April 16, 2024

The Next Level: The Unsung Heroes of Fast-Growth Companies

The Next Level

Avoiding the pitfalls of fast growth.

Academia and media tend to focus on leaders. As a result, they often miss the importance of the unsung heroes in disruptive, fast-growth companies who make sure the disruption is carried all the way through the company.

This person has a similar skill set to an unsung hero in health care during combat — the head nurse, a person serious enough to give urgent orders, soft enough to hold a soldier’s hand in pain, and strong enough to wake up the next day and do it all again. Most people don’t even know this role exists in fast growth, but don’t try to grow without one. Who is this person? A No. 2 Who Can Do.

Often, the No. 2 is the smartest person in the room, talks the least, gets the most done and does not have a big ego. Like head nurses, as long as the No. 2’s can keep the company alive and going, they are just fine letting others shine. Really good No. 2’s don’t care about titles, offices or who goes to lunch with whom. In fact, all of this stuff runs contrary to what a real No. 2 can do.

A true No. 2 Who Can Do must go up, down and across your organization and have “walking around” rights in your company and customer environments. Titles can help you go to the top but can also prevent you from going down the organization to fix the root causes of problems.

At my company, STI Knowledge, I had a great No. 2, Gary Volino, who went up and down and across the company every day. He came to work with us when we had 48 employees, and he really had two jobs: fix problems on the inside and protect revenue on the outside. We called him the “Mad Italian” because he worked so hard and was so funny. He was 5-foot-7 and had done stand-up comedy at night when he was a consultant at Price Waterhouse. He was funny but also very real.

I asked him once why he had so many chief executive friends. “I am a small-frame guy,” he said. “I don’t think they find me intimidating.” He and I worked together for seven years and never had a cross word, and he never had an official title. I cannot even recall where he sat, but I do know this: Without Gary we might well have been just another company that started fast and then hit dead man’s curve — where the growth stalls and the company falls.

Because too many companies hit that curve somewhere between 50 and 500 employees, I will lay out some prerequisites for hiring No. 2’s. They have to be able to knock down doors day after day, perhaps even literally. Once, having flown back from New York, I had arrived at the office late in the afternoon with a skip in my step and a pretty big smile. We had just won an account with Ralph Lauren, having beaten out all of the big guys.

As I was walking tall around the office, I saw Gary coming down the hall with a sense of urgency, calm but concerned. Welcome to the N.F.L. — Not For Long — which is the length of any celebration at a fast-growth company. I asked Gary what was wrong. He said that when our controller left the company, he had locked the payroll checks in the safe. These were the payroll checks we have to send overnight to our remote employees, including the new hires on site at Ralph Lauren. When a premier company takes a chance on an insurgent company like ours, you cannot have your employees saying, “Our paychecks are late.”

I said, “Break the safe.” Gary said, “He locked the safe in the storage room with the iron door, and we have five minutes if we are going to get the checks on the FedEx jet.” So the “Mad Italian” broke down the iron door, and everyone was paid. No. 2’s don’t second-guess — they do. Of course, a No. 2 like Gary patches up a lot more things than he breaks down: system shortfalls, skill shortcomings, hurt feelings, customer expectations, sales revenue, and strategies of swinging for the fences. I don’t think I ever asked him to work on a problem. A good No. 2 finds problems and solves them, usually without drama. When things were tense, Gary would say something funny to make everyone laugh. Humor can solve more problems in fast-growth companies than anything, other than revenue.

A true No. 2 does not necessarily think he should be the second-highest paid person in the company but does want to be a significant equity holder. Gary was the second-largest equity holder at STI, but he never asked me if that was the case. He asked for a certain amount and I agreed. The subject was never discussed again.

So how do you find such people? You don’t. They find you. If you go out there and tell the world that you are looking for a No. 2, you wind up with a show horse instead of a work horse. You are also telling your people that you are putting up a wall between you and them. Most often, good No. 2’s emerge from an existing leadership pool. Or, occasionally, they will find you and say, “I want to work with you.”

They are even good at picking No. 1’s.

