Treat operational debt like tech debt - Leah Sutton on Elastic's distributed work playbook

[00:00:00] While those barriers have been coming down, they've really been shattered. But again, understanding how do you speak to that talent in a compelling way, as opposed to, well, now I can just hire anywhere. So I'm going to do that because having that infrastructure, having the understanding, having the tools, having people that truly know what it means to work lead and manage in a distributed way is different.

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today's episode. So to have in-depth I am thrilled to be joined by Leah Sutton. Leah is the SVP of global HR at elastic, which powers open source software for search and data analytics and what public back in 2018, Leah's worked in HR since 2001st cut her teeth working at bloom energy. She's perhaps best suited to talk about the challenges and opportunities.

For HR departments in our current moment, elastic has been a distributed company long before 2020, and currently has over 2000 employees spread across 40 countries and 48 states, Leah joined elastic back in 2016 and she said she was drawn to the company in large part because of the unique challenges of scaling culture across a distributed company.

Even though at the time she was signing on to be a team of one in today's conversation. We look closely under the hood of what Leah calls elastics distributed by design company DNA. She walks us through her learnings, tackling challenges. Companies now are paying close attention to including how to interview for leaders that can manage well remotely and even dives into the nitty gritty details about payroll and compensation across regions.

She also outlines a few of the tactics. Elastic has leaned on to smooth over some of the language and cultural barriers that often trip up global leadership teams, Leia zooms out even further to discuss Elastic's source code, which she describes as not so much a traditional list of values, but more the things that make elastic elastic.

One of her favorites is be humble. Be ambitious at elastic. We are both. And she's got plenty of stories of how this mandates starts with elastic CEO, Shay Bannon. Finally, she makes her pitch for why companies should talk about operational debt as much as they do technical debt. Today's conversation is a must listen to for HR leaders, of course, but also for folks on the hunt for a more systematic approach to the new challenges of distributed work, whether they be operational questions, crossed wires or management stumbles, I really hope you enjoy this episode.

And now my conversation with Leah, thank you so much for joining us. 

[00:03:36] You're welcome. Happy to be here. Wanted 

[00:03:37] to start by maybe talking at a high level. We were talking about this a little bit before we got started, but for all the obvious reasons, there's been a lot of writing and sharing about running distributed companies.

But just wanted to start by having you share some of the things that you've come to learn over the past five years about successfully running a distributed company that you think. Aren't talked enough about, or maybe I'm sure lots of people over the past months have reached out to you for advice. And you know, you leave the calls, there's Nunes and you're like, oh, I'm surprised they didn't ask X or, or they should really be asking why and thought that might be a great place to start.

[00:04:14] I mean, I think one of the things that will be interesting is as we snap back to hate the new normal, the next normal, whatever you want to call it, companies saying, oh, now we've just shifted right now. We're distributed. We know how to do it. And the fact of the matter is it's intentional. Like we always say distributed by design.

And I think there are a few things that there's a point of difference there. In that for five years, we've been screening people, particularly managers and leaders to say, have you worked in a distributed fashion before? And. If so great. Tell me about that. If not, tell me about your communication style, help me understand how you would approach leading a distributed team.

And so this very intentional focus on finding folks that have the experience or fundamentally understand the difference. That's not the same thing to leave a team where you're not getting into a conference room, or you're not co-located in an office than it is to in that situation. And so I think that the thing I, I was counseled people like, listen there, you're doing it because you have to right now.

But that doesn't mean that people are going to be great at it or that they even want to do it that way. So I think that there's a real intentionality about how to think about leadership and management in particular. When you are distributed, the assumption is, well, we didn't think we could do it because we hadn't done it now we're doing it.

And it's just, we've done it because of force of necessity. It's not actually what it's going to look and feel like when people can get back to an office. So I think that's one thing. I think the other thing is just really thinking about the tools and who is working for you and how you can extend your reach.

And I think one of the things that we've always. Worked on, perhaps not even as best as we could at elastic is thinking about who are the populations that you wouldn't reach if you're just focused on having your engineers in the bay area or having your finance team in the bay area or having sales is interesting, right?

Because sales is more typically distributed, right? You're selling regionally. You've got folks out in the field regionally, but core functions where they have more typically been office based companies for a long time. They've lost that on talent that perhaps required flexibility. Didn't want to make a terrible commute who.

