satisfied employees often share an attribute that people understand the why behind the work that they do.” Aligning a team behind that “why” requires a narrow focus on how you measure success and how you plan to grow.

SIMPLE & SUCCINCT STRATEGIES FOR GROWTH
Once you start intentionally aligning your team with your mission statement and purpose, the next step is to apply a clear outcomes orientation to anything you undertake. Mansbach recommends “fewer strategies — the fewest possible — is usually best.” Why so few? Because, Mansbach says, “You can’t provide alignment if everyone has different measures of success. You need a smaller number, and those measures have to connect people cross-functionally. If you’re trying to measure only three things driving the behavior of product, and marketing, and sales, and onboarding, then it becomes much easier to align these teams around a common outcome.”

Two of MINDBODY’s priorities for growth are to build a company and brand people love and to be essential for businesses and consumers. Sounds a lot like marketing speak fit for a corporate website, right? In theory, “the concept of strategy can be an abstraction,” says Mansbach. “It’s hard to make it useful without measuring the what and the when.” In action, specific metrics are associated with each strategy for growth, and moving the needle on those metrics is the hard part. Want to be a company and brand people love? Take a long look at how your customers and team rate you. Want to understand the essentiality of your software? Find out how many people at each customer business are using your product: how much of it, how frequently, and for what purpose. MINDBODY’s strategies dictate what metrics they use to measure success, not the other way around.

GROWTH WITH PARTNERS AND COMPETITORS
Another strategy for MINDBODY is to grow with partners and competitors. Many companies spend time — waste it, actually — explaining why their software is better, faster, cheaper, and more reliable than their competitors’ software. And many companies, especially software startups, painstakingly draw up a roughly defined plan to build another revenue channel through partnerships. MINDBODY, however, takes a more altruistic view. “Working with competitors can accelerate our company’s overall purpose of connecting the world to wellness,” Mansbach explains. “We are building a product with open APIs that are accessible to any partner, including those some might consider competitors. Our competitors are not competitors when it comes to our purpose. Our purpose is to help people lead healthier, happier lives by connecting the world to wellness, which doesn’t mean we’re just going to connect the world to the MINDBODY business management solution.”

Granted, it might not be realistic for every software company to offer up its platform to competing businesses. Not all companies have a marketplace model like MINDBODY’s to accommodate this. And not all software companies have the resources to acquire partners and competitors like MINDBODY recently did. Reading between the lines of the press releases announcing the acquisitions of Booker Software (April 2, 2018) and Fit- Metrix (Feb. 20, 2018) makes it clear that these decisions directly tie to the company’s “be the ecosystem of choice for partners and competitors” growth strategy.

WHERE STRATEGY MEETS RESULTS
In addition to acquisitions, the process of defining its growth strategies is partly what led MINDBODY to refine its subscription strategy. For some context, MINDBODY is a platform for both wellness businesses and the consumers of those wellness services. For example, the consumer app allows a user to discover and book a yoga class on-the-go. The B2B side of the equation provides a complete business management software suite for the gyms/studios/teachers providing those yoga classes.

"For every function, there's an opportunity for every person in a company to get married to the outcomes of the business. Very healthy companies with deeply satisfied employees often share an attribute that people understand the why behind the work that they do."

MINDBODY focuses its growth strategies around outcomes for its three most important constituencies: team, customers, and consumers. In order for MINDBODY to be essential for customers and consumers, it first needs to understand the type of person/business for whom its software is truly essential. At first, the narrowed definition of ideal customers meant a slight dip in total customer numbers. But more importantly, focusing on the “be essential” growth strategy improved other metrics overall, such as:

  • Σ 24 percent increase in bookings through the platform (an indicator of consumer engagement)
  • 37 percent increase year-over-year in the number of consumers transacting with customers
  • 11 percent increase in the number of available classes and appointments available to consumers
  • 22 percent year-over-year increase in payments volume (amount of money customers are processing on the platform)
  • 13 percent year-over-year increase in the number of practitioners using the platform
  • 31 percent year-over-year increase in revenue.

While the concept of “be essential for businesses and consumers” might sound to some like wordsmithing for an “about us” page of a company site, these metrics give those words real clout. The measures of this growth strategy explain MINDBODY’s focus on making its software more important to an increased number of users and customers. “It’s hard for companies to create three to five strategies because that means they have to say no to a bunch of other things,” says Mansbach. “But when you get the list down to the three to five, the actual process of aligning around these as priorities of the business gets easier. Whether you have 20 people or 5,000 people, everybody understands explicitly what the company is trying to achieve and why they’re trying to achieve it.”

THE JOURNEY TO A PURPOSE-DRIVEN CULTURE NEVER ENDS
Mansbach admits he’s never had a clearly defined answer to the question “What’s your leadership style?” Or at least, it’s not as succinct as MINDBODY’s 12-word mission statement or its strategies for growth. Instead, he views leadership as a journey he gets to take every day with hundreds of passionate and committed teammates. “As leaders, our job is to create clear connective tissue, to help people figure out how our work leads to measureable progress toward the what, our purpose,” he explains. “We’re not going to wake up one day and say, ‘Oh, we’re done — we’ve got it nailed.’ Our goal is that 1,300+ people do wake up every day aligned with and excited about our purpose, excited about what they’ll do that day to learn, teach, and accelerate us toward it.”

Whether it’s a publicly traded company like MINDBODY or a brand-new software startup struggling to gain traction, Mansbach’s advice is to focus on getting to outcomes. “It’s not just that you have 1,500 people or 15 people each working on their goals. You have to align them to address a small number of ‘whats’ that are the strong issues of the business as measured by KPIs. Then whether they are individual contributor, or manager, or developer, or a C-level executive, everybody will understand how their role correlates to the outcome.”