Tag Archives: Organic

How Do You Generate Growth? Three Options

Situation: A company faces three options to generate growth. The CEO wants to pursue a path that keeps employees happy and rewards them for their efforts on behalf of the company. What are the trade-offs between the options and the potential impact on employees? How do you generate growth?

Advice from the CEOs:

  • There are three options to generate growth – continuing organic growth, accelerating growth through a merger, or by being acquired. These options are not mutually exclusive. The company may pursue more than one.
  • Organic growth can be accelerated by hiring an individual who’s focus will be company growth. The offer may include a minor equity position that is non-dilutive to current employee-owners, with vesting two or more years out.
    • It is important that top staff and key employees are comfortable with the person before finalizing any offer.
    • The message to current owners: “This person will drive this business with X expectations for results. The ownership position is contingent on delivery of anticipated results. Is this works as we anticipate, it is a win for all owners.”
    • Have a buy-back agreement as part of the employment contract should the individual leave. This should guarantee the company the right to repurchase any shares at an agreed price in the case of a separation.
  • The CEO has been approached by another company interested in a merger.
    • Is the value of this option increased or decreased by hiring the person described above?
    • Should the merger option still make sense, calculate a merger split that makes sense to current owners and see whether the merger partner will accept this. If not, find an excuse to drop or defer the merger discussion.
  • The CEO has also been approached by a potential acquirer. This could expand the market position of the combined companies, provide additional opportunity for current employees, and a cash payoff for current owners.
    • Talk to the other owners. Does this option meet personal financial and professional targets? What about personal needs to stay involved in business?
    • Once these discussions are completed, tell the potential acquirer what you want and need from the deal. They may agree!

How Do You Manage Culture as You Grow? Six Solutions

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.