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.
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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.
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.
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