https://technation.io/news/what-is-a-scaleup/
Notes:
2:30-4:23 The importance of network effects
6:55 - 10:29 What changes when the company goes into scale mode?
* How to think about what roles should be filled by whom?
* The importance of establishing incentives so employees workes towards making it easy for someone else to take over their job.
* The importance of being upfront with your employees, that in a scale up face, things will be caos for awhile.
11:45-17:00 How you should think about requtement
Optimize for abilitiy to learn and adaptibility, not skills.
17:00-26:30 On the importance of establishing the right culture before you grow too big
* Culture eats strategy for breakfast
26:30-27:58 How recrutment processes should change once the company grows fast
29:57-31:58 Why early employees leave and what to do about it?
31:38-32:45 You must repeat yourself over and over and over to keep the organization aligned
33:30-34:32 It is important that the organization is aligned - that employees knows what goals the company is working towards.
"What Got You Here Won't Get You There" is a leadership book by leadership coach Marshall Goldsmith.
The title of the book has turned into a saying of its own, basically conveying that just because you have been successful in getting to your current destination, that does not mean that repeating the same behaviour will make you successful in reaching a different destination.
https://wecomplish.no/consulting#scaleupmode
How scale up differ from a start up? - Lessons learned
Four things that are necessary to focus on in the transition between a start up and scale up.
Prosess
- Prosess > kaos when reaching 100-150 people
- Formalizing processes important
- Growth rate will decrease without processes
- Alignment important. Do this by establish processes
Prioritization / clarity
- With scale comes complexity. Leader must provide clarity to employees
- Employee engagement survey. They are looking for clarity.
- To sustain growth: Focus on fewer and most impactful things. Leadership must define what is important, and more importantly, what is not important.
- Take a step back, focus on what you have to do today to get where you want in 18 months, 5 years, 10 years. (Only after you reach product-market fit).
- Do not focus on building more products. Focus on improving your initial product.
Captial is long term
- Don’t wait too long to get efficient
- The sooner you get efficient, the less capital do you need to raise, and the more control you have over the firm.
- You’re building the company for the next 10 years. Your investors may look for 5 years. The leaders in the board room will therefor not have the same priorities.
- CV want to be on the board. You should have people on the board that has done what you want to do (build a company). People with experience with handling CV etc. You need people who can help you from the fence of «I have done this», not only from capital.
Its about the team
- Most sensitive issue
- Once the organization scales: It becomes about the teams, and less about individuals
- About the people you recruit and the leaders you put in place.
- Founders identify = their company, but it now has to become about the organization.
- Know when to bring in help to diversify skill sets and experience on the executive positions.
- If you can’t delegate decision making, the company can’t scale.
- It is the CEO´s only job to make sure that we have the right strategy, the right team and enough capital.
Startup stages
A the startup world, a company is commonly placed into one of three stages:
- Startup
- Scaleup
- Scaler
Greiner's Growth Model
In the Greiner’s Growth Model framework, a company is can be said to be in one of the following six stages:
- Phase 1: Creativity
- Phase 2: Direction
- Phase 3: Delegation
- Phase 4: Coordination
- Phase 5: Collaboration
- Phase 6: Alliances
AIHR
According to the HR resource web site AIHR, an organization can be broken down into the following stages of development:
- Entrepreneurial stage
- Collective leadership
- Formalization stage
- Elaboration stage
- Startup stage: Startup founder / Team leader
- Scaleup stage: Scaleup founder / Team leader
- Scaler (mature) stage: CEO / Team leader
Andrew Wilkinson articulates this differentiation (referring to them as different profiles) in this video:
Startups focus on speed since they are burning cash every day as they search for product/market fit. But over time code/hardware written/built to validate hypotheses and find early customers can become unwieldy, difficult to maintain and incapable of scaling. These shortcuts add up and become what is called technical debt. And the size of the problem increases with the success of the company.
You fix technical debt by refactoring, going into the existing code and “cleaning it up” by restructuring it. This work adds no features visible to a user but makes the code stable and understandable.
While technical debt is an understood problem, it turns out startups also accrue another kind of debt – one that can kill the company even quicker – organizational debt. Organizational debt is all the people/culture compromises made to “just get it done” in the early stages of a startup.
Just when things should be going great, organizational debt can turn a growing company into a chaotic nightmare.
Growing companies need to understand how to recognize and “refactor” organizational debt.
- What are we doing
- How are we doing it
- Why are we doing it
"Misaligned people misalign people."
An organization will grow from team, to teams, to teams of teams.
No one tells you what happens after product market fit (having a product is not enough).
Marketing product
From 00:00 - 12:39
Most people make mistakes at the marketing stage.
If customers aren't happy, engaged, profitable and stick around, don't start acquiring more of them.
Talk to customers in order to understand if:
- You are building what you're selling
- You are selling what you're building
- You are selling what they're buying
- They are buying what you're selling
Switching from the competition
In order to market properly you need to understand you competition and why customers would switch.
You should attempt to anderstand and document the forces influencing a customer switch, including:
- Push: What is getting them away from their current product?
- Pull: What's attractive about you and your product?
- Anxiety: What are their hesitations? What are the things they don't know?
- Habit: What do they still kind of like about their existing solution?
