avoid the pitfalls of growth
TRANSCRIPT
Avoid the Pitfalls of GrowthBuilding a 21st century business demands a thorough understanding
of the demands that rapid growth can bring.
For many businesses, rapid growth is
the Holy Grail. Eager entrepreneurs
envision their companies rising up
from anonymity to take their rightful
place on the Inc. 100 list, expanding
rapidly from a mid-sized firm to a
multi-billion dollar organization in a
matter of months.
It’s not a far-fetched idea – especially in
the tech industry. These days it may
seem like every startup with a bright
idea is going from obscure to global
giant overnight, but the reality is that
for every success story there are
hundreds of failures. Many emerging
growth companies may start on the
same track, but what differentiates
successful companies from failed
enterprises is how well company
leadership can maintain the integrity of
the strategic vision. Rapid growth can
often monopolize leadership’s time
forcing leaders to get caught up in the
day-to-day challenges and causing
companies to veer off track. And just
like that, rapid growth can turn into
rapid decline.
There are ways to avoid the crash,
however. Smart companies looking for
long-term sustainability figure out early
on that managing growth requires
discipline, focus and being open to
input. These companies know that
guarding corporate culture, prioritizing
activities, methodical hiring, guidance
from outside experts and working with
partners to hand off tasks that don’t
deliver core value are all part of the
toolkit for successful growth.
Culture and the Art of Growth
“The first rule of growth is to accept
that change is going to happen,” says
Bryce Maddock, co-founder of TaskUs.
“[Change] is inevitable, so all you can
do is plan for it.”
Growth – and the change it unleashes
– can pose a significant challenge to
the health and wellbeing of any
mid-sized business (revenues of
$5MM-$150MM). Culture, operations
and profitability can all be negatively
impacted if the organization does not
adequately plan for this change.
Ideally, growing companies find a
balance between accommodating
increased business flow and
maintaining the culture and core
competencies that gave them a
competitive edge in the first place.
Maintaining culture may not seem like
a priority at a time when a business
should be focused on quantitative
growth, but it is. Entrepreneurs spend
a lot of time creating a workplace that
will foster creativity, innovation and
partnership. Indeed, culture is one of
the most important aspects of a
business, and it is often the thing that
inspires the first round of employees to
invest their time and sweat equity in
building the business.
“The only thing of real importance that
leaders do is to create and manage
culture,” Edgar Schein, Professor at
MIT’s Sloan School of Management
once famously said. “If you do not
manage culture, it manages you.”
Many business leaders understand this
idea in theory. But when their
companies hit a growth trend they get
so caught up in growing to meet the
challenge, they fail to see how growth
is affecting the culture. And that is
when it falls apart, says David Drake,
founder of LDJ Capital, an investment
equity firm in New York. “Company
leaders have to be proactive in
building the culture of the company,
but when you grow too fast you can
easily lose control.”
Pressure on employees to produce
more, coupled with rapid hiring and
over stretched resources, can
transform a great place to work into a
place where leaders spend much of
their time putting out fires and dealing
with conflicts that can cause good
employees to move on.
To prevent that from happening,
company leaders need to ask
themselves three questions:
1.What do we love about our
culture?
2.How does our culture define us?
3.How do we scale the most
important aspects of our culture?
The third question can often be the
trickiest, because the little
extravagances – free soda in the
company fridge, or picking up dinner
to celebrate the end of a project – are
the kinds of perks that small teams
love. But that generosity can get out of
control when you have hundreds of
employees.
Business leaders need to understand
the motivations that drive culture – it’s
not about free drinks, it is about
acknowledging that your team is going
above and beyond for your success.
Once you understand the sentiment,
you can try to adapt your strategies to
accommodate growth, says Jaspar
Weir, president of TaskUs.
One of the hardest parts of this
transitional phase is delegating
authority, he says. “A lot of
entrepreneurs struggle to give up
control when their companies grow.”
Weir understands this challenge first
hand. TaskUs has experienced 100%
growth in the last year, and has been
on the Inc. 500|5000 list two years in a
row. It is an exciting time for the
company, but it has been challenging
to adapt, Weir admits.
“When we had 20 employees I had a
hand in every project,” he says. Now,
with more than 1100 employees, and
clients across the country, he can’t
manage the business in the same way.
“I have to trust others to take the lead
on those projects, so I can make the
right decisions for the company.”
Us vs. Them
Hiring is another key activity that
business leaders struggle with during
periods of rapid growth.
For rapidly growing companies, finding
talent can become an all-consuming
task that distracts leaders from the
more strategic goals of the business,
says Sander Daniels, founder and CEO
of Thumbtack, a provider of local
service professionals for consumer
jobs. “The best place to find talent is
your personal network, but if you need
to hire a lot of people fast, your
network won’t be enough.”
Ultimately, outfitting a 25-person
customer service team, or filling myriad
lower level positions that are vital to
running the business but not a part of
your core value proposition, is not a
good use of time or resources.
“The more time you spend hunting for
talent, the less time you have to drive
your business,” Daniels says.
It can be tempting to throw warm
bodies into chairs just to solve the
latest problem. But that’s a risky
approach as a few bad hires can
disrupt the entire organization, driving
turnover among top performers while
the laggards stay on board.
And even if you are able to fill those
positions with smart, skilled,
culturally-appropriate people, you may
find yourself facing an “Us vs. Them’
dilemma.
In lot of cases, talented college grads
will take low-level jobs in innovative
companies with the hope of becoming
a part of something bigger, Weir says.
But if they don’t see a path to
leadership or win a stake in the
business, it can become frustrating for
them and for the people they work
with – particularly if some employees
are treated differently than others.
In many companies, the first round of
employees received an ownership
stake in exchange for their hard work --
but later hires may not get the same
deal. Those second round employees
may put in just as much effort, but due
to timing and the roles they fill, they
get a paycheck, while their colleagues
await the big payday. “When you have
two classes of workers it can create a
really toxic environment,” he says.
Unless you are planning to give every
employee their own private piece of
the company, you need to
acknowledge the challenges you’ll face
as you add staff who have no real stake
in your future, and ask yourself whether
hiring an employee to finish every task
is the right choice for you.
Outsourcing Eases Growing Pains
One of the easiest ways to minimize
internal conflict and keep your core
team focused on the strategic goals of
your business is to outsource work that
doesn’t fall into your area of expertise,
says Drake. “You remove a lot of
tension from your company and
corporate culture when you
outsource.”
Outsourcing companies, like TaskUs,
take over non-core tasks like customer
support and a wide range of back
office processes, which can include
content moderation, lead generation,
transcription, accounting, payroll and
more. While the nature of the process
that companies like TaskUs can take on
varies, the benefit does not. Working
with an outsourcing partner can free
up company leaders and overwhelmed
staff and help company operations
become more efficient and effective.
Outsourcing to third party providers
can deliver a number of strategic and
cultural benefits for fast growing
companies:
1. Eliminate Recruiting Headaches
Trying to hire a large number of
employees in a short amount of time
can be distracting, expensive and a
waste of limited resources, Drake
argues. If a company is on a fast
growth track, however, they can’t risk
ignoring customers while trying to find
people to manage essential tasks like
customer service. That’s especially true
given the fact that the average
“wronged” customer will tell about
8-16 people about their negative
experience – and that’s not even
accounting for the social media effect.
By outsourcing these processes,
companies not only eliminate the
strain and risk associated with
recruiting, but also gain the peace of
mind that comes from knowing that
the job is being done well. The net
effect is liberating and crucial for
intelligent growth. “The more you
outsource, the more you can focus on
your core business, and hiring for your
core team,” Drake says.
2. Tap a Global Talent Pool
Filling every open position locally can
be both difficult and expensive,
especially for businesses
headquartered in high-rent locales like
New York City or San Francisco. It’s
also completely unnecessary, says
Thumbtack’s Daniels. “It turns out that
the city where your company is located
doesn’t have a global monopoly on
talent.”
