Situation: A tech company has grown to twenty people. The CEO is concerned that if they grow much beyond this their culture will start to change. The principal question is whether team leadership structure will remain tight and focused, while teams will continue to be flexible and have fun. How do you manage culture as you grow?
Advice from the CEOs:
Other companies have grown to twice this size and continue to increase their number of employees.
One uses component owners as leads, with people under them. Leads are more technical than managers and aren’t expected to be superb managers.
They grow middle managers organically instead of hiring from outside.
If an individual’s plate is full, give them the ability to delegate work to an up and comer.
Active communication has number limits.
The optimal functioning group is 7-12; higher functioning teams are even smaller with 7-8 members.
Create flexible teams that maintain communication pathways and culture.
Consider using reconfigurable space.
When one company grew from 25 to 60, they noticed that at 30 people it became difficult to track people; they needed to develop systems and internal management tools.
Much more attention was needed on sales forecasting and expense elasticity. The solution was to study peaks and valleys and built a model that could function within historic peak /valley limits.
How do you maintain the contractor pool?
Keep a list and actively communicate with them about current and anticipated needs.
One company’s rule: consultants are 100% billable – functionally they are only able to realize 98%, but the rule keeps this number high.
Use contractor pools to supplement project tasks. If your primary differentiating focus is on successfully closing projects, focus contractors on ramping new projects.
Hire people who embody you and your culture. Hire in your own image.
Situation: An early stage company is wrestling with team dynamics and coordinating the achievement of critical milestones. The strategic picture seems to change on almost a daily basis. New employees who have big company experience want to see formal job descriptions and role definition. Older employees are jealous of the attention that newer, more highly qualified employees are receiving. Where should the CEO be focusing. How should she be handling these challenges? Should a start-up focus on team dynamics?
Advice from the CEOs:
At this point, the company is in start-up stage. The most critical issue isn’t team dynamics, it’s getting a product to market and demonstrating that you can sell it. If you don’t have a product, you don’t have a company.
Your top 4 areas of focus for the next 3-6 months should be:
Get the product out.
Close 3-4 good customers – preferably customers that you can reference.
Securing the funding – partnership or investor – that will get you to your next key milestones or to positive cash flow.
Build your organization and keep planning.
As an early stage company, distinct roles and job definitions make no sense. Your strategic picture is currently very dynamic. You need good people who can flexibly wear several hats and fill diverse roles.
If employees with big company backgrounds press you on job descriptions and role definitions, tell them that as a small company you must be quick on your feet, and that you need them to fill flexible roles. As you grow beyond 35 employees then roles will start to become more clarified. Ask for their patience.
If they continue to struggle with loose role definitions, then they aren’t the right people for an early stage company.
Employees who started with you early were great for the beginning. However, they may not be the best for you long-term. They may feel hurt as newer employees with deeper expertise and resumes start to replace them. In the interests of the company, the game is not longevity with the company; it’s about quality and putting the most competent people in the most critical roles.
If you are playing pick-up basketball, you play with whoever comes along.
If you decide to form a team and to compete, you need quality players. Some of your pick-up players won’t make the cut and need to go find another pick-up game.
Situation: Edgar Allen Poe’s “Surviving the Maelström,” is a tale is of three brothers whose fishing boat is caught in a monstrous whirlpool, and how the reaction of each brother determines his fate. Similarly, in times of uncertainty, our ability to react with either panic or a rational, reasoned response determines our fate. How do you survive a maelström?
Advice of the CEOs:
Based on Poe’s story, you need to replace fear with assurance, uncertainty with boldness, and doubt with conviction.
There are several potential financial bubbles forming including student loans and negative interest rate loans to sovereign governments. Both, in their own way, pose a threat to the international and domestic financial systems and could rapidly impact borrowing costs for companies. The solutions are to stay in ongoing contact with customers, and to stay light and flexible as companies so that you can adapt to market changes.
For Internet companies, the shift to Freemium offerings (a base product for free with pay as you go functional add-ons) makes it more difficult to design viable business models, and means new competition for established companies in low capital cost businesses. Again, a solution is to stay in ongoing contact with customers, constantly reinforcing your value proposition and the reality of switching costs.
Creative Destruction – particularly the emergence of new companies that threaten large customers and can change the value perception of suppliers’ core competencies. Solutions include ongoing communication with customers seeing what they see as “the next big thing,” focusing on continually improving our own core competencies, and possibly teaming with the more promising emerging companies.
The illusion that advertising will pay for everything – in reality, advertising dollars are a scarce resource like all other resources. Solutions include testing our own value-adds as an ongoing process, and creating fast-fail models to cost-effectively test our own promotions.
Definitions of value and productivity are no longer stable; all depends on the method of measurement. A solution is to remain aware of the innovator’s dilemma and to continually renew our value propositions.
A workforce in flux where young people don’t want to work for what they perceive as “old line” companies, as well as early-retiring baby boomers who may learn in 3-5 years that they can’t afford retirement. Solutions include focusing on employee engagement, building more flexible and “liberating” business models, and teaming younger with more experienced workers to cross-train each other.
Situation: A company has a number of key employees who are nearing retirement. These employees possess software skills and company knowledge which will be difficult to replace. How are you planning for baby boomer retirements, and what advice would you have for this company?
Advice from the CEOs:
Following the loss of investment value after the 2008 market crash, Baby Boomers may retire very differently from their parents. Many don’t have the savings to support themselves during retirement and may well work 10 years later than their parents did.
Brute economics will force Boomers to continue to work. However, Boomers may want to work their own hours and on their own terms as they age. The focus may switch to part-time jobs just to maintain cash flow.
One solution is to offer more flexible working arrangements that allow individuals to keep working but with more freedom to work as they wish.
To replace in-house talent, develop mentor and apprentice programs now to pass your knowledge base on to younger workers.
The Internet has significantly changed the picture. People considering retirement may relocate to less expensive regions but virtual employment or virtual office solutions can keep them working.
Rising health insurance costs and questions about the viability of Medicare under the Affordable Care Act are concerns for Baby Boomers. This is another factor that may keep them working.