The way to scale - up

The way to scale – up

“I want to meet all our new joiners as part of their onboarding process; that’s what we used to do since day one”.?That was the request of a CEO from a founding group of a startup that has become a medium-sized, growing company I used to work with.

During my career, I worked for a few companies supporting their journey from start-up to scale-up and throughout their growth phases.

Here, I’ve gathered some ideas of how to make a successful transition, mainly from an organisational change aspect.

A start-up, a scale-up, and a growing company are three different things. It's different, even at the same type of organisation. A start-up is beginning to build the product and secure funding. The organisation is different from the scale-up phase, where the product has already been established and is on the way to accelerating growth, laying foundations of structure and well thought out process. And it changes even more when it becomes an organised company after the scale-up stage.

So how do you cover the gap between a start-up and the growth stage? The strategy, culture (especially the culture), structure, processes, people and technology that helped in the start-up phase often do not work in the growth phase. Usually, the talent and leadership that enable rapid expansion in the early stages of a company may not be enough to continue to drive funding and growth. It is important to remember that the difference between a brilliant idea, a successful start-up and a successful company is big, so you need to know how to manage an innovative tech product, and, at the same time, to manage relationships with employees, managers, investors and various other stakeholders.

The targets have changed – as a start-up, the main target was to raise awareness and sell the idea, and now the target is to make money!

Amongst this target, there is another important one: to manage employees so that they are highly motivated, with positive and meaningful employee experience so that they will be productive, have a clear purpose and are engaged.

The most significant change that founders need to make is to understand that the company has grown and has more employees that need to develop their career paths and expect the company to invest in them.

Those who were used to working on their individual targets and programming on their own have to turn to other things on a strategic level and change that work style.

The transition from phase to phase is the time to challenge the management team to move on to the next stage and meet the new business and leadership demands, going from good to great.

The transition from a start-up to a medium-sized company sometimes happens quickly. Some things were done at the beginning that worked well, and other things were trialled and failed, but in the end, it is crucial that there was learning from every decision.

Here are some things I've learned going through the stages:

The combination of order and chaos

For companies that are in the stages of scale-up and growth, the concept is a combination of order and chaos. The chaos is always there, and it's good that it is; we need the drive and the ability to change and react fast. This was also true in the start-up phase – while we used Agile and Scrum frameworks, for example.

However, there are times when set processes are important for the continuity of the company.

We will see the need for order when we talk about organisational processes and procedures and how we manage our employees.?Therefore, if in the early stage, our senior leader’s types would be?"entrepreneur" and "executionist", in order to grow the company, we will need additional managers types such as "integrator" and “administrator" in order to manage the company. (A model of 4 management styles. )

Entrepreneurs talk

One of the things I noticed that contributes to companies that move from stage to stage is the possibility for the founding team to arrange discussions and consulting groups, such as joint brainstorming sessions, mentoring programs, online courses and participate in start-up conferences. Conferences also allow an increase in networking and mingling, which sometimes even brings "leads" or new deals. It is also possible to host events so that you can start growing your network of contacts and find contacts in the industry, mentors and business contacts.

F-2-F and virtual events are valuable because they offer learning and networking regarding the company's development.

Team discussions can help to initiate SWOT discussion - strengths, weaknesses, threats and opportunities in every stage. When you can identify the strengths as well as the blindness and weaknesses, you can also find ways to improve and grow.

Reality vs desired

Management teams, organisational culture and communication cultures are influenced by geography, language, the type of people hired, etc. A culture that centres around a common vision and core values allows a team with various people to work well together.

We need to ensure that we have a management team with a common organisational culture that shares the same core values and that there is agreement on the division of roles and the main common accountability areas.

Airbnb is a great example of a scale-up company that has created a community around its product. Airbnb, provides a platform for people to rent out their homes or apartments to travellers looking for unique and affordable accommodations.

Airbnb has built a community of hosts and guests who share a passion for travel, adventure, and authentic experiences. The company's community engagement strategies include features that allow hosts and guests to communicate with each other before, during, and after stays and a review system that encourages transparency and accountability.

In addition, Airbnb offers a range of resources, including travel guides and local experiences, that help guests explore new destinations and connect with local cultures. The company also hosts events and experiences that bring together hosts and guests from around the world, fostering a sense of community and belonging among its users.

