Startup Strength (and How to Get It)

Startup Strength (and How to Get It)

Last year, one of my former Bain colleagues wrote an article for Harvard Business Review titled “Professionalize a Startup Without Stifling It.” The piece struck a responsive chord for me, and I thought it might for many of you.

The author, James Allen, describes a situation many of us have observed or experienced: A fast-growing startup reaches a point at which the founding team members recognize they can’t do it alone—that the heroics upon which company lore and legend are based are simply unsustainable.

And that’s when the situation gets risky.

Identify Your Risks

The first risk stems from denial and procrastination; this happens when the leadership team fails to move quickly enough to hire the quantity and quality of talent needed to maintain the startup’s steep growth trajectory. What often results in such an understaffed organization are costly errors of omission, unexpected sales misses, and overall underperformance.

The second and perhaps greater risk is upgrading with the wrong type of talent. The CEO agrees with the business imperatives: staff up, professionalize, standardize practices, run a tighter ship, etc. The question he/she should be wrestling with is: “How do we upgrade the talent and professionalize our startup without stifling the entrepreneurial spirit that helped us thrive during our ‘young insurgent’ phase?”

Cultivate Good Hiring Practices

It may be tempting to hire people from the industry incumbent. You may recognize the hiring targets:  fifteen- to twenty-year veterans who claim to have seen it all, perhaps done it all, and promise to re-create the playbook of the market leader. They’ve got the pedigree, they are disciplined, and they promise to bring the best from their current employer. They seem like safe, “can’t-miss” bets.

But be wary . . . the problem is they might bring along some unwanted baggage: the dreaded “mindset of the incumbent,” along with a penchant for rules and standardization that stifle the type of independent thinking crucial to a successful startup.

Alternatively, perhaps you’re recruiting for an “administrator” type. The person seems like a perfect fit: a professional manager skilled with a track record of managing complex systems. The problem is that the professional manager may not have any experience designing and building the next-generation system your business desperately needs.

So, just as I would advise the companies in our Lewis & Clark Ventures pipelineinterview carefully. Look for hands-on managers, people who have built and managed the functions you need. If you are going to hire someone from the industry incumbent and/or market leader, don’t be afraid of considering a person who might be considered a “black sheep” in their current organization.  There’s a good chance that the black sheep doesn’t have the incumbent’s mindset. He/she could be someone who’s ready for a little bit of adventure and will bring some of what they consider the incumbent’s best practices, while leaving behind the demotivating practices of their rule-bound organization. Such an individual might be a good fit with your more freewheeling startup and more readily gain acceptance from the skeptics in your young company.

Always Remember the Bottom Line

According to my Bain colleague, the bottom line is this:

“Professionalization will always be a challenge for growing companies, and there’s no faster way to arrest a company’s momentum than to do it badly. The key is to strike a balance between heroes and systems. Sustaining growth means carefully defining where new systems are necessary while insisting on the primacy of the company’s insurgent mission. The effort to professionalize should always be a means to an end—not an end itself.”