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Growing Pains: Tips To Avoid Common Cultural And Operational Challenges When Scaling a Startup

20th October 2014
By Steve Scott

This blog post was born out of an email thread with one of our portfolio founders earlier this year, covering some of the key challenges the company had in growing their team and the associated operational overheads that come with scaling.

Some of this post’s content is from various reading material, but the majority is direct (mostly painful) experience from startups who made it, and startups who didn’t. What they have in common is what I’m sharing here. It’s far, far from exhaustive and is mainly focused on team dynamics as opposed to specific business challenges. There are many good guides to the latter on the web and in various books, but few about the former. Hopefully some of these points will help, or at least raise a wry smile of recognition, amongst those involved in such a dynamic environment.

Delegation – going straight to the top

One of the biggest challenges when growing a team isn’t drawing up a smart new org chart, it’s putting in place the right protocols between the team and the founders. The headcount grows and the complexities and decision-making trees expand, but the original founder(s) remain the ‘go-to’ people for the rest of the organisation when they have a question or an idea. This is rational, as staff know they are generally still the most knowledgeable – and have the authority to green-light that new widget that will change everything. However, people don’t follow org charts, they follow knowledge and decision-making power.

Delegation is hard, and it can be hard for founders to relinquish opportunities to brainstorm or resolve conflicts, but it hurts the company in the end, as what was once the wellspring becomes the bottleneck.

All of the above can be amplified if the founder is either too resistant to delegate, as described above, or is too eager to do so. Striking the balance is the main challenge here.

Cliques – “This isn’t the company I joined…”

With scale comes a need to more tightly define business functions and roles. My rule of thumb is that as soon as a company gets to around 10-12 people, it’s no longer possible to involve everyone on everything. New positions might be dedicated product management, sales, marketing, account management and so on. As these roles come on board, each adds another layer of complexity and sometimes confusion amongst less experienced staff, many of whom have been with you from the start, but who never had to work alongside these roles. This can lead to insecurity (“Why am I no longer allowed to sit in on every meeting?”, “Why do I have to talk to X about Y when we used to just make it happen?”) and from there many things can start to spiral. Addressing this means clear communication, demarcation of responsibility and job specifications.

Process and division of labour – roadblocks and roundabouts

Where work has previously been done by individuals (i.e. at the start the founder is CEO, head of sales, head of product and so on) the introduction of dedicated roles means this work is now done by cross-functional teams. Getting them to work together effectively is probably the most difficult in all scaling challenges.

Teams should produce more in less time, right? Well often the reverse is true. Where once someone might have the germ of an idea, sketched out a wireframe mockup and gone to the CTO who then built it, the reality now is there are 4 or 5 people in different teams trying to hand off at each stage. Good operational process can overcome this, but not immediately, no matter how good the individuals are. And initially pretty much everyone will hate you for adding rules and processes. Guaranteed.

Documentation – surfacing knowledge

Boring as hell to a startup culture, but key to imparting knowledge from the more experienced employees to the new ones. This is everything from product overviews to customer target profiling and everything in between. It’s the only way to get knowledge out of the inevitable cliques that form within teams and into the rest of the organisation.

The right people – hiring (and firing)

My favourite topic and a constant challenge for all small companies. Two things to say here:

  1. Finding the right people takes time, and that can lead to taking the ‘good enough’ option to candidates. This is a big mistake and will come back and bite the company down the road. A bad hire will be your first fire, and first time entrepreneurs never forget how painful that is. It’s also toxic to the team overall.
  2. Hiring senior people shouldn’t always mean bringing in someone from a big corporate. It’s attractive to think you could entice someone who has run a global sales team, or was next in line to the CEO gig at a Fortune 500 company. The danger here is that they can tend to think their job is to remake your startup in the image of their former employers. This often leads to culture clashes and frustration on their part that everything can’t be done straight away.

All of the above occurs in some shape or form. That said, not everything can be addressed at the same time. The founder’s job, and one of his / her real skills, is knowing what to choose to focus on at any given time, otherwise nothing gets implemented properly. That, however, is a whole other topic.

Credit: xkcd
Credit: xkcd
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