On a regular basis, I speak to founders building fast growth companies.
These entrepreneurs lead businesses in a range of industries and sizes. Varying from 1 to 600 employees in four years, right down to those with 20 employees in only 18 months.
Yet, they all share one commonality – the desire to build a great culture. They all want to build a company that matters – to their employees, customers and society. They want employees who get up for work excited about their day.
Yet, culture is often something they struggle with. It’s commonly referred to as great, but few can define or explain it. Many confuse culture with providing employees with free drinks or massages.
Intuitively, they know that culture is important. Yet, as they scale they realise their workforce is becoming more difficult to manage. Almost overnight, a newbie versus original employee divide appears impeding productivity and alignment.
It’s around then that their business starts to get the wobbles. Common signs include employees resisting change and confusion about where the business is heading. Mistakes get made repeatedly. Worst of all, customers start complaining. The big wake up call is when someone resigns (or gets fired) and supplies a nasty exit interview.
The issue was that the company needed stronger foundations for future growth. Founders need to constantly adjust and scale up their people and processes. Take Mikitani, the CEO and founder of Rakuten who has grown the company from 0 to 12,000 employees. He noticed that every time the number of employees tripled (eg: 1 to 3, 3 to 9, 30 to 90) everything stopped working.
Growth is hard. But it doesn’t have to be that way. After all, plenty of companies survived the transition from being a start up to a large enterprise. Just look at Facebook, AirBNB, Apple and Uber.
How the Unicorns Do it
You’ve probably heard of the term ‘unicorns.’ Fast growth start ups that have a valuation of $1 billion+ within a few short years.
While their fast growth is astounding, you have to ask “how did they scale and grow their culture?”
After all, they do risk becoming bloated, bureaucratic and losing their way. Yet, these founders have put processes in place to avoid potential downfalls.
Let’s take a look at six areas where unicorn founders focus on to ensure they keep scaling their culture as they grow.
1. Connect everyone to the organisational purpose – The company’s mission is always top of mind with leaders constantly repeating it and ensuring that employees understand it, even well before they are even recruited into the company. A prime example is Facebook. In 2010, they had 1700 employees. Now, they have 12,000 staffers.
In a Fast Company interview, the CEO and founder of Facebook, Mark Zuckerberg, said “I think it’s been a process over time of building a culture where people think about the mission in the same way that I do. That’s allowed us to take on more and more products and things that we can try to solve for the world.”
2. Provide individual meaning to work – Leaders make an effort to ensure employees understand how their work makes a difference to the company. They align employees’ self-interest to a more meaningful, bigger purpose set by the organisation. As Scott Meyer, the founder from Ghostery said “People want to know does it matter if I turn up to work. Does what I do move the needle on some metric for the company?”
3. Communication is meaningful – High performance companies have highly targeted and frequent internal communication. They don’t rely on generic SOS communication – “Send Out Stuff.” The bigger a company becomes, the more likely employees are drowning in information, but starving for wisdom. The wisdom comes from the CEO being clear about the why behind the company and how the vision and goals are in alignment with that.
During growth, employees start to worry about the security of their jobs and want to feel safe. It’s during these times that they need to know almost everything that’s going on. Otherwise, they will collectively get together and fear the worst. Leaders must provide transparent information that soothes any potential fears. Successful founders know when to communicate and always provide meaning and context about decisions. And it’s always tied back to the vision and values.
4. They accept culture change – Often, founders will tell me that they want to keep their start up culture as they grow. The reality is that this isn’t sustainable. The truth is as your reality changes, so does the need for your culture. Culture needs to be regularly assessed, so that it’s:
- aligned to the values (which don’t change),
- the aspirations of where you want to be, and
- your market needs.
Mark Zuckerberg famously said ‘Move fast and break things.’
Now, as Facebook has grown bigger he has acknowledged that mantra no longer works.
“We officially retired that, because we were getting to a point where, at the scale we were at, we were making so many mistakes that actually having to go back and fix the mistakes afterward was slowing us down more than it was helping us speed up. So we switched the strategy to ‘Move fast with stable infrastructure.'”
5. They define their culture – It’s during this time of fastest growth that it becomes essential for the organisation to remain focused on its core. This requires an in-depth understanding of the company’s essence.
Companies that can’t accurately describe their culture (eg: who it’s suited to, acceptable and unacceptable behaviours ) are more likely to hire the wrong people and execute inefficiently. It’s also very difficult to change the wrong behaviours, if you don’t really know what they are.
The more specific you can be about who you are as an organisation, the greater the likelihood for success.
Hubspot, a marketing automation software company has grown to 800 people. Dharmesh Shah, one of the cofounders of Hubspot, said: “In our early years, we didn’t talk about culture much. We hadn’t documented it all. We just built a business that we wanted to work in. And, that was great. But the real return on culture happened when we started getting more deliberate about it. By writing it down. By debating it. By taking it apart, polishing the pieces and putting it back together. Iterating. Again. And again.”
6. On-boarding process – Unicorn founders design an intensive induction process to fully indoctrinate employees into the culture and learn about the process and systems. Despite what people want to believe you don’t hire a culture fit, you must develop it. Yes, you still want to recruit people more likely to resonate with your values. But you still need to train them in how your culture operates. Importantly, you have to provide consistent training that helps people understand the meaning behind the company and how their work matters.
Take Zappos, an online shoe retailer with 1,000 employees. Every new Zappos staff member undertakes the same four week training process. They learn about the company’s strategy, culture and customer service philosophy. Every new starter spends two weeks in the call centre. During those four weeks, Zappos tests if they really care about customers.
At some point during the training, Zappos offers $4,000 to the new employee to quit and walk away from the company. Tony Hsieh, the CEO says they don’t want people who are there for a pay cheque and they don’t want people who feel trapped. On average, a small 2-3% accept the pay cheque.
Creating Collective Ambition
Essentially, to scale a start up to a large organisation requires a founder who can sell the vision, as more and more people come on board. At the same time, the right people to need to be recruited, while the original employees need to be assessed for their fit as the company changes.
As Wayne Whelan, the CEO of Therapy Store realised “Growth is good, but not everything grows equally. If you don’t focus on the skills and abilities of your team, then you may be growing a bigger set of problems.”
If the leaders have been solely focused on growth, the organisation gets to a point where work needs to be done to improve the culture and align everyone to the vision through effective communication (and a ‘weeding’ process).
It’s essential CEOs create an environment where both leaders and employees understand why the organisation exists, what they hope to accomplish, how they will collaborate to achieve the vision and how the brand pillars aligns with the organisational core values.