Strategic CIO // Team Building & Staffing
Commentary
8/4/2014
09:06 AM
Dustin Lucien
Dustin Lucien
Commentary
100%
0%

Grow Your Tech Company & Stay Cool

Automate everything, ditch fancy titles, and other ways a small company can scale fast without losing its soul.

When a successful startup hits growth mode -- say, after a big round of venture capital funding -- it becomes necessary to grow the company quickly to meet the demand of more product features and more customers.

But it's not always easy to preserve a company's original culture while moving so quickly. I liken it to changing the tires on a car -- maybe more accurately, swapping out the chassis and the engine -- while traveling at 100 miles per hour.

[Be the type of company that lives in your customer's digital worlds. Read 5 Steps To Become A Digital Business]

Rapid growth is not just about software engineering, but organizational engineering. It's important to understand how to set up an organization to grow quickly and increase the pace of new product development -- as well as do everything else a growing business needs to get done.

Early days are a sandbox
Many startups begin with a tightly knit team that works and plays together. They exemplify all the best traits of a group of friends -- and they just happen to be professional colleagues as well.

Work is planned informally. If you need something, you walk over to the person you think could help you, and ask. Easy. That's process. We'll call this approach to organizational design The Sandbox. theScaffold CEO Joaquin Roca has a great blog post on the topic of formal versus informal organizational design that reinforced much of my thinking on the topic.

However, this informal approach to planning and executing work can create stress fractures that can open up when the company grows fast -- for example, growing 5x in eight months.

What do you do to get ready for the change? To use Joaquin's language, you move the organization from the Sandbox to the Hive, which will better support the coming growth without ruining the culture.

Focus on process, not hierarchy
To make the shift, first focus on defining a process for getting work done with the people you currently have in the organization, while anticipating the size of the company you want to have a year from now. The hierarchy that you'll need to increase efficiency will become obvious.

Many startups, including some that I've been at, attempted to solve growing pains through titles. Lots of fancy titles for people who had even fancier resumes. And what did we get? A lot of titles that still couldn't get anything done, and a lot of other people who had worked really hard to get the company to its current stage that now felt passed over. I like to call this scaling technique "organizational Jenga."

One of our board members has a saying that sums up nicely what can happen at a hierarchy-loving startup: "Don't break the glass box." While the board member conveyed it in the context of building a product, I'm using it in the context of the team culture and dynamics.

The most valuable thing a startup has besides its product (sometimes despite its product) is its company culture. Culture is a fragile thing. If you mishandle it, you can easily break it, and it's nearly impossible to repair. Just like a glass box.

Process fosters collaboration
Your team-oriented process should produce good communication and collaboration within small groups that have all the tools they need to solve a problem. When you focus on process first, you focus your efforts on making your current employees -- the ones that have gotten you to the successful point you're at -- happier and more effective in their daily jobs.

This paradigm also has the best chance of preserving the culture through the high-growth stage because these are the people that "got it" without having to be taught it.

Minimize the cost of change
Rapid growth is continuous change. If the cost of change is too high, growth will be painful for your team and will ultimately hurt your chances at startup success and slow growth because of attrition, low-quality execution, and a general lack of alignment with company goals.

The following three steps are engineering specific, but I feel they apply to any function of a company that is up against significant growth.

Streamline the hiring process
Simplify and make sure everyone at the company knows what their role is in the interview process, how to objectively grade the candidates, and how to stop the process quickly if the candidate just isn't a fit.

Onboarding "boot camp"
Onboarding is especially costly in engineering, so at Betterment we've created a formal two-week program to familiarize our new hires with how our system works. This obviously helps to incorporate new hires into the team, but it's also a great opportunity to pull out all of the tribal knowledge buried in the minds of your existing employees.

Automate everything
Reading documentation is slow. Writing it is slower. Maintaining it... doesn't happen. To combat that, we've invested heavily in removing as many manual processes as possible from engineering to operations. We've set a goal in engineering that every new hire is completely setup and productive within a day. Automate everything you can.

