The great strengths exhibited by companies that are successful early on can often become their biggest weakness. The processes and free-form culture of a startup, even the people, often don’t scale as a business grows.
At Vitals, we lived this firsthand. For most of our six-year history, we grew through scrappy ingenuity. And, by many measures, we did quite well. Potential clients were seeking us out. We added offices and hired new staff. We were growing at an eye-popping rate of over 40 percent every year. Investors were knocking on our doors. Opportunity was everywhere.
And yet -- somehow -- we couldn’t scale to meet the demand.
In many ways, we worked the way 7-year-old kids play soccer. Wherever the ball went, we chased it. People didn’t stick to their positions; they simply did what needed to get done. And while that admirable quality helped us through the early days, the accompanying lack of process and structure started hampering our efficiency and burning people out. It was no way to keep growing a business.
So, we had to change. And change is hard. Nearly all of us would rather do things the way we've been doing them, and the way know how to do them. Certainly, that model had worked for us in the past.
What's more, it's understandably difficult to change assumptions that have built your business, and still stay true to your values -- which is why many good companies plateau. They hang on tight to business-as-usual practices, ultimately inhibiting their own growth.
For some companies, that’s actually an okay outcome. But at Vitals, we were hooked on growth and believed we were executing a multi-billion-dollar market opportunity. We didn’t want to end up flattening out at $15 million in revenue. So, after much soul searching, we decided to radically change the following three major aspects of our business.
1. New processes
When we first launched our website, the webmaster would make site changes, as our then-four-person staff looked over his shoulder. As we grew, product features were often prioritized based on small inter-department huddles. But there was too much demand for a thin pipeline, so people walked away from those meetings feeling like winners or losers.
Obviously, we needed more discipline as to process
To fix this, we installed an Agile software development system, as so many tech companies have done. Changes are scored on a variety of yardsticks and then slotted into an upcoming repeatable work cycle, called a sprint. That felt bureaucratic to an entrepreneur like me, but it oiled the communication-and-information exchange among our departments and created a document trail. Not everyone gets what he or she wants to appear on the schedule, but we’ve rationalized the process.
While the addition of new processes can seem onerous and cumbersome at first, it ultimately aligns teams and improves accountability. And, process allows for structured growth.
2. A culture of owners
Culture is an intangible, but very real, part of any business. In the early days, our culture was an outgrowth of the people, all of them owners. Long hours and a commitment to create something new blurred the lines between work and play.
At 10, 50, even 100 people, our colleagues were still on a first-name basis. We met regularly with one other and knew the major projects each department was working on. As a company that builds healthcare transparency tools, the practice of remaining inclusive of one another came naturally.
But, as we edged closer to 200 people, it became harder to forge close bonds between departments. Meetings became insular. People didn’t know who worked just a few cubicles away. Worse, at one point, our product team spent months on a project our engineers couldn’t implement.
We couldn’t afford to silo across department lines -- or create an ambivalent workforce. So we became deliberate about creating a culture of unity and even hired a Chief People Person. We gave every person shares in the company (in some cases, we did so retroactively). We began to hold companywide meetings monthly to share what other private businesses keep confidential: corporate financials and department benchmarks.
We even began to decorate desks with balloons on people's birthdays so everyone could wish those workers well. And we began to plan regular corporate activities like ski trips, bike rides and happy hours to encourage people to get to know one another outside of the four office walls.
These activities have cost money, taken time away from work and required trust. Yet, they’ve fostered a community of peers who work hard, with the organization’s best interest in mind.
3. The right people
It’s important to realize the difference between a start-up staff and seasoned professionals. Like entrepreneurs, start-up folks think creatively. They work with customers on vaguely defined problems and can creatively assemble what’s necessary on a shoestring budget to follow through and deliver.
Seasoned professionals perform horribly in this environment. Accustomed to well-defined products, processes and structure, these professionals quickly grow frustrated at an early-stage company. I know. A few years back, I hired some highly talented corporate execs -- and it ended badly. They were fish out of water. Yet, we needed to make a bigger pond.
It took us some time to structure the company to embrace their expertise. Once we had a great product and market fit, we were ready for the people who knew how to crank up sales and scale growth.
Many of those new managers were brought in from outside, although I would have preferred to promote from within. Problem was, the original team mostly did not have the skills to manage structured growth. In fact, I ultimately replaced myself and hired both a new CEO and COO, people who could scale the business better than a scrappy entrepreneur like me. Not easy, but needed.
Just like bushes that need to be cut back, so they can grow larger, companies sometimes need to be chopped at the knees to scale towards excellence. This year, we’re anticipating a 55 percent growth rate, and will be triple the size we were two years ago. That's way past that revenue plateau I mentioned earlier. But, deep down, we remain inclusive, efficient and smart.
We have, however, reinvented how we work, in order to reach new heights. And that was always the goal.
Related: The Hurdles of Scaling Globally