Through these efforts, Airbnb has scaled up its business and expanded its offerings to include a range of travel-related services, such as tours, activities, and transportation. The company's success demonstrates the importance of building a strong community around a product, particularly in industries like travel, where personal connections and authentic experiences can be key drivers of customer loyalty.

Airbnb has several core values that guide its business operations and community engagement strategies:

Belonging: Airbnb aims to create a sense of belonging among its users, fostering connections between hosts and guests, and promoting inclusivity and diversity.

Hospitality: Airbnb strives to provide a high level of hospitality to its users, emphasising the importance of warmth, generosity, and kindness.

Entrepreneurial Spirit: Airbnb encourages hosts to embrace an entrepreneurial spirit, empowering them to start their own small businesses and share their unique perspectives and experiences with guests.

Impact: Airbnb is committed to positively impacting its communities, promoting responsible and sustainable tourism practices and supporting local businesses and cultural organisations.

Intentional Design: Airbnb emphasises the importance of intentional design, striving to create products and experiences that are intuitive, user-friendly, and aesthetically pleasing.

We can see that Airbnb's values reflect a strong commitment to creating a sense of community, promoting inclusivity and diversity, and positively impacting the world.

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Bottom of Form

From the corporate communication aspect, it is important that immediately after a company defines values, they must be communicated and implemented within the organisation through several channels (these channels are essential throughout all stages of growth as a management tool that also reflects employees’ targets, business update, promotions, changes, etc.):

·?????Simple and fixed templates of messages to employees.

·?????Weekly communication between the managers and their teams as a group and one-on-one.

·?????Monthly or quarterly company meetings with the CEO.

·?????Performance review cycles and progression frameworks.

·?????Awarding behaviors that are aligned with values.

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Structure

The recommended scale-up and growth phase structure defines the strategic focuses and organizational culture and includes all level roles.

This is also where we start planning the future, separating and defining roles. When planning the transition to specific positions and duties, we start thinking about an overall organisational hierarchy.

Initially, it may feel intimidating as many startups tend to make scale-up as "flat" as possible, and hierarchy smells like unnecessary bureaucracy.

Hierarchy makes it possible to start laying down new limits for the new size. Boundaries form the basis for the development of the company.

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Promotions

It is preferable, as much as possible, to promote internal talent and invest in those who are from the start-up stage. This helps to ensure that the company’s atmosphere and culture (originally started) are maintained.

Going forward, it will be better to build departments focusing on professionals with expertise and experience. Some entrepreneurs are excellent CEOs - but sometimes, they are not the best option. Founder and CEO are "different roles"; if It does not work, founders need the courage to accept that the company may need a different type of leadership. It is important to emphasise: there are people in the founding team with managerial and leadership abilities, and there are founders or members of the founding team who are weaker in management but better operationally. Some of them are not suitable for management or need much support so that they can be leaders and support the company through change.

A company that moves from the startup stage to the larger company stage should be brave enough to appoint managers in the growth stage who are suitable for managing people. The damage of appointing inexperienced or ‘bad’ managers could cause a lot of unnecessary challenges.

There is also no guarantee that employees from the startup’s early days will remain in senior positions as the company grows, but they still deserve recognition. It is desirable to officially recognise those who made us who we are and to make them feel valued.

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Roles and duties:

In the startup phase, the company's team looks like a group of people who can "lend a shoulder and a hand" to everything that needs to be done and know a little bit of everything – jack of all trades comes to mind. This dynamic can certainly be beneficial while initiating the business, but it is unlikely to be sustained in the long run.

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Defining the focus and functional roles is important when moving to a medium-sized company. Day-by-day management requires more detailed work that looks different in the growth stages.

In the startup phase, the organisation cannot afford an entire team, so the small team is forced to work in many roles instead of specialising in one focused position. As the startup generates more revenue and brings in new employees, it's time to start moving away from this model. If we want to expand the size, it is required that each person be focused on one role and specialise.

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It will be confusing and unproductive if team members still juggle multiple roles, which will only slow progress. And yet, I noticed that companies in the scale-up stages often rely on a few key employees with more versatile abilities who do a "part and a half role" - half a role in the startup stages and a full role in the scale-up stage.

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Recruitment

The other side of this growth is bringing in new employees.

