Growth Traps…Proceed with Caution

OK, you know that “Grow, grow, grow” is the startup mantra, right? But what happens when it doesn’t quite work like that? Do you madly start to do things that…well…might not be in your company’s best interests? And as you do start to grow, are there some things you should watch out for?

There is pressure from investors and venture capitalists to demonstrate stellar growth trajectories. Of course you need to experiment, and try new things. But focus is one of the most critical elements of success. The fragmentation that comes from too many priorities in a world of scarce resources gets squarely in the way of focus, and ultimately, in the way of growth. 

Some growth traps watch for:

Going to the “next product” too soon: Running after the next “shiny object” before getting traction with the first one can dissipate the energies of a small team. The development team should be spending its time enhancing the first product to get it right. The only exceptions: (1) if the next product enhances the first one so that the joint offering is significantly more attractive (2) if the first product is clearly failing, and a pivot is needed. In all other situations, time is better spent honing the first product. At Salesforce, we had a successful Sales Cloud product, then focused on adding functionality and resources to move up-market; Service Cloud came years later.

Expanding to other countries too quickly…Just because someone asks doesn’t mean you go! While it’s terrific to get positive affirmation about your product, is it going to take substantial resources away from your core market focus? What are the regulations in the country? GDPR, anyone? How do companies do business there? At Salesforce, I remember an early attempt to get into the China market with an “online-sales only, low-cost Chinese language CRM” for small businesses. We then learned that most Chinese small businesses at the time did not have internationally recognized credit cards, hence they could not buy. Ooops!     

…Or expanding to other segments too early: Additionally, be wary if you are SMB/mid-market focused, and the company asking for your product is a big Enterprise company. I remember the GitHub cofounder telling me that when Disney came knocking in the early days, they were SO not ready. At Comfy, the last startup I was with, we caught the eye of some big Australian customers. For a small US-based startup with an IoT product that needed onsite installation, the distance and the customization became a huge distraction. There is enormous lift required to work through the legalese and the procurement process, as well as the scrutiny on privacy and security. Make sure you are ready before you go there!

Waiting too long to fire and replace: In fast-growth environments, a common mistake is not moving fast enough to replace team members who are not a good fit. You need to explicitly admit you were wrong in hiring the individual in the first place, which is hard. You also need to have a frank, possibly unpleasant conversation, which is also hard. Sometimes an individual was the right person for a role in the very early days, but does not grow into what you need as the company grows. The reality is you are doing a disservice to both the company and the individual by not having the conversation earlier than later, and then taking prompt action when needed.

Not being explicit about an achievement-oriented culture: It matters, especially in the downturns. Many startups have wonderful values: “be empathetic, show curiosity, be humble, be a team player”. But sometimes, as at the most recent startup I was with, the concept of “get it done” is missing. The cofounders felt that this should be a natural outcome. Lack of explicit achievement-oriented values can sometimes reflect in urgency being less than desired. And when you have a less inexperienced team who sees a down cycle for the first time, it can be very, very hard for the team to keep pushing, to keep the positive energy flowing. Help your team by making an outcome-driven focus an inherent part of the company fabric.

Trying to scale and codify too early…or too much: Sure, you should define processes so that you provide clarity on how a job should be done. However, some managers are inclined, given the plethora of tools out there that promise to improve productivity, to add the tool before they have clarified their processes. They feel the tool will enable them to be more efficient and to scale. Take it from me: if you automate a mess, you still have a mess. It’s just disguised by all the cool dashboards. 

The reality is that in the early days, as each functional area is growing, so much is changing that locking down a process is often counter to the end goal of ultimately scaling your processes. You need to be ready to iterate. First, be thoughtful about designing and documenting processes to ensure outcomes you need. Then consider whether you need a tool to help, but be sure you implement the tool in a way that, as your customer base and your product portfolio changes and grows, your can evolve your processes too.

So yes, “grow, grow, grow” by all means…just don’t inadvertently get in your own way!

This article was originally posted on LinkedIn