Quick Summary - Scaling is a critical phase for a startup that can lead to both triumph and collapse. In the article, we focus on one of the most important points of the process – team management.
15 mins read
February 7, 2023
Modern giants such as Apple, Amazon or Uber were once only ideas, and later startups that began to scale.
Scalability (ability to expand) can usually be predicted, according to Deloitte. Industries such as software development, online services, electronics, and entertainment are designed for scale from the beginning. However, this stage can turn into a complete failure. Only 1 in 200 new businesses is able to become a scale-up, the report shows.
Scale startup: steps to follow
Unlike business growth, which requires exponentially increasing investments, scaling involves increasing productivity through efficient solutions and moderate costs. For example, instead of a large number of call center operators, you hire one IT person who develops a bot for high-quality order processing.
Scale startup: steps to follow
As LinkedIn co-founder Reid Hoffman says, the company’s evolution goes through several stages of scaling from “family” to “nation”:
The size and quality of your team is one of the decisive factors in whether it is possible for your business to go from startup to scale-up and not to fail.
When there are five or ten of you, usually everyone does everything. It is possible to do without a clear hierarchy and documentation of tasks, improvise and have blurred approval procedures. When a company grows to 30, 50 or 100 employees, the old management model no longer makes sense.
A scale-up requires more precise management than a startup. Of course, there is no one-size-fits-all recipe for scaling. But in any case, it is unlikely to establish the team’s work in new conditions, trying to squeeze it into outdated frameworks.
Organizational changes can be painful, but they are absolutely necessary during the scaling phase, according to Sarah Tavel, formerly product lead at Pinterest. The case of a company that went through the scaling process many years ago and now has 445 million users and growing revenues is very telling. It shows that one of the root causes of all execution problems is poor organizational structure.
Initially, they had a matrixed approach, Sarah Tavel says. Teams didn’t have all the resources they needed to build a product, and quick implementation of ideas became impossible. So the solution that made everything work was to create full stack teams. Another lesson was the redundancy of internal coordination when the growth team had to report to the marketing dep. The solution was to move the growth team to report to the product, which reduced unnecessary meetings and approvals, saving time and resources.
As ballast is dropped from a balloon in order to gain altitude, and a company on the way to scaling should get rid of everything that complicates or slows down its work.
The easiest steps are choosing the one suitable tool for organizing work instead of numbers of different messengers and apps, and developing clear algorithms for setting and performing tasks. This significantly reduces the load and frees up resources for productivity.
But ideally, it is necessary to implement IT solutions to automate all possible processes – from payroll to specific production needs. Whatever the algorithm can provide, let it do. Whatever a machine can’t do, entrust it to the right talents.
Team scaling: how to build a core dev team
Business is a team game. According to the ScaleUpNation report, 95% of scale-ups were created by three or more founders. In addition, such companies are twice as likely to become “one big family” than startups. The report compares a scaling company to a pack of wolves that are skilled, open to increase in numbers, and united at the same time. Together they can hunt large prey, but alone – only a rabbit.
Be prudent when hiring new staff. Choose specialists whose skills are absolutely necessary, and whose intentions are visionary. Before scaling, also make sure the existing team is strong and all your specialists are ready for the change.
At the scaling stage, you can no longer single-handedly control the processes and current work, and it is difficult for employees in a large team to stay engaged without direct leading. Therefore, experienced managers should be the first to appear on the “must hire” list.
Also, it’s time to get more serious about hiring senior staff. According to the report, 42% of scaling CEOs spent 10% more of their time recruiting seniors.
Do not rush to hire permanent workers. The essence of scaling is to increase production without significant investment, and therefore the involvement of extended teams can save a lot.
This allows scaling companies to be flexible to changes, and to attract highly qualified specialists at moderate rates. Typically, outsourcing providers have advanced tools and skills. And experienced outstaff employees are able to quickly onboard the core team.
Scaling is a time to learn to delegate and trust. You managed to assemble a strong team, so it is important to reduce their dependence on you personally. Give employees clear guidelines and tasks, and also allow them to reveal their own potential and make decisions independently within their competences.
Team scaling in startup
When the startup team was easily housed in a garage or studio apartment, and all its members were close friends with common values, there could be no problems. But a company with dozens or even hundreds of employees must take care of its own corporate culture.
At this stage, the company recruits new members to the team, who will need training and integration to the collective. Therefore, you cannot do without HR specialists and recruiters. These responsibilities can also be outsourced to save time and money, not establishing the in-house department.
You can no longer rely on improvisation and chaotic evaluation of work results. Implementation of the KPI allows you to clearly set tasks and control the quality of their execution.
As mentioned above, a successful business should work without your active intervention. The performance control system becomes a guarantee that prevents processes from getting out of hand, while maintaining the autonomy of the current work.
Scaling is a leap into the unknown. Employees who are ready for it together with you are a valuable asset. Give them freedom for creativity and stimulate bold ideas.
Research shows that scale-ups do just that. 96% of such companies encourage the teams to experiment and give them more freedom to deviate from the instructions.
PerceptionBox will help you with extending the team allowing you to scale with the lowest costs. We also provide high-quality team support and onboarding, help with retention and HR services. Contact us for details and start scaling.
