Common Scale-Up Mistakes
If you’re not already familiar with the term, scale-ups are companies that have already validated their product within the marketplace and have proven that the unit economics are sustainable. They’re typically at a different stage of funding, starting to have better defined organizational roles, more structure and some processes in place for delivering milestones & on-boarding new employees.
Even though a scale-up is more or less expected to have a less chaotic environment than a startup, some scale-ups struggle through that transition, and sometimes for years. The most challenging part becomes switching the office culture and older employees’ mindset to see beyond the excitement they were having during the startup phase – “doing things on the fly” in fire-fighting mode, and recognizing how unsustainable it becomes at the current growth rate, as the teams get bigger, and the scope of work and services increase.
They Undervalue the Importance of Planning & Processes
Planning & processes are perceived as a waste of time. Time taken to plan & follow process, means time away from “producing” actual results. This mindset spans across various activities undertaken by the organization; whether it’s taking time to understand customer requirements, evaluating the importance of the requirement, assessing the value delivered, designing the feature and finally planning the actual work.
The truth is, at that phase the company has already established enough of a customer base that they don’t need to immediately react to every customer request in panic. They have the liberty to review priorities, assess a feature’s value and product alignment (especially for SaaS product-based companies).
During the scale-up growth phase and at the rate and scale at which the company is operating, following process is recommended to reduce errors and negative impacts on customers. However, most scale-ups learn this the hard way, if at all.
They Promote Unqualified Individuals to Leadership Positions
When you’re operating a startup/scale-up, loyalty is everything. As a founder of the company you feel obliged to reward individuals who have worked hard and stuck around during the grind times. Typically, that happens by promoting the “oldies” to leadership positions that they’re not qualified for, while providing zero training and coaching to support their transition.
Companies can reward hard working employees and prepare them for those roles better, instead of setting them up and the organization as a whole for failure.
They Hire Overqualified People
You have more money to hire experienced people, but you get them reporting to unqualified leadership, which is a recipe for high employee turnover rate. You’ll be at an 80–100 employee count forever, you’ll hire 20 and lose 25 employees in the span of 6 months.
Experienced hires feel they’re tied up, typically reporting to either a micromanager who can’t let go, cause they used to do everything themselves “back in the day”, or they’ll report to managers who are threatened ‘cause now they’re managing employees that have more experience than them. Both dynamics result in unhappy employees, and result in all sorts of politics and toxicity in the work environment.
They Think that Happy Hour and Swag is a Solution
Freebies and free booze don’t constitute as true office culture, and when employees are spending 1/3 (if not more) of their day facing chaos & leadership challenges, free stuff isn’t enough to retain the employees you actually need to take your scale-up to the next growth phase.
You’re likely to have happier employees if they feel that leadership and the organization choose idea meritocracy over seniority.
