Organizations are Organisms

As a company scales, everything seems to break. That goes for both startups and companies with thousands of employees. Adapting to this is one of the hardest problems in business, and it is a topic of many management books (some books that I’ve read on the topic...I highly recommend Jim Collins). But that’s what separates the great from the good, and the good from the dead ????. As you scale, so much can go wrong:

• Projects are executed more slowly
• Animosity builds among teams vying for ownership
• Aligning bigger teams towards one strategic direction becomes harder
• You see “sub” cultures (and toxic cultures) build among teams
• A lack of accountability grows as it isn’t explicitly defined
• Tasks do not get done with so many stakeholders and cooks in the kitchen
• New managers struggle in their roles
• Your product begins to fall apart (tech debt, shipping speed)
• The list goes on...

I have seen these challenges manifest themselves at a small scale when I was on the exec team at Breeze/Canvas, and I have seen similar challenges at a much larger scale at InVision (though, at a more junior level).

Organizations are organisms: they are hard to control and they take on minds of their own. How do you control an organism? You can’t. But you CAN set up guardrails and encode rules that help guide it down the right path. It is like biological evolution or writing a program: the rules you write will guide the entity down a path, so write those rules effectively and you can give your company or team a shot at success.

What are those rules?

1. Your vision & strategy
2. Your values
3. Your goals (which lead to org alignment, empowerment, and accountability)

In this article, I’ll run through the key (rather abstract) ideas that are essential to put into place to set your organism/organization down the right path as it starts to scale.

Principle #1: Your company vision and strategy must be well articulated and evangelized. Become a broken record.

It is obvious that your company should have a defined mission/vision and strategy, but it may be surprising to know that many organizations don’t do this well. I know this first hand, through speaking with executive coaches, and by talking to friends and colleagues at other companies.

It is the job of the founder(s) and executive team to translate their vision into an articulated strategy. At a SUPER early stage, this is tough – you might not really know your true vision or strategy. Or, maybe you have a vision, but you’re still figuring out how to get there. Assuming you are not in “figure it out” mode, it is essential that you write down your company’s vision for the future and how your business strategy plays into that vision. 

Here is a bad example I just made up for Canvas (offering a flexible alternative to car ownership):

Vision: The way people are living and working is changing: people are moving to cities, working more flexibly, and are not settling down as early as they once did. Traditional forms of car ownership are not adapting to the changing needs of these consumers, and we seek to create a more flexible form of “car ownership” that adapts to the changing economy. 

Strategy: Create a more flexible, digitally native, and “no frills” alternative to car ownership that remains cost effective vs. traditional car ownership.

Note: Your vision shouldn’t change, and your strategy shouldn’t change often (i.e. every year at the absolute most). Revisit your strategy every six months to one year to make sure you are on the right track, and do this more frequently as a young company.

Writing this down allows you to get the company on the same page. “We believe this to be true, we are going this direction, and this is our strategy in how we get there.”

In this example above, employees now understand our view of the world and why what we are building matters (which should motivate them). They also know we are going to achieve this by creating something more flexible, digitally native, no frills, and cost effective. That should help them make decisions about goals, projects, and what is important (“we shouldn’t make that decision because it will make our service far less flexible”).

Writing this down is only half of the story. As a leader, you must DRILL THIS into everyone’s minds. Become a broken record. You may think you have articulated this more than enough times – maybe it is said at the beginning of every All Hands, maybe it’s included in employee onboarding, maybe you have it plastered on the walls – no, that’s not enough. KEEP TELLING PEOPLE. Similar to values (described later), infusing this into the DNA of your organization is a monumental task and it only becomes more difficult as you grow. How do you get employee #500 to believe in this vision? IMO this should be a good portion of the CEO’s job – for example, CEO’s can do a great job articulating this externally so that current and prospective employees have it drilled into their minds from different angles. It doesn’t need to be the full vision every time, either...maybe sometimes you just say “we are transforming car ownership”. Play around with it.