From the beginning, Daniels decided
to keep his company’s core team of
engineers and leaders in-house
because they built the technology and
strategy behind the company’s
business. Then they outsourced
everything else. “San Francisco is one
of the most expensive places in the
country to live,” he notes. “We want
the best talent, but that doesn’t mean
we need to hire them here.”
Today, Thumbtack has 50 employees in
its San Francisco office, and 500
outsourced team members, most of
whom reside in the Philippines. “We’ve
found amazing talent at much lower
rates and they still make a great living
where they work,” he says.
3. Avoid Employee Conflict
Outsourcing non-core jobs can prevent
the “Us versus Them” environment by
ensuring everyone you hire has a
strategic role in the company, says
Maddock. Just because you need to
get a job done, doesn’t mean you
need to hire an employee to do it.
“You want to keep your core team
focused on creating value,” he says. It’s
a good yardstick for prioritizing
recruitment. If the work you need done
doesn’t add strategic value to the
business then it is a role that could
potentially be outsourced.
4. Maintain Competitive Agility
Growth is rarely a steady process, and
there can be many peaks and valleys
along the way. If you are always hiring
to accommodate the peaks, you may
end up with a lot of disengaged
employees when business falls off, says
Kate Vitasek, faculty at the University of
Tennessee College of Business
Founder of consulting firm Supply
Chain Visions, and innovator of the
Vested business model.
Or worse, as you grow the skills you
need change, causing you to outgrow
the capabilities or your current staff.
That can put you in the awkward
position of having to fire one set of
employees while recruiting another.
Outsourcing can help minimize those
ebbs and flows by allowing you to take
advantage of third party resources
when you need them, and dial back
those services when you don’t. “When
you outsource you get the talent you
need and they can scale with you,” she
says.
That helps companies stay agile, which
makes them more competitive.
5. Expand Your Knowledge Base
You may be great at what you do, but
that doesn’t mean you know
everything about business, says Drake.
“Outsourcing provides companies with
a fresh perspective and a chance to
learn from a group that knows more
than you,” he says.
You may find inspiration from a
consultant, or discover a more efficient
way of doing things by partnering with
a service provider who specializes in
managing these business processes.
“When you outsource it’s partly about
getting a job done, and partly about
looking for inspiration,” he says.
It’s also a great way to spread the word
about your business. “Every time you
outsource, more people learn about
you, which can open new doors,” he
says. “It’s another opportunity to
cross-collateralize.”
How to Choose
Outsourcing can help companies that
are managing the host of issues that
come with rapid growth. But as with
any business decision, an outsourcing
relationship has to be thoughtfully
vetted and carefully managed if it is
going to work, says Vitasek. “A lot of
processes make sense for outsourcing,
but if you are going to do it, you have
to do it right.”
Once you decide to outsource, your
first goal is to choose the right partner
for your needs. “You don’t want to be
their biggest client or their smallest,”
Weir advises. “And you do want to be
sure they have the talent, experience
and commitment to meet your needs.”
Before shopping for an outsourcing
partner, define the kind of workers you
want and the skills you want them to
have, Daniels says. For example, you
may require a team who speaks perfect
English and has strong writing skills, or
you may be seeking a specific
technical certification, or business
experience. “Knowing who you want
working for you will help you vet
whether partners can meet your
needs.”
And don’t just take their word for it,
Weir advises. “Talk to their past
clients, get references and ask hard
questions like ‘tell me about a time
when you made a mistake,” he says.
“How companies handle mistakes says
a lot about how they deal with tough
situations.”
You should also ask about their
managerial process, Daniels advises.
Outsourcers like TaskUs, for instance,
closely manage your outsourced team
as part of their service delivery process,
while others will give you access to
talent but don’t offer managerial
support.
If you have the time and inclination to
manage an outsource team in-house,
management services may not be
important, but if you are in growth
mode, you will need a company that
can oversee the outsourced operation
for you, according to Daniels.
Manage Outcomes not Activities
When you chose an outsourcing
partner, remember that they are the
expert and treat them accordingly,
Vitasek says. Companies that think
they know more than your outsourcer
tell them what to do, instead of
working with them to find the most
effective solution. But that often leads
to ineffective work. “It is better to give
them your desired outcome, and ask
them the best way to get there.”
You also need to take the time to
educate the people who will perform
the tasks about your company and
your business goals, Weir says. “When
they understand how their work is
connected to your success, they will be
more engaged in the deliverables.”
To ensure those deliverables are being
met, set clear parameters for success
that align with your business goals and
track them at least once a month,
Vitasek says. For example, if you
outsource a marketing campaign and
your strategic goal is to generate sales,
then measure the success of that
outsourced project based on increased
sales – not pages of marketing material
generated.
“Too often companies pay for
transactions – an hour of coding, or
cost per call – when what they really
want is results,” she says.
Finally, be prepared to spend some
extra time and attention on the
outsourcing project as it ramps up, and
make sure the outsourcing team has a
single point of contact in your
company to address any issues.
It takes time to build an outsourcing
relationship and make sure things are
operating smoothly, Maddock says.
“You’ve got to be prepared to invest in
the relationship, and work with that
team to get the best results.”
For many businesses, rapid growth is
the Holy Grail. Eager entrepreneurs
envision their companies rising up
from anonymity to take their rightful
place on the Inc. 100 list, expanding
rapidly from a mid-sized firm to a
multi-billion dollar organization in a
matter of months.
It’s not a far-fetched idea – especially in
the tech industry. These days it may
seem like every startup with a bright
idea is going from obscure to global
giant overnight, but the reality is that
for every success story there are
hundreds of failures. Many emerging
growth companies may start on the
same track, but what differentiates
successful companies from failed
enterprises is how well company
leadership can maintain the integrity of
the strategic vision. Rapid growth can
often monopolize leadership’s time
forcing leaders to get caught up in the
day-to-day challenges and causing
companies to veer off track. And just
like that, rapid growth can turn into
rapid decline.
There are ways to avoid the crash,
however. Smart companies looking for
long-term sustainability figure out early
on that managing growth requires
discipline, focus and being open to
input. These companies know that
guarding corporate culture, prioritizing
activities, methodical hiring, guidance
from outside experts and working with
partners to hand off tasks that don’t
deliver core value are all part of the
toolkit for successful growth.
Culture and the Art of Growth
“The first rule of growth is to accept
that change is going to happen,” says
Bryce Maddock, co-founder of TaskUs.
“[Change] is inevitable, so all you can
do is plan for it.”
Growth – and the change it unleashes
– can pose a significant challenge to
the health and wellbeing of any
mid-sized business (revenues of
$5MM-$150MM). Culture, operations
and profitability can all be negatively
impacted if the organization does not
adequately plan for this change.
Ideally, growing companies find a
balance between accommodating
increased business flow and
maintaining the culture and core
competencies that gave them a
competitive edge in the first place.
Maintaining culture may not seem like
a priority at a time when a business
should be focused on quantitative
growth, but it is. Entrepreneurs spend
a lot of time creating a workplace that
will foster creativity, innovation and
partnership. Indeed, culture is one of
the most important aspects of a
business, and it is often the thing that
inspires the first round of employees to
invest their time and sweat equity in
building the business.
“The only thing of real importance that
leaders do is to create and manage
culture,” Edgar Schein, Professor at
MIT’s Sloan School of Management
once famously said. “If you do not
manage culture, it manages you.”
Many business leaders understand this
idea in theory. But when their
companies hit a growth trend they get
so caught up in growing to meet the
challenge, they fail to see how growth
is affecting the culture. And that is
when it falls apart, says David Drake,
founder of LDJ Capital, an investment
equity firm in New York. “Company
leaders have to be proactive in
building the culture of the company,
but when you grow too fast you can
easily lose control.”
Pressure on employees to produce
more, coupled with rapid hiring and
over stretched resources, can
transform a great place to work into a
place where leaders spend much of
their time putting out fires and dealing
with conflicts that can cause good
employees to move on.
To prevent that from happening,
company leaders need to ask
themselves three questions:
1.What do we love about our
culture?
2.How does our culture define us?
3.How do we scale the most
important aspects of our culture?
