Growth, scaling and expansion—these are the mantras echoed by startups and mature organizations alike. According to Accenture, a staggering 73% of executives are setting their sights on delivering "double-digit growth by 2025." This ambition, however, is fraught with challenges that can easily derail even the most promising companies.
Liam, the CEO of a rapidly expanding cloud service provider, found himself navigating these very challenges. His company has grown from 300 to 700 employees in just three years, and the recent acquisition that positioned them as the largest cloud service provider in the region only intensified the pressure. “I don’t recognize people in the corridors anymore," he told me. "How can we keep being effective in reaching our targets when we don’t have the close, connected teamwork we used to have?”
Liam, the CEO of a rapidly expanding cloud service provider, found himself navigating these very challenges. His company has grown from 300 to 700 employees in just three years, and the recent acquisition that positioned them as the largest cloud service provider in the region only intensified the pressure. “I don’t recognize people in the corridors anymore," he told me. "How can we keep being effective in reaching our targets when we don’t have the close, connected teamwork we used to have?”
The demand to sustain this growth while managing operations effectively is a tightrope that many leaders like Liam must walk.
Working with many leaders of fast-growing companies, I’ve noticed five major challenges, or growth traps, most of them fall into.
Let’s break them down with examples of how you can recognize them and how they can be effectively addressed:
1. Lack Of Formal Processes
In the rush to grow, companies often operate with ad-hoc processes, which might work in the early stages but can crumble under the weight of expansion.
A retail tech company I worked with struggled with R&D processes. Every time they started a new project, they felt like they were reinventing the wheel. What worked well when they were a team of 10 people became a total disaster when the R&D team grew to 100 and they had to partner with much larger product and engineering teams.
If you have a similar issue, start drafting scalable processes early on. They might evolve over time, but it lays a good foundation for ensuring consistency and efficiency as the company grows.
2. Overburdened Founders
Founders who wore too many hats in the early days often find themselves stretched too thin as the company scales.
VC fund founders hired me when they realized that they were overloaded with operational work. They wanted to move to their next projects and build strategic relationships with the company's major partners and clients, but a growing team and operational workload didn’t give them space for any of that.
As the company grows, make sure you hire strong team members who are ready to take on ambitious tasks. As Matthijs Welle, CEO of Mews, shared in an interview with me, “I’ve embraced that I should hire smarter people than me below me in my leadership team because they’ll lift me. ... In the early days, I wanted to be involved in everything. I wanted to prove to people that I could do it. And I've actually learned that there are better people for certain jobs and specialties. So just bring them in. And they will raise you” and drive the organization forward.
3. Communication Gaps
Rapid expansion and bringing new people on board can lead to breakdowns in communication as you try to scale communication along with the company's growth.
One of the very common consequences of communication gaps is a duplication of projects or other initiatives in an organization. One CHRO shared with me that they once discovered that three internal task-tracking platforms were being used by different teams, unaware that there was a company-wide initiative to implement a unified platform for all employees.
Regularly revisit your internal communication strategy to make sure information reaches every employee top-down, bottom-up and across units. Tom Gibby, co-founder and CMO of The Bot Platform, shares in his article that “the most successful companies understand the importance of two-way communication. They know that when staff are engaged and feel supported, they do their best work and generally stay at the company longer.”
4. Departmental Silos
As organizations grow, departments can become siloed, focusing on their own goals rather than the company’s overall objectives.
Liam’s organization painfully experienced this. C-suite members who used to work as a team in the early days now started to fight for resources and for their functional goals more than they looked at the whole company trajectory.
Try to focus on leadership team goals more than functional team goals. Your C-suite members are leadership team members first and functional team leaders second. It means that being a team member is more important than being a leader. Start incorporating teamwork and followership more than leadership.
5. Cultural Shift
Rapid growth often leads to a dilution of the original company culture, making it harder to maintain employee engagement and retention.
The founding team of a telecom startup that once thrived on a flat organizational structure, rapid changes and very transparent communication felt the shift when they now had to be more mindful about their communication and decisions because the number of people involved grew significantly and the cost of mistakes became much higher. The thing that helped them keep their highly ambitious, innovative culture was the focus on values.
Be intentional about preserving and nurturing the company culture, even as new employees are onboarded and the organization expands. Stacey Walker, CHRO at Fortive, shares in her article that “developing a consistent culture of continuous improvement and deep belief in achieving more can help drive innovation, foster diverse perspectives and improve business outcomes.”
Final Thoughts
I've seen companies fall into these traps, causing them to lose the speed, flexibility and efficiency they once had at a smaller scale. To avoid this, organizations need to prepare for future growth from day one by establishing scalable practices.
This involves being mindful of current organizational capabilities and adjusting norms and processes at every stage of the company’s growth. By doing so, companies can continue to grow while maintaining the flexibility and effectiveness that made them successful in the first place.