Oct 22 2019

Organizational Scaling

For the early part of your business you’re likely too busy to be spending a lot of time thinking about management structures, team optimization and how your business scales. You’re just getting shit done. And, even for experienced executives, making quite a few things up as you go along. The solution to many early scale challenges is to find something that works and then do more of it. That works great, right up to the point where it stops working completely. We’ve had a lot of companies go through scale challenges (I’d say typically around 100 people, but plenty of companies have muscled through that point and built 200 or even 300 person organizations without paying much attention to the scale structured needed to make that kind of organizational scale actually work. Here are a few things to think about/look out for based on our experience messing this up over and over again.

Don’t be the single point of failure. For good reason, CEOs often are the key decision maker early on in a business. You likely approve any major expenditure and certainly all new hires. As your business scales this doesn’t work. Maintaining control of expenditures in this way isn’t you being a thrifty CEO, it’s you creating a bottleneck for anything getting done and not empowering your team. Budgets and delegating and distributing authority (with clear limits and rules) is how this is better managed.

Matrix, don’t hub and spoke. While plenty of companies do some form of a management team/e-team meeting, many don’t in favor of 1:1 conversations with the CEO. This can sneak up on you as is often the product of an early team running around all over the place and often not in the same state or country, let alone the same room. So the CEO starts direct check-ins to make sure everyone is on the same page. Great. But that doesn’t scale and it doesn’t allow your scale VPs to work collaboratively on the business. An awesome off-site isn’t the remedy to this. Weekly meetings with everyone in the room – talking to each other, not just reporting back to you – is.

Your head of talent is a key manager and should report to the CEO. Gone are the days when HR reported to the CFO as a purely administrative function. Have a talent professional with a seat at the e-team table and have them report directly to you as CEO. That elevates the position properly in your organization, empowers them to be a driver in your business and will pay back dividends many times over in terms of reduced turn-over, greater transparency and alignment across the organization and fewer headaches for you as CEO.

Communicate. The larger you get the more more deliberate you should be about communicating across the organization. The company takes direction from you as CEO but it can’t read your mind. So communicate often and clearly with the entire team, not just your direct reports. One of my favorite examples of this is Scott Dorsey’s famous Friday Note. Scott led Exact Target from their founding to $2.5bn exit. Every Friday, no matter where he was in the world, he’d send a note to the company talking about what was going on with the business, what he was up to and sharing additional thoughts about the market or something interesting he was reading or thinking about. His employees loved it, it set the tone for the organization, and everyone know that they’d hear from the CEO directly every week. Not necessarily what you need to do, but find some way of communicating with everyone at the company on a regular basis.

Invest in systems. This one stands out – it can be hard to spend money internally when there’s so much [product/sales/marketing/etc] to do at your company. But growing past the startup stage can require an investment in some internal systems that help create alignment and facilitate the communication that I’m describing above. This comment goes beyond internal HR related systems and includes making sure that you’re not cheaping out on other systems that are critical to running your business (i.e., by limiting access to them to a small number of employees). Take a broad view of systems and make sure you’re not skimping out on the last 5% of cost that can drive outsized benefit.

Hopefully this has spurred some thinking about how to scale the management side of the business. I’d love to hear more ideas, so let me know what other things changed for you markedly when your company scaled past 100 or 150 people.