The structure transformation is one of the hardest processes that founders of small companies must face.
In this podcast, Bolek Drapella is talking about the changes in the organizational structure in a fast-growing company. The organization is usually founded on a passion. Is it a problem or advantage?
I’m recording this episode on request, as a follow-up to the survey posted on the “Startup Talks” group on Facebook, asking what topic you would like to hear about next. Some dozen people responded to the survey, having chosen the topics proposed there or adding their own ideas. It turned out, that the most wanted topic was the changes in the organizational structure in a fast-growing company. I’m glad this was your choice, because the structure transformation is one of the hardest processes that founders of small companies must face.
THE FOUNDERS’ DILEMMA
The hard thing here is that an organization is usually founded on a passion. A passion which is not necessarily an urge to lead a company, manage its staff or handle the financing, strategies, crises and challenges. Usually the founder’s driving force is discovering a group of people that have a certain need and an inspiration of how this need can be served. This is why the founder creates a company – to solve a problem of a target group.
Eventually, the company achieves a financial success if the target clients find their problem urgent enough to pay for the offered solution.
That is what the passion-driven founders may find hard to assume – the consequences of their success. One such consequence is the inevitable structural change.
THE EMOTIONAL SIDE OF COOKING A FROG
In a different aspect, the fast growth of the organizational structure may bring about emotional difficulties. It’s not easy to part with the people, often co-founders, who have been working with us from the very start and may be unaware it’s time to change or leave.
It is a syndrome of a frog that, slowly boiled, does not notice being cooked alive.
Similarly, founders, chair people or CEOs, growing along with the organization, don’t see they have fallen behind with their competencies. Being in charge of modifying the company structure, they often overlook the time when the changes must be made. Naturally, they have been doing their best to mature and meet the ever-changing demands of their position. But the challenges of a fast-growing company may exceed skills of even highly adaptable leaders.
On principle, nobody likes changes, so most of us avoid them. If something works well, why touch it and risk breaking it? The proverbial frog, cooked alive, does not even notice that something might work better, if organized in a new way.
AVOIDING NEGATIVE SELECTION
There is one more problem area that makes fast company growth hard to deal with. When an organization expands, there is a lot of staff competency verification going on, which sometimes results in layoffs. This information, however, is not shared with mid-management, especially when the top managers – the founding group – lack these competencies or are unable to define them.
The sooner the leaders realize that their own or staff’s competencies should develop along with the fast company expansion, the better.
As a way to deal with this problem, the A-players technique is often mentioned. Its point is to employ the best candidates – the A-players – because it is only them who, in turn, will be able to hire the best people. The less gifted people – the B-players – might be scared of future competition, so they will tend to hire C-players, to the detriment of the company.
NO FREE EXPERTISE
The trick is how to employ the A-players, having very limited financial resources of a newly born organization. How to make the best people join us if they are usually the most expensive ones? Having the best ones on board will ensure the natural evolution of company structure with adequate and timely changes in response to emerging needs. These questions take us back to a fundamental issue – how to assemble the right founding team. The team united by a common passion, that will comprise diverse skills set. The business experts, prepared to devote a few years of their life to create an organization, in exchange for later participation rather than immediate cash return.
NO ETERNAL HEROES
All along, it’s worth remembering that the competencies of the founders and the managerial structure they build should be adequate to the company needs at its current stage of growth and in its near future. In most cases, they probably won’t be the ones that will put the company in NASDAQ. All founders should bear in mind that their names are not engraved on some founding fathers’ plaque and, like anyone else, they will have to either keep up with the changes or give up their post to someone more suitable at a new stage of development.
It is vital not to overlook such moments.
The more they are aware of that, the higher the chance that this attitude is passed on to the co-founders and top managers who join in later and will hand it on to the mid-management and further down the ladder.
HOW TO TELL A MATURE LEADER
If you want to hear more on the question of the mix of diverse competencies in the founding team, you are welcome to listen to podcast number 8 – “ The Diversity”. What it all comes down to is that the founding team members and all managers
should accept the fact that structure changes are immanent.
They are to be expected as something good – a natural and welcome consequence of fast growth. The way the managers deal with structural changes, whether they involve employee movement or not, is surely a relevant test of their maturity. The good ones probably won’t bend corporate policies or structure to the available human resources. More likely, they will seek the best people to achieve the objectives of the development process underway.
Employee attrition is discussed in more detail in podcast number 5 – “Managing People Out”. There, I talk about the ways to verify whether people still fit in their team to face up to the current challenges. I give advice how to clearly communicate to such employees the fact that, although their post still has the same name, the company and its leadership are expecting them to perform different tasks. I explain why this practice is useful in a wider context, when the information on the current developments and fast growth must be shared around the organization.
ADVICE FROM FRIENDS
There is another good practice that helps cope with the structural changes in a fast-growing company. It is consulting someone beyond your organization, who has experienced a similar situation (check out podcasts number 2 – “Find Your Counterpart” an number 16 “Ask for advice”). That person, perhaps your counterpart, may have managed a product, marketing or IT department comparable to yours, or led a company while it was at a stage analogical to the one you’re entering or going through. Such external insight, or a look from a time distance, might help you spot the things invisible to you day to day. It might help you avoid the frog syndrome and see that you are in the wrong.
Summing up, remember that structure changes in a fast-growing company are only natural.
What your organization looks like now will and should be totally different from what it will look like in 2 years. Just think how your staff and structure have changed over the last six or twelve months. Not only should you be just prepared for changes but you should treat them as an advantage, a proof of the healthy growth, which naturally calls for new competencies, new people or at least a new style of work.
YOU’LL NEVER WALK ALONE
Embrace the changes and don’t forget to ask others for advice. Ask the people from other organizations, or anyone that now is where you want to be, but has been through what you are currently going through. Although today their organizations are 10 times the size of yours, they may still recall the challenges they met 2-3 years ago and help you out. Maybe these structure changes won’t hurt that much if you face them unafraid and use a little help from your friends and mentors.
Thank you. Have a great day.
Click the picture to listen more or record a voice message.