The third question can often be the
trickiest, because the little
extravagances – free soda in the
company fridge, or picking up dinner
to celebrate the end of a project – are
the kinds of perks that small teams
love. But that generosity can get out of
control when you have hundreds of
employees.
Business leaders need to understand
the motivations that drive culture – it’s
not about free drinks, it is about
acknowledging that your team is going
above and beyond for your success.
Once you understand the sentiment,
you can try to adapt your strategies to
accommodate growth, says Jaspar
Weir, president of TaskUs.
One of the hardest parts of this
transitional phase is delegating
authority, he says. “A lot of
entrepreneurs struggle to give up
control when their companies grow.”
Weir understands this challenge first
hand. TaskUs has experienced 100%
growth in the last year, and has been
on the Inc. 500|5000 list two years in a
row. It is an exciting time for the
company, but it has been challenging
to adapt, Weir admits.
“When we had 20 employees I had a
hand in every project,” he says. Now,
with more than 1100 employees, and
clients across the country, he can’t
manage the business in the same way.
“I have to trust others to take the lead
on those projects, so I can make the
right decisions for the company.”
Us vs. Them
Hiring is another key activity that
business leaders struggle with during
periods of rapid growth.
For rapidly growing companies, finding
talent can become an all-consuming
task that distracts leaders from the
more strategic goals of the business,
says Sander Daniels, founder and CEO
of Thumbtack, a provider of local
service professionals for consumer
jobs. “The best place to find talent is
your personal network, but if you need
to hire a lot of people fast, your
network won’t be enough.”
Ultimately, outfitting a 25-person
customer service team, or filling myriad
lower level positions that are vital to
running the business but not a part of
your core value proposition, is not a
good use of time or resources.
“The more time you spend hunting for
talent, the less time you have to drive
your business,” Daniels says.
It can be tempting to throw warm
bodies into chairs just to solve the
latest problem. But that’s a risky
approach as a few bad hires can
disrupt the entire organization, driving
turnover among top performers while
the laggards stay on board.
And even if you are able to fill those
positions with smart, skilled,
culturally-appropriate people, you may
find yourself facing an “Us vs. Them’
dilemma.
In lot of cases, talented college grads
will take low-level jobs in innovative
companies with the hope of becoming
a part of something bigger, Weir says.
But if they don’t see a path to
leadership or win a stake in the
business, it can become frustrating for
them and for the people they work
with – particularly if some employees
are treated differently than others.
In many companies, the first round of
employees received an ownership
stake in exchange for their hard work --
but later hires may not get the same
deal. Those second round employees
may put in just as much effort, but due
to timing and the roles they fill, they
get a paycheck, while their colleagues
await the big payday. “When you have
two classes of workers it can create a
really toxic environment,” he says.
Unless you are planning to give every
employee their own private piece of
the company, you need to
acknowledge the challenges you’ll face
as you add staff who have no real stake
in your future, and ask yourself whether
hiring an employee to finish every task
is the right choice for you.
Outsourcing Eases Growing Pains
One of the easiest ways to minimize
internal conflict and keep your core
team focused on the strategic goals of
your business is to outsource work that
doesn’t fall into your area of expertise,
says Drake. “You remove a lot of
tension from your company and
corporate culture when you
outsource.”
Outsourcing companies, like TaskUs,
take over non-core tasks like customer
support and a wide range of back
office processes, which can include
content moderation, lead generation,
transcription, accounting, payroll and
more. While the nature of the process
that companies like TaskUs can take on
varies, the benefit does not. Working
with an outsourcing partner can free
up company leaders and overwhelmed
staff and help company operations
become more efficient and effective.
Outsourcing to third party providers
can deliver a number of strategic and
cultural benefits for fast growing
companies:
1. Eliminate Recruiting Headaches
Trying to hire a large number of
employees in a short amount of time
can be distracting, expensive and a
waste of limited resources, Drake
argues. If a company is on a fast
growth track, however, they can’t risk
ignoring customers while trying to find
people to manage essential tasks like
customer service. That’s especially true
given the fact that the average
“wronged” customer will tell about
8-16 people about their negative
experience – and that’s not even
accounting for the social media effect.
By outsourcing these processes,
companies not only eliminate the
strain and risk associated with
recruiting, but also gain the peace of
mind that comes from knowing that
the job is being done well. The net
effect is liberating and crucial for
intelligent growth. “The more you
outsource, the more you can focus on
your core business, and hiring for your
core team,” Drake says.
2. Tap a Global Talent Pool
Filling every open position locally can
be both difficult and expensive,
especially for businesses
headquartered in high-rent locales like
New York City or San Francisco. It’s
also completely unnecessary, says
Thumbtack’s Daniels. “It turns out that
the city where your company is located
doesn’t have a global monopoly on
talent.”
From the beginning, Daniels decided
to keep his company’s core team of
engineers and leaders in-house
because they built the technology and
strategy behind the company’s
business. Then they outsourced
everything else. “San Francisco is one
of the most expensive places in the
country to live,” he notes. “We want
the best talent, but that doesn’t mean
we need to hire them here.”
Today, Thumbtack has 50 employees in
its San Francisco office, and 500
outsourced team members, most of
whom reside in the Philippines. “We’ve
found amazing talent at much lower
rates and they still make a great living
where they work,” he says.
3. Avoid Employee Conflict
Outsourcing non-core jobs can prevent
the “Us versus Them” environment by
ensuring everyone you hire has a
strategic role in the company, says
Maddock. Just because you need to
get a job done, doesn’t mean you
need to hire an employee to do it.
“You want to keep your core team
focused on creating value,” he says. It’s
a good yardstick for prioritizing
recruitment. If the work you need done
doesn’t add strategic value to the
business then it is a role that could
potentially be outsourced.
4. Maintain Competitive Agility
Growth is rarely a steady process, and
there can be many peaks and valleys
along the way. If you are always hiring
to accommodate the peaks, you may
end up with a lot of disengaged
employees when business falls off, says
Kate Vitasek, faculty at the University of
Tennessee College of Business
Founder of consulting firm Supply
Chain Visions, and innovator of the
Vested business model.
Or worse, as you grow the skills you
need change, causing you to outgrow
the capabilities or your current staff.
That can put you in the awkward
position of having to fire one set of
employees while recruiting another.
Outsourcing can help minimize those
ebbs and flows by allowing you to take
advantage of third party resources
when you need them, and dial back
those services when you don’t. “When
you outsource you get the talent you
need and they can scale with you,” she
says.
That helps companies stay agile, which
makes them more competitive.
5. Expand Your Knowledge Base
You may be great at what you do, but
that doesn’t mean you know
everything about business, says Drake.
“Outsourcing provides companies with
a fresh perspective and a chance to
learn from a group that knows more
than you,” he says.
You may find inspiration from a
consultant, or discover a more efficient
way of doing things by partnering with
a service provider who specializes in
managing these business processes.
“When you outsource it’s partly about
getting a job done, and partly about
looking for inspiration,” he says.
It’s also a great way to spread the word
about your business. “Every time you
outsource, more people learn about
you, which can open new doors,” he
says. “It’s another opportunity to
cross-collateralize.”
How to Choose
Outsourcing can help companies that
are managing the host of issues that
come with rapid growth. But as with
any business decision, an outsourcing
relationship has to be thoughtfully
vetted and carefully managed if it is
going to work, says Vitasek. “A lot of
processes make sense for outsourcing,
but if you are going to do it, you have
to do it right.”
Once you decide to outsource, your
first goal is to choose the right partner
for your needs. “You don’t want to be
their biggest client or their smallest,”
Weir advises. “And you do want to be
sure they have the talent, experience
and commitment to meet your needs.”
Before shopping for an outsourcing
partner, define the kind of workers you
want and the skills you want them to
have, Daniels says. For example, you
may require a team who speaks perfect
English and has strong writing skills, or
you may be seeking a specific
technical certification, or business
experience. “Knowing who you want
working for you will help you vet
whether partners can meet your
needs.”
And don’t just take their word for it,
Weir advises. “Talk to their past
clients, get references and ask hard
questions like ‘tell me about a time
when you made a mistake,” he says.
