Considerations for Scaling
This week’s article is by Greg Moran, a C-level digital, strategy and change leadership executive with extensive global operations experience. It is a companion to his interview on Innovating Leadership, Co-creating Our Future titled What Leaders Won’t Talk About When Scaling a Business that aired on Tuesday, January 11th, 2022.
No cute titles, no click-bait tag lines – just an honest conversation about some of the things I’ve learned from creating, launching and getting through the first couple of stage gates on scale. I spent most of my career working at big companies like Bank One (Chase), Ford Motor and Nationwide Insurance either to transform to meet competitive pressure or maintain the status quo of a business model that hasn’t changed since before I was born. Starting a company is way more fun, but much of my experience did little to prepare me for the challenges of actually going through the process in a leadership role – kind of like how watching the Tour de France on TV does little to prepare you to ride your bike 100 miles in a day. For this blog, I’ll summarize the headlines that we cover in the accompanying podcast. I encourage you to listen so you get the nuance of what the words mean because they can look obvious on paper without hearing the dialogue.
The thing about back-office investment is that you don’t want to make the investment until you need to, but when you need to, it’s usually painful and distracting – like changing the tires on a car that’s going 70 mph. The trick of it is to be ahead of the curve, but not too far ahead of the curve. One of the things that I’ve found useful is to remember 2 things:
- “Skate to where the puck is going to be, not where it has been.” – Wayne Gretsky
- Tech costs a lot less than people do, so get on platforms that will make sure your back office stays off the critical path of your growth, otherwise you will have to compensate with people.
DEI and ESG
Nobody wants to talk about this because they are afraid of getting canceled or saying the wrong thing and getting attacked. There are some cold hard truths you need to know about this space if you are starting a tech company (and many other types of companies as well):
- The talent pool of people that can tolerate the perceived risk of a startup is not as diverse as the general labor pool.
- The talent pool of people that are experienced in the functions you need to fill AND have start-up experience is even less diverse, and you rarely have the luxury of time to go find that unicorn.
- The people who are attracted to the risk profile of the startup world expect to be compensated with equity in a way that rewards them for the risk and have little practical interest in the other ‘equity’. Everyone has a good set of talking points these days, the expectations remain (I’m living this now, even though we are well beyond the risk-equity phase of growth).
- Your ability in the early days to create ESG metrics will be limited and probably irrelevant.
So what does this mean for you? My suggestion is the following:
- Have a clear set of principles on DEI and ESG that guide the company’s decision-making and are very transparent to the board, the leadership team, every employee and every prospect.
- Back up the principles opportunistically at every turn, without compromising the integrity of your commitments to existing employees and investors. In the early days, compromises on competence will stick out like a sore thumb and may kill the company if the role is important enough.
- Rely on advisors to help bolster/refine the thinking of the team over time.
- As soon as you can begin to build a pipeline, invest in talent resources that have the clear accountability to do so.
- Use search firms to amplify your reach to great diverse candidates.
- Insist on equally engaging events and practices within the company.
- Don’t virtue signal with grand statements that you can’t back up and just invite criticism and ‘got Chas’.
Space and People
Scaling and Covid combined have raised some interesting questions on space and people. As you grow, does your philosophy on space and employee experience change? Is remote your new operating model – going full virtual? How do you handle in-person collaboration when it benefits the company and/or the process and/or the individuals who may desperately want to have and build personal relationships?
I think any singular answer to this question would end up being a ‘one size fits none’ solution, so I’ll stick to some principles we have embraced (for now) in light of the ever-shifting landscape in which we all find ourselves:
- Don’t be definitive and don’t show a preference for remote vs. in-person. If you really want to allow either to give you access to more talent and allow you to grow faster (or whatever reason), then truly embrace and invest in both.
- Model both from a leadership standpoint, even if you have a strong preference. Your modeling will empower.
- Make in-person compelling – give people a reason to come in, regardless of the frequency.
- Do the same for remote – support the gear that makes it a great experience for the remote employee and those they interact with. Provide stipends and perks to enhance the remote experience. Create quality virtual events – serious and fun.
- Communicate and get feedback as the game changes.
Value Chain Balancing
As you scale a business, maintaining balance throughout your value chain is essential. You really are only as strong as your weakest link and if you are over-invested in one element of your business, but constrained in another, you are just wasting money. One of my friends that had exited a start-up gave me some great advice as we started our company. ‘Never confuse having a product with having a company’, he said. It was brilliant advice and has value chain balance at its heart. If you build a better mousetrap, the world will not beat a path to your door. In fact, the world will probably never know you exist. If you have no pipeline, hiring people to close deals is a waste of money.
Pay attention to and build specific metrics around your funnel – know the numbers for you and for your industry and stay on top of it! Keep the operations functions off your critical path by making sure they have the capacity to support your growth – HR, Finance, Facilities, etc. Force business case discipline on your product and engineering functions (which is not to say don’t place bets, but the business cases force the homework to be done and give you data on which to base the bet, which will lead to better decisions and board-level buy-in).
One of the most insidious things that can happen as you scale is that the world will want to talk to you and your team about your success. The temptation to do so is pretty irresistible and you should fight it aggressively. When you start up the steep scaling curve is when the company needs focused leadership the most. I’ve seen great young companies and budding CEOs get totally derailed by the seduction of publicity that makes them feel good but does nothing for the company, its customers or its team. Do a couple of carefully curated and well-managed events per quarter and stay focused on your broader objective.
I hope this practical approach is useful. I’m not looking to impress you with clever aphorisms (I have a bunch that perhaps I’ll drop in another blog someday), but rather to give you some super simple, easy-to-implement concepts. Upward and onward!!
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Check out the companion interview and past episodes of Innovating Leadership, Co-creating Our Future, via iTunes, TuneIn, Stitcher, Spotify, Amazon Music, Audible, iHeartRADIO, and NPR One. Stay up-to-date on new shows airing by following the Innovative Leadership Institute LinkedIn.
About the Author
Greg Moran is a C-level digital, strategy and change leadership executive with extensive global operations experience. He led corporate strategy for Ford and designed the plan that Alan Mullaly used to turn around the company. Greg held C-level IT positions in app dev, infrastructure and core banking applications at Ford, Nationwide Insurance and Bank One/JPMC, respectively. He began his career in consulting with Arthur Andersen Accenture, working across industries with 100 companies over the course of a decade. He is passionate about leadership and culture and teaches part-time on the topic at Ohio University.