Step 3: Balancing heroes with systems

balancing-heros-with-systems-220x207As founder-led companies grow, the founding team eventually needs to bring some order to the chaos—the unsustainable hours, the lack of control, the burn-out, the scarcity of systems, the inconsistencies, etc. The start-up needs to start to grow up.

When we began talking about the Journey North with founding teams, we never expected the question of “how do we professionalize?” to be such an emotive and urgent issue. We should have. How a growing company navigates this challenge can determine whether it continues to move north—retaining its sense of insurgency, its owner mindset, and its obsession with the front line and customers—or whether it starts to drift off course, becoming slower, more predictable and, ultimately, less competitive.

In our DM100 meetings, we considered a pair of related questions about creating the right balance:

  • How do you move from the chaos and heroics of the early founding period to becoming a more professional, balanced company without destroying the culture of the start-up?
  • How do you bring in the right systems, and the professionals required to run them, without eroding the company’s most precious asset relative to larger incumbents—its speed?

The answer? We learned that the professionalization agenda must be guided by the strategic agenda and not become an end in itself. This has led to six lessons around Step 3 in our Journey North: balancing heroes with systems. The lessons are:

  1. Start a Monday meeting. The idea is simple (and let’s be clear—the Monday meeting can be any day of the week). The leadership team needs to meet once a week to do whatever it takes to resolve issues that are clogging up the business. The meeting serves two purposes: It pulls leaders out of their silos to make decisions together, signaling to all that success equates with “gang-tackling” problems. It also tells the broader organization that they only have four days each week to blame leadership for slow decision making, since you’ve promised to resolve issues at the weekly meeting. Our founders talk a lot about accelerating the cadence of conflict resolution and encouraging gang-tackling. The Monday meeting is an effective means for achieving both objectives.
  2. Embrace conflict. Related to the Monday meeting is the lesson to embrace conflict. A key goal in organizational design is to create conflict. Resolving these conflicts is an essential part of serving the customer. For example, you want part of the organization to worry about tailoring and customizing solutions for local customers. And you want another part of the organization to be working on standardized customer solutions to pass on the benefits of scale. The conflict between the two is healthy so long as it’s resolved quickly and to the customer’s benefit.Sadly, as companies grow and become more complex, this sort of conflict comes to be viewed as a bad thing—perhaps, the thinking goes, it shows that a meeting wasn’t set up right, or individuals behaved badly, or the organization wasn’t operating seamlessly. Poppycock. Conflict among leaders is an essential part of making better decisions. If you are in charge of the Indian market, then for goodness’ sake fight on behalf of the Indian customer. If your company’s global solutions aren’t right, demand they be tailored. If you’re not fighting for these customers, who is? The head of supply chain, meanwhile, will likely fight back by seeking the benefits of standardization and deflecting complaints from markets like India that one size doesn’t fit all. Ultimately, the team has to come together to make the decision. But a meeting without such conflicts is a meeting where tough decisions have not been aired and customers have not been properly represented.
  3. Embrace chaos. Conflict, meet Ms. Chaos. You are bound to get along. As we’ve said, the major objective of professionalizing is to bring order to the chaos of insurgency. But that doesn’t mean a certain degree of chaos somehow demonstrates a lack of leadership or structure. Because the market isn’t predictable and your customers and competitors don’t tend to follow your preapproved internal meeting agenda, there are three aspects of chaos that are important to preserve even as you add systems and processes: You need the ability to redeploy resources quickly across organizational lines. You need the ability to ignore the clock when important issues arise and flex your agenda accordingly. And you need the ability to regularly throw out the org charts and “direct connect” with the heroes of the business.The first point is this: As companies grow they suffer from trapped resources. Managers are given fixed “head count,” and over time it becomes very difficult to reassign people based on changing priorities. But maintaining an insurgent mindset means having the flexibility to throw people against the latest customer crisis immediately (we even looked in some detail at how Bain does this).The second point is about time management. In this, we’ve learned to talk about the Greek gods Chronos and Kairos. Chronos is the god of sequential moments, the god of time. A company governed by Chronos stops a meeting about customer complaints when the second hand signals the end of the hour, so they can move on to the next agenda item. Kairos is the god of supreme moments, those that are filled with possibility, the moments that define us. A company run by Kairos will never keep to an agenda but will always seek the supreme experience from each day. We suggest balancing the two. For 80% of the time, let Chronos reign. But for 20% of the time, listen to a different master—choose moments of leadership to signal to your organization that this one thing matters above all else. Intentionally overwhelm the problem with 10 times the talent and resources you give to something less important.On the final point, we had at least 10 discussions with founders who had a complaint that went roughly like this: “Our company was built upon the heroics of 26-year-olds—and yet I no longer see people of that age.” The leaders complain that they are handcuffed by organizational layers and unable to connect directly to the frontline employees and new recruits who are doing heroic things. The lesson? Risk a bit of chaos, leave your desk and get back to the front lines, connecting directly with the future heroes. They haven’t gone away, but the organization conspires to keep them from you.