“How companies handle mistakes says
a lot about how they deal with tough
situations.”
You should also ask about their
managerial process, Daniels advises.
Outsourcers like TaskUs, for instance,
closely manage your outsourced team
as part of their service delivery process,
while others will give you access to
talent but don’t offer managerial
support.
If you have the time and inclination to
manage an outsource team in-house,
management services may not be
important, but if you are in growth
mode, you will need a company that
can oversee the outsourced operation
for you, according to Daniels.
Manage Outcomes not Activities
When you chose an outsourcing
partner, remember that they are the
expert and treat them accordingly,
Vitasek says. Companies that think
they know more than your outsourcer
tell them what to do, instead of
working with them to find the most
effective solution. But that often leads
to ineffective work. “It is better to give
them your desired outcome, and ask
them the best way to get there.”
You also need to take the time to
educate the people who will perform
the tasks about your company and
your business goals, Weir says. “When
they understand how their work is
connected to your success, they will be
more engaged in the deliverables.”
To ensure those deliverables are being
met, set clear parameters for success
that align with your business goals and
track them at least once a month,
Vitasek says. For example, if you
outsource a marketing campaign and
your strategic goal is to generate sales,
then measure the success of that
outsourced project based on increased
sales – not pages of marketing material
generated.
“Too often companies pay for
transactions – an hour of coding, or
cost per call – when what they really
want is results,” she says.
Finally, be prepared to spend some
extra time and attention on the
outsourcing project as it ramps up, and
make sure the outsourcing team has a
single point of contact in your
company to address any issues.
It takes time to build an outsourcing
relationship and make sure things are
operating smoothly, Maddock says.
“You’ve got to be prepared to invest in
the relationship, and work with that
team to get the best results.”
For many businesses, rapid growth is
the Holy Grail. Eager entrepreneurs
envision their companies rising up
from anonymity to take their rightful
place on the Inc. 100 list, expanding
rapidly from a mid-sized firm to a
multi-billion dollar organization in a
matter of months.
It’s not a far-fetched idea – especially in
the tech industry. These days it may
seem like every startup with a bright
idea is going from obscure to global
giant overnight, but the reality is that
for every success story there are
hundreds of failures. Many emerging
growth companies may start on the
same track, but what differentiates
successful companies from failed
enterprises is how well company
leadership can maintain the integrity of
the strategic vision. Rapid growth can
often monopolize leadership’s time
forcing leaders to get caught up in the
day-to-day challenges and causing
companies to veer off track. And just
like that, rapid growth can turn into
rapid decline.
There are ways to avoid the crash,
however. Smart companies looking for
long-term sustainability figure out early
on that managing growth requires
discipline, focus and being open to
input. These companies know that
guarding corporate culture, prioritizing
activities, methodical hiring, guidance
from outside experts and working with
partners to hand off tasks that don’t
deliver core value are all part of the
toolkit for successful growth.
Culture and the Art of Growth
“The first rule of growth is to accept
that change is going to happen,” says
Bryce Maddock, co-founder of TaskUs.
“[Change] is inevitable, so all you can
do is plan for it.”
Growth – and the change it unleashes
– can pose a significant challenge to
the health and wellbeing of any
mid-sized business (revenues of
$5MM-$150MM). Culture, operations
and profitability can all be negatively
impacted if the organization does not
adequately plan for this change.
Ideally, growing companies find a
balance between accommodating
increased business flow and
maintaining the culture and core
competencies that gave them a
competitive edge in the first place.
Maintaining culture may not seem like
a priority at a time when a business
should be focused on quantitative
growth, but it is. Entrepreneurs spend
a lot of time creating a workplace that
will foster creativity, innovation and
partnership. Indeed, culture is one of
the most important aspects of a
business, and it is often the thing that
inspires the first round of employees to
invest their time and sweat equity in
building the business.
“The only thing of real importance that
leaders do is to create and manage
culture,” Edgar Schein, Professor at
MIT’s Sloan School of Management
once famously said. “If you do not
manage culture, it manages you.”
Many business leaders understand this
idea in theory. But when their
companies hit a growth trend they get
so caught up in growing to meet the
challenge, they fail to see how growth
is affecting the culture. And that is
when it falls apart, says David Drake,
founder of LDJ Capital, an investment
equity firm in New York. “Company
leaders have to be proactive in
building the culture of the company,
but when you grow too fast you can
easily lose control.”
Pressure on employees to produce
more, coupled with rapid hiring and
over stretched resources, can
transform a great place to work into a
place where leaders spend much of
their time putting out fires and dealing
with conflicts that can cause good
employees to move on.
To prevent that from happening,
company leaders need to ask
themselves three questions:
1.What do we love about our
culture?
2.How does our culture define us?
3.How do we scale the most
important aspects of our culture?
The third question can often be the
trickiest, because the little
extravagances – free soda in the
company fridge, or picking up dinner
to celebrate the end of a project – are
the kinds of perks that small teams
love. But that generosity can get out of
control when you have hundreds of
employees.
Business leaders need to understand
the motivations that drive culture – it’s
not about free drinks, it is about
acknowledging that your team is going
above and beyond for your success.
Once you understand the sentiment,
you can try to adapt your strategies to
accommodate growth, says Jaspar
Weir, president of TaskUs.
One of the hardest parts of this
transitional phase is delegating
authority, he says. “A lot of
entrepreneurs struggle to give up
control when their companies grow.”
Weir understands this challenge first
hand. TaskUs has experienced 100%
growth in the last year, and has been
on the Inc. 500|5000 list two years in a
row. It is an exciting time for the
company, but it has been challenging
to adapt, Weir admits.
“When we had 20 employees I had a
hand in every project,” he says. Now,
with more than 1100 employees, and
clients across the country, he can’t
manage the business in the same way.
“I have to trust others to take the lead
on those projects, so I can make the
right decisions for the company.”
Us vs. Them
Hiring is another key activity that
business leaders struggle with during
periods of rapid growth.
For rapidly growing companies, finding
talent can become an all-consuming
task that distracts leaders from the
more strategic goals of the business,
says Sander Daniels, founder and CEO
of Thumbtack, a provider of local
service professionals for consumer
jobs. “The best place to find talent is
your personal network, but if you need
to hire a lot of people fast, your
network won’t be enough.”
Ultimately, outfitting a 25-person
customer service team, or filling myriad
lower level positions that are vital to
running the business but not a part of
your core value proposition, is not a
good use of time or resources.
“The more time you spend hunting for
talent, the less time you have to drive
your business,” Daniels says.
It can be tempting to throw warm
bodies into chairs just to solve the
latest problem. But that’s a risky
approach as a few bad hires can
disrupt the entire organization, driving
turnover among top performers while
the laggards stay on board.
And even if you are able to fill those
positions with smart, skilled,
culturally-appropriate people, you may
find yourself facing an “Us vs. Them’
dilemma.
In lot of cases, talented college grads
will take low-level jobs in innovative
companies with the hope of becoming
a part of something bigger, Weir says.
But if they don’t see a path to
leadership or win a stake in the
business, it can become frustrating for
them and for the people they work
with – particularly if some employees
are treated differently than others.
In many companies, the first round of
employees received an ownership
stake in exchange for their hard work --
but later hires may not get the same
deal. Those second round employees
may put in just as much effort, but due
to timing and the roles they fill, they
get a paycheck, while their colleagues
await the big payday. “When you have
two classes of workers it can create a
really toxic environment,” he says.
Unless you are planning to give every
employee their own private piece of
the company, you need to
acknowledge the challenges you’ll face
as you add staff who have no real stake
in your future, and ask yourself whether
hiring an employee to finish every task
is the right choice for you.
Outsourcing Eases Growing Pains
One of the easiest ways to minimize
internal conflict and keep your core
team focused on the strategic goals of
your business is to outsource work that
doesn’t fall into your area of expertise,
says Drake. “You remove a lot of
tension from your company and
corporate culture when you
outsource.”
