avoid the pitfalls of growth
Post on 07-Jan-2017
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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
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