avoid the pitfalls of growth

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  • Avoid the Pitfalls of GrowthBuilding a 21st century business demands a thorough understanding

    of the demands that rapid growth can bring.

    For many businesses, rapid growth is

    the Holy Grail. Eager entrepreneurs

    envision their companies rising up

    from anonymity to take their rightful

    place on the Inc. 100 list, expanding

    rapidly from a mid-sized firm to a

    multi-billion dollar organization in a

    matter of months.

    Its not a far-fetched idea especially in

    the tech industry. These days it may

    seem like every startup with a bright

    idea is going from obscure to global

    giant overnight, but the reality is that

    for every success story there are

    hundreds of failures. Many emerging

    growth companies may start on the

    same track, but what differentiates

    successful companies from failed

    enterprises is how well company

    leadership can maintain the integrity of

    the strategic vision. Rapid growth can

    often monopolize leaderships time

    forcing leaders to get caught up in the

    day-to-day challenges and causing

    companies to veer off track. And just

    like that, rapid growth can turn into

    rapid decline.

    There are ways to avoid the crash,

    however. Smart companies looking for

    long-term sustainability figure out early

    on that managing growth requires

    discipline, focus and being open to

    input. These companies know that

    guarding corporate culture, prioritizing

    activities, methodical hiring, guidance

    from outside experts and working with

    partners to hand off tasks that dont

    deliver core value are all part of the

    toolkit for successful growth.

    Culture and the Art of Growth

    The first rule of growth is to accept

    that change is going to happen, says

    Bryce Maddock, co-founder of TaskUs.

    [Change] is inevitable, so all you can

    do is plan for it.

    Growth and the change it unleashes

    can pose a significant challenge to

    the health and wellbeing of any

    mid-sized business (revenues of

    $5MM-$150MM). Culture, operations

    and profitability can all be negatively

    impacted if the organization does not

    adequately plan for this change.

    Ideally, growing companies find a

    balance between accommodating

    increased business flow and

    maintaining the culture and core

    competencies that gave them a

    competitive edge in the first place.

    Maintaining culture may not seem like

    a priority at a time when a business

    should be focused on quantitative

    growth, but it is. Entrepreneurs spend

    a lot of time creating a workplace that

    will foster creativity, innovation and

    partnership. Indeed, culture is one of

    the most important aspects of a

    business, and it is often the thing that

    inspires the first round of employees to

    invest their time and sweat equity in

    building the business.

    The only thing of real importance that

    leaders do is to create and manage

    culture, Edgar Schein, Professor at

    MITs Sloan School of Management

    once famously said. If you do not

    manage culture, it manages you.

    Many business leaders understand this

    idea in theory. But when their

    companies hit a growth trend they get

    so caught up in growing to meet the

    challenge, they fail to see how growth

    is affecting the culture. And that is

    when it falls apart, says David Drake,

    founder of LDJ Capital, an investment

    equity firm in New York. Company

    leaders have to be proactive in

    building the culture of the company,

    but when you grow too fast you can

    easily lose control.

    Pressure on employees to produce

    more, coupled with rapid hiring and

    over stretched resources, can

    transform a great place to work into a

    place where leaders spend much of

    their time putting out fires and dealing

    with conflicts that can cause good

    employees to move on.

    To prevent that from happening,

    company leaders need to ask

    themselves three questions:

    1.What do we love about our


    2.How does our culture define us?

    3.How do we scale the most

    important aspects of our culture?

    The third question can often be the

    trickiest, because the little

    extravagances free soda in the

    company fridge, or picking up dinner

    to celebrate the end of a project are

    the kinds of perks that small teams

    love. But that generosity can get out of

    control when you have hundreds of


    Business leaders need to understand

    the motivations that drive culture its

    not about free drinks, it is about

    acknowledging that your team is going

    above and beyond for your success.

    Once you understand the sentiment,

    you can try to adapt your strategies to

    accommodate growth, says Jaspar

    Weir, president of TaskUs.

    One of the hardest parts of this

    transitional phase is delegating

    authority, he says. A lot of

    entrepreneurs struggle to give up

    control when their companies grow.

    Weir understands this challenge first

    hand. TaskUs has experienced 100%

    growth in the last year, and has been

    on the Inc. 500|5000 list two years in a

    row. It is an exciting time for the

    company, but it has been challenging

    to adapt, Weir admits.

    When we had 20 employees I had a

    hand in every project, he says. Now,

    with more than 1100 employees, and

    clients across the country, he cant

    manage the business in the same way.

    I have to trust others to take the lead

    on those projects, so I can make the

    right decisions for the company.

    Us vs. Them

    Hiring is another key activity that

    business leaders struggle with during

    periods of rapid growth.

    For rapidly growing companies, finding

    talent can become an all-consuming

    task that distracts leaders from the

    more strategic goals of the business,

    says Sander Daniels, founder and CEO

    of Thumbtack, a provider of local

    service professionals for consumer

    jobs. The best place to find talent is

    your personal network, but if you need

    to hire a lot of people fast, your

    network wont be enough.

    Ultimately, outfitting a 25-person

    customer service team, or filling myriad

    lower level positions that are vital to

    running the business but not a part of

    your core value proposition, is not a

    good use of time or resources.

    The more time you spend hunting for

    talent, the less time you have to drive

    your business, Daniels says.

    It can be tempting to throw warm

    bodies into chairs just to solve the

    latest problem. But thats a risky

    approach as a few bad hires can

    disrupt the entire organization, driving

    turnover among top performers while

    the laggards stay on board.

    And even if you are able to fill those

    positions with smart, skilled,

    culturally-appropriate people, you may

    find yourself facing an Us vs. Them


    In lot of cases, talented college grads

    will take low-level jobs in innovative

    companies with the hope of becoming

    a part of something bigger, Weir says.

    But if they dont see a path to

    leadership or win a stake in the

    business, it can become frustrating for

    them and for the people they work

    with particularly if some employees

    are treated differently than others.

    In many companies, the first round of

    employees received an ownership

    stake in exchange for their hard work --

    but later hires may not get the same

    deal. Those second round employees

    may put in just as much effort, but due

    to timing and the roles they fill, they

    get a paycheck, while their colleagues

    await the big payday. When you have

    two classes of workers it can create a

    really toxic environment, he says.

    Unless you are planning to give every

    employee their own private piece of

    the company, you need to

    acknowledge the challenges youll face

    as you add staff who have no real stake

    in your future, and ask yourself whether

    hiring an employee to finish every task

    is the right choice for you.

    Outsourcing Eases Growing Pains

    One of the easiest ways to minimize

    internal conflict and keep your core

    team focused on the strategic goals of

    your business is to outsource work that

    doesnt fall into your area of expertise,

    says Drake. You remove a lot of

    tension from your company and

    corporate culture when you


    Outsourcing companies, like TaskUs,

    take over non-core tasks like customer

    support and a wide range of back

    office processes, which can include

    content moderation, lead generation,

    transcription, accounting, payroll and

    more. While the nature of the process

    that companies like TaskUs can take on

    varies, the benefit does not. Working

    with an outsourcing partner can free

    up company leaders and overwhelmed

    staff and help company operations

    become more efficient and effective.

    Outsourcing to third party providers

    can deliver a number of strategic and

    cultural benefits for fast growing