As they make the leap from a business with tens of millions of dollars in sales to one with revenues of many hundreds of millions of dollars, fast-growing technology and media companies must contend with a variety of operational, organizational, leadership and talent challenges. New processes and structures are needed. The responsibilities and requirements of senior roles must evolve. And new functional and business leaders are needed. On top of all that, companies that plan to expand the business outside their home market have additional challenges to overcome, including how to build an international team.
In recognition of the challenges rapidly growing companies face, Spencer Stuart is embarking on a series of interviews with technology company executives who are in the midst of or have overcome the common growing pains and are willing to share what they have learned so that others may benefit from their experience.
The first in our series of discussions is with Rajeev Singh, president and COO of spend management solutions provider Concur, which today has more than 22,000 customers in 150 countries. Future discussions will include leaders of companies at earlier stages of the high-growth period and those that have grown much larger. Among the leadership and organizational issues we will explore include the following:
When to recruit new senior leaders
Most startups begin as entrepreneurial ventures, with a small, close-knit team of leaders able to collaborate and make decisions quickly. In the earliest days, certain leadership roles and formal processes don’t seem especially important, as the key players are aligned and in close communication. Over time, however, as the company grows and the business becomes more complex, a lack of standard processes in key areas — finance, human resources, operations, compensation practices and, even, decision-making — can become an obstacle to continued growth.
Once the business achieves a certain scale and degree of complexity, fast-growing companies find they need to build out the management team with a few key external hires with the “big company” experience to take the business to the next level and put needed processes and systems in place. Common questions that organizations wrestle with include how to evaluate the capacity of current team members to scale with the business and how far in advance of growth should they hire. Underhiring can affect the company’s performance if executives in critical roles don’t have the leadership and technical skills to keep pace with the growing demands of the business. Yet bringing on highly experienced executives from outside who are not willing to be “doers” is not the solution either.
How to organize to expand overseas
What’s the most effective way to build a business in a new geographic market? Startups frequently experiment with different approaches to staffing and supporting new market teams before finding one that works. High-growth companies often struggle with issues such as: defining the ideal skillset for leaders in new markets; recruiting and retaining the executives with the necessary local knowledge, commercial experience and familiarity with the product; striking the right balance between entrepreneurial spirit and standardized processes; defining the appropriate level of investment to get the business off the ground; and the most effective ways to build organizational and cultural connections between far-flung locations and headquarters.
How to retain the founding culture
High-growth companies often hire hundreds or thousands of people a year. As a result, in any given year, the number of new employees may dwarf the number of people who are already with the company. In short order, then, the organization no longer is a small group of people who know each other and are intimately knowledgeable about the objectives of the business, and this can have important implications for the company and the culture. It can be more difficult to inspire and engage a larger and more dispersed group of employees and ensure they feel connected to the mission and objectives of the company. Furthermore, fast-growth companies have to find ways to institutionalize the values — a commitment to ongoing innovation, for example — and preserve the important elements of the culture that the founders sought to create. It’s not uncommon for fast-growth company leaders to learn the hard way the importance of assessing whether job candidates, especially for senior roles, are compatible with the company’s culture and values.
When to evolve the board composition
High-growth leadership teams can benefit from having an engaged, experienced and connected board of directors. In the best cases, directors provide insightful input and useful guidance, help solve problems and open doors. Careful consideration must be given to the composition of the board, which may need to change over time as the company grows and the opportunities and challenges it faces change. Especially if public financing is planned, the board may need to add independent directors, and certain new skills may be valuable to have. In addition to thinking about the skills and experience board directors bring to the table, the CEO and his or her team must find ways to work effectively with the board, including the cadence and content of communication between the CEO and board and when to engage directors on key strategic and operational issues.