  4. Translate the strategy into talent and systems tables. So far, we’ve been talking about strategies to preserve flexibility, spontaneity and responsiveness even as a growing company adds systems, processes and new professionals to run them. But it is also vital to ensure that every decision to build systems and hire professionals advances the strategy and the organization’s ability to deliver it. If professionalization simply becomes an end in itself, it will inevitably hobble you over time.To this end we co-created with our DM100 members two tools we call the talent table and the systems and capabilities table. The talent table helps focus your talent-building agenda on “swing values.” By this we mean you need to translate your strategy into the most important initiatives in terms of creating value or avoiding value destruction (dodging a price war can be as important as launching a new innovation). Once you’ve determined your top initiatives, you can then define precisely the mission-critical experience you are seeking—what does each person need to do and, therefore, what real experience am I looking for? If you are an insurgent company in need of a sales director, for instance, you most likely want one who has built a salesforce from scratch rather than one who has managed an existing system. The systems table does the same thing for capability building. We learned that after you have translated your strategy into “non-negotiables”—the essential frontline routines and behaviors required to deliver strategy—you then have to work with your teams to define the capabilities and systems you’ll need to build to support those non-negotiables. This ensures that the systems you build enhance the delivery of strategy instead of slowing it down.We’ve found that using these two tables will produce a very long, multiyear “professionalization agenda” that is linked directly to your strategy. Having established this agenda, you must stop everything else you are doing in terms of recruiting talent or building capabilities. If it hasn’t emerged as a priority through these two tables, you simply don’t have the time to work on it.
  5. Overwhelm recruiting and integration. We learned that the founder and the original team need to own recruiting and integration. It can’t be handed off to a third party or a newly hired professional. The best analogy is the science of aging: Aging and death are ultimately the result of increasing mistakes. The cells get worse and worse at the job of replicating the core DNA and the body succumbs to the accumulated mistakes. So, too, with companies. When the leadership team abdicates responsibility for the selection and integration of talent, the company’s original DNA gradually erodes as outside recruits come in and try their best to guess the original sequence. In this context, we described five ways to promote eternal youth, all focused on how the original team recruits and brings in the next generation of leaders. We also singled out one company in particular— China’s Yonghui Superstores—that has done an outstanding job of bringing in the professionals. Along the way, we’ve had detailed discussions about how to match your recruiting strategy to the personality of and role played by the founders.
  6. Deal with leadership problems, no matter how painful, as fast as you can. Lastly, we learned that all the pre-work in the world won’t save you from two potential problems: The founder fails to evolve as the company grows, or you make serious mistakes in bringing in professionals. From our early work on the Founder’s MentalitySM, we’ve discovered that sometimes founders themselves become part of the problem—they are not scalable. We also have listened to long, sad stories about failed recruiting. Typically, bad recruits fall into buckets that are implied by the lessons above: They aren’t team players (they’ve forgotten the art of gang-tackling); they aren’t comfortable with chaos and conflict; or they were recruited independently of the strategy and find themselves superfluous to requirements. Or they were great recruits but the founding team failed to integrate them properly. At some point, despite all the Monday meetings in the world, the team becomes dysfunctional. The lesson: You have to deal with these issues far sooner than you want to. That’s easy to say, and incredibly hard to do. But the reason it is essential is that bad leaders will destroy the fabric of the culture and tear the nobility from the insurgent mission.

So we’ve completed the two major organizational design issues (scaling for speed and balancing heroes and systems). Next, we’ll tackle the fourth step in the Journey North—how you can start building learning systems from day one.

Learn more about The Journey North and its steps:

This entry was posted in The Journey North by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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