Cliff Oxford is the founder of the Oxford Center for Entrepreneurs. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/29/the-unsung-heros-of-fast-growth-companies/?partner=rss&emc=rss

The Next Level: Why Everyone Wants to Fire the Founder

The Next Level

Avoiding the pitfalls of fast growth.

With all of Facebook’s struggles since its initial public offering, I suppose it’s not surprising that there were whispers over the summer that Mark Zuckerberg should be replaced as chief executive. But spare me. There is no one on Earth who is as qualified to run Facebook.

While things have started to look up for Facebook of late, this conversation is part of a familiar pattern. Bankers, investors and consultants are often outrageously quick to pull the trigger on founders of fast-growth companies. We all get intoxicated by hyper-growth, and expectations can get out of control, which is why smart, fast-growth entrepreneurs temper those fantasies. But it can be hard when the publicity machines are trying to turn the entrepreneur into some kind of Superman.

It happens all of the time with entrepreneurs who are successful enough to hire experts to help them move their companies to the next level. The problem is that the bankers and consultants often show up right in the middle of the hyper-growth stage and sometimes the next level is where the growth starts to level off into reality.

At this point, the bankers and consultants really can’t help, but they want to stick around and the only way to do that is by firing the guy who hired them and bringing in a white knight to “save” the company. You’ve seen this movie before: the founder steps down and is followed by a carousel of unsuccessful chief executives for years to come. If this kind of talk can happen to a founder like Mark Zuckerberg, who has produced billions of dollars of revenue, it can happen to any founder. But given how poorly the strategy often turns out, it’s tempting to ask why people are so quick to fire the founder.

There are two reasons. First, bankers, investors and consultants often underestimate founders by calling them visionaries or technical geniuses while questioning their skills as executives. But to get a company from start-up to second stage — where it has transitioned to both positive cash flow and increased market share — is extremely demanding. It requires swift execution and creativity. If the founder didn’t have those skills, the company wouldn’t have gotten so far. Often, the founder has to plead with people to make personal sacrifices; it can be very hard for an outsider to walk in and make the same demands.

In addition, bankers, investors and consultants often point to a decline in revenue growth (or in the stock price if the company is public) as a sign that the entrepreneur should depart. But no company — not even Facebook — has financials that only go up. Often, this argument is just a pretext. The fact is, the relationship between founders and financiers is uncomfortable from the start. Entrepreneurs are wheelers and dealers who are always testing limits and trying new things. Bankers and consultants like predictability and stability. More to the point, for them, firing the founder is part of their own exit strategy. Their goal is to flip the company by telling the next investor, “We have proven the concept, and we are now bringing in professional management to take it to next level.”

It does not have to be this way. Keep in mind that most of the people suggesting the replacement of fast-growth entrepreneurs have never built anything themselves. They don’t understand what it takes.

Founders often have more options than the bankers lead them to believe. For example, if the issue is getting financing, a good place to start can be your own customers — and I don’t just mean by selling them something. Lots of established companies are willing to make strategic investments in a smaller company that is performing a vital role for their businesses. Don’t be bashful. Present the idea as if you are giving the company a rare opportunity. And if you are asking for $5 million, make the effort to look and act like you know what to do with $5 million.

It’s also critical to be smart and careful with board seats. Don’t hand them out like water in the good times, and make sure you know how to count. If you have seven seats, you have to have four votes you can count on in tough times. That’s one reason I am a big advocate of keeping one or two people from within the company on the board.

All companies go through ups and downs. The bankers, investors and consultants will always be quick to pull the plug on founders when the first signs of trouble appear. But the person who is most likely to get the business to the next level is the very same person who got it to the current one.

Cliff Oxford is the founder of the Oxford Center for Entrepreneurs.

Article source: http://boss.blogs.nytimes.com/2012/11/06/why-everyone-wants-to-fire-the-founder/?partner=rss&emc=rss

The Next Level: Further Thoughts on the Brilliant Jerk

The Next Level

Avoiding the pitfalls of fast growth.

In my first post for this blog, I wrote that I wanted my posts to provide a forum for “debate and disagreement” on what it takes for a company to grow fast. Well, that didn’t take long. One week later, my post on what to do with a “Brilliant Jerk” sparked plenty of debate and disagreement. In fact, the overwhelming majority of commenters disagreed with me — although I did get some support from people who actually own and run businesses.