In its ninth year, Interop New York (Sept. 29 to Oct. 3) is the premier event for the Northeast IT market. Strongly represented vertical industries include financial services, government, and education. Join more than 5,000 attendees to learn about IT leadership, cloud, collaboration, infrastructure, mobility, risk management and security, and SDN, as well as explore 125 exhibitors' offerings. Register with Discount Code MPIWK to save $200 off Total Access & Conference Passes.

Dustin is the Vice President of Engineering at Betterment, the leading automated investing service, where he oversees the direction and operations of the engineering team. Prior to Betterment, Dustin held leadership positions at TheLadders, Layer 7, and Oracle. View Full Bio
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
MichaelP455
50%
50%
MichaelP455,
User Rank: Apprentice
9/25/2014 | 2:58:57 PM
Most people still want some sense of what the hierarchy is, i.e. who is the Boss ?
Having lived rapid organic growth from 2 to 75 people in a vertical market software company, I would add that most people still want some sense of what the hierarchy is. When they have an administrative problem, they need to know who their boss is and who makes the final call in the pecking order( they also need the vision, the mission clear goals and enforced accountability... just like children ). 

I agree with letting process drive this vs titles, but if the growth is substantial, the processes will evolve. Functional areas and their ownership must be clear. Employees on board from the days of five people will look for fairness and equitable treatment when there are 50. ( they shouldn't automatically receive elevation in the organization, but they need special care if they still contribute ). 

We tried to change to a more fluid organization chart, but all it did was confuse everyone. Once we went back and clearly defined reporting lines, everything was fine again. The other major factor is preserving productivity and a united march toward the mission was compensation. Everyone had their salary but could also earn a 'piece of the pie'. Their reward was not based on where they were in the organization level, but how well they met their goals. This allowed us to keep almost everyone highly motivated ( 'almost' because you cannot please everyone ). 

 

Mike Pochan
Shane M. O'Neill
50%
50%
Shane M. O'Neill,
User Rank: Author
8/11/2014 | 1:21:04 PM
Make it YOUR hierarchy
Of the many good tips here, the line "anticipate the size of the company you want to have a year from now" jumps out. There will always be a hierarchy of some sort, but create the hierarchy that will best support the company you're becoming. Not the hierarchy that worked for another company.
zerox203
50%
50%
zerox203,
User Rank: Ninja
8/4/2014 | 3:42:47 PM
Re: Grow Your Tech Company & Stay Cool
This is an issue that startups have struggled with since the word 'startup' was invented . As you say, Dustin, it stretches far beyond just engineering, and touches every aspect of business - after all, startups have been losing their culture since long before what we would call modern 'processes' even existed. It sounds easy in theory - in fact, it even sounds like a flimsy thing to complain about. 'Don't lose your culture' it sounds like something out of an afterschool special. Yet, as you point out, the productivity and talent losses that come with it are very real. That's why you can't afford to ignore it.

Some of these I agree with, and others not so much. On Mr. Roca's chart for example (thanks for the reading material), the intent seems clear - each organizational system has it's own strengths and weaknesses, rather than some being better than others. Even still, his wording seems a little loaded, painting some things as negative that I would paint as more neutral.  After all, companies of all four types have been succesful. You also mention that the hiring process should be 'based on objective grading' while still allowing room for immediate termination for subjective 'bad fits'. You can't always have the best of both worlds - some things have to be one way or the other.
Lorna Garey
100%
0%
Lorna Garey,
User Rank: Author
8/4/2014 | 1:48:21 PM
Jenga is a fantastic analogy
A friend works for a company that depends heavily on its people and has gotten much larger over the past year. New executive leadership promptly brought in former colleagues and gave them the fancy titles you mention, passing over long-term employees. There's already been some attrition, with a ton of institutional knowledge walking out the door. I get the idea that as a CxO you want to surround yourself with familiar faces, but this seems short-sighted.
2014 US Salary Survey: 10 Stats
2014 US Salary Survey: 10 Stats
InformationWeek surveyed 11,662 IT pros across 30 industries about their pay, benefits, job satisfaction, outsourcing, and more. Some of the results will surprise you.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest, Dec. 9, 2014
Apps will make or break the tablet as a work device, but don't shortchange critical factors related to hardware, security, peripherals, and integration.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.