Growing Up but Staying Young
Our company is growing fast, and we've started to have trouble organizing ourselves. What is the best way to go from a small company to a big one?
What a great problem to have. Growth like yours can only mean that you’ve figured out a strategic “aha”—a new product or service customers really want and competitors don’t offer—and that you have an energized team to match. Nice going! But brace yourself. The leap from startup to going concern is one of the trickiest transitions in an organization’s life, and if left to chance, it can make a company come unglued. The problem is that many startups, while installing processes and systems to organize their burgeoning bigness, accidentally kill the spirit and energy that made them so successful when they were small. That’s why your overriding goal right now must be to help your company grow up and still stay young at heart.
Begin by going back to the basics: mission and values. When you were starting out, everyone probably worked together, and people could feel in their bones where you were going and what behaviors were expected of them to get there. But as hires have poured in and operations have dispersed, your mission and values have probably become somewhat fuzzy. That’s trouble waiting to happen. Stop it by talking about them ad nauseam, always remembering that most people haven’t lived them the way you have.
Your next step is to establish an operating system and rhythm since you’ve probably gotten along so far using ad hoc forms of budgeting and planning. It’s time for the real thing now, but remember: Avoid bureaucratic awfulness. Keep the planning down to a few slides designed to generate lively discussion, and make sure budgeting doesn’t devolve into a phony series of negotiations that culminate in a rigid number instead of exciting stretch goals. Whatever you do, never punish people for missing bold targets. Reward them instead based on how their results compare with last year’s and how they did relative to the competition or the opportunity.
Speaking of rewarding people, no company can go from small to big without a rigorous, candid appraisal system, conducted at least twice a year. Momentum won’t carry you forever, and you must make sure you have the best team. To do that, you will need some systematic form of differentiation, identifying great, average, and sub-par workers so they can be managed up or out accordingly. Unfortunately, in your situation, as with every growing startup, some underperformers are sure to be from the ranks of your original employees. Just because people are Badge No.6 or Badge No.14 doesn’t mean they are stars. Maybe they got lucky, hopping on the train as it was roaring downhill but only serving as dead weight on the uphill journey. You can’t carry them along for the ride.
Perhaps that challenge is a metaphor for what is so hard about the small-to-big transition you’re going through. You need to let go of the “winging it” part of your past but hold on to the informal, indomitable feel that launched you. Hard stuff. But exciting, too.
You’re ahead of the game because you recognize the challenge. Now, you’ve got a glorious piece of blank paper in front of you. The future is yours to design.
This question and answer originally appeared in Business Week magazine on December 11, 2006.
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