Why is this important? It helps your employees understand whether or not their projects or goals are in line with the company’s overall strategy, and it gets people thinking about things that could impact the company towards this goal (you are not the keeper of all of the best ideas). 

Principle #2: Values are the root cause of everything

Here is a hot take of mine: values are the root cause of almost everything good and bad within a company. 

Note: when talking about values, I mean company/employee values (e.g. “Candor with compassion”).

Why do I think values are the root cause of everything? How employees interact with one another, how people make decisions, what your team focuses on, how to balance customer vs. company needs...so many things are determined by the values by which your company abides.

“Don’t be evil” at Google is an example that many people have heard. This value alone helps employees ask themselves a simple question when making a decision about a feature, a marketing campaign, an interaction with a colleague, etc. – “Am I being evil/will this make others think that we’re being evil? Is this in the customer’s best interest?”

The objective of an agreed upon set of values is to give EVERYONE in the company a framework to make the right decisions. If you don’t instill your employees with a set of agreed-upon values, everyone will be operating with their OWN set of values, which may or may not jive with your company’s. As you get bigger, this only becomes more dangerous and challenging.

At Breeze, we failed pretty hard here. Not only did we not believe in our values, but we also did not invest in evangelizing them. Just like your company vision and strategy, your values must be equally integrated into your employees’ day-to-day. This led to many internal issues which ranged from lack of trust between teams to decisions being made that benefited the company but ruined the customer experience.

But when crafting and disseminating your values, many things can go wrong:

• Too many values (people cannot remember them or what they stand for)
• You do not believe in the values and/or they are not your true self (so, your leaders do not embody those values)
• You half ass creating values in the first place (employees can tell)
• Values are developed, they’re distributed, and then never followed up on again → evangelism failure

Avoid these issues, and really, REALLY invest in building your values into your day-to-day. At InVision, we have value cards that people hold up in meetings when someone embodies a value; we have custom Slack emojis; we have awards; people bring it up at will in the #team channel; the list goes on – values must be referenced as much as humanly possible.

A few best practices when it comes to values:

• No more than 6 values – we violated that rule in the image above ??
• Make these aspirational but realistic – they should represent what you value as people and what you strive to become as a company
• Wordsmithing definitely matters – make them short yet meaningful

And to reiterate my earlier point, embed these into EVERYONE’S day-to-day as much as possible. Whatever you do, it is not enough. You must embody these, explicitly bring them up, and interweave them into the fabric of your company’s operations (e.g. reviews).

If you want to learn more about this subject, I highly recommend listening to Drew Kugler who is an expert in this field. He’s also a great executive coach.

Principle #3: Translate your strategy into goals, and build alignment and ownership via those goals

After building a great vision, strategy, and series of values for your company, translating that into an execution plan is the next big (tough) step. How do you take your strategy and turn that into an actionable plan? Why goals, of course.

Goals shouldn’t be half assed. Establishing great goals that tie directly to your company’s strategy and objectives is HARD work. The leadership team should spend a good amount of their time thinking about goals for their respective organizations and how those trickle down into sub-teams’ goals and individual goals. 

When you establish good goals, a few things happen:

1. Hitting those goals will result in your company successfully executing its strategy
2. Employees feel empowered to make an impact and understand how they can do that
3. Swim lanes are drawn and teams know where to focus
4. You unearth organizational flaws
5. You set employees down the right path to make the right decisions in a vacuum

Fred Wilson summed up a key issue that surfaces when you do not set employees down the right path when he said: 

“My partner Brad likes to ask about the distinction between doing things right and doing the right thing. His observation, which I totally agree with, is that many people and companies do things right but don’t do the right thing.”

This is the last layer in getting your team to make the right decisions. Again, this is a giant organism with dozens or thousands of minds making an innumerous number of decisions every day that impact the success or failure of your company. You can’t control that. You can only control the guardrails and articulating your strategy into an actionable format (into goals) is how you build those guardrails.