You job is to improve push/pull and diminish anxiety/habit.
Understand and market to the different ways people buy
- Problem based: They search by the description of their problem
- Category based: They search by the solution category
- Competition based: They want a better version of what they currenly have
- Brand based: They want you
Scaling product
From 12:39 and to the end.
Establish a roadmap process based on feedback from relevant sources. Earn building new features and prioritize fixing issues.
Innovation and problem solving are different modes of work.
Every feature/product needs to have a revenue hypothesis. Act on your customers' behalf, not on their direct request.
Be wary of feature-wars with competitors (and looking too much like them).
Re-evaluate product beliefs so it does'nt become dogmatic.
From 29:49 - 32:42
If you hire people who are not on the same page, they are going to hire more people who are not on the same page. It's not malicious, but it can make people's efforts extremely unhelpful.
Keeping people aligned is important. New person onboarding tends to get left behind.
A person joining a 5 person company has access to everyone and learns everyhing through osmosis.
Person number 66 joining a 65 person company gets access to three people, each of whom have been there less than a year.
The logical conclusion is that the company goes off course.
Business development and organizational development are two related but distinct concepts that focus on different aspects of a company's growth and success.
Business development refers to the processes and activities that are aimed at expanding a company's market share, customer base, and revenue streams. This involves identifying new business opportunities, developing relationships with partners and customers, and creating strategies to increase sales and profits. Business development typically involves sales, marketing, and partnership activities, as well as product development and innovation.
Organizational development, on the other hand, refers to the process of improving a company's overall performance and effectiveness through changes to its structure, culture, and processes. This involves identifying areas where the company can improve, developing new policies and procedures, and implementing new systems and technologies. Organizational development typically involves human resources, management, and leadership activities, as well as change management and training.
In summary, business development is focused on generating revenue and expanding a company's market share, while organizational development is focused on improving the company's overall effectiveness and efficiency. Both concepts are important for a company's success, and when scaling there needs to be a sync and balance between the two.
Notes
Things to think about after product-market fit, after we have hit around 25 people.
Management
- In the beginning of the company there are noe management. That is optimal.
- But needs it in about 25 emoloyees.
- All you need: To have everyone know who their manager is, and there should be exactly one.
- Clear reporting structure is the most important.
- Clarity and simplicity is the most important.
- You want to innovate on your product, not on management.
- Before product-market fit you are building a great product. After, its about building a great company.
- Four failure cases
- Being afraid of hiring senior people. People with experience is valuable.
- Hero mode - Do not be an extreme leading by example.
- Bad delegation: that founders give away too little responsibility. Delegate so it scales.
- Not developing a personal tracking and productivity system.
- Write down how and why you do things (cultural values). This is a good way to have an influence when the company scales. Lack of doing this will lead to oral tradition and the message will live its own life as the company scales.
9:05 - HR
- HR speeds you up
- Performance feedback - simple and frequent. People needs to know if they do good or bad.
- Compensation brands tied to performance. So people know what they must do to get this and that compensation. If you put up a fair system now, you avoid the disaster that comes when everyone finds out everyone else’s comp. It will also save you time and effort, avoiding negotiations.
- Equity: You should give a lot of equity to your employees. And your shareholders will disagree. Give 3-5 % of the company every year. Get this in place early.
- Monitoring your team for burnout
- Put in place a hiering process - Hire a full time recruiter.
- Diversity on the team. To only hire one group will create a culture that is hard to change.
- Think about the early employees. Be proactive. What is the path for my first 10-15 employees. Talk to them about it.
16:25 - Company Productivity
- Productivity goes down with the square of employees.
- Alignment is the most important to stay productive.
- Everyone should know about the roadmap and goals.
- The focus should still be about product, but you need some form of processes.
- Transparency and rhythm of communication and reporting
- Doing a plan for the quarter
- Get people out of the office
- The point is building a company that creates enduring value over a long period of time.
- Repeatable innovation and a culture of operational excellence are the hardest thing to do in business.
- Most companies does one thing great, but does not innovate much after that.
21:30 Legal, Finance, Accounting, Tax
- Hire one to do fundraising full time
26:30 Your own psychology
- The highs are better, but the lows are worse.
- Ignore the haters (Comments on the internett and journalists)
- Make a long-term commitment and have a long-term strategy
- Monitor burnout. Take vacations
- Focus. Don’t do much else than building the company.
- Ignore acquisition interest. Don’t use time to explore. All of them are lowballing. Don’t start any acquisition conversations unless you are ready to sell at a low price.
- Startups fails when founders quit
31:00 Marketing and PR
- Find out the key messaging. Do not outsource.
- Get to know key journalists yourself.
- Do not hire a PR-firm.
- Pick 3-4 journalists that resonates with you. Build a relationship.
32:40 Dealmaking
1. Build a great product
2. Develop a personal connection with anyone you are going to have a deal with.
3. Have a competitive dynamic (in negotiation, have two or more actors).
4. Be persistent. Go beyond your comfort point.
5. Ask for what you want.
34:00 The process of starting a startup and questions
Explore the concept of leadership support.
Before you scale anything you must answer the question, “if you had unlimited amounts of time to research a prospect… what would you go find and why does that matter?” - Jordan Crawford