In today’s competitive job market, one of the easiest ways to find talents is not limiting hiring to geographic location but instead hiring remote workers. Source potential candidates with the right skill sets and knowledge, not by location. If you are increasing the team quickly, hiring a recruiter to find talents may be worthwhile in the early stages. Recruiting key employees and filling the rest of the support team is also important.

Before starting to recruit new employees, it’s important to define onboarding and training processes. What does a new joiner need to know before starting work in the company? First impressions are so important.

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It is possible to create a simple entry model with defined training steps. A buddy is another example of a supporting tool that will help a new joiner to engage and feel part of the company. Of course, there are also accelerated courses in the professional field of the company and leadership, best practices for tools/software - everything you think a new employee needs in order to succeed in the company.

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This does not mean training begins and ends at the onboarding process; many learning activities can allow supporting growth and development throughout an employee’s journey.

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Processes

One of the most attractive things about a startup is the freedom. In the startup phase, there is still freedom to experiment with the product; you can decide what you want to sell and how you want the business to function, and it can be conducted easily without overhead and bureaucracy. No red tape.

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Managing employees has usually been done directly by the founders. However, some things are worth investing in when you start growing from the start-up stage. In the growth stage, when the roles are clearly defined, comes the stage of building the processes. Process mapping drives efficiency and consistency throughout the organisation; employees and managers can check whether the customer and employee recruitment methodology are performed most efficiently. New goals and processes are usually identified during these checks.

As a company grows, it needs to develop advanced employee management procedures and financial analysis systems in order to analyse business performance objectively. These processes should include:

A cross-company process according to performance, metrics, and compensations.

Cross-company evaluation and feedback processes.

Implementing human resource management processes in the company, including screening, recruitment, referencing, onboarding, training, organisational development, welfare, compensation, benefits, employee relations and internal communication.

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Many organisations fear that integrating structure and processes into their businesses will hinder innovation and flexibility. The real challenge is getting the entire organisation to adopt an effective way that balances processes and procedures and maintains flexibility and degrees of freedom that preserves the advantages in the start-up phase.

Finding the right atmosphere and designing a developing process and policy is important while maintaining the freedom to innovate and create.

Companies in start-up mode have two crucial priorities: Creating an innovative and attractive product and acquiring customers. This focus is essential before a startup can consider moving to a more mature company. A more mature company is already busy with the questions of profitability, expanding the market and employee engagement.

Many managers and employees do not think about the consequences of scaling the company when they are in start-up mode. The growing pains that accompany these changes can feel very uncomfortable; discomfort is a natural ritual of growing. Successful companies are those who predict the growing pains and figure out how to manage them successfully.

Leadership development

In my opinion, one of the areas that require development, as quickly as possible, when growing fast is leadership.

Mid management level embodies the main change in the transition to scale-up - these are essentially the "muscles of the new growth" within and from which the founders' DNA and the growth strategy implementation can be spread. The mid-management level is a key factor in the ability of organisations to implement the strategy, as they connect the two levels - senior management, which deals with strategy and the execution level, which deals with the daily routine of doing things. The mid-level managers lead the day-to-day activities, define the atmosphere and implement the company's values.

They need leadership development during growth to provide tools for developing managerial skills. It can be a peer group that runs over time and 1/1 consulting or mentoring processes.

Another significant tool in developing leadership for the middle level is a mentoring process that the executive management can facilitate.

An integrated process of leadership development that included mentoring and a peer group I held in growing companies in the past injected energy and built strong connections and engagement of the middle-level managers with the company's goals and values.

Welfare

Regarding employee welfare, it is recommended to create a plan on areas such as health benefits, parental leave, time off pay and salary increases. Building a company culture that makes employees proud to work in is important. Making and maintaining this engagement will create team spirit and will retain key talents at all levels.

The best of both worlds

One of the things I noticed that characterises companies that make the transition from a startup to a more organised and growing company is a combination of two approaches: Professionalisation, building an orderly structure, some automation and simple work processes on one hand and maintaining grey areas and flexibility on the other. A combination of creativity and construction. The advantage of processes is that they pave the way for standards, practices and principles. This is necessary when a company has reached a certain size. But also need to be able to act agile and reactively. As the company grows, you need to be able to delegate, organise and coordinate. Lots of managerial time goes into managing people and communication.