Outsourcing companies, like TaskUs,
take over non-core tasks like customer
support and a wide range of back
office processes, which can include
content moderation, lead generation,
transcription, accounting, payroll and
more. While the nature of the process
that companies like TaskUs can take on
varies, the benefit does not. Working
with an outsourcing partner can free
up company leaders and overwhelmed
staff and help company operations
become more efficient and effective.
Outsourcing to third party providers
can deliver a number of strategic and
cultural benefits for fast growing
companies:
1. Eliminate Recruiting Headaches
Trying to hire a large number of
employees in a short amount of time
can be distracting, expensive and a
waste of limited resources, Drake
argues. If a company is on a fast
growth track, however, they can’t risk
ignoring customers while trying to find
people to manage essential tasks like
customer service. That’s especially true
given the fact that the average
“wronged” customer will tell about
8-16 people about their negative
experience – and that’s not even
accounting for the social media effect.
By outsourcing these processes,
companies not only eliminate the
strain and risk associated with
recruiting, but also gain the peace of
mind that comes from knowing that
the job is being done well. The net
effect is liberating and crucial for
intelligent growth. “The more you
outsource, the more you can focus on
your core business, and hiring for your
core team,” Drake says.
2. Tap a Global Talent Pool
Filling every open position locally can
be both difficult and expensive,
especially for businesses
headquartered in high-rent locales like
New York City or San Francisco. It’s
also completely unnecessary, says
Thumbtack’s Daniels. “It turns out that
the city where your company is located
doesn’t have a global monopoly on
talent.”
From the beginning, Daniels decided
to keep his company’s core team of
engineers and leaders in-house
because they built the technology and
strategy behind the company’s
business. Then they outsourced
everything else. “San Francisco is one
of the most expensive places in the
country to live,” he notes. “We want
the best talent, but that doesn’t mean
we need to hire them here.”
Today, Thumbtack has 50 employees in
its San Francisco office, and 500
outsourced team members, most of
whom reside in the Philippines. “We’ve
found amazing talent at much lower
rates and they still make a great living
where they work,” he says.
3. Avoid Employee Conflict
Outsourcing non-core jobs can prevent
the “Us versus Them” environment by
ensuring everyone you hire has a
strategic role in the company, says
Maddock. Just because you need to
get a job done, doesn’t mean you
need to hire an employee to do it.
“You want to keep your core team
focused on creating value,” he says. It’s
a good yardstick for prioritizing
recruitment. If the work you need done
doesn’t add strategic value to the
business then it is a role that could
potentially be outsourced.
4. Maintain Competitive Agility
Growth is rarely a steady process, and
there can be many peaks and valleys
along the way. If you are always hiring
to accommodate the peaks, you may
end up with a lot of disengaged
employees when business falls off, says
Kate Vitasek, faculty at the University of
Tennessee College of Business
Founder of consulting firm Supply
Chain Visions, and innovator of the
Vested business model.
Or worse, as you grow the skills you
need change, causing you to outgrow
the capabilities or your current staff.
That can put you in the awkward
position of having to fire one set of
employees while recruiting another.
Outsourcing can help minimize those
ebbs and flows by allowing you to take
advantage of third party resources
when you need them, and dial back
those services when you don’t. “When
you outsource you get the talent you
need and they can scale with you,” she
says.
That helps companies stay agile, which
makes them more competitive.
5. Expand Your Knowledge Base
You may be great at what you do, but
that doesn’t mean you know
everything about business, says Drake.
“Outsourcing provides companies with
a fresh perspective and a chance to
learn from a group that knows more
than you,” he says.
You may find inspiration from a
consultant, or discover a more efficient
way of doing things by partnering with
a service provider who specializes in
managing these business processes.
“When you outsource it’s partly about
getting a job done, and partly about
looking for inspiration,” he says.
It’s also a great way to spread the word
about your business. “Every time you
outsource, more people learn about
you, which can open new doors,” he
says. “It’s another opportunity to
cross-collateralize.”
How to Choose
Outsourcing can help companies that
are managing the host of issues that
come with rapid growth. But as with
any business decision, an outsourcing
relationship has to be thoughtfully
vetted and carefully managed if it is
going to work, says Vitasek. “A lot of
processes make sense for outsourcing,
but if you are going to do it, you have
to do it right.”
Once you decide to outsource, your
first goal is to choose the right partner
for your needs. “You don’t want to be
their biggest client or their smallest,”
Weir advises. “And you do want to be
sure they have the talent, experience
and commitment to meet your needs.”
Before shopping for an outsourcing
partner, define the kind of workers you
want and the skills you want them to
have, Daniels says. For example, you
may require a team who speaks perfect
English and has strong writing skills, or
you may be seeking a specific
technical certification, or business
experience. “Knowing who you want
working for you will help you vet
whether partners can meet your
needs.”
And don’t just take their word for it,
Weir advises. “Talk to their past
clients, get references and ask hard
questions like ‘tell me about a time
when you made a mistake,” he says.
“How companies handle mistakes says
a lot about how they deal with tough
situations.”
You should also ask about their
managerial process, Daniels advises.
Outsourcers like TaskUs, for instance,
closely manage your outsourced team
as part of their service delivery process,
while others will give you access to
talent but don’t offer managerial
support.
If you have the time and inclination to
manage an outsource team in-house,
management services may not be
important, but if you are in growth
mode, you will need a company that
can oversee the outsourced operation
for you, according to Daniels.
Manage Outcomes not Activities
When you chose an outsourcing
partner, remember that they are the
expert and treat them accordingly,
Vitasek says. Companies that think
they know more than your outsourcer
tell them what to do, instead of
working with them to find the most
effective solution. But that often leads
to ineffective work. “It is better to give
them your desired outcome, and ask
them the best way to get there.”
You also need to take the time to
educate the people who will perform
the tasks about your company and
your business goals, Weir says. “When
they understand how their work is
connected to your success, they will be
more engaged in the deliverables.”
To ensure those deliverables are being
met, set clear parameters for success
that align with your business goals and
track them at least once a month,
Vitasek says. For example, if you
outsource a marketing campaign and
your strategic goal is to generate sales,
then measure the success of that
outsourced project based on increased
sales – not pages of marketing material
generated.
“Too often companies pay for
transactions – an hour of coding, or
cost per call – when what they really
want is results,” she says.
Finally, be prepared to spend some
extra time and attention on the
outsourcing project as it ramps up, and
make sure the outsourcing team has a
single point of contact in your
company to address any issues.
It takes time to build an outsourcing
relationship and make sure things are
operating smoothly, Maddock says.
“You’ve got to be prepared to invest in
the relationship, and work with that
team to get the best results.”
For many businesses, rapid growth is
the Holy Grail. Eager entrepreneurs
envision their companies rising up
from anonymity to take their rightful
place on the Inc. 100 list, expanding
rapidly from a mid-sized firm to a
multi-billion dollar organization in a
matter of months.
It’s not a far-fetched idea – especially in
the tech industry. These days it may
seem like every startup with a bright
idea is going from obscure to global
giant overnight, but the reality is that
for every success story there are
hundreds of failures. Many emerging
growth companies may start on the
same track, but what differentiates
successful companies from failed
enterprises is how well company
leadership can maintain the integrity of
the strategic vision. Rapid growth can
often monopolize leadership’s time
forcing leaders to get caught up in the
day-to-day challenges and causing
companies to veer off track. And just
like that, rapid growth can turn into
rapid decline.
There are ways to avoid the crash,
however. Smart companies looking for
long-term sustainability figure out early
on that managing growth requires
discipline, focus and being open to
input. These companies know that
guarding corporate culture, prioritizing
activities, methodical hiring, guidance
from outside experts and working with
partners to hand off tasks that don’t
deliver core value are all part of the
toolkit for successful growth.
Culture and the Art of Growth
“The first rule of growth is to accept
that change is going to happen,” says
Bryce Maddock, co-founder of TaskUs.
“[Change] is inevitable, so all you can
do is plan for it.”
Growth – and the change it unleashes
– can pose a significant challenge to
the health and wellbeing of any
mid-sized business (revenues of
$5MM-$150MM). Culture, operations
and profitability can all be negatively
impacted if the organization does not
adequately plan for this change.
