The importance of being data-driven
The last point above is particularly important - great companies are data-driven.
Specifically, such companies:
- Have a set of metrics that reflect the value they’re delivering to their customers, which are the fundamental metrics that they optimise for (more on this in Part 4).
- Make sure these metrics are shared between and owned by all functions within the company, as most of them require a concerted effort to deliver and improve. This includes making sure that all functions know how they need to contribute to improve the metrics and to act in concert with the other functions.
Remember, to move the needle for your customers, you have to be able to measure the value you’re delivering to them. If you haven’t implemented these types of metrics yet, be aware that it can be surprisingly difficult to do so in a deep way and it will take more time than you think! So you’ll want to start as early as possible, as the costs of shoehorning metrics into your entire organisation later are disproportional.
For instance, even if you can’t do meaningful A/B testing yet because of insufficient traffic, you may want to build and start using the capability early as it will save you massive amounts of time later. Also there are benefits to A/B testing even at low volumes of traffic: if you break something significant the test will turn red quickly and serve as a complementary way of monitoring the health of your systems not just from a system perspective but also from a customer perspective. (This by the way is an example of a counterintuitive premature optimization that is sensible.)
(Living) values and metrics are important for your success post-PMF. Here are some additional things to consider as you scale your culture.
Your culture evolves with your company
Firstly, keep in mind that as it grows, your company is akin to a living organism and change is what makes that growth process possible. In particular, your culture is not set in stone. (Stone tablets are the realm of big corporations so if you’re reading this, we assume you still have some ways to go to get to that stage.)
Initially, culture is set by the founders, and these traits will typically persist long into the life of the company, when the founders may not even be around any longer. However, you need to keep evolving your culture and invite active participation from new hires. The key to being able to do this successfully is to hire A players who can inject meaningful ideas into the discussion.
Introduce processes where needed
As the company grows, you will need to introduce more processes; “informal” collaboration tends to break down once you get to 50-100 people, sometimes even sooner. Putting in place new processes should be done thoughtfully, to strike the balance between essential processes and flexibility.
Based on our experience, if you hire sufficiently senior A players, lightweight processes should be enough. Conversely, if you find yourself having to add more and more processes, you may not be hiring the right level of people or the right seniority mix.
Delegate as much as possible
In a small startup, the founders are often the “centre of the universe”, as they try to imprint their vision and execute on it. This doesn’t scale once the company gets larger, and it’s also a suboptimal way of leveraging the great talent you’re hiring (as well as your time).
Delegation and empowerment need to become key elements of your culture at this point, and be promoted by all levels of management.
An important advice for founders at this stage is: delegate anything you can. If you can’t delegate yet, hire people to whom you will be able to delegate.
You need to apply this recursively to your entire organisation by teaching your managers how to do the same. The best organisations are not driven top-down only, but in a combination of bottom-up, middle-out, and top-down.
As you start delegating more stuff, this is a good time to remove Single Points of Failure (SPoFs) in your teams; startups tend to generate SPoFs because they’re trying to minimise costs. Remember, no one should be irreplaceable and people should be able to take time off or sick time when needed without worrying that the “sky will fall” while they’re out.
Autonomy without accountability is a holiday
Delegation and empowerment are sometimes misunderstood. While everyone in the company should be focused on the common mission, each employee has a role to play and is expected to play their part in line with the company's growth strategy.
Autonomy should be encouraged based on one's ability to consistently demonstrate sound judgement, alignment with strategic goals, and a track record of effective decision-making. This approach ensures that team members are not only empowered but also equipped and responsible for contributing to the collective success. By fostering a culture where autonomy is a reward for proven competence and commitment, you can ensure that your team is not only efficient but also deeply invested in the company's vision and goals.
As we mentioned in Part 1, post-PMF your culture should support people if they fail and learn from the experience. However, failure should be for the right reasons (e.g. trying a new positioning with customers that turns out not to work) and not for the wrong ones (trying to implement a new, unproven development methodology when there are enough approaches that work). A key part of this is promoting excellence in every function. You do this by hiring the best and most experienced people and providing room for them, as well as setting a high bar for the quality of work.
Innovation (still) is key
Innovation is key during both pre- and post-PMF changes, however the meaning of “innovation” changes - don’t assume that what you did during the start-up phase is the same as what you need to do now:
- Pre-PMF: “what can we do to get closer to PMF as quickly as possible?” Note this implies an experimentation mindset, where you’re ready to implement things quickly (and possibly without thinking too much - or at all - about technical debt), try them out, and throw away/redo stuff that doesn’t work.
- Post-PMF: “How can we improve PMF?”, “how can we grow market share?”, “How can we improve our margins?” This implies that you need to build a solid basis on which to grow the company. The cost of re-doing things or of having to fix things that don’t scale grows super-linearly with the number of customers and the company size.
Post-PMF, there’s a lot of innovation required around your key mission and increasing value for your customers. You need to focus your team’s energy on that.
In the remaining three parts, we’ll cover the specifics of what needs to change:
- Part 3 discusses scaling aspects that are common to both Product and Engineering. [Coming soon]
- Part 4 focuses specifically on how you need to evolve your Product discipline. [Coming soon]
- Part 5 discusses aspects that are specific to your Engineering team. [Coming soon]