You know, live in a small town in the mountains or in the Midwest or wherever, but that's a lifestyle choice, right? Their family's close by. They want to be there. And there've been struggles because they haven't necessarily had opportunities or options in terms of career paths or growth because of geography.

And I think that while those barriers have been coming down, they've really been shattered. But again, understanding how do you. Speak to that talent in a compelling way, as opposed to, well, now I can just hire anywhere. So I'm going to do that because having that infrastructure, having the understanding, having the tools, having people that truly know what it means to work lead and manage in a distributed way is different.

And so I think that's something that will be interesting is how companies start to access talent pools that they didn't formally have access to. And can they do it successfully? And I'm not talking about like, well now we just, we don't need to have it in the bay area. So we're going to set up a, an engineering center somewhere else, or we're going to do it.

We're still going to do it in a node kind of way, as opposed to in a really distributed way. So I think that will be an interesting thing to watch as well. 

[00:07:07] So one of the things you just talked about was this idea of hiring people that understand, or maybe are built for this idea of distributed leadership or management, and would be great to talk about what are you looking for to assess.

That someone would be a great person running a remote team versus a great manager in general. And I'd caveat by saying it would be very easy just to go and interview somebody and say, oh, you worked at envision. So you manage people remotely and we're through your own experience. Obviously you had never done this and you've obviously been hugely successful in running very large team now.

And so what do you look for in somebody who has not done it before, but gives you conviction that they could be exceptional. And what is different about that person than just an exceptional manager? 

[00:07:54] Communication is that was key from my perspective with great leaders, great managers. They by necessity must be great communicators.

Now, can they do that in a written way? Can they do that over video? Can they do that on the phone? And so I think it's one thing when you can sit in a room with someone and have a conversation and you know, what did they say? Like 80% of communication is body language. You've just lost 80% of your cues, right?

So, are you able to pick things up and Intuit these things via these other forms of communication where you don't have the luxury of being able to sit six, six or eight feet away from someone? Right. So I think that's very different. And I think just that when you are communicating, this is the path we are on, this is the direction we are going, being able to do that in an incredibly crisp, articulate way for us in particular, because English is the language that we work in, but we have people.

Across the world for whom it is not their first language, that precision of language and being really clear and communicate patients becomes even more important. So I think there's that piece. But at the end of the day to meet great managers have to be able to connect. And so if you are not able to connect in these ways that are perhaps different for you or not comfortable for you, that's going to impact your ability to inspire a team.

Get good feedback to a team connect with individuals and ultimately have them be their best selves at work. So I think that that communication piece, but not the, we just sort of take for granted that, oh yeah. I meant like I managed people. I'm going to be able to see them every now and again and connect with them.

Right. So I think there's just a, there's a shift and I think it's elastic in particular, I would say we're very, heart-centered human centric in terms of how we lead people so that you're not just getting down to business. Right. You're figuring out and. I've been saying this for a long, long time, but like ultimately when you're distributed and you're working over zoom, it's very intimate, right.

You're in a person's home. And so that's not traditionally what has happened. So I think really reading cues in a different way is going to be really critical and that can be very difficult. Perfect. So 

[00:09:55] how does that map to the interview process for a manager or a leader? Can you talk a little bit about that in some detail?

[00:10:02] Absolutely. So I think there's a real focus on that behavioral situational set of questions. Walk me through that. What worked, what didn't, what have you learned? Funny enough? Like, I don't think the fundamental way you interview effectively has changed, but it's really cuing in on. The things that didn't work and focusing more on the great.

So you had that great experience with your team. What team member weren't you able to take along and why, and how did you correct that? I don't believe anyone just gets us out of the gate. Right? It does take work and it does take patience. Right. And testing and learning. People are individually motivated.

It's doubly hard over in kind of a remote environment. So really. Understanding through your, the questions that you're asking are they wrote or are they going to really figure out a more individualized, like, can you come to an individualized way of communicating and connecting with people as simply asking questions around how they've done that and ensuring that you're getting good examples and continuing to push.

Cause it's, it's like, yeah, everyone can give you the good example, but you want to really understand like where it's gone awry and how they've course corrected from that. So I don't know that it's wildly different. From how we would communicate or ask questions normally in a behavioral interview, but focusing specifically in, on those communications, both the written piece and the verbal piece, and then also we're doing more, um, case studies.

