Corporate Capabilities for Start-ups and Fast-Growing SME's

Customers love us, sales grow fast and we hire more and more people.

This is a great scenario that happens for many start-ups and fast growing SME's. Founders, executives and their teams are super-busy and everyone is focused on customers and growth. Execution is all that matters.

But please, stop and reflect on what the future will look like if/when you become a larger organization.

In our fast business environment of today, this will happen faster than many think. Suddenly, you have hundreds of people and a platform of offerings. You can no longer execute as you did in the days where it was basically do-or-die in the sense of getting things done, growing the business and simply put surviving or shutting down.

Now, you have a growing number of strategic choices to address in the context of not only customers, but also on people/employees, organizational structures and how you get things done.

The challenge begins for real when you still manage your company as a start-up, but have run out of start-up people to hire. You get more and more corporate people on board and even though they bring lots of great things to your company, this changes some important dynamics.

Most corporate people bring with them traditional views and approaches to organizational structures and how to get things done and if your leadership is not alert here, this will take over your company and turn it into just another big company down the line. If you want to stay adaptive and fast in the long run, you need to set the proper foundation in the early years. This is where the important stuff - values, structures and how to get things done - are set in stone.

A few years into being a traditional larger organization, it is too late to change and you must embark on an endless journey of small improvements. Unfortunately, I see this repeatedly in my work with executives and their teams on corporate transformation, digitalization and innovation management in larger organizations today.

Leaders and their teams can do much better on this transition phase and here you get reflections:

Put employees before customers: Yes, customers are important, but not as much as they used to be. If we can agree that markets will change faster than before and thus create new opportunities as well as new challenges, hopefully we can also agree that the engine of your company is what really matters as you strive to adapt to these changes.

Your engine is built on corporate capabilities and processes for getting things done. This is all about people. Let's start to put employees before customers.

Hire for potential, decide in committees: You should hire people for potential rather than competences as you don't know the future. You should hire and promote by committee to keep the standards high. Build on this to get mindset and processes in place that help you get the right people in the right places at the right time.

Make HR the driver for innovation: Corporate development or transformation efforts should be led by a triangle of the CEO and other top executives, a core team that goes across the organization and the HR team. Unfortunately, the HR team is not ready for this as they do not hold a strategic role in most companies. This is not good as corporate transformation, digitalization and innovation management is about people and the processes they work in.

If you make the HR team responsible for innovation (which cannot be separated from digitalization today), you build strong corporate capabilities that are rooted in culture rather than being one-offs or event driven. Make the investment, turn the HR function into a strategic player in your organization.

Core teams, not committees: A tip for better corporate innovation management in the long run? Build a core team and give executives skin in the game. The core team should have 6-8 members with a mix of top level executives (at best led by the CEO him or herself) and people with the right mindset and skills towards innovation. This team must make things happen and the key elements are to set the direction, build the belief and remove the obstacles for better innovation management. Don’t turn this into a talk, talk committee. It must be action-driven and people - including the executives - need to be hold accountable for its success.

A core team can clone itself into more core teams as the organization grow and you can use a waves approach to get things done through the organization and external partners.

Build the right organizational structures: Our current organizational structures are built on beliefs and approaches that are decades or even centuries old. This is not a good fit for organizations today and in the future that will be driven by technology, mixes internal and external resources and needs to be highly adaptive. There are no clear answers on what the right structure is for your organization so just as we have begun to experiment around the development of technologies, products, services and business models, we also need to start experimenting on our organizational structures.

Focus on root causes, not barriers: There are many barriers and obstacles for making innovation or any kind of effort - work in an organization. For innovation efforts, it could be that there is no strategy, the infrastructure and processes are not up to speed, there is no willingness to experiment, you work in silos, there is no time for innovation and that your executives and managers are risk averse.

The key insight is that you will not be able to make any progress if you keep fighting such barriers and obstacles head-on. First, you need to understand the root causes for your problems. The root causes are most often centred around leadership approaches, organizational structures and processes for your organization to get things done.

You need to figure out what is broken here and what the knock-on effects are. Then, you can start a much more directed effort to improve things. If not, you will keep just fighting the same things repeatedly.

What are some common root causes?

• Leaders are managers, not leaders
• You do the right things - for the past, not the future
• There is no sense of urgency
• Too much focus on the day-to-day business and thus a lack of time for the important things
• A lack of understanding of innovation management as a leadership discipline.

Focus on root causes, not barriers and obstacles.

Build ecosystems for all aspects of your business: You must merge internal and external resources together in a way that delivers better outcomes faster. This is conceptually understood in the context of corporate innovation today, but the execution is still lacking. Do well here and you can beat your competition on important issues.

You can start with innovation efforts, but you should go further promote the mindset of merging internal and external resources to all functions in your organizations (balance is key) and you should also develop flexible talent marketplaces that allow you to operate with small, nimble teams.

Adapt your leadership approaches: You need to explore situation-based approaches with start-up and operational being the two most relevant and important approaches for your leaders. This also builds on the belief that leaders should be leaders; not managers. Too often, I hear employees working with digitalization and innovation management complain about the lack of direction.

Oh, do you know what Steve Jobs, Elon Musk and Jeff Bezos shared as leaders? They are/were benevolent dictators - yes, this could also be an approach for your leaders.  

Strategy for a digital world: Your company needs new approaches to strategy that must be rooted in the belief that there is no such thing as a digital strategy, just strategy in a digital world. Besides digital focus, your strategy approach must also be built on speed and flexibility, which means that you must listen, adapt, experiment, and execute better and faster than ever before - and certainly better and faster than your competition.

Stay true to your DNA: Once you have the right corporate DNA in place, stay true to this. Learn and be inspired and adapt as needed, but don't water it down over the years.

Good luck with your growth!