Before early stage businesses fail, they fail to grow. Symptoms start to appear everywhere. Sales plateau, profitability decline, leaders and key contributors quit, finger-pointing begins and critics question the business model and strategy.
The pitch on the value proposition, competitive advantage, and strategy that founders made to the investors or loan officers still holds ground. The external environment is still the same but business does not grow.
So what really stops working?
It all started with an entrepreneur’s idea. Passion and the energy were in abundance. Inspiring, visionary entrepreneur and a small team working together day and night towards a common goal of making their product (or service) a success.
Team members spoke to each other and exchanged ideas. Founders were available and present in the meetings. Management and the team were on the same page. Though investment money was little, there was a consensus on how and when it will be spent.
Everybody hustled to get things done.
Well…that is the problem.
Hustle does not scale anymore.
Business growth is a game of rapid multiplication. Every function and interactions among those functions grow at a non-linear scale when the business grows. That multiplication has to happen quick and faster than competition’s pace.
It’s easy to blame sales for not bringing new deals or to blame marketing for not gaining enough mindshare or to procurement for not purchasing quality material. But all of the functions were fine to begin with so there must be something else in the system that fails.
In the early phase, there is an invisible “broker” who is carrying the messages among different functions. The broker is making sure that if one of the function is not performing as it should, the feedback is instantaneous and correction is immediate.
Role of the broker is played by the key founders, interlocking teams or by a group of driven hustlers in the business.
When businesses start to grow, new employees join business functions. Specialization increases. Interactions multiply. But there are just not enough hours in a day for that many interactions to take place. Brokers feel burdened and burnt out.
Businesses that are able to manage the growth, recognize these signals early and adapt.
Businesses that are still in hustle mode, are still busy getting things done. Preparing for the growth just does not occur to them.
So what exactly does needs to happen?
The role of broker still needs to exist but must be replaced by something else. Businesses need to create brokers that scale and work even when employees are sleeping.
The new brokers
A new set of brokers that provide the multiplication at every level comes from the following provisions.
Document everything. Then share with everyone. When a business reaches a critical mass, it is physically not possible to communicate in real time and guarantee that the message will reach the desired recipients, let alone be acted upon.
Documentation, as the broker, is in the reach of every organization. But very few take it seriously. There is no excuse for not documenting.
Both technology and processes are dual edge swords. Both enforce rules, but at the same time, if used appropriately, enable collaboration. Use automation and processes to govern collaboration.
Why “governed collaboration” and not just collaboration?
Collaboration when not governed, in my opinion, is the biggest multiplier of productivity leakage. Meetings and always-on instant corporate messengers are some of the forms of collaboration. Shared information exchange portals, discussion forums are other examples. Use technology and processes to ensure right collaboration tool is used for the right purpose, and with a goal in mind.
Automation is the true multiplier. It is not possible to scale without automating mundane and repeatable tasks and workflows. Let automated processes act as the new broker.
Not everything in the business can be automated to reach the desired scale. The human function is the biggest bottleneck and must be made efficient.
Broker function played earlier by the select individuals must now be distributed throughout the organization in each business function.
In order to grow, hiring more people is necessary but not sufficient.
Each leader should spend 15% of their time in grooming junior leaders so they can play the role of that broker.
Business functions get distant from each other as the organization grows. The flow of information among the functions should be driven by KPIs (Key Performance Indicators). KPIs are the quantitative measure of success. For example, the expectation of Operations team from Marketing team should be documented in terms of KPIs. KPIs govern the “contract” between two business functions.
For when Online Marketing function is not generating enough leads for Sales to act on, instead of expressing frustration and anger, Sales should point to pre-agreed KPIs that have not been achieved. A conversation based on KPIs leads to a meaningful plan of action.
Just like starting up a business requires investment. Every growth spurt of business requires a tranche of investment money. CEO needs to willfully allocate funds that are marked for growth. It’s one thing to talk about growth and another put money behind it. All of the brokers listed above need investment.