So giving people an example of something that's going on and asking them to react to it real time. That's been really telling for us, we're doing it on the HR side. Obviously we do that in sales kind of stand and deliver, but really doubling down and making sure for our managers and leaders that we understand their communication style coming in and trying to see how that will translate in a remote.

[00:11:40] you walk through one of those case studies or an example of what that looks like? 

[00:11:45] On the HR side in particular, one of the things that is always tricky is like, if you have a performance management issue, how do you deliver tough feedback or terminate someone, right. When you're doing it over zoom, that's a very different experience.

So asking a person to kind of walk us through, okay, you've got a difficult situation. Take us through how you would run this fear interview in a business partner. How would you run this through with the manager? And so asking them very specifically, here's the situation. You've got an employee who, even if it's not terminated, they won't turn their video on.

They're very terse and emails. They're not on slack. How do you get to the bottom of what's going on? So asking them to kind of walk through when you've got someone on the other end, who's not being communicative. How do you get them to engage? And how do you dig in to understand what's going on from a personal perspective?

Right? So giving them those situational pieces. And I think the performance one is often the most difficult one because they haven't necessarily done that before. So you get a pretty good assessment of how someone is thinking about. What would I do if I was only able to do this over zoom and I can't sit down with someone in a conference 

[00:12:47] room, given you're operating in different states and different countries around the world.

What have you learned about how different people from different places behave differently? 

[00:12:59] Yeah. So I think one of, one of the things I always tell people is like, context is wildly important. And so at elastic, we have folks from 97 different nationalities, and I love that stat because it's just, it blows my mind in 40 different countries.

And you can imagine the dozens of different languages that our employees speak, which is amazing. That said styles of communication. And this is where things can get really tricky. So I would tell people if you see something over slack over zoom, that doesn't feel right to you. Part of our source code is don't assume malice, right?

So assume positive intent and a lot can get lost in translation. There's the culture map. There's a lot of different books that sort of go into great detail about different cultures and how they communicate differently, right. Or how they would prefer to communicate. One of the conversations I had, this is several years ago that really opened my eyes to this.

I had a colleague, quite a senior technical person who is Japanese, and he's like, listen, if I had my way, I would always prefer to raise my hand in a meeting and have someone call on me. It's culturally difficult for me to. Just interject, like you're having this rollicking conversation about a technical issue and it's, I'm uncomfortable.

It's just sort of. Jumping in. And I think that gets exacerbated over zoom. So how do you ensure that folks that culturally may not find it appropriate for just jumping in the conversation? And let's see, you've got stereotype for a bunch of noisy Americans that are just going and going. You can totally lose voices in that conversation because you aren't paying attention.

One of the best things. Recently, we had a session on power and privilege and tech, and one of our engineering leaders, a woman who is Indian. And she said, I encourage people to respect the pause. She's like, because in my mind, I'm formulating what I'm going to say in a different language. And then I have to translate it to English and then I'm going to say it.

So it might take me a moment. So when I pause, it's not that I don't have something important to say or something powerful to say, it's just, I need it. I needed a little bit more time. And so that's kind of been, our new catch phrase is just respect the pause because it doesn't mean that someone isn't.

Going to say something they just might need a little more time. So that's, I think one of the biggest takeaways for us around just how people want to participate and communicate that can create conflict. It can create misunderstandings. And so really, I tell people two things like give people time, call on people as a manager, like be aware of how different folks on your team want to communicate.

But then also if something comes across and it feels insensitive or it feels a little bit off. Just say, Hey, I'm not sure what you were trying to get at there, as opposed to assuming that they were being malicious or had, you know, had poor intent because that context of where you come from and how are you used to communicating and even the language in which you're used to communicating are super, super important.

So that's probably the biggest thing that we'll bump into that we're trying to coach managers on being a lot more aware of that. Are there 

[00:15:45] other rituals or habits that you've developed. It could be in meetings. It could be in the way that you communicate across the entire company, like respect the pause that you found useful.