Ideally, growing companies find a
balance between accommodating
increased business flow and
maintaining the culture and core
competencies that gave them a
competitive edge in the first place.
Maintaining culture may not seem like
a priority at a time when a business
should be focused on quantitative
growth, but it is. Entrepreneurs spend
a lot of time creating a workplace that
will foster creativity, innovation and
partnership. Indeed, culture is one of
the most important aspects of a
business, and it is often the thing that
inspires the first round of employees to
invest their time and sweat equity in
building the business.
“The only thing of real importance that
leaders do is to create and manage
culture,” Edgar Schein, Professor at
MIT’s Sloan School of Management
once famously said. “If you do not
manage culture, it manages you.”
Many business leaders understand this
idea in theory. But when their
companies hit a growth trend they get
so caught up in growing to meet the
challenge, they fail to see how growth
is affecting the culture. And that is
when it falls apart, says David Drake,
founder of LDJ Capital, an investment
equity firm in New York. “Company
leaders have to be proactive in
building the culture of the company,
but when you grow too fast you can
easily lose control.”
Pressure on employees to produce
more, coupled with rapid hiring and
over stretched resources, can
transform a great place to work into a
place where leaders spend much of
their time putting out fires and dealing
with conflicts that can cause good
employees to move on.
To prevent that from happening,
company leaders need to ask
themselves three questions:
1.What do we love about our
culture?
2.How does our culture define us?
3.How do we scale the most
important aspects of our culture?
The third question can often be the
trickiest, because the little
extravagances – free soda in the
company fridge, or picking up dinner
to celebrate the end of a project – are
the kinds of perks that small teams
love. But that generosity can get out of
control when you have hundreds of
employees.
Business leaders need to understand
the motivations that drive culture – it’s
not about free drinks, it is about
acknowledging that your team is going
above and beyond for your success.
Once you understand the sentiment,
you can try to adapt your strategies to
accommodate growth, says Jaspar
Weir, president of TaskUs.
One of the hardest parts of this
transitional phase is delegating
authority, he says. “A lot of
entrepreneurs struggle to give up
control when their companies grow.”
Weir understands this challenge first
hand. TaskUs has experienced 100%
growth in the last year, and has been
on the Inc. 500|5000 list two years in a
row. It is an exciting time for the
company, but it has been challenging
to adapt, Weir admits.
“When we had 20 employees I had a
hand in every project,” he says. Now,
with more than 1100 employees, and
clients across the country, he can’t
manage the business in the same way.
“I have to trust others to take the lead
on those projects, so I can make the
right decisions for the company.”
Us vs. Them
Hiring is another key activity that
business leaders struggle with during
periods of rapid growth.
For rapidly growing companies, finding
talent can become an all-consuming
task that distracts leaders from the
more strategic goals of the business,
says Sander Daniels, founder and CEO
of Thumbtack, a provider of local
service professionals for consumer
jobs. “The best place to find talent is
your personal network, but if you need
to hire a lot of people fast, your
network won’t be enough.”
Ultimately, outfitting a 25-person
customer service team, or filling myriad
lower level positions that are vital to
running the business but not a part of
your core value proposition, is not a
good use of time or resources.
“The more time you spend hunting for
talent, the less time you have to drive
your business,” Daniels says.
It can be tempting to throw warm
bodies into chairs just to solve the
latest problem. But that’s a risky
approach as a few bad hires can
disrupt the entire organization, driving
turnover among top performers while
the laggards stay on board.
And even if you are able to fill those
positions with smart, skilled,
culturally-appropriate people, you may
find yourself facing an “Us vs. Them’
dilemma.
In lot of cases, talented college grads
will take low-level jobs in innovative
companies with the hope of becoming
a part of something bigger, Weir says.
But if they don’t see a path to
leadership or win a stake in the
business, it can become frustrating for
them and for the people they work
with – particularly if some employees
are treated differently than others.
In many companies, the first round of
employees received an ownership
stake in exchange for their hard work --
but later hires may not get the same
deal. Those second round employees
may put in just as much effort, but due
to timing and the roles they fill, they
get a paycheck, while their colleagues
await the big payday. “When you have
two classes of workers it can create a
really toxic environment,” he says.
Unless you are planning to give every
employee their own private piece of
the company, you need to
acknowledge the challenges you’ll face
as you add staff who have no real stake
in your future, and ask yourself whether
hiring an employee to finish every task
is the right choice for you.
Outsourcing Eases Growing Pains
One of the easiest ways to minimize
internal conflict and keep your core
team focused on the strategic goals of
your business is to outsource work that
doesn’t fall into your area of expertise,
says Drake. “You remove a lot of
tension from your company and
corporate culture when you
outsource.”
Outsourcing companies, like TaskUs,
take over non-core tasks like customer
support and a wide range of back
office processes, which can include
content moderation, lead generation,
transcription, accounting, payroll and
more. While the nature of the process
that companies like TaskUs can take on
varies, the benefit does not. Working
with an outsourcing partner can free
up company leaders and overwhelmed
staff and help company operations
become more efficient and effective.
Outsourcing to third party providers
can deliver a number of strategic and
cultural benefits for fast growing
companies:
1. Eliminate Recruiting Headaches
Trying to hire a large number of
employees in a short amount of time
can be distracting, expensive and a
waste of limited resources, Drake
argues. If a company is on a fast
growth track, however, they can’t risk
ignoring customers while trying to find
people to manage essential tasks like
customer service. That’s especially true
given the fact that the average
“wronged” customer will tell about
8-16 people about their negative
experience – and that’s not even
accounting for the social media effect.
By outsourcing these processes,
companies not only eliminate the
strain and risk associated with
recruiting, but also gain the peace of
mind that comes from knowing that
the job is being done well. The net
effect is liberating and crucial for
intelligent growth. “The more you
outsource, the more you can focus on
your core business, and hiring for your
core team,” Drake says.
2. Tap a Global Talent Pool
Filling every open position locally can
be both difficult and expensive,
especially for businesses
headquartered in high-rent locales like
New York City or San Francisco. It’s
also completely unnecessary, says
Thumbtack’s Daniels. “It turns out that
the city where your company is located
doesn’t have a global monopoly on
talent.”
From the beginning, Daniels decided
to keep his company’s core team of
engineers and leaders in-house
because they built the technology and
strategy behind the company’s
business. Then they outsourced
everything else. “San Francisco is one
of the most expensive places in the
country to live,” he notes. “We want
the best talent, but that doesn’t mean
we need to hire them here.”
Today, Thumbtack has 50 employees in
its San Francisco office, and 500
outsourced team members, most of
whom reside in the Philippines. “We’ve
found amazing talent at much lower
rates and they still make a great living
where they work,” he says.
3. Avoid Employee Conflict
Outsourcing non-core jobs can prevent
the “Us versus Them” environment by
ensuring everyone you hire has a
strategic role in the company, says
Maddock. Just because you need to
get a job done, doesn’t mean you
need to hire an employee to do it.
“You want to keep your core team
focused on creating value,” he says. It’s
a good yardstick for prioritizing
recruitment. If the work you need done
doesn’t add strategic value to the
business then it is a role that could
potentially be outsourced.
4. Maintain Competitive Agility
Growth is rarely a steady process, and
there can be many peaks and valleys
along the way. If you are always hiring
to accommodate the peaks, you may
end up with a lot of disengaged
employees when business falls off, says
Kate Vitasek, faculty at the University of
Tennessee College of Business
Founder of consulting firm Supply
Chain Visions, and innovator of the
Vested business model.
Or worse, as you grow the skills you
need change, causing you to outgrow
the capabilities or your current staff.
That can put you in the awkward
position of having to fire one set of
employees while recruiting another.
Outsourcing can help minimize those
ebbs and flows by allowing you to take
advantage of third party resources
when you need them, and dial back
those services when you don’t. “When
you outsource you get the talent you
need and they can scale with you,” she
says.
That helps companies stay agile, which
makes them more competitive.
5. Expand Your Knowledge Base
You may be great at what you do, but
that doesn’t mean you know
everything about business, says Drake.
