Hack:
'Small' is desirable in workplaces - How to scale Small to Big without losing the advantages of small? (real case incl.)
This hack is pinpointing some ideas for how companies - which stand in front of challenge of rapid growth - should go about scaling themselves without losing their engaging, entreprenerial and experimental culture, the ones they had when they were small entities. A real company case is used as a basis for coming up with ideas.
So the questions in mind are: 1) Is it possible to grow smaller experimental organizations into larger entities without destroying the inspiring and engaging culture that it had when it was small? Can the organization remain its engaging and non-bureaucratic approach, agility and experimental culture as increase in size typically produces more bureaucracy in enterprises?
In the last couple of years, I have been working with large enterprises in the field of internal and external collaboration using web 2.0 tools and technologies as enablers. Most companies that I work with are the ones that are large and trying to overturn and change their culture from a typically command and control to a more networked and collaborative.
However during a seminar, I happened to come across a small company which has experimented with new ways of doing things to avoid bureaucracy and has created a non-command/hierarchical culture/structure which it is proud of.
This 150 people company[1] is growing rapidly, and this company’s management is currently standing in front of a major challenge – Its business is growing, and it questions if it scales its business to 300-500 people, can the organization remain its engaging and non-bureaucratic approach, agility and experimental culture as increase in size typically produces more bureaucracy in enterprises? Employees are involved in these discussions – they want to keep their agile and innovative culture.
To exercise mine and the readers’ way of thinking and test if there are limitations in a possible approach/solution, I am using this small company as an example which I have initiated a discussion with.
Some of the key elements that creates the foundation of this company culture:
- The leadership philosophy is: Our People comes first.
- Employees are encouraged to challenge the way the company works, its leadership etc.
- To ensure to avoid underutilization of people’s capabilities, every employee is responsible for his or hers personal development and formal learning – this means that every employee is responsible for signing him or her for courses (within reasonable costs, naturally), being up to date within the core field of the company’s IT services.
- To ensure that the employee naturally embraces the culture, the employee will not be sent out alone on a project at client site in the beginning. A sparring partner and mentor are officially assigned to the person but in a non-hierarchical way. The mentoring and sparring goes both ways. There is no direct boss, but employees work in teams which occur and dissolve depending on the project. Workspace is flexible.
- Much time is spent on recruitment as the leadership team is aware of the fact that not all people can work in such a company culture. There is little personnel turnover
- Even though the company claims it does not have any structured processes, it has. It has e.g. a time registration for the purpose of billing clients – it also has set up some routine practices for example: 1) large white board with post-it for project issues, when an issue is resolved, the post it is taken away, 2) it is pre-requisite for teams to meet once a week in the office to ensure the attachment to the company and the importance of human interactions which is part of its culture. A blog is used to share knowledge and best practices – one-to-many communications.
- I have observed that the company has started to be seduced by its own successes – as I refer to as the arrogance of success - something that leadership should be alert about.
[1] Profile: very successful IT Company, which has been awarded several times for its non confirmative way of leadership. The company is not using any collaborative platform to support its org. model, but uses simple tools that it has developed by itself to meet the special cultural requirements for simple processes and tools.
Here is how I would go about it – there are probably many more areas, as it is a process that will evolve over time:
1. Create only the most necessary formal processes or practices – like the time sheet registration for customer billing is necessity to conduct business and ensure customers get billed for the right amount of hours, identity processes that are a pa pure necessity. As the number of employee grows, allow for formalized non linear HR processes, such as real time feedback (should be embedded into normal day to day work not a tool or process that one specifically have to go to) instead of annual performance reviews, relationship workforce planning based on learning and customer input (see point 2) .
2. Let customer be part of the company’s processes –customers are the best critics and can provide the company with great feedback. Holding regular workshops’ with them will give the company a signal if the culture (behavior, practices, goals of employees) has changed to a more positive way, and if the ‘formalized’ processes are positive or negative from a customer POV. Doing this also helps ensure that the IT services are driven by actual market needs, fuel to solving real customer problems, and are within the core expertise that company wants to maintain.
3. Sharing and collaborating internally on ideas on growing together – the post-it notes can be applied when all people are in the share same office space. However, moving the post-it notes to a collaborative platform will allow the company employees not only to maintain the ‘connection’ as company grows, but also surface knowledge & expertise and new ideas and comments on unnecessary processes, structures etc. The network effect and the feeling of belonging will be kept, and learnings surface.
4. Visibility of the leadership - Even though the company has a democratic leadership style, with leadership happening as part of people taking responsibility (no formal boss), the founders and the leadership of the company will play an important role in that change process. They will have to embrace the changes required to enable the business to grow. It is at this stage of growth that the vision, and comfort with change become particularly important. The leadership/founders can in additional to its personal and face to face approach, use e.g. its blog to take the temperature of how employees feel about the changes.
5. Peer-to-Peer recruitment, peer to peer on-boarding, sparring partner/mentoring – sourcing through peers could be working in large organizations. The company’s employees meet many people while doing work at customers, so there is plenty of possibility to meet the next candidates for hire. Focusing on peer-to-peer involvement in many of the processes when a new employee is entering the organization will be important. The influence from peers will ensure that the cultural aspects are adapted easier by newcomers.
