Growing from a small team to a larger one poses several challenges for an organization. Young companies are able to change and adapt to the environment quickly as opportunities or threats arise. As companies mature, many lose this agility and ability to be flexible. This raises a key question for a small organization as it evolves into a larger one: How can we maintain the ability to work as a startup when faced with a bigger and more complex org chart?
In the beginning, when the team is small, everyone understands the direction of the company and even if they are in doubt, the founder(s) is rarely more than a few meters away for any questions. This leads to everyone having an intrinsic understanding of the company and hence they make decisions aligned with this understanding. At some stage, the organization hits the inflection point and some teams start making decisions that seem mysterious. Where did this change come from?
As the organization grows, a more layered organizational structure is required – which results in reduced founder face time and decreases this intrinsic understanding of the direction. Thus, it becomes increasingly difficult to keep everyone aligned with the direction of the company. The resulting misalignment leads to suboptimal decisions, which raises the requirement for more processes and more structure around decision-making.
A common way to enforce alignment in decision-making when delegating is by implementing processes, which add transparency and increase control over key decisions.
While processes and structures help ensure that everyone is running in the same direction, they do per definition limit the flexibility of each team. Given how valuable flexibility and agility is, alignment through processes and structures alone comes at a high cost.
Biased from having been part of an organization from the beginning, I myself have experienced how processes may seem like the obvious answer. After all, what better way to ensure that people have a framework that guides them to make the right decisions?
What I’ve learned since then is that while some degree of process, structure, and control is necessary, they are rarely the full solution.
Despite the potential benefits, every process or control system comes with at least three potential drawbacks:
- To be effective, processes of control must make simplifying assumptions along the way. It would be impossible (and impractical) to define all the things a team shouldn’t be able to make decisions on, and as such, a process is never perfect.
- The process of documenting decisions adds extra workload to the team.
- Depending on the level of detail, the documentation may remove some of the feeling of ownership for the team.
As an entrepreneur, when you become aware of the need for alignment, it’s important to remember that while processes and control will align people’s actions, they won’t necessarily align the beliefs and the mindsets. Without strong alignment on how the company should execute its strategy and achieve its goals, bad decisions will inevitably occur as the company grows. Not even the most well-engineered process will be able to cater for all scenarios.
The only way to truly prepare for all eventualities is to ensure that every team member understands where the company is heading, how the company will get there, and why this is the most important thing for the company. There is no long-term substitute for this understanding. Only effective communication around the direction of the company – its goals, its strategy, and its values – will aid that.
Getting the organization aligned with the founder’s vision for the company takes a lot of effort. The direction may seem obvious for the founder and it may – deceptively – seem like it has always been that clear. But early on in the company’s lifetime, it rarely is. It is therefore easy to underestimate the amount of time it has taken to arrive at the current strategy and direction.
Similarly, it takes time for the organization to get there. An intellectual understanding of why the strategy is right may come after a single presentation or conversation, but that is not enough. Explaining it once won’t get it into the fabric of everyone’s skin. It’s not a matter of making people aware of the strategy and direction intellectually, but to get the organization to live it day to day.
As a founder, I have made the false assumption that the fiftieth employee was just as aligned as the first one around what we were trying to achieve. I have experienced first-hand how misalignment on strategy and goals lead to bad decision-making, but also how focusing on explaining the aim of the company helps empower leaders to make the right decisions for the company.
This doesn’t mean to say that you won’t need processes and some degree of control as you grow the business. In the end, processes can be an effective way to make decision-making more efficient. However, don’t rely on them to ensure alignment in your organization’s beliefs. There is no substitute for a deep understanding of your direction.