The Growing Pains of Rapidly Expanding Businesses - Part 4

In Parts 1, 2 & 3 of this multi-chaptered blog I looked at six of the Growing Pains associated with rapidly expanding businesses - Changing the Starting Line Up, Building the Business Infrastructure, The Premises Conundrum, the Clique Communications Challenge, Plugging the Process Gaps and the Joy of Regulation.  I compared these business Growing Pains to the growing pains experienced by rapidly growing teenagers.  

In this, the final blog of the series, I’m going to look at the four remaining growing pains.  These four growing pains are very similar to the challenges a teenager faces as they make their final transition from home life to university life or work.  The first of these is the Hiring Hiccough, the second is the Culture Preservation Seduction, the third is the Complexity Jam and the fourth is the Honey Trap of Fame.  The challenge is of course to stand on your own two feet and make your own high quality decisions amongst a storm of distractions and conflicting advice without the benefit of history to guide you.

Let’s have a look.

The Hiring Hiccough

When your business is growing rapidly you naturally need to hire new employees to help – usually lots of new employees – usualy in a hurry.  The challenge is that the senior executives and managers are often too busy running the business to run an effective hiring process.   Like a teenager juggling lectures, work, social life, hobbies and families there is just too much to do.  So how do you recruit the quality and volume you require at the pace you desire.  The standard screen the CV, conduct a phone interview, conduct a preliminary interview, undertake psychometric testing, conduct a structured interview and complete a final interview process is OK when hiring on an occassional basis but can seem massively elongated, complex and time sapping for managers when you are looking to recruit at speed in bulk.   So what are the alternatives?   There are a number.   Some are better than others.

Option 1 – stick with the standard process - it will deliver good hires but will be exceptionally painful and may hamper growth and delay key product launches, system upgrades etc.   Many organisations are trying to make as many of the steps as possible self service (delivered over the internet) in an attempt to reduce the staff hours required to support the process.   However, more often than not, it is still “high touch”

Option 2 – shorten the process – drop out a few of the recruitment process steps and commit to making rapid decisions.  Whilst this sounds good in theory it often doesn’t reduce the burden on the business management by much and tends to increase the risk of poor hiring – this of course creates its own problems.

Option 3 – lower your standards – this allows you to take in many more hires at speed and you can use the probabtion period of the first six months of employment as a kind of extended job interview.  However, this is often a recipe for disaster as most under pressure managers will neither manage low performing staff effectively or exercise the option to let an employee go before the end of their probation period.  The end result is an organisation weighed down by poorly hired, ineffective resources that they struggle to develop or manage out of the business.

Option 4 – hiring as a project – one of the more effective solutions is to actually see the need to recruit and onboard a large volume of people as a project in its own right that requires dedicated resources and budgets.  Rather than rely on the best “side of desk” efforts of the management appoint line staff + contractors/consultants to work full-time as interviewers, screeners etc on behalf of the business.

Option 5 – outsource hiring -  really a version of Option 4 – has the least impact on the schedules of business management and can be very effective.  However, it can lead to dissatisfaction from both candidates and hiring units who are kept apart from each other until the hiring is completed

My recommendation – is stick with Option 1 for as long as possible and when it is just too slow and painful swap to Option 4 or 5.  Whilst Options 2 & 3 sound attractive they are only ever going to work in a mature business and the undesired consequences are just too hard to manage in a rapidly expanding business.

The Culture Preservation Seduction

When you have had the joy and excitement of overcoming obstacles and building new relationships and creating a bit of history as a successful start up it is hard to see that history and the culture associated with it, become diluted by new people and new ideas as your business rapidly expands.   Assuming you are managing to hire effectively you will now have lots of new people joining your rapidly growing business.   They don’t know your culture and they don’t know your ways of working.  They are bringing in new ideas, new ways of behaving and some of it seems counter-cultural.  So what are you going to do?   This is of course a challenge that entrepreneurs often face and unsurprisingly the obvious solution is often not the best.  

