The more people you add, the slower your business gets. But it doesn't have to be that way. Here's how to keep your start-up spirit alive.
As any company grows, its daily operations get more complex. You have more employees, more customers, and more revenue--all of which are good things--but you're still using the same systems and processes you had in place when you first started.
"It's a cruel irony in business: the more people you add, the slower you get," writes Boris Wertz, founder of Version One Ventures, in a recent post on his firm's blog.
Want to avoid what he calls "scale stagnation"? Read on for his tips on how to avoid operating like a big, slow company.
The two-pizza team rule.
Wertz says he subscribes to Jeff Bezos's "two-pizza" team rule. When Bezos was first building department teams at Amazon he said he made sure to keep them small--to insure nimble agility in decision-making and innovation. Bezos says if you can't feed a team with two pizzas, it's too large. Therefore, a team must be kept to five to seven people.
Invest in management first.
Some of the most important hires you'll make are middle managers, so make those decisions carefully. "An ineffective employee is bad for the company, but the impact of an ineffective manager reaches across the organization, multiplied by the number of people he/she manages," Wertz writes. "For this reason, you need to hire the absolute best people you can get for managerial positions. Invest both money and time in developing their managerial skills, and have a strong employee feedback system in place to make sure you can identify and correct the 'bad apples' right away."
Make decisions, not perfect decisions.
When you're trying to stay numble, indecision is your worst enemy. "Prioritizing speed over perfection can be a very powerful way to keep momentum up as you scale, particularly as you add layer upon layer to the organizations and require multiple signatures to get things done," Wertz writes. "One key message that can apply to any start-up is to never end a meeting without a decision (unless everyone determines that more data is needed to make that decision). If a meeting begins to succumb to groupthink and indecision, you need to ask why we can't make a decision today instead of another day."
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