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Avoiding Cracks in the Foundation

In the wake of success can be the seeds of failure

We all know the stats on the low success rate of startups. It’s hard to take an innovative idea and bring it to market. Even if you can do that, we believe the next step is even harder, and even more painful if you fail. That next step is the transition from the rocket ship startup phase into a sustainable enterprise. One that can carry forward success into long term prosperity.

Many companies, especially start ups, succeed based on their ability to quickly make critical strategic decisions. Whether it's identifying a niche market, differentiating from competitors, or keeping pace with a rapidly changing business context, companies need to move quickly and solve complex challenges in order to survive today’s world. That strategic insight is essential for an organization to get a foothold in a market and build loyalty among their customers.

The rub is that the skills needed to build a great product / service are necessary, but insufficient for sustained success. Many companies with early market victory stall out as their success brings growth and complexity that early innovators are ill-equipped to navigate. This is not a critique of the leaders of breakthrough innovation - in many ways it is a testament to their strengths. The strengths that make creators successful are rarely paired with those needed to build the organizational scaffolding that enables sustained success.

The result can be a lack of interest and focus on the foundational pilings needed for long term success. Those foundations simply feel less urgent, and therefore get less attention. Especially when an early team is small and self-managing. Consequently, seemingly small cracks or underdeveloped areas in the organization, over time, can magnify and calcify to the point where they become seemingly intractable issues that limit long term success. Examples of this abound in early stage companies making the transition from ~50-100 employees into larger organizations. Those who’ve walked the halls of companies at this size have seen the telltale signs:

  • Inflated VP titles for sharp technical experts who don’t know how to manage teams or functional units

  • A leadership team whose history and relationships trump accountable performance

  • A cacophony of workarounds and processes that hamper agility and efficiency and make onboarding (customers and employees) a bespoke time consuming effort

  • Emerging culture rifts between the ‘old timers’ and the ‘new folks’

  • Cross-functional friction as young leaders hold onto autonomy and control that made sense in the the startup phase, but don’t fit with the needed enterprise mindset

  • Bottlenecked decision-making as all decisions have to pass through a single CEO/founder OR an ever-growing committee of voices

The upshot is that the leadership that drives early innovation needs to evolve, just at the time when success seems rampant. At risk of wearing out a great Einstein quote, one can't solve problems by using the same kind of thinking that created them.

That can feel a bit overwhelming to early-stage executives, as their success is based on moving fast, trusting their gut, and being able to more or less personally oversee all critical operations. To pivot to a focus on a scalable operating model, organization structure, culture, etc. can feel at times tedious and worse, frivolous. It is tough to switch from driving actions and creating immediate wins, to building structures and processes focused on collaboration, coordination and consistency. AND, that is what is required for sustained success.

In our view, at Volition Partners, this really is hard work, but HOW one does it makes all the difference. We believe that the solution to making the leap from scrappy startup to successful enterprise is to draw a plumb line from strategy through organizational operating model into culture. Meaning, don’t try and pretend to be a big company and adopt practices that are ‘best in class’ for others. That rarely works. Instead, we believe you should build on the DNA that enabled the early success and thread that throughout your design for the future.

How do you do that? An organizational structure and operating model should be an extension of your strategy. In looking at your strategy, you can step back and identify a set of organizational design principles - those capabilities that must inherently be enabled. Here are some examples from a recent client that was focused on hyper-growth through user intimacy/ engagement:

  • Be Customer Centric – make it easier to engage meaningfully with users and improve their experience by organizing our cross-functional activities and our portfolio of assets and tools around our customer groups

  • Diversify decision-making – empower team members by locating leadership and decision making deeper in the organization, closer to the customer vs. at executive level (trust our teams)

  • Build to Scale - create all structures and processes such that they could functionally accommodate 10x increases in size and scope (including acquisitions) without multiplying complexity.

Using those principles as a lens, a leader can scan an organization to see what fits and what doesn’t. Systems and processes can be tailored to work in line with the strategic DNA of the company. In our years of experience, we believe successful companies are those who don’t trade-off strategy for culture or vice versa. They find the plumb line that connects them.

We’ve often found that even experienced leaders want to import a solution from past experience vs. craft the unique one that is tailored for current moment. Volition Partners operates with the belief that success lies in the integrity of the interconnected system - and transplanted solutions rarely support that integrity. The glue that holds everything together is clarity of purpose and strategy and the values that go with them - the very DNA that enabled the initial success.

We also believe that it is hard to identify issues and come up with solutions from the inside alone. We create an objective and balanced dialogue, one that helps transcend entrenched positions and over-stressed systems. We’re hands on, working directly with teams to ideate or create solutions together. We’re not afraid to get into the thick of the root cause issues, delivering the difficult but critical feedback needed to to address cracks in an organizations foundations -- before they become fatal.

Curious on how to identify cracks in the foundation within your organization? Try this simple approach, by yourself or with your leadership team:

  1. Create your own organizational design principles:

  2. Reflect on your strategy, vision, purpose, OKRs, etc.

  3. Ask yourself, “what capabilities should our organization be exceptionally good at?” and “what can we afford to outsource?”

  4. Don’t think in terms of technical capabilities, focus on the systemic / organizational ones (like we listed above).

  5. Then look at your biggest organizational pain points (highest friction processes, bottlenecks, dropped balls, etc.) and ask, “do these areas abide by our design principles?” If not, “why not?”

  6. Assess the long term ‘worst case’ scenario of letting these misalignments play out - what is the reason for change?

  7. What would it look like if these areas were designed from scratch in line with the principles above?

We'd love to hear how it goes so please contact us here.


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