6. Use moderns off the shelf/web 2.0 tools as enablers – the company has fallen into the pitfall that it is so special it needs to create its own technology as nothing standard is good enough – I have seen those pitfalls in large organizations customizing their ERP systems down to the tiniest detail. My advice would be: focus on the culture transformation and on growth rather than on developing technology unless it is because you want to commercialize it.
7. Set up a formal structure for entrepreneurship. Give people enough time away from their “day jobs” to work on own projects (either work related or personnel development) – if work related, set up formal processes to make sure those ideas develop and take root. This will underline the culture of agility and experimentation.
8. Assemble a diverse workforce - as the company grows, it will require more specific capabilities to carry out the work. When I met with one of the employees, I asked why they are not turning ‘their business model’ into a new service, thinking that I as an independent consultant could help them monetize the model. The answer was: we are an IT company. The company can naturally grow within its current business area, but eventually it will hit the ceiling as there is a maximum demand for its services in the market. By recruiting people with diverse backgrounds and points of view result in new and better services and better ideas.
And as the company continues to grow, focusing on internal synergies and how they can be combined to the benefit of the employees and the company and how they will make employees to work together to reach the common, and maybe revised vision.
- grow but without losing the culture that inspired ad engaged employees to do their work because they loved to and not because they were told to
- maintain agility of a small organization even though one becomes a larger entity
- maintain focus on connecting employees and as entity grows, focus on creating a collaborative workstyle and sharing culture
- zeroing linear processes and command structures
- maintain a learning attitude
I was just giving career advice to a friend who is considering moving from a large corporation (thousands of employees) into a small start-up. I talked about my own experience working at a start-up right after college, where I was able to participate in activities and make decisions that were “above my pay grade,” such as managing major projects and interfacing with top clients. I found my next job at a larger, 30 year old company, although it included a better salary and title, to be a step back. At my new job all of my work was funneled into a couple of projects and I was not allowed to make key decisions. Consequently, I believe the experience at working at a small company was much more valuable to my development as a professional than my work at the larger company. Despite the fact that the culture and solutions you laid out here for this small company are very progressive, they do not necessarily address the issue that employees, especially junior employees, may be less satisfied at a larger company because they are given a less responsibility for tasks and decisions, and less ownership of outcomes. I think the start of a solution might be in your suggestions of “sharing and collaborating internally on ideas on growing together” and “set up a formal structure for entrepreneurship,” but I also feel that something is missing to address the problem I’m discussing. Maybe on the list of solutions could be added something about consciously seeking out ideas from junior/new staff, focusing on career tracks for junior staff, etc.
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@Priscilla – I totally agree with you that learning from younger staff and adversity can stimulate new ways of doing business and new ideas (the case I am using the average age is around 30, so thank you for adding this important point). Creating workspaces (pairing) or technology enabled internal sites where new opportunities (new bright and bold ideas coming from younger staff) and knowledge (expertise coming from more experienced staff) blend together to solve problems, or just exchange information could be a solution?
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Great Article this is a very important topic that many companies face as they grow from a start up to a larger company. I worked for a smaller organization and was able to learn a great deal from all the different departments I was able to work in. The entrepreneurial aspect creates this hunger to learn not just about your function but also about whatever maybe required to get your company to the next level. There is a culture difference that is instilled by working for these smaller companies that can play a key role if maintained once the company expanding. I feel one of the ways this aspect is lost is when companies grow faster than they are ready for, which is more often the case. They tend to lose focus on what had gotten them to that point and focusing trying to manage this growth. They are dealing with a heavier workload, more employees and more than likely trying to mimic the structure of larger corporation.
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@Efrain – this is so true. I would like to add that small businesses can be just as hierarchical as big ones. They might not have the layers like found in bureaucratic organizations, but there are often dominant founders, or owners that practice command and control. Employees might accept this, and if they are previously used to hierarchies, it is familiar and they think it is inevitable. If businesses would better understand the impact hierarchy has on human beings and how it kills innovation, we would have an incitement not to mimic the ‘usual way of doing business’ and move away from hierarchies?
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I have gone through an experience in an organization that grew from 150 people to over 800 people in a short span of 4 years. It was a drastic change as this organization tried to maintain the “cozy”, “family”, and “home-grown” identity even as it grew to this size, though it ultimately succumbed to top-down leadership to maintain corporate structure (which isn’t necessarily bad, but just impossible to sustain). I’ve left the organization along with many others largely because of this as it did not match my desire to stay in an organization that evolved dramatically from the original culture it developed and since transitioned away from its roots.
