My first thought was, of course, “all the lonely people,” the refrain from the Beatles’ “Eleanor Rigby,” and both CEOs looked at me quizzically as I started to hum the song. My second thought was that it is time to write a blog on this topic. […]
In a recent blog post about how companies can increase their metabolic rate, I noted that one of the main cultural differences between insurgent and incumbent companies is how their leaders solve problems: The leaders of insurgent companies tend to break down a problem into actionable sub-elements, while the leaders of a typical incumbent tend to take a problem and make it so big it becomes unsolvable. The net result is that insurgents operate with a bias to action, while incumbents tend to suffer from a bias to inaction. […]
We recently attended an offsite meeting held by the supply-chain partner of a major European retailer. There is nothing wrong with this company; in fact, its performance is enviable. But amid what its leaders call “the insidious creep of complexity,” they are concerned about the company’s ability to sustain its performance year after year. They posed it as a question: How can a highly successful, rapidly growing company maintain the insurgency?
As we often do in these situations, we asked the company’s leadership team to take a Founder’s Mentality® survey. The issues the company faces are fascinating. On the one hand, its insurgent culture is strong—all leaders knew the company’s insurgent mission, its and the critical capabilities that would lead to success. On the other, the leadership team felt the company was at an inflection point. As the head of one business unit noted, “I joined this company because it was a rebel, full of innovation, full of people doing the right thing for our customers. It was a game changer, a group of entrepreneurs breaking the industry rules and trying to transform the world.” He added: “But as we grow and as we bring in professionals, I worry that we will start to favor ‘control and compliance’ over doing the right thing with speed and purpose. After all, control is boring.” Another key meeting participant put it this way: “Our people are starting to feel those first signs that getting the job done is like pushing clouds uphill.” […]
I know … you’re probably thinking I chose the title of this post by throwing a handful of those little word magnets against our fridge. Close, but not quite. Actually, I’m reading Charles Duhigg’s book, The Power of Habit, and he cites a study on willpower that I think applies to our work on the Founder’s Mentality®, particularly regarding the twin dangers of increased complexity and the rise of the “energy vampire.” His story supplies the chocolates and radishes. I supply the energy vampire. […]
One of the most difficult things for a growing company to get right is how to “professionalize” while preserving the Founder’s MentalitySM. We’ve discussed in earlier blog posts two ways to strike the right balance: First, the founder must bring in the right professionals and work hard to integrate them into the insurgent culture. Second, the “professionalization agenda” must be shaped and driven by the company’s strategy, not pursued as an end in itself.
At a Developing Market 100 meeting in Mumbai recently, we co-created a third way for professionals and founders to get this right: The incoming professionals need to be clear about which type of founder they are dealing with and then figure out how best to channel and complement those skills—not conflict with them. […]
When corporate executives talk about creeping bureaucracy they tend to sound like frustrated gardeners battling an infestation of kudzu—cut it back today and it will reappear tomorrow. We recently assembled some of Japan’s most successful corporate leaders in Tokyo for a discussion of the Founder’s Mentality and how companies can maintain it as they grow. All agreed that taming bureaucracy was one of their stiffest challenges.
“When you grow,” said Asahi Group CEO Naoki Izumiya, summing up the group’s common view, “you inevitably become bureaucratic, and it happens for all the familiar reasons while you are still growing.” […]
In meetings with clients over the past few weeks, a common theme has emerged regarding the perils of planning as companies grow. The latest instance was at a meeting in the US in which several founders on a panel were discussing the positives and negatives of being bought by a large corporation. One of them raised an issue I’ll paraphrase this way: “I don’t want this to be quoted back to me when we set this year’s budgets, but one thing has really struck me about joining a corporate parent—I’m being encouraged to think smaller.”
That echoed something I’d heard a few weeks earlier in a conversation with a partner at a private equity firm. “The bigger we get, the more conservative we’ve become,” he said. “It is now viewed as a good thing to hit the very conservative investment thesis formed at the time we did the original deal. As we grow, it is a lot harder to ‘think big’ and take risks to create a 10X deal.” […]
Any discussion of how companies can “maintain the insurgency” as they grow toward scale will eventually run into a fundamental tension. On the one hand, maintaining an insurgent mindset requires expansiveness—stretching beyond a company’s existing revenue streams and narrow market definition to imagine how the original insurgent mission can be applied in new, disruptive ways. On the other, sustaining profitable growth requires intense focus—a companywide commitment to continuously improve the company’s core business and exploit its full potential.
The solution to this seeming contradiction is for leaders to strike a balance between core focus and an insurgent mission as they debate growth strategies. But it’s important to understand why the tension is a necessary one. […]
We’ve all been there at some point: a long, unfocused corporate meeting where half the people in the room are tapping away at their smartphones. As metric-laden PowerPoint slides slip by one after another your mind drifts to everything else on your plate and, inevitably, to a pair of questions: What are we really doing here, and how much is it costing us?
The truth is, most companies have no idea. […]
As companies seek to grow and achieve scale while maintaining their Founder’s MentalitySM, they face one constant: the tension between building a professional organization and maintaining a company’s entrepreneurial energy.
As we’ve discussed previously in these blog posts, companies can and must thoughtfully add professional management without destroying the founding culture. We’ve talked about the value of “upside-down management” and adding structure without sinking into the quicksand of bureaucracy. None of this, of course, is clear cut. For a fascinating look at the lively debate around the wisdom of replacing founders with outside talent, consider the well-argued, but opposing, viewpoints of Ben Horowitz (on behalf of founders) and Reid Hoffman (in support of professional management). […]