I was recently chatting with the CHRO of a highly successful tech startup. She has helped them grow from 500 to 2,000 people in less than two years — effectively doubling their size each year.
Every ambitious startup wishes they could do that. That kind of growth is how you make an impact on the world, delight your investors, and build a lasting company. From the sound of these numbers, that company was on the right track.
But what’s behind the numbers? Is this a company that’s killing it and poised to continue up the exponential scaling curve? Or one that’s throwing people at problems and headed for a harsh reckoning?
The CHRO’s assessment said it all.
“When I arrived, they weren’t scaling — they were just growing. It was a huge job to turn the ship around.”
What’s the difference?
Growing is hiring lots of people with little thought to how to make that growth sustainable.
It’s assuming that the old ways of getting stuff done will continue to work as your headcount grows by 50%, 3x or even 5x. It’s hoping that the culture stays much the same but not investing in practices that reinforce that.
It’s asking execs to take on ever-increasing responsibilities and more teams without stopping to consider whether they’re likely to be successful. It’s promoting people into management roles simply because they’ve been around for a while and understand the function, whether or not they’re suited to management. It’s assuming that, as CEO, you should continue to be involved in all key projects and decisions rather than consciously crafting how and where you spend your time.
In my experience, many “scale-ups” aren’t actually scaling — they’re just growing.
Scaling is the deliberate and conscious effort to create a sustainable, high-performance organization.
It’s thinking backwards from the future — imagining the organization you’ll need to run the scale, scope and complexity of the business you’re planning to build. It’s assessing your current capabilities and proactively investing in new ones you’ll need down the road. It’s recognizing the huge number of middle managers you’re going to need and creating a management development program that instills the right skills.
It’s making sure that all your execs, starting with you, understand how to “give away their Legos” as the company grows. It’s investing heavily in onboarding — more like a week than a couple of hours — so the many people you’ll be hiring are truly integrated into the culture and understand how the company works. It’s ensuring that people have developmental paths and aren’t just running on the (short-lived) thrill of working for a high-growth company. It’s tying all these things together and prioritizing ruthlessly.
You can’t “just grow” forever
Growing (not scaling) is completely natural — even inevitable — in your early days. Your org organization is still simple and you just need a few more hands to get the work done. It’s not really anyone’s job to think about the org as a whole, and everyone is too busy building the business to think about org planning.
But this type of growth does eventually break down.
Your executives get overwhelmed. People don’t know what they’re supposed to be doing or how to succeed at it. The company gets trapped into constantly responding to short-term pressures, so productivity and positivity both deteriorate. Just throwing people at the work — even people with the right skills — no longer gets the job done.
It’s a lot harder to fix that than it is to avoid in the first place, by consciously shifting from growth to scaling.
Scaling allows you to grow while maintaining the performance and culture that jump-started your success in the first place. It helps you manage complexity and anticipate the changing needs of the organization, rather than just pushing for more of everything.
Most importantly, it turns growth into a sustainable process that can continue indefinitely.
How to know if you’re scaling
To see if your company is on the right track, ask yourself these four questions.
- Are you working backwards from the future?
Have you taken the time to develop a rough vision of what the organization will need to look like in 1–2 years to successfully operate the business you’re hoping to build? This is typically a day-long process of engaging your senior executives in thinking about the future capabilities you’ll need, how you’ll build these, and where you need to focus your hiring, onboarding, advancement and development efforts.
2. Are you thinking consciously about the growth potential — as well as the limitations — of your current execs?
Some of your execs may be ready to take on much greater responsibilities. Others are already maxed out. There’s a tendency to assume that your current leadership team can scale with the business, but often that’s not the case. Remember: people usually grow linearly, but your business is growing exponentially.
3. Do you have a plan for ensuring the continuity of your company’s culture?
The culture that made you great won’t sustain itself automatically. You need practical measures to teach, embed and support it, especially as the number of new hires reaches the hundreds per year.
4. Do you regularly step back to look at how your org is functioning and assess how it needs to change?
With the assistance of your Chief of Staff, CHRO, and possibly an outside coach, take time to deliberately question whether the existing ways of doing things (teams, processes, meetings, information flows, decision-making, etc.) serve their purpose and will continue to work in the future.
If you said “no” to any of these four questions, congratulations — you’re normal. Most startup CEOs don’t start scaling until after they really need to…but that doesn’t mean it’s too late.
Start by stepping back
The number one obstacle to effective scaling is being too busy. This causes you to focus excessively on the immediate challenges and leaves you no time or mental energy to think about the future needs of your org.
To some degree, this is inevitable — during periods of hypergrowth, it feels like you and your execs are running fire drills every day. But those times are also when it’s most important not to get sucked into untamed growth.
First, take a moment to step back and breathe. Collect input from others to help you get out of the trees and see the forest. Talk to your top execs, as well as leaders one and two layers down. A classic engagement survey of the whole company can also be valuable here.
So can an external perspective. You and your colleagues might be too close to your organization to notice some issues. Plus, you may never have run a larger organization before, so getting input from someone who has can be game-changing.
Once you’ve gathered some information, take a day offsite to think about the future. In particular, ask yourself whether you have the HR department you need to scale properly. In the end, this whole process is about people, and the CHRO will be a crucial collaborator in driving these changes.
This day of thinking and planning is where change begins. In a future post, I’ll show you what comes next: building an organizational roadmap.