How to stay nimble as you scale

I recently spoke with a founder and CEO of a start-up that had just crossed the 200-employee milestone. Like so many others lucky enough to reach that level, he was complaining about how progress was coming to a halt as the organization grew and became more complex. I myself experienced this as COO at AbeBooks. It’s a cruel irony in business: the more people you add, the slower you get.

To help overcome this scale stagnation, I have three pieces of advice:

1. Overinvest in your management team

An ineffective employee is bad for the company, but the impact of an ineffective manager reaches across the organization, multiplied by the number of people he/she manages. For this reason, you need to hire the absolute best people you can get for managerial positions. Invest both money and time in developing their managerial skills, and have a strong employee feedback system in place to make sure you can identify and correct the “bad apples” right away.

2. Listen to Amazon: two-pizza teams and internal APIs

Few would argue that Amazon is one of the most entrepreneurial companies around and CEO Jeff Bezos has an uncanny ability to see patterns long before others. Two of the reasons Amazon is able to keep its momentum even as a 97,000-employee giant are pizza teams and APIs…

  • “Two-pizza teams”: Bezos structured Amazon as a decentralized company where small groups can innovate on their own and be free from the inherent problems of groupthink. Company-wide, he introduced the principle of the two-pizza team. If a team can’t be fed by two pizzas, then the team is too large.
  • Internal APIs: Every internal product should have an API, just as if it were developed for an external client. This decouples the speed of development between different product teams, as you can have a clean hand-off between the two.

The added bonus is that APIs lay the groundwork for the productization of internal tools. Bezos mandated that all IT assets be exposed as APIs. To quote a Forbes article, “That single, simple declaration created an IT (and cultural) architecture that catalyzed and stoked the stunning growth of Amazon Web Services, which is thought to be a billion-dollar business unit after only a few short years of growth.”

In short, small teams can run fast and innovate because of their size and the fact that they’re not reliant on the technology from other teams.

3. Focus your culture on speed over perfectionism

Facebook has created a culture of agility with a philosophy to “move fast and break things.” Mark Zuckerberg explained the company’s Hacker Way in a letter to investors included in Facebook’s filing:

“Hackers try to build the best services over the long term by quickly releasing and learning from smaller iterations rather than trying to get everything right all at once…We have the words ‘Done is better than perfect’ painted on our walls to remind ourselves to always keep shipping.”

Prioritizing speed over perfection can be a very powerful way to keep momentum up as you scale, particularly as you add layer upon layer to the organizations and require multiple signatures to get things done.

One key message that can apply to any start-up is to never end a meeting without a decision (unless everyone determines that more data is needed to make that decision). If a meeting begins to succumb to groupthink and indecision, you need to ask why we can’t make a decision today instead of another day. After all, you just need to move forward.

 

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  • http://www.startupmanagement.org/ William Mougayar

    You really hit the nails on the head. Management gets under-rated but it is what helps employees maximize and focus their productivity. Management is the direction of the arrow.

    Another point is about “process”. Introducing them helps, but gradually, so they can help you not re-invent the wheel which slows you down. Trick is to not go crazy on processes, and allow imperfect ones initially.

  • bwertz

    Yeah, learned the “management” lesson very early in my career as an operator

  • nthampy

    Great post | Progress is better than perfection |

  • http://dataddict.wordpress.com/ Marcos Ortiz

    Great post.

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  • Pavol Hollosy

    i agree “the more people you add, the slower you get” … “small teams can run fast and innovate because of their size and the fact that they’re not reliant on the technology from other teams.
    global catalog dot com

  • Eric James Thomson

    Works for an entrepreneur who can lead (or who hires the one to lead) while they focus on their sweet spot (product development, marketing, client interfaces etc.) The teams still need to have a goal that will move the company forward; time lost can’t be regained.

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