“Outsourcing provides companies with
a fresh perspective and a chance to
learn from a group that knows more
than you,” he says.
You may find inspiration from a
consultant, or discover a more efficient
way of doing things by partnering with
a service provider who specializes in
managing these business processes.
“When you outsource it’s partly about
getting a job done, and partly about
looking for inspiration,” he says.
It’s also a great way to spread the word
about your business. “Every time you
outsource, more people learn about
you, which can open new doors,” he
says. “It’s another opportunity to
cross-collateralize.”
How to Choose
Outsourcing can help companies that
are managing the host of issues that
come with rapid growth. But as with
any business decision, an outsourcing
relationship has to be thoughtfully
vetted and carefully managed if it is
going to work, says Vitasek. “A lot of
processes make sense for outsourcing,
but if you are going to do it, you have
to do it right.”
Once you decide to outsource, your
first goal is to choose the right partner
for your needs. “You don’t want to be
their biggest client or their smallest,”
Weir advises. “And you do want to be
sure they have the talent, experience
and commitment to meet your needs.”
Before shopping for an outsourcing
partner, define the kind of workers you
want and the skills you want them to
have, Daniels says. For example, you
may require a team who speaks perfect
English and has strong writing skills, or
you may be seeking a specific
technical certification, or business
experience. “Knowing who you want
working for you will help you vet
whether partners can meet your
needs.”
And don’t just take their word for it,
Weir advises. “Talk to their past
clients, get references and ask hard
questions like ‘tell me about a time
when you made a mistake,” he says.
“How companies handle mistakes says
a lot about how they deal with tough
situations.”
You should also ask about their
managerial process, Daniels advises.
Outsourcers like TaskUs, for instance,
closely manage your outsourced team
as part of their service delivery process,
while others will give you access to
talent but don’t offer managerial
support.
If you have the time and inclination to
manage an outsource team in-house,
management services may not be
important, but if you are in growth
mode, you will need a company that
can oversee the outsourced operation
for you, according to Daniels.
Manage Outcomes not Activities
When you chose an outsourcing
partner, remember that they are the
expert and treat them accordingly,
Vitasek says. Companies that think
they know more than your outsourcer
tell them what to do, instead of
working with them to find the most
effective solution. But that often leads
to ineffective work. “It is better to give
them your desired outcome, and ask
them the best way to get there.”
You also need to take the time to
educate the people who will perform
the tasks about your company and
your business goals, Weir says. “When
they understand how their work is
connected to your success, they will be
more engaged in the deliverables.”
To ensure those deliverables are being
met, set clear parameters for success
that align with your business goals and
track them at least once a month,
Vitasek says. For example, if you
outsource a marketing campaign and
your strategic goal is to generate sales,
then measure the success of that
outsourced project based on increased
sales – not pages of marketing material
generated.
“Too often companies pay for
transactions – an hour of coding, or
cost per call – when what they really
want is results,” she says.
Finally, be prepared to spend some
extra time and attention on the
outsourcing project as it ramps up, and
make sure the outsourcing team has a
single point of contact in your
company to address any issues.
It takes time to build an outsourcing
relationship and make sure things are
operating smoothly, Maddock says.
“You’ve got to be prepared to invest in
the relationship, and work with that
team to get the best results.”
For many businesses, rapid growth is
the Holy Grail. Eager entrepreneurs
envision their companies rising up
from anonymity to take their rightful
place on the Inc. 100 list, expanding
rapidly from a mid-sized firm to a
multi-billion dollar organization in a
matter of months.
It’s not a far-fetched idea – especially in
the tech industry. These days it may
seem like every startup with a bright
idea is going from obscure to global
giant overnight, but the reality is that
for every success story there are
hundreds of failures. Many emerging
growth companies may start on the
same track, but what differentiates
successful companies from failed
enterprises is how well company
leadership can maintain the integrity of
the strategic vision. Rapid growth can
often monopolize leadership’s time
forcing leaders to get caught up in the
day-to-day challenges and causing
companies to veer off track. And just
like that, rapid growth can turn into
rapid decline.
There are ways to avoid the crash,
however. Smart companies looking for
long-term sustainability figure out early
on that managing growth requires
discipline, focus and being open to
input. These companies know that
guarding corporate culture, prioritizing
activities, methodical hiring, guidance
from outside experts and working with
partners to hand off tasks that don’t
deliver core value are all part of the
toolkit for successful growth.
Culture and the Art of Growth
“The first rule of growth is to accept
that change is going to happen,” says
Bryce Maddock, co-founder of TaskUs.
“[Change] is inevitable, so all you can
do is plan for it.”
Growth – and the change it unleashes
– can pose a significant challenge to
the health and wellbeing of any
mid-sized business (revenues of
$5MM-$150MM). Culture, operations
and profitability can all be negatively
impacted if the organization does not
adequately plan for this change.
Ideally, growing companies find a
balance between accommodating
increased business flow and
maintaining the culture and core
competencies that gave them a
competitive edge in the first place.
Maintaining culture may not seem like
a priority at a time when a business
should be focused on quantitative
growth, but it is. Entrepreneurs spend
a lot of time creating a workplace that
will foster creativity, innovation and
partnership. Indeed, culture is one of
the most important aspects of a
business, and it is often the thing that
inspires the first round of employees to
invest their time and sweat equity in
building the business.
“The only thing of real importance that
leaders do is to create and manage
culture,” Edgar Schein, Professor at
MIT’s Sloan School of Management
once famously said. “If you do not
manage culture, it manages you.”
Many business leaders understand this
idea in theory. But when their
companies hit a growth trend they get
so caught up in growing to meet the
challenge, they fail to see how growth
is affecting the culture. And that is
when it falls apart, says David Drake,
founder of LDJ Capital, an investment
equity firm in New York. “Company
leaders have to be proactive in
building the culture of the company,
but when you grow too fast you can
easily lose control.”
Pressure on employees to produce
more, coupled with rapid hiring and
over stretched resources, can
transform a great place to work into a
place where leaders spend much of
their time putting out fires and dealing
with conflicts that can cause good
employees to move on.
To prevent that from happening,
company leaders need to ask
themselves three questions:
1.What do we love about our
culture?
2.How does our culture define us?
3.How do we scale the most
important aspects of our culture?
The third question can often be the
trickiest, because the little
extravagances – free soda in the
company fridge, or picking up dinner
to celebrate the end of a project – are
the kinds of perks that small teams
love. But that generosity can get out of
control when you have hundreds of
employees.
Business leaders need to understand
the motivations that drive culture – it’s
not about free drinks, it is about
acknowledging that your team is going
above and beyond for your success.
Once you understand the sentiment,
you can try to adapt your strategies to
accommodate growth, says Jaspar
Weir, president of TaskUs.
One of the hardest parts of this
transitional phase is delegating
authority, he says. “A lot of
entrepreneurs struggle to give up
control when their companies grow.”
Weir understands this challenge first
hand. TaskUs has experienced 100%
growth in the last year, and has been
on the Inc. 500|5000 list two years in a
row. It is an exciting time for the
company, but it has been challenging
to adapt, Weir admits.
“When we had 20 employees I had a
hand in every project,” he says. Now,
with more than 1100 employees, and
clients across the country, he can’t
manage the business in the same way.
“I have to trust others to take the lead
on those projects, so I can make the
right decisions for the company.”
Us vs. Them
Hiring is another key activity that
business leaders struggle with during
periods of rapid growth.
For rapidly growing companies, finding
talent can become an all-consuming
task that distracts leaders from the
more strategic goals of the business,
says Sander Daniels, founder and CEO
of Thumbtack, a provider of local
service professionals for consumer
jobs. “The best place to find talent is
your personal network, but if you need
to hire a lot of people fast, your
network won’t be enough.”
Ultimately, outfitting a 25-person
customer service team, or filling myriad
lower level positions that are vital to
running the business but not a part of
your core value proposition, is not a
good use of time or resources.
“The more time you spend hunting for
talent, the less time you have to drive
your business,” Daniels says.
