From a venture investor’s diary #3: a few scale-up lessons

SimplifyMy mind has recently been preoccupied by a number of founder-CEOs who have been doing too many things, or, more accurately put, having too many people doing too many things that are going in different directions, creating lots of chaos and / or spinning somewhat out of control.

Scaling up is hard.  We talk about “growth challenges” that come with “growth” and how the founder-CEO needs to spend as much time working on and managing “growth challenges” as on “growth”.  In fact, the two go hand-in-hand and are two sides of the same coin.

And two of the best ideas in handling “growth challenge”?: simplify and align.

Young founders may think scaling means increasing headcount: it can take time for the realisation that this is not the most important thing a founder-CEO would need to do, and that the first thing to focus one’s mind on when doing team expansion is finding the right people especially at the “key persons” and manager levels.

Here are some excellent things to think about as you (prepare to) scale, all of which related to simplifying and aligning:

(i) Get the right partners on-board #1.  Get even better at bringing on the right partners and that includes the right investors with a good understanding of the business and what needs to be done today vs tomorrow.  That can mean reducing the role of the partners who have travelled with you to-date and / or getting the wrong ones “off the bus”, so to speak.

(ii) Get the right partners on-board #2.  Now this is about your team: the advice is always to get the right people in the right place, but it is especially important when you are scaling fast to ensure you have the right hire on-board – especially the most important one, two or three “management” team members after the founders – which requires you to get the wrong ones “off-board” (so as to create the space to hire the right ones).  Ideally, you can find a management team member whose sense of ownership and whose ability to align his or her decisions and actions with the company’s mission is founder-like.

(iii) Standardise / start building for repeatability.  Getting to MVP is good, but the next step is to get your product to be sales-ready (i.e. ensure you are moving beyond MVP as you convert pilots and trials to commercial sales, contracts and a clear and scalable revenue model).  It is only when you get to that proper (standardised) version that is sales-ready and know who your customers are, why they buy and why from you (i.e. what would get them to stop buying or “switch”), the prices they are willing to pay for your product, and so on, that you are ready to “scale”.

(iv) Align #1:  strategy, planning and management tools.  Aligning the team towards the mission and in the same direction is very important as an anti-complexity and “growth pain” management strategy, and quite a number of widely used and well-known business strategy, planning and management tools are very helpful for aligning (I’ve written about 8 of these in the earlier, “managing growth pains” post).

(v) Align #2: align or “re-align” through changes to the organisational structure as you scale team size.  It is highly inefficient if you have many too many people reporting to you; you need to find the COO and Head of Sales and so on so that they can take some of the management burdens off you, and you will manage the performance of these managers.  This, of course, strongly suggests the need to find the right COO and Head of Sales, otherwise, not only will they end up not helping you but they will create even more problems and “pain” for you.

Finally, you the founder-CEO also needs to “gear shift” again: while the product development and product-market fit part of the business-building is still going to require much learning, you should not be learning from scratch when it comes to the “organisational health” aspects of scale-up: many companies have grown from fewer than 10 people to 100 to more before and there is a science to it.  There are well-known, well-tested, well-understood tools, strategies and lessons you should make use of.  So, leverage those experience and lessons and get help from the right people with relevant experience, even if it is simply starting off with spending one hour asking thoughtful questions to 5 COOs who have done hyper-growth scale-ups, before you make your COO hire.  Or as a founder-CEO recently puts it to me, you need to align your personal growth to the company’s growth and the company’s (hyper-growth) needs (and potential).


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