Organizational systems

Everyone likes a fast growing startup. The team comes into work each week having more users, customers, and revenue than the week before, investors are happy, and the media loves you. This is why Paul Graham wrote a post with the title Startup = Growth.

I agree that it’s great to be part of a startup experiencing very fast growth. This likely means that you’ve found product market fit. And achieving product market fit, rather than what I’m going to write about now, is your biggest challenge.

However, together with very fast growth comes a need to build the organizational systems necessary to effectively scale that growth. For example, a startup can support its growth by haphazardly hiring people and assigning them to whatever project is most urgent at the time. A better approach is to establish systems to ensure that each department has clearly defined qualitative goals, KPI’s, and an internal process that helps it achieve these performance targets.

For example, rather than having a random hiring process, a startup that has achieved product market fit needs to review its existing employees to optimize its hiring process. Is there a specific channel that has produced better hires than others? Do specific backgrounds make for more productive employees in the company? How should the employees be trained for their new roles? Should the company have a formal feedback process or encourage a culture of open feedback in the moment? What HR software should the company use to track job applicants, interviews, offers, on-boarding activities, and employee performance?

The same systems need to be debated, resolved, documented, and propagated in each department. This includes technology, product, sales, marketing, customer service, and every other department specific to your company’s needs. Since you can’t do them all at once, you’ll need to prioritize those that will have the greatest impact on your business. And since you need these systems to be propagated in each department, you need to have strong department heads in place to do so. There’s no point in setting up an effective system for a department without a strong leader to internalize the system and help it cascade throughout their department.

Having to set up these systems is a nice problem to have. It means you’ve achieved product market fit which is a much bigger challenge. But you need to recognize when the systems become necessary. An investor or advisor who has seen similar events unfold in other companies and who has a bird’s eye view of what’s going on in your organization can help you identify the right timing. And when the time arrives, you just have to roll up your sleeves and do it. It may not be as exciting as growing, but your company’s long-term success depends on it.