It can be tempting to throw warm
bodies into chairs just to solve the
latest problem. But that’s a risky
approach as a few bad hires can
disrupt the entire organization, driving
turnover among top performers while
the laggards stay on board.
And even if you are able to fill those
positions with smart, skilled,
culturally-appropriate people, you may
find yourself facing an “Us vs. Them’
dilemma.
In lot of cases, talented college grads
will take low-level jobs in innovative
companies with the hope of becoming
a part of something bigger, Weir says.
But if they don’t see a path to
leadership or win a stake in the
business, it can become frustrating for
them and for the people they work
with – particularly if some employees
are treated differently than others.
In many companies, the first round of
employees received an ownership
stake in exchange for their hard work --
but later hires may not get the same
deal. Those second round employees
may put in just as much effort, but due
to timing and the roles they fill, they
get a paycheck, while their colleagues
await the big payday. “When you have
two classes of workers it can create a
really toxic environment,” he says.
Unless you are planning to give every
employee their own private piece of
the company, you need to
acknowledge the challenges you’ll face
as you add staff who have no real stake
in your future, and ask yourself whether
hiring an employee to finish every task
is the right choice for you.
Outsourcing Eases Growing Pains
One of the easiest ways to minimize
internal conflict and keep your core
team focused on the strategic goals of
your business is to outsource work that
doesn’t fall into your area of expertise,
says Drake. “You remove a lot of
tension from your company and
corporate culture when you
outsource.”
Outsourcing companies, like TaskUs,
take over non-core tasks like customer
support and a wide range of back
office processes, which can include
content moderation, lead generation,
transcription, accounting, payroll and
more. While the nature of the process
that companies like TaskUs can take on
varies, the benefit does not. Working
with an outsourcing partner can free
up company leaders and overwhelmed
staff and help company operations
become more efficient and effective.
Outsourcing to third party providers
can deliver a number of strategic and
cultural benefits for fast growing
companies:
1. Eliminate Recruiting Headaches
Trying to hire a large number of
employees in a short amount of time
can be distracting, expensive and a
waste of limited resources, Drake
argues. If a company is on a fast
growth track, however, they can’t risk
ignoring customers while trying to find
people to manage essential tasks like
customer service. That’s especially true
given the fact that the average
“wronged” customer will tell about
8-16 people about their negative
experience – and that’s not even
accounting for the social media effect.
By outsourcing these processes,
companies not only eliminate the
strain and risk associated with
recruiting, but also gain the peace of
mind that comes from knowing that
the job is being done well. The net
effect is liberating and crucial for
intelligent growth. “The more you
outsource, the more you can focus on
your core business, and hiring for your
core team,” Drake says.
2. Tap a Global Talent Pool
Filling every open position locally can
be both difficult and expensive,
especially for businesses
headquartered in high-rent locales like
New York City or San Francisco. It’s
also completely unnecessary, says
Thumbtack’s Daniels. “It turns out that
the city where your company is located
doesn’t have a global monopoly on
talent.”
From the beginning, Daniels decided
to keep his company’s core team of
engineers and leaders in-house
because they built the technology and
strategy behind the company’s
business. Then they outsourced
everything else. “San Francisco is one
of the most expensive places in the
country to live,” he notes. “We want
the best talent, but that doesn’t mean
we need to hire them here.”
Today, Thumbtack has 50 employees in
its San Francisco office, and 500
outsourced team members, most of
whom reside in the Philippines. “We’ve
found amazing talent at much lower
rates and they still make a great living
where they work,” he says.
3. Avoid Employee Conflict
Outsourcing non-core jobs can prevent
the “Us versus Them” environment by
ensuring everyone you hire has a
strategic role in the company, says
Maddock. Just because you need to
get a job done, doesn’t mean you
need to hire an employee to do it.
“You want to keep your core team
focused on creating value,” he says. It’s
a good yardstick for prioritizing
recruitment. If the work you need done
doesn’t add strategic value to the
business then it is a role that could
potentially be outsourced.
4. Maintain Competitive Agility
Growth is rarely a steady process, and
there can be many peaks and valleys
along the way. If you are always hiring
to accommodate the peaks, you may
end up with a lot of disengaged
employees when business falls off, says
Kate Vitasek, faculty at the University of
Tennessee College of Business
Founder of consulting firm Supply
Chain Visions, and innovator of the
Vested business model.
Or worse, as you grow the skills you
need change, causing you to outgrow
the capabilities or your current staff.
That can put you in the awkward
position of having to fire one set of
employees while recruiting another.
Outsourcing can help minimize those
ebbs and flows by allowing you to take
advantage of third party resources
when you need them, and dial back
those services when you don’t. “When
you outsource you get the talent you
need and they can scale with you,” she
says.
That helps companies stay agile, which
makes them more competitive.
5. Expand Your Knowledge Base
You may be great at what you do, but
that doesn’t mean you know
everything about business, says Drake.
“Outsourcing provides companies with
a fresh perspective and a chance to
learn from a group that knows more
than you,” he says.
You may find inspiration from a
consultant, or discover a more efficient
way of doing things by partnering with
a service provider who specializes in
managing these business processes.
“When you outsource it’s partly about
getting a job done, and partly about
looking for inspiration,” he says.
It’s also a great way to spread the word
about your business. “Every time you
outsource, more people learn about
you, which can open new doors,” he
says. “It’s another opportunity to
cross-collateralize.”
How to Choose
Outsourcing can help companies that
are managing the host of issues that
come with rapid growth. But as with
any business decision, an outsourcing
relationship has to be thoughtfully
vetted and carefully managed if it is
going to work, says Vitasek. “A lot of
processes make sense for outsourcing,
but if you are going to do it, you have
to do it right.”
Once you decide to outsource, your
first goal is to choose the right partner
for your needs. “You don’t want to be
their biggest client or their smallest,”
Weir advises. “And you do want to be
sure they have the talent, experience
and commitment to meet your needs.”
Before shopping for an outsourcing
partner, define the kind of workers you
want and the skills you want them to
have, Daniels says. For example, you
may require a team who speaks perfect
English and has strong writing skills, or
you may be seeking a specific
technical certification, or business
experience. “Knowing who you want
working for you will help you vet
whether partners can meet your
needs.”
And don’t just take their word for it,
Weir advises. “Talk to their past
clients, get references and ask hard
questions like ‘tell me about a time
when you made a mistake,” he says.
“How companies handle mistakes says
a lot about how they deal with tough
situations.”
You should also ask about their
managerial process, Daniels advises.
Outsourcers like TaskUs, for instance,
closely manage your outsourced team
as part of their service delivery process,
while others will give you access to
talent but don’t offer managerial
support.
If you have the time and inclination to
manage an outsource team in-house,
management services may not be
important, but if you are in growth
mode, you will need a company that
can oversee the outsourced operation
for you, according to Daniels.
Manage Outcomes not Activities
When you chose an outsourcing
partner, remember that they are the
expert and treat them accordingly,
Vitasek says. Companies that think
they know more than your outsourcer
tell them what to do, instead of
working with them to find the most
effective solution. But that often leads
to ineffective work. “It is better to give
them your desired outcome, and ask
them the best way to get there.”
You also need to take the time to
educate the people who will perform
the tasks about your company and
your business goals, Weir says. “When
they understand how their work is
connected to your success, they will be
more engaged in the deliverables.”
To ensure those deliverables are being
met, set clear parameters for success
that align with your business goals and
track them at least once a month,
Vitasek says. For example, if you
outsource a marketing campaign and
your strategic goal is to generate sales,
then measure the success of that
outsourced project based on increased
sales – not pages of marketing material
generated.
“Too often companies pay for
transactions – an hour of coding, or
cost per call – when what they really
want is results,” she says.
Finally, be prepared to spend some
extra time and attention on the
outsourcing project as it ramps up, and
make sure the outsourcing team has a
single point of contact in your
company to address any issues.
It takes time to build an outsourcing
relationship and make sure things are
operating smoothly, Maddock says.
“You’ve got to be prepared to invest in
the relationship, and work with that
team to get the best results.”