I would just think it's such an interesting problem. You have cultures that are hierarchical culture that are direct. You have cultures that are more oriented around the hours I work than the output that I have. I mean, there's just so many things. Even when you, when you have a diverse group of folks, That all live in the same city, let alone different countries.

And so I'm curious what other habits or practices that you've developed over the years that you think help enable people to be super productive for people to feel welcomed and for people to feel like they can do their best work? 

[00:16:34] I think there's a couple things related to communication. And then a couple of things just in terms of how we work.

In addition to that, respect the pauses, really encouraging people. To as much as possible use very plain language. So in written communications and in verbal communications, I tend to speak very, very quickly. So we always joke that a lot of our engineers will listen to things, whether it's a podcast or a book on tape, or, uh, you know, a meeting playback on zoom, they'll speed it up.

I was like, yeah, they can't when they get to me, cause I'd sound like a chipmunk. I speak very quickly normally. Right. So really encouraging people to. Be clear use plain language and everyone does this. It's pervasive. Don't use analogies, whether they be sports, particularly sports analogies, move it up the field.

There's a zillion of them because not only does not everyone care about that particular sport, but they very often do not translate. Globally. So there's, there's things like that to be very cognizant of. And I think one of the things just very open, so have the opportunity. Often once a month, we do an ask me anything forum with all of our executives and a lot of companies do this.

So this is not rocket science, but I do think it plays to ensuring that folks understand what's going on and feel comfortable about what's going on. And I always encourage, there's sort of nothing that's out of bounds for those. And if it is out of bounds, we're really clear, like for various reasons, whether it's because we're public or this or that, like, we're not going to answer that right now.

So I think that we just over-index on the transparency and clear communication piece, and then we've got our source code and I don't know if you've ever seen the elastic source code, but it's not a set of values, but it's a set of statements and sort of ideas. That really, I think make elastic elastic.

And so we try as much as possible to tie the things that we do back to that source code when we are rewarding people or acknowledging a job, well done, tie it back to like, Hey, you're really, this is really emblematic of that piece of our source code. So things like come as you are humble, ambitious, simple progress, simple perfection, right?

These are things that we try to live and breathe. And that having those baseline things, I think really enables us people know when they come in. I don't think I've talked to a candidate in recent history where I'm like, Hey, did you like the source code? They're like, it was definitely a reason I decided to join elastic.

We're very clear about the things who we are and what those things are. Can you talk a 

[00:18:47] little bit more about the source code and maybe how it differs from sort of standard values or well done employee handbooks or what have you. 

[00:18:56] For sure. I mean, I think when we went through it, like I said, they're not S you know, people say we value authenticity, right?

They're not a set of statements. They're sort of more around ideas. And I always tell people they're are both aspirational, true and aspirational. Right. We live in that tension between that. And ultimately they sit on top of a phrase, which is speed, scale relevance. Right. Unless. We can operate at speed. We can scale and we are relevant to our customers.

None of the source code stuff matters. Right? So we tie them together with this is all about. A great business, as opposed to just some fluffy words on a wall that people are like, okay, fine. And I think one of them that I love is, oh, one dot oh two comma backslash format, and it's all about being distributed.

Right. And so I always ask people when I do new hire training, like, oh one dot oh two, like what's that date? And everyone's sort of chuckles because it could be different things depending on what part of the world you're in. So we talk a lot about that. We have to really be intentional because. Even a date can cause confusion, depending on your location.

There are things like that. This idea, like empathy has to be the center of all that we do that idea of a diverse elastic is great, but that is also hard. And so how do we make sure that clarity is part of what we do, but. Also not assuming malice also be an empathetic. So I think that what I love about them is like, if it's a set of ideas, as opposed to like words or statements and they're really open for interpretation, right?

So everyone looks at the source code and takes different things away from it. You know, there are pieces of it that for me, I'm like, yeah, that doesn't totally resonate with me, but I love the rest of it. And so I don't expect people to be adherent to a set of things. It's more like, do you believe in that idea?

And if that idea is exciting to you, then this is a great place for you. And I think that is how people engage with it and get excited about it. But it's definitely something that we spent probably a year and a half really creating because it needed to feel very true to who can you talk 

[00:20:50] about maybe a story or something that comes to mind where.