The goal setting process can take on many forms (OKRs, quarterly vs. annually, SMART…), but do what works for your company. If you are early and still figuring things out, don’t plan too far ahead, but DO NOT leave your team in limbo – give them something to work with.

During this process you may uncover various challenges. For example, maybe there are overlapping responsibilities or a lack of ownership over an area or metric. This helps you form your org and make strategic decisions about how to evolve the company, teams, and responsibilities. So, by taking your strategy and translating it into a set of SMART goals, you also empower your leaders to make long-term organizational decisions that will make the company execute the right projects better and faster.

The way I think about org structures? Try to eliminate as much friction as possible, and friction can take the form of:

1. Unnecessary processes
2. Not aligning team resources to the metrics they seek to impact

If you have team members responsible for key projects or resources that impact a metric but not responsible for that metric, you have a problem. I’ll save deeper thoughts there for another post.

If you are looking for more reading on how to set goals, here are some articles I recommend:

• https://firstround.com/review/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite/
• https://productcoalition.com/5-ways-your-company-may-be-misusing-okrs-3d5cdb22aa4e 

(Bonus) Principle #4: Don’t forget to invest in your culture

When you’re small, the company culture reflects the founders’ personalities. As you grow, that culture evolves, and it can take on a mind of its own. Do work early on to define the culture you want to establish, and try to make it as inclusive as you can. Otherwise, the culture will develop into something outside of your control. Some things that can happen when you don’t invest enough in culture:

• Micro cultures evolve (not bad when you’re a BIG company, but definitely bad if you’re <100 employees)
• Toxic cultures evolve: look to Uber as an example
• “Bro” culture develops and fosters exclusivity; new employees don’t feel welcome and leave
• New and existing employees stop enjoying their job (and are less productive)

At Canvas, we had a leadership offsite where we tried to define the culture we wanted to build. It was directly intertwined with our company values, but it also represented other things like how hard we thought people should work, where we thought we should land on the pay scale relative to the market, and how we thought about company parties/outings.

The culture you build should also represent your personality to some degree – try to be the best version of yourself here, but don’t lie to yourself. If you try to build a culture that is the opposite of your founders’ true selves, it will be very difficult to pull off.

Balance your investment depending on your size

Everything in this article needs to be thought of in context. You could spend hundreds of hours on this stuff, but is it the most valuable use of your time? At an early stage, probably not.

Balance your investment here but make ENOUGH of an investment given your company’s current situation. Here are some super rough guidelines to help you think through things...take them with a grain of salt.

If you are Series A/B: 

• Write a few one-pagers in Google Docs for your vision, strategy, and values. Revisit your strategy half yearly or yearly.
• At a minimum, evangelize your vision, strategy, and values in Slack, all hands, employee reviews, and onboarding.
• Plan higher-level company goals for 6 month periods, and have teams set goals quarterly or every 6 months. Your goal setting process should not take more than 2 (MAX 3) weeks to complete.

Series C & beyond:

• You can keep your vision, strategy, and values in Google Docs, but you should have other areas where you make this visible (company walls, value cards, internal videos, etc.).
• Your CEO should be spending a large % of time engaging with employees and journalists/reporters/investors evangelizing your vision and strategy.
• Company values should be interwoven with employee reviews and should impact hiring, firing, promotion, and compensation adjustments.
• Robust systems for annual planning should be in place (or beginning to get into place), and you should have company goals established for the next 12 months. Teams should set goals at least every 6 months, and the process should be initiated at least 1 month before quarter-end.

Wrapping up

Outside of having a bad product (or a good product in a bad market), I believe that establishing the right system for developing and revisiting your vision, strategy, values, and goals is what makes or breaks nearly every company. If something goes wrong – a wrong investment was made, a decision was not well thought out, the wrong metrics were being monitored, customer satisfaction dropped – I bet if you break it down from a first principles approach, the root cause will be a failure in one of these 4 things. Or, you simply didn’t execute because you were incompetent (which I doubt is the case).

So, take the time to invest in this stuff – it is not just fluff, or else you may wake up one day and not recognize the company you were trying to build.