I just wanted to mention that this organization followed almost all of the key elements you mentioned from the beginning: recruitment, creating minimal but necessary structures, observing and mimicking its own success, establishing partnerships in projects, and instilling responsibility for personal development, as it emerged. It heavily recruited additional members, even at its current size, based on the fact that it has developed and maintained a small company culture at a large company size. Why did so many people leave? The main reason is the fact that a top-down leadership / hierarchal system eventually took place due to the organizations sheer size. With the amount of people, the amount of different activities, the organization wanted a way to control its identity in the market, and didn’t want any one employee taint its image, the management team felt it was necessary to maintain complete control. Business is no longer territorial, but having a global impact, the existence of entrepreneurial mistakes, risk taking chances could happen at the organization’s stake. This of course is acceptable, however at the same time the organization “hypocritically” continues to stress the importance of entrepreneurship, collaborating internally on ideas and growing together, and minimal and most necessary structures, creating a very frustrating work environment for the workers that have been recruited and “promised” the flexibility and innovative work environment.
Overall, I believe this is definitely on the right track as a method to maintain a company’s culture as it evolves from a nimble, small company towards rapid growth. These points seems very valid in keeping the employees motivated, it gives them the opportunities to succeed, and it gives them a way to assess their ability to succeed, however I definitely would warn that as the manager of a large corporation, because there simply are more people you are responsible for, how much of the little things affect the business identity? How will a flexible structure affect the uniformity of your products?
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@Ken – Thank you for sharing this very interesting case. You point out very big and important issues, and I do not have a ready and generic answer. Maybe you have some input? But I would like to add the following. Since the creation of this hack, I have done some market investigation on the IT-company and my sources have pointed out that due to its rapid growth, it has started to show ‘flaws’ in its services delivery to clients. So your point on product uniformity is post on. But is it possible to come up with a magic number for an ideal sized company or is it because one of its ‘flexible processes’ has started to fail, e.g. recruiting?
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"The arrogance of success" I love this. I think many larger company’s rely too heavily on their brand and historical success and forget that you must adapt to a changing business environment for future success. As I read through all of these stories, a few key themes keep popping up: collaboration, innovation, employee and customer feedback, transparency. Clearly these are the things that big companies need to re-focus on to prepare for the future but I wonder if some companies have simply grown too big for their own good (at least in today's environment). Organizational processes that were once put in place to create efficiencies and drive down costs are now seen as a hindrance to innovation. I understand how the proposed solutions work for a small company in growth mode but how does mature companies (the wal-marts of the world) strip out the unnecessary processes already in place? Interesting times. I see this very thing going on in my own industry and wonder if the industry leaders will soon fall from grace.
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@Vanessa – Good and reverse point, thank you. I read about W.L. Gore which seems to have gotten something right. The founder identified that when employees no longer recognize the names of other associates (they do not operate with employees, but associates), the unit is too ‘large’. E.g. within a 30 miles radius, they have built 18 plants, which might on paper look costly, but the company seems to continuously outperform and employees love their work. Maybe larger organizations should look at the successes of other, and experiment with some of those new paradigms? In times, where downsizing is daily news, a company which has less employees, has the same business processes in place, the same leadership and the same technology – where will its growth and innovation come from?
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@all, you really made my day . Over night, all these really relevant and challenging and intelligent comments and great ideas arrived in my email. I realized that this hack should have been constructed as a crowdsourcing exercise, and I would like you to continue igniting the discussion to get the input to an improved step-wise approach, which I will share.
@Priscilla – I totally agree with you that learning from younger staff and adversity can stimulate new ways of doing business and new ideas (the case I am using the average age is around 30, so thank you for adding this important point). Creating workspaces (pairing) or technology enabled internal sites where new opportunities (new bright and bold ideas coming from younger staff) and knowledge (expertise coming from more experienced staff) blend together to solve problems, or just exchange information could be a solution?
@Efrain – this is so true. I would like to add that small businesses can be just as hierarchical as big ones. They might not have the layers like found in bureaucratic organizations, but there are often dominant founders, or owners that practice command and control. Employees might accept this, and if they are previously used to hierarchies, it is familiar and they think it is inevitable. If businesses would better understand the impact hierarchy has on human beings and how it kills innovation, we would have an incitement not to mimic the ‘usual way of doing business’ and move away from hierarchies?
@Ken – Thank you for sharing this very interesting case. You point out very big and important issues, and I do not have a ready and generic answer. Maybe you have some input? But I would like to add the following. Since the creation of this hack, I have done some market investigation on the IT-company and my sources have pointed out that due to its rapid growth, it has started to show ‘flaws’ in its services delivery to clients. So your point on product uniformity is post on. But is it possible to come up with a magic number for an ideal sized company or is it because one of its ‘flexible processes’ has started to fail, e.g. recruiting?
@Vanessa – Good and reverse point, thank you. I read about W.L. Gore which seems to have gotten something right. The founder identified that when employees no longer recognize the names of other associates (they do not operate with employees, but associates), the unit is too ‘large’. E.g. within a 30 miles radius, they have built 18 plants, which might on paper look costly, but the company seems to continuously outperform and employees love their work. Maybe larger organizations should look at the successes of other, and experiment with some of those new paradigms? In times, where downsizing is daily news, a company which has less employees, has the same business processes in place, the same leadership and the same technology – where will its growth and innovation come from?
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