If nothing else, I seem to have united the Brilliant Jerks around the country, which is good. I respect Brilliant Jerks; they do invaluable work for start-ups and small businesses. In my post, I may have even gone overboard explaining how invaluable their contributions are in the early phase of a company. I wanted to give them their due.

But times change. What the start-up really starts to grow, the entrepreneur needs to bring on new people and adopt new strategies that can undermine the Brilliant Jerk’s self-worth and identity. For example, in rapid growth, entrepreneurs who identify winners on the front line may need to promote them two, three or even  four levels at a time. You have to push these winners to the top. The team will applaud and embrace these new leaders but the Brilliant Jerk won’t.

In a fast growth company, he becomes the Grinch who steals growth, which is why he has to go. This can be hard to understand unless you have experienced the fragile environment of rapid growth when you are adding customers and employees by the dozens and sometimes hundreds. Everything is thin – time, cash and management. It is like driving a race car across thin ice, and you certainly do not need anyone jumping up and down and screaming and distracting from the larger cause.

Many of the comments suggested that maybe I was just a bad manager. There is probably some truth to those comments — entrepreneurs, admittedly, are not always great managers or developers of people. But there are times when those skills are all but irrelevant. In rapid growth, you need leaders who take action. If you want to remain a small company, spend your time managing and pacifying the Brilliant Jerk. But if you want to grow your company, then you have to grow up, lead and put others before yourself. You need a team that wants to be lead, not managed.

When my start-up put 150 additional people on the payroll in one month, it took everyone on the team wanting the person next to them to succeed. There were no Brilliant Jerks to be found in that group. Fast growth is not about happiness and who keeps the coffeepot full. It is a team sport. When you walk into a meeting, you are there to make everyone else better. In a fast growth company, you either add energy to the company or take it. The Brilliant Jerk sucks the life out of a company. Every minute you spend consoling the Brilliant Jerk is a minute you take from customers and, by the way, it is the customers who pay the bills.

Some of the commenters suggested that this is really about entrepreneurs being greedy. That’s not how I see it. When fast growth takes off, the entrepreneur is usually “all in” — with his house, a second mortgage, savings, college funds all on the line. Greed would be milking the Brilliant Jerks, who are generally very high producers, for everything they are worth. Guts is accepting the short-term financial pain of letting a big producer go for the long-term gain of the company. Most of the time, you are watching revenue walk out the door. It is a gutsy gamble but the right one.

Some commenters asked how I could just toss away a dedicated, smart employee. Well, I can tell you after we discovered he could not work in a culture of growth, it should have taken me three months to let him go instead of three years, and boy, did I try everything over those three years. I promoted him to chief operating officer, and I sent him home to work by himself and gave him special assignments. Nothing worked – the Brilliant Jerk needs singular recognition in a controlled environment.

The reality is, I waited too long. And that was the purpose of writing my blog post – to introduce the Brilliant Jerk so that when entrepreneurs recognize one in their organizations, they don’t wait three years to figure out what has to be done. It is not easy. You will have gone through so much together. When I finally walked into that room and said, “it’s time to go,” we both cried.

One last thing – let’s clear up the Steve Jobs issue. He was not a Brilliant Jerk; he was a Brilliant Entrepreneur who always put the Apple brand and his products way ahead of himself. But if you read his biography, you will understand that he had to be fired. That gave him the opportunity to learn from his mistakes and become a better leader. If he had been a Brilliant Jerk, he would have continued to whine about getting fired from Apple and played the victim – “Oh, they were so mean to me.” Instead, he was a leader who moved on and made history as one of the greatest entrepreneurs ever.

In a fast growth company, rule No. 1 is no whining allowed. Period. And no second-guessing. Period. Happily, however, that rule does not and should not apply to blog posts. I look forward to reading your comments.

Cliff Oxford is the founder of the Oxford Center for Entrepreneurs.

Article source: http://boss.blogs.nytimes.com/2012/10/03/further-thoughts-on-the-brilliant-jerk/?partner=rss&emc=rss