Avoiding the 6 Classic Ways to Crash Your Company

Inc Magazine has a great article on the speed traps for managing fast growth. This then begs the question of what do you do about it? Taking the 6 scenarios they talk about, here’s how a product mindset can help address them.

1. Your Business Outgrows Its Staff

Scenario: The people who got you to $5 million aren’t the ones to get you to $50 million.

A few years back I was working for a consulting company where they had a reverse takeover with a larger software company. The leaders of this business were good a software consulting. They thought they could run the larger business just in the same way as they had around the kitchen table with best friends in the previous leadership. It failed spectacularly, and took about 3 years to turn around.

They couldn’t understand why consultants charged premium rates for PowerPoints versus code, and when an IT advisory project didn’t suggest their team to implement, they felt that they weren’t supporting winning the work. It took 2 years for the message to come across that IT advisory work got to more senior stakeholders, that this pre-qualified winning opportunities, and found new ones.

What the combined business really needed when it merged was:

  • Review of their solution or product portfolio,
  • Align that to both the business sales process, and
  • Align the product set to client’s value-chain, and lastly
  • Decide the right skillset to do this review.

Too often organisations put the technology development person as the chief product officer (or not even have them) and that role stays as the organisation grows and the need for product maturity increases. Considering including, even a part-time, product director helps see the bigger picture, the commercial picture, and alignment of multiple functions to deliver the product portfolio, rather than just seeing it as a technology problem.

2. You Wait Too Long to Hire

Scenario: Demand is surging. Where are the employees to handle it?

Small businesses hiring can be a real challenge. You cannot afford ‘bad hires’. For one client they had recruited a new business development manager. He came from a different industry, but struggled to get things to work. It all came down to core skills – listening to the customer, matching that with business needs, and being clear and succinct in the process. On the colour works personality profile he was more yellow – easty going and enjoying the conversation. It meant we didn’t close deals and the proposals were not crisp enough. It cost us 6 months of sales, a huge amount of senior leadership time with an improvement plan, and some tough decisions. We found that an enthusiastic, constantly learning consultant was more effective.

The second elements is not to believe that you can only do this by hiring. There are a number of recruitment models out there now – portfolio executives for a start. These are part time leaders who are operational, rather than a consultant, and you get decades of experience at the fraction of the price of a full time individual. The second is to look at the return to work mum, who might well give you 5 days of work but outside the normal hours, or in core hours of 10am – 3pm. In a similar vein having ad-hoc support outside your timezone can also be effective. One client has a designer in New Zealand, so they can turn around graphics overnight.

Whatever option you take, there is a learning curve – and that’s why it is important to use multiple options to build the staff up AND make sure you are not reliant on any single person – because they might leave.

3. Your Business Lacks the Right (Sized) Systems

Scenario: Eventually, gut instincts won’t cut it.

As you grow, communications lines get longer – and the risk of Chinese whispers sets in. Additionally, what was in someone’s head become more than they can handle, or they become a bottleneck, and working with ad-hoc spreadsheets becomes cumbersome. In fact as the business grows, the team will end up replicating products that are in the market for timesheets, HR, projects etc in their own ad-hoc tools. Staff time is often thought of as free-time so there is a huge hidden cost for the development and management of these tools.

It’s worth thinking if there are tools in the market that can reduce the admin of the ad-hoc tools (but at the right scale that they don’t add bureaucracy). One of my mantras is that any management tool should be available any place any time – so you can get the information you need at 9am or 9pm and not just in meetings. Too often I see small businesses working of duplicated private reference documents so you are dependent on the person at the meeting sharing. In fact, the least efficient was where one company had a meeting where one person verbally read through their status of team members, for the other person to type it into their report. They thought this was a productive meeting – but actually 90% of the call was a dictation session, rather than decision making.

In a product space – its worth making sure the product roadmap, product backlog, and status is widely visible, and develop the reporting tools to check the impact of new features on customer usage, satisfaction and revenue. Without clear systems it’s hard to be able to make decisions on profitability, cashflow and trajectory.

4. You Run Out of Money

Scenario: Cash flow is always a concern–no matter how much cash you have.

When looking at your product set, this is where the product portfolio and product roadmap come to the fore. What can you do to generate income whilst investing in other areas. How can the product be stepping stones to the perfect product? How do you design your revenue model to be resilient against delays in product delivery?

Too often I see technical roadmaps that might be agile to build but are still not connected to the commercial model. In the technical world, to build and discard seems wasteful, but in a commercial mindset, it might be better to build some throw away elements if that brings revenue before the major benefits are built. For one client they developed a 3 year plan of migrating their banking systems from the mainframe to a modern platform, but all the benefits arrived in year 3. When we then looked at the commercial outlook and business predictions, we could see that they were likely to merge or take over other companies in this 3 year window which could make their plans out of date. It was three years to ‘minimise’ costs, but revamping it to benefits every 3-6 months, the overall cost was higher, but the ability to bring income in from year 2 meant those extra costs were funded by income.

A well designed product roadmap aligned to a commercial model, will help you balance investment and revenue.

5. Matching company size with demand

Scenario: When people want what you’re selling, you had better be able to provide it.

COVID showed the challenge when there are step changes in demand, and it is difficult to have the right size business for the demand.

One company I’ve worked with struggles with growth because it won’t recruit until it has a clear backlog of work, but won’t sell because it doesn’t have the staff to deliver. Thus it is in a bind – it won’t grow unless it breaks this.

On the other hand the risk of waiting for the work to arrive before recruiting means that you are under immense pressure when the work arrives, and getting the right person fast is a huge compromise. Firstly you may recruit a sub-optimal person, and they will take time to get good at their job, so the customer service drops.

How do you break that bind. Some consulting firms, build up a cash buffer, that allows them to recruit before demand, so that staff are ready for when the new work arrives. Others keep their eye out on the market at all times, with the attitude that a good employee will create demand, as customers want more of them, when they arrive.

Personally I subscribe to the attitude of recruit the right person and they will create demand.

6. The Problem Is You

Scenario: As your company grows, you need to grow with it.

Many organisations end up ‘re-platforming’ their technology as they realise that the architecture won’t scale to the new size of business, but rarely think about leadership, and management style also needs to change. As Mashall Goldsmith put it in his booked title “What got you here, won’t get you there”.

At one client we had a great CEO. He was desperate to grow the business, but struggled to delegate. He was very forgiving about his loyal staff – ‘I can’t give him the report to do, because he doesn’t like writing reports’. But this created a culture where the team did what they liked and the CEO filled all the gaps, working 14 hours a day to do so.

For him to grow the business, he had to let go. Had to learn directing skills rather than doing skills, so that the team work doing the work and he was the coach, rather than the team was the spectators whilst he did the running around.

So if you are finding challenges in growth, it might be time to look at the skill set of the team, train them at the new level, and your style of recruitment – are you recruiting for the future, or recruiting new people with the past skills.

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