9 Things Every Start-up CEO Needs to Think About Immediately

Start-up CEOMy editor asked me for a list of things that startup entrepreneurs should address early lest they turn into problems as a company grows. Since scaling up is not my area of expertise, I asked Stanford professor Robert I. Sutton, co-author of Scaling Up Excellent: Getting to More Without Settling for Less to help out. Here’s my take on what he told me:

1. It’s a ground war not an air war.

There’s no point in the growth of a company where you can focus on grand strategy and let the tactical details take care of themselves. At each stage of growth, it’s attention to details and (especially) putting the right individuals into the right roles that will make the growth possible. Sutton: “The only cases of fast and easy scaling turned out to be the ones we didn’t understand very well.”

2. Focus on mindset not footprint.

Scaling up isn’t a matter of hiring a lot of people but of creating a culture that draws the right people into the organization. Sutton draws the comparison between Facebook, which kept their “move fast and break things” culture and “Starbucks forgot and did major damage to the company which they are still repairing.”

3. Embrace the inevitable mess.

When successful founders tell the story of how they grew their own firms, they tend to blur over the mistakes they made and create a narrative plot where growth seems logical and inevitable. Sutton: “But that is almost never how it feels as it unfolds… there are many times when you need to muddle forward until you figure out what works.”

4. It’s addition AND subtraction.

Scaling up doesn’t just mean doing new things to be successful; it also means NOT doing old things that once made you successful. Sutton cites the case of IDEO whose “all hands meetings worked perfectly when they had 40 or 50 employees but became impossible when they grew to 100.”

5. Create mutual loyalty.

For organizations to scale up, they need employees who feel as if “I own the place and the place owns me.” To make this point, Sutton compares IN-N-OUT burgers, which has scaled up and kept its founding energy and the perennially-troubled United Airlines, where employees feel betrayed, misunderstood and misused.

6. Connect your pockets of excellence.

As you identify parts of your company that are doing great work, have other groups in the company learn about and learn from them. Sutton says that was “what made HP a great company under Hewlett and Packard” (when it saw its fastest growth.) By contrast, when HP bought Compaq, it absorbed Compaq’s worst practices. (This is my observation, not Sutton’s.)

7. You’ll need hierarchy, structure and process.

It’s a complete myth that a company can remain freeform and ad-hoc as it grows. To make this point, Sutton paraphrases Chris Fry, the head of engineering at Twitter: “the purpose of hierarchy is to destroy bad bureaucracy – if your people feel as if they are walking through muck, then you’ve got to do something about it.”

8. Small teams win; big teams suck.

While you’ll need to add hierarchy, structure and process, the one thing that you must avoid is the creation of huge teams–the death knell for many a growing firm. Sutton says that the “optimal team size is 4 to 6 for most tasks and as you head towards 10 or more performance drops exponentially.”

9. Dump the jerks ASAP.

Nothing drags a growing company down than negative people and their negative behavior. Sutton: “Destructive team members, laziness, incompetence, nastiness, stealing, etc. are many times more powerful and contagious than their positive counterparts. A single destructive team member brings down performance 30% to 40% because their nastiness or incompetence is contagious and distracting.”

Originally published by Inc. 

Geoffrey James

Geoffrey James

Geoffrey James, writes a daily column for Inc.com and is the author of the newly-published book Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know.

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