I’ve seen first hand how a start-ups work - and I’ve seen how a ‘grown up’ business works. They couldn’t be more different.
A start-up has an almost magical energy. It has goal, and a vision that everyone rallies around. There are no safety nets, no job titles and no KPIs - just survival and trial and error until the end result is reached. There is huge momentum. What’s more, the customer is the only king - because there is no boss to take up that position.
Fast forward a couple of years, and that business grows.
Systems and processes are introduced. Roles get delineated. The head office expands. Those with more established CVs are drawn to the company, and the level of experience and knowledge within grows.
But often, as a result, the momentum stops. Systems slow down the trial-and-error process as suddenly everyone is "too busy". The boss takes over the customers’ position as king. Collective experience becomes entrenched and the ‘this is how we do things’ mentality of the new team stops the guesswork, making the company immune to trying new things.
Essentially, the success that got you there in the first place makes you fearful of change, and protective of the status quo. So complacency sets in, and your company culture becomes a world apart from that of the high energy start-up it once was.
I’ve seen this happen first hand with countless businesses, including with Coffee Republic, the business I started with my brother.
Of course you can’t run a bigger company like a two-person kitchen start-up. You do need a certain amount of process and discipline once the team starts growing, a head office to co-ordinate, experience and industry knowledge. But how can you do this without accepting the culture of complacency that naturally comes with it?
The answer, I think, is both simple and powerful - remain vigilant. Just look at big companies that manage to keep their entrepreneurial DNA despite their size. Google naturally comes to mind. Laszlo Bock, Google’s Head of People operations, says: "We enjoy a constant paranoia about losing the culture…this is a good sign! This feeling of teetering on the brink of losing our culture causes people to be vigilant about threats to it". Google counters these threats by having “bureaucracy busters” and even a Chief Culture Officer whose job is to fight to keep its core culture strong.
While I believe this vigilance is essential, there is no one way to achieve it. L’Oréal, the world’s largest cosmetic company, has been around for over 100 years but still maintains a challenger mindset in its unique way. Doing so has enabled it to maintain its position as the market leader by continually launching new products.
In the words of its UK Managing Director Michel Brousset: “It’s about counteracting our own complacency and managing the paradoxes. Ours is a company of paradoxes - the constant tension between ‘we need to systemize, we need to control’ and ‘there could be better ways of doing this, by not controlling, letting people be’. The tension between research and intuition, between the need to co-ordinate everyone but not get bureaucratic.”
I wish I had known about this need for vigilance when Coffee Republic grew from one to 110 stores in five years. Instead, we bought into the now outdated thinking that a company should grow out of a start-up phase and into a mature professional phase, so we actively set about actually destroying the entrepreneurial culture. We were very keen to leave the start-up phase behind and be “grown up”.
Being customers ourselves (and always putting ourselves in our customers’ shoes) was replaced by formal mystery customer surveys. We gave everyone titles for the first time. The dramatic culture shift alienated most of our original founding team members who had been with us since the beginning. They had the start-up mentality, they didn’t care much for titles or hierarchy, and just believed in rolling their sleeves up and getting things done. Suddenly, it wasn’t the old Coffee Republic any more. As founders my brother and I felt the same - that our passion and creativity was now useless to this mature professional company.
In short, we thought of being a start-up as a phase we needed to grow out of. Instead, we should have seen it as a mentality we needed to fight to preserve.
How could we have kept that entrepreneurial DNA alive? There is no one answer for all businesses – no answer except vigilance. Companies, like people, come in all shapes and sizes and different personalities. That’s the magic of start-ups, that unique, dynamic "feeling" that makes them successful. That secret sauce can’t be decreed from the top. It’s a collective mentality that is reinforced or destroyed by the sum total of little day-to-day decisions and interactions – the choice to try out that crazy idea (or not), whether or not failures and mistakes are punished or seen as learnings, whether systems and processes are given more importance than individuals etc.
The trick for every founder, or any successor teams, is to recognize this start-up magic and to be vigilant every day that it’s not being squashed by the weight of the company’s growth.
This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details.