It's a paradox that confronts every successful company: Growth creates complexity, which then threatens growth. A company's early success is often powered by the monumental contributions of a core team of employees who are willing to do whatever it takes to make customers happy.
But as the company matures from bold disrupter to established power, something's gotta give. That all-for-one, let's-pull-yet-another-all-nighter spirit that landed you your first big contract, and maybe your second and your third, simply can't be sustained.
So you introduce systems, policies, procedures, and rules that you believe (quite rightly) will create the efficiencies needed to support continued growth.
The trouble is, these systems also have the potential to create a stifling corporate bureaucracy, one that may introduce more complexity, attract the kinds of employees who value process over innovation, and drive away the star employees whom some of those policies were meant to help.
That's the view of James Allen, a senior partner with Bain & Company in London, who goes so far as to warn of a "complexity doom loop," in which business complexity begets organizational complexity, which begets process complexity. This in turn creates yet another form of complexity: dissonance within the management team. "Before you know it," Allen says, "a good day at the office is one where you think, 'We're aligned.' People stop talking about acting or doing anything; they're just content to be aligned." Exhaustion sets in, and leaders eventually fail to do the one thing that matters most: deliver a simple plan of action.
The challenge for leaders is to reap the benefits of scale and scope while also retaining what Allen terms a "founder's mentality," which comprises several traits, notably a bias toward action, a long-term vision, an obsession with customers and frontline operations, and an antibureaucratic mindset.
Put another way, it comes down to balancing "the conflict between projects and processes," says Derek Lidow, a professor of entrepreneurship and design at Princeton, and founder of market research firm iSuppli. "People tend to like one or the other, so the leader must keep reiterating how and why both are necessary. Remind the projects people, who may be driving innovation, that the processes you're rolling out won't kill the fun; they'll generate the money to fund more projects."
Allen agrees that it's all about balance, but he cautions that the implementation of systems can take on a life of its own. "As companies move from insurgent to incumbent," he says, "the original culture is often lost." A variety of factors contribute, but one in particular concerns talent management: As you implement more systems, you tend to hire the kinds of people who are comfortable working within, or running, systems. "You jump from a 'time of heroes,' " Allen says, to a culture reshaped by hastily implemented systems that may drive away your best talent.
To guard against that, he urges companies to recruit "the black sheep of the blue chips," i.e., strong candidates who come from great companies but who hate bureaucracy and maintain an insurgent mindset. You won't be able to forgo systems altogether, but if you make sure the systems you create support your people, without overriding them, you'll be on your way toward maintaining that all-important founder's mentality.