The knee-jerk solution will see the reintroduction of a number of cultural traditions from the start up phase that may have faded out of fashion (e.g thursday night beers, cake for birthdays, monthly brain jams, etc, etc).  These activities will seek to “recapture the entrepreneurial spirit of the start up”.   Now whilst they are OK activities in themselves and may well be enjoyed and serve a purpose, no amount of gimmickry and nostalgia can recreate the culture of the start up.   This is actually a good thing.  The business has changed, its no longer a start up and is now rapidly growing and like a student who insists on going back home every weekend of their first term in college, by trying to cling to the past  you are in danger of missing the excitement of the here and now.  

Of course it is important to remember and celebrate the corporate history, but it is really important not to preserve the start up culture in aspic.  The solution, be brave, create a new set of cultural norms and ways of working for this rapid growth phase – do by all means base them on your values and principles but don’t base them on your old ways of working.   Engage the new joiners, create new history and celebrate the growth and progression of your culture.   If you try to preserve the start up culture your business will struggle to grow and will eventually die.

The Complexity Jam

Entrepreneurs can often be “fire, ready, aim” kinda people by nature.   They are not afraid to take big risks, they survive on their wits, their instincts and their ability to rapidly draw conclusions and act.  These are all admirable qualities and almost all essential for leading a successful start up.  However, they can be an absolute disaster for the rapidly growing business as it wrestles with a growing amount of complexity. 

Daniel Kahneman has recently championed the idea of human beings having two decision making systems – the “always on” system 1 that allows us to rapidly make sense of our surroundings and make quick decisions and the “big thinking” system 2 that we deploy when we need to really think things through.   He also pointed out that system 1 was prone to errors that were only visible if we force ourselves to use system 2 to properly analyse the situation.   The challenge for entrepreneurs in rapidly growing businesses is therefore how to slow themselves down enough to ensure that they are applying system 2 thinking to deal with the growing complexity in their business.   It's the business equivalent of the student who has to learn that simply regurgitating other people's ideas and opinions is not enough to get top marks.  Original thought is required and that takes time and effort.  

The answer is for the entrepreneur to delegate more so that they can concentrate on a fewer number of high value decisions that require a higher level of analysis.  They need to start demanding more data and better analysis.  Now before you all start having a heart attack and wondering whether or not I have lost the plot, what I am not talking about here is a call to introduce analysis paralysis, but rather to introduce a way of making decisions that is considered and takes account of the inherent complexity that the business is now carrying as it rapidly expands.  This is really the first step on the road to building a mature governance structure for the organisation, one that lays out clearly the people or bodies that can commit the organisation to action.

So my advice – when you feel like the business is getting too complex and that the quality of decision making is deteriorating, that’s the time to invest time and effort in revisiting your governance process.  Whilst seemingly a dull activity it can genuinely unjam decisions and lead to a rebirth of activity and growth.

The Honey Trap of Fame

And finally – the last of the growing pains – the Honey Trap of Fame.  Now whislt this is obvious it is still worth mentioning as there are not many entrepreneurs who don’t see themselves as the next Richard Branson or Steve Jobs.   When a business enters a phase of rapid expansion it is very likely to attract media attention.  Specificlally the press are keen to find the human interest stories behind the person/team that built the business. 

Now as previously hinted at throughout the other blogs in this series, entrepreneurs can have a bit of an ego and the chance to see their images and words repeatedly appearing in the media is intoxicating.   For those that manage it well it can be a tremendous opportunity to market the business.   For those that manage it badly it’s a one-way ego trip to bad business as in order to chase further media opportunities your claims, behaviours and quotes get more and more exotic and detached from reality.  Like the student in the bar, high on alcohol and excitement your jokes and ideas are funny at 11pm but overstay your welcome and your musings will have lost coherence, credibility and audience by 5 the next morning.   Learn when to stop and leave the audience wanting more.

The solution to the lure of the Honey Trap of Fame – find some wise advisors who understand you, the world of business and the world’s of media and PR.   They will help you stay grounded, be clear about your message and help you to maximise the benefits of the exposure that you choose to receive.  It’s not rocket science but it makes sense.

OK – that’s it.  I’ve now outlined the 10 major growing pains of rapidly expanding businesses.  I hope you have found this 4 blog series helpful.  If you want to discuss any of the issues raised or get in touch for help or advice you can contact me at rickfreeman@addonova.com   In the meantime may you find great delight in building your own rapidly expanding business.   I know I intend to have fun with mine and I hope I have the humility to take my own advice.