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How to Grow As a Startup After First Three Years Every entrepreneur fantasizes about scaling, but first ensure you've got a good reason for scaling

By Kevin Ng

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Nine in 10 startups fail within the first three years. Those which survive sometimes struggle with the growth plan.

Here are two tips to help you go beyond survival and thrive as a start-up.

Time your scaling

Every entrepreneur fantasizes about scaling. But first, ensure you've got a good reason for scaling. Most entrepreneurs overlook this critical point as their minds are clouded by the hows of scaling.

Here's the secret: once you're providing real and significant value, the hows may not be as complicated.

Once you have that sorted out, ask yourself the following:

  • What do I need for scaling? And why?

Three common things needed for scaling are people, systems and product.

  • Do I have the right team, the right size with the right mindset?

Larger is not necessarily better, as research shows that a team larger than five eventually spends more time on coordination than doing the actual work.

Moreover, hiring is just the first step. You've got to ensure your new hires understand and buy into your vision, what your company represents and find out their personal goals to jointly craft out a progression for them that will incentivize them to not only stay with your startup for the long haul but to truly put in their best efforts.

  • Are your systems ready to scale?

The common view is that scaling involves increasing the number of formal processes and layers of management and that inevitably obscures your view of the systems but is a necessary evil.

But what if the opposite should be true instead? Instead, you should be taking a closer look to eliminate unnecessary processes, reduce bloat in processes, automate manual procedures and outsource low value-add and non-key processes.

An example of such was former General Motor's CEO Ed Whitacre, who's often credited with turning the firm around by significantly reducing the number of reports employees had to file.

That said besides removal, there are also new processes that may need to be created or existing ones to be revamped to meet the new scaled-up needs else your startup will risk severe breakages.

So don't just scale up, but scale smart and relentlessly pursue constant improvement of your systems ensuring they are consistently able to support your new scale at a lower operational overhead.

  • Have I ensured accountability measures?

Scaling without accountability measures is suicidal, especially when you are scaling your team. Bob Sutton, organizational behavior expert at Stanford's School of Engineering, defines scaling as spreading excellence. The best way of spreading excellence is by holding everyone accountable for the success of your startup's growth, irrespective of their role or title.

Challenging your employees

When you first begin, your first employees are often fervent believers in the vision of your business and have trust in you. However, that changes as your team expands beyond a critical number of around 20 to 50, as now you'll no longer have time to interact with every team member personally on a regular basis.

And at this stage, new hires and your existing employees begin to be increasingly concerned about possible career paths or growth opportunities. While it may seem like something to toss to HR, you should be involved in proactive planning to address employees' growth.

The best way to address this is by personally challenging your employees with new projects or giving them the opportunity to take on new responsibilities. But now, your challenge will be to create systems and leadership to take on that role for you.

This is important also because setting the right kind of challenge for employees helps foster a culture of innovation within your company, as shown in multiple studies. A 2014 review of several meta-analyses at the University of the Basque Country found that 67 percent of people placed in a role with challenges demonstrated above-average creativity in their performance, compared to only 33 percent of those in easy jobs.

And if a startup loses its drive to innovate, can we still truly call it a startup?

So, how can you achieve this?

  • Find the optimal challenge

Unfortunately, the relationship between challenge and innovativeness is non-linear. Thus, you've got to establish a sweet spot by ensuring that employees have a high degree of skills required to work on a task that you and your employee would define as challenging or risk them simply getting frustrated.

  • Use the Pygmalion effect and recognize potential in employees publicly

We, humans, are social creatures by nature, and the Pygmalion effect takes advantage of that, what you publicly callout and praise will materialize as employees will feel encouraged to step up to the challenge.

  • Use Google's 70 per cent rule

The fear of failure often prevents employees from setting and taking on great challenges. Moreover, employees' performance indicators are often linked to their compensation, further increasing the perceived costs of failure.

Why not follow Google? Google uses Objectives and Key Results (OKRs) instead of the traditional Key Performance Indicators (KPIs). Most importantly, OKRs aren't linked to pay and employees are encouraged to attain only around 60-70 percent of OKRs. A level that nears 100 percent drives the management to signal "you should be aiming higher", in contrast to "well-done" in KPIs.

Next time you set a new challenge or goal for your employees, consider using Google's 70 percent rule helps to reduce the associated risks of failure and liberates them from playing it too safe.

  • Make failure an acceptable part of learning

What you do as a leader after an employee encounters a failure, speaks volume about your real attitude and commitment toward employees' growth. It's important to help employees get back up as soon as possible.

The best approach is by having a one-on-one discussion that's framed as a learning opportunity genuinely, and not overly critical. Always reinforce the message that you regard failure as part of growth and that you see new tasks ahead for your employee to continue stretching his or her potential.

In essence, your role to help your startup thrive goes beyond your product, your hustling or even your leadership sphere of influence but into creating systems, culture and a team which can consistently grow alongside you to break new grounds.

Kevin Ng

Managing Director, ThunderQuote


Kevin Ng is a Managing director of Thunderquote.com, ASEAN's most comprehensive business services portal - www.thunderquote.com), with clients like NTUC, ST Kinetics and Singapore Press Holdings. He was the Student Entrepreneur of the Year 2015 for Singapore (GSEA National Champion), and was crowned World Top 6 Student Entrepreneurs (Global Grand Finalist) in Washington D.C. on behalf of the nation.

A veteran technology entrepreneur certified in project management and quality assurance(CAPM/Six Sigma), he has worked on over five technology product fields, including mPOS, event app engines, manpower scheduling, Web ERP systems, and more.

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