The Three Deadly Sins of Scale-Ups

So, you managed to pull it through. You found your product-market fit (or at least partially), got customers to pay, and secured your funding to expand. Your tight-knit team where everybody knows what everybody is doing will now double and triple in size as you add more people to the team to support your growth. Congratulations! Make sure you take time to celebrate because you are about to embark on a new and equally challenging journey!

The people you hired for the first phase were most likely generalists who thrive when things are unclear and problems just need to be solved without any process or long decision processes. You now need to decide who to hire for the next phase. Do you hire more generalists? Smart people who are individualists who will figure it out or do you hire people from larger organisations who can help you put things into process and scale up? Chances are that you are already establishing an HR organisation, and you are about to distribute the control of who you hire to those you have just recently hired. Most likely, the new HR organisation will put together an interview process, hiring criteria, and individual managers will start making hiring decisions. You are supposed to hire quickly, and priority number one is to hire the best people, but not necessarily the ones you need. This is deadly sin number one: not having explicit and detailed criteria as well as hands-on control over who you hire in this phase. The people who you hire now will define your company in years to come.

Many years ago, during the dot-com boom, I worked in Silicon Valley and got exposed to the cynical view that:

“A-people hire A-people, and B-people hire C-people.”

Through the best of intentions, you are now hiring (hopefully) smart people who can help you reach the goals of scaling up your company. If not, you will get a lot of people who are good, but not star performers, and then they will hire people who are not that good. Be careful, who do you need and what do you want for your organisation? Smart or best are not good hiring criteria, what will they prioritise and how will they shape your organisation?

Anyway, some of these new hires will come from larger organisations (you need that). However, this is where you risk doing deadly sin #2. As you grow, people will loose touch with management decisions, who is doing what, how to get things done, and as growth is typically chaotic, you will get dependencies across different parts of the organisation that will slow things down or even prevent people from even attempting to do the right thing. The response is always the same (and especially from people who come from larger organisations): We need more knowledge sharing through presentations, newsletters, demos, documentation, presentations, wiki pages, you name it. AND, we need processes that can help us get things done: A program management meeting, let’s hire project managers, we need more coordination meetings, who can make sure we sync up across teams, how do we make decisions, who can describe how we are supposed to do X?

You were used to having an organisation where everybody just made it happen, now, you have people who see it as theie job not to make it happen, but to coordinate, call meetings, write summaries and project plans, and structure your Jira projects. And who do they engage? Exactly the people who used to spend all their time making it happen, so now they have to spend time in meetings, report on progress, and update tickets. And they don’t think things are going in the right direction…

It is all done with the best of intentions and there IS a need to coordinate more, document things, and create some processes. And after all, this is what worked for organisation X (replace X with your favourite large tech company). The two main problems are that:

1. this is often overwhelming to people, and you risk them disengaging from many of the things that are not directly related to them and
2. you are introducing bureaucracy (i.e. a predictable process), but is it at the right place (helping you scale) or do you create barriers for getting the right things done? Also, your early generalists are bickering, this is not what they like. Where they earlier just fixed the problem, they now have to follow a process and they feel they waste their time. You risk loosing some of the star performers that enabled you to do the right things early on

So, deadly sin #2, overwhelm everybody with knowledge sharing that they don’t really know if they need and not controlling strictly where you introduce the right process, so in sum you frustrate people and slow down execution.

This is where you are about to enter the ranks of established companies, and your employees will be able to complain about how much red tape and meetings you have, and how difficult it is to just do the right thing because there are so many people who need to have an opinion. Now we are getting to the worst of the deadly sins, #3: introducing top-down processes of program management, managers, decision processes, gating criteria, and other mechanisms that are meant to get overview and control. It is in the nature of people to seek control, of course the organisation needs to be in control. The move towards the top-down control is reinforced by the people you hired. People who are very comfortable with establishing processes and deliverables to get in control.

But what is really the alternative?! Not putting in place ways to get decisions done, coordinate with others, and share knowledge will also slow down your organisation. We hear about empowerment of employees and establishing independent teams that can make decisions without consulting everybody else. But is that desirable? Can you avoid top-down control and still move forward as one company? So, should you avoid it? You want the ability to deliver on your corporate goals, you want to be able to estimate delivery dates, and you want to report on the progress, right?

De-coupling of dependencies between teams and individuals is the only scalable alternative to top-down control. It requires careful design of organisation, responsibility, and accountability.

This is really, really hard, but it is the only way you can get employee empowerment and the engineering and product velocity you want. If that is what you prioritise. The top-down control and planning may be something you prioritise, and you are willing to sacrifice velocity to get it. However, if speed is what you need, you need to organise small teams that are not dependent on top-down planning processes, where dependencies on other teams can be loosely coupled, and where the teams and the individuals are comfortable with making decisions and deliver on what they believe is the right things to deliver.

Teams will in reality never be independent, there will always be some other teams that will be impacted by decisions or that rely on what is delivered by others. Also, you want people to run in the same direction. This means that you need two things to get a de-coupled organisation:

1. a strong sense of strategy and purpose down to team level that guides decisions and
2. technical and organisational mechanisms that make it simple to understand how to interact with other teams (i.e. loosely coupled).

Designing a loosely coupled organisation is not trivial, especially when the urge to get that overview, that top-dow control, is so strong. However, if somebody pushes a change to a repository, the right documentation is updated, and the right people are notified, and they know how to change and update their own code, then you are onto something!

The key challenge is that the urge and the ways to implement top-down control are generic and well-known, while the path to de-coupled organisations is always specific to the organisation and requires careful and step-wise implementations that are tested and continuously improved. This is why the three deadly sins are so connected: the people you hire will determine whether you are able to scale through de-coupling or top-down mechanisms.