The source code or the way in which you articulated your values was particularly impactful or shared them. Kind of living in the real 

[00:21:03] world. Yeah. That really popped for me. And I think one is humble. Ambitious. I was teasing our CFO about this before earnings call this week because we're doing great things in the world and we have amazing people here, but everyone is incredibly humble.

And I always use like shy or CEO. I love to tell the story where he was on a flight sitting in coach next to some guy they got to chatting. And it turns out that the gentleman who was sitting next to you was a product manager at another tech company. And, you know, the guy asked him like, oh, where do you work?

He's like, oh, I work at elastic. And so they were chatting and this guy was unloading about what he thought about elastic. Good bad and otherwise. And you know, she has like, oh, that's really interesting. Have you thought about this? And so they had this very engaging textual conversation. And at the end of the flight, the guy's like, oh, sorry, I didn't introduce myself.

I'm John. And I said, oh, I'm shy. And this, the guy realized like, he'd been talking to the CEO for a couple of hours in this flight. And she never said, Hey, I'm the CEO. Or I'm the, I'm the guy who actually wrote the original code. And, and he would never do that. Right. He's just a very humble guy. And I think that sort of humility at the top really permeates through the organization.

The source code that the humble ambitious is the tag, but ambition drives us to challenge ourselves and the people around us to do better. It's not an excuse to be an asshole. And that is literally our source code. Right. Be humble, be ambitious at elastic. We both, and I think that people get that because I think a lot of people have worked at companies where the brilliant jerk exists.

Right. And that just. Doesn't fly at elastic. I mean, I think for me, early days, we had an engineer who was brilliant and kind of top of his game in a particular part of our stack. And he was a tyrant and it was very public. It was on GitHub. He was making comments, he was sending emails and no one thought we would fire the guy cause he was so good.

And we did. And I think that just sends a really strong message. Early on about like, listen that that's not going to work. Right. You can be great at what you do, but you also have to be good to the people that you work with. We've added several new leaders over the course of the last year, and that's really, as we're looking at these very senior C-level folks, we really push on that.

Right. Cause that's the tone of the top from my perspective is extraordinarily important. In fact, perhaps the most important with some of these things and we've got it in spades, which is really 

[00:23:10] great. How do you interview or evaluate if someone's humble? And have you ever thought someone was humble in the interview process?

And you hired them and they turned out not to be. Yes. 

[00:23:20] Uh, we certainly have done that. I always tell people like to use a sports analogy. You're never going to bat a thousand, so right. You're never going to be perfect. No company is no matter how structured, how process oriented your interview processes.

It's not perfect. We're humans. It's so it's happened. I always ask people, what are you proud of? And it's always very interesting to me where people take that question and. If it's an I centered statement, or if it's about the team or if it's about their family, where do they go? And I always sort of use that as a little bit of a litmus test to understand how they orient their success.

[00:23:53] there any other ways that you. Evaluate. If somebody is humble, I 

[00:23:57] think we always particularly senior folks will ask our recruiting coordinators. Hey, what's your experience been with this person? How do they treat the folks that are perhaps not as visible? I know I've interviewed hundreds of people over the years, so you, you start to get a sense for your meter for what's.

How does personality come through? Gets pretty good. But I think there's also, you know, we've absolutely had people that were rude to coordinators or rude to our EAs and we're like, yeah, that's not going to fly. Like these folks are the heart of what we do. They make the wheels turn. And if they can't.

Behave well to them in this process. Like, so I think we spend a lot of time, just how are you engaging with everyone that you're touching along the way? Cause you, you know, you have people that can kiss up and kick down and that's, that's also not going to work. And like I said, it's not perfect. I can't claim that we haven't hired people that do that.

And I. I feel pretty confident that for the most part, it's like, yeah, that's, that's not going to stay long. Right. It's not going to work long. And if you can't adjust it, you won't be here. 

[00:24:54] Moving back to the earlier conversation we were having about building distributed company. Are there things that have surprised you most or stories that come to mind that.

Kind of were unlocks for you when thinking about how to effectively build a distributed company. I mean, I 

Today's episode is with Leah Sutton, SVP of Global HR at Elastic, which provides open-source software for search and data analytics. Elastic has been a distributed company from the beginning, now with over 2,000 employees across 40 countries and 48 states. Leah opens up her "distributed by design" HR playbook and doles out spot-on advice for tackling operational debt.