Building a scalable and high-performing organization
As businesses grow, it becomes increasingly important to create a scalable and high-performing organization. Simply increasing capacity is not enough. It's crucial to balance high autonomy and high alignment to achieve maximum efficiency.
Efficiency and Alignment: Keys to Building a Successful Organization
Highly autonomous teams require less capacity, while highly aligned teams lead to greater efficiency. Achieving both can be challenging, but it is crucial for success.
As a company scales, it becomes more feasible to bring on senior personnel to focus on processes. A smaller team of 20 people may be manageable by a single CEO, but with 200 people, it's necessary to establish alignment and rely on a team. Alignment is the big brother of processes, as alignment consumes less time.
In order to achieve the goals of autonomy, certain traits can be observed in "Northstar" companies that are highly efficient and have low employee churn. These include delegated authority within teams, transparency in how they operate with data, and attempts to be load-dependent on each other internally. Access to data is not only provided but also contextualized, allowing for better-informed decisions. While full internal independence may not be achievable, striving for maximum autonomy and alignment can lead to a highly efficient and successful organization.
To scale an organization, it's important to have a clear reason and strategy behind it, rather than doing it for the sake of growth. It's better to scale in stages, allowing time for the organization to adjust and be efficient while staying focused on the customer and not compromising on the vision.
Clear Strategy and KPIs: Creating Alignment from Top to Bottom
To create a successful strategy, a top-down and bottom-up approach is required. The company strategy should be clear and focused, with boards, CEOs, and management working together to deliver it.
Additionally, there needs to be a bottom-up approach where teams take ownership of specific domains and work towards achieving the goals set by the strategy. This approach creates alignment within the organization and allows for everyone to prioritize what they believe in to deliver successful results.
It takes about three to six months to achieve alignment between management, boards, and investors, including a period of one to three months to clarify expectations, followed by giving the team enough time to fully understand and meet those expectations.
When choosing a focus area, it is important to select something relatable and influenceable by the team, which should drive key performance indicators (KPIs) and the business case.
Note: Avoid using Annual Recurring Revenue (ARR) as it may not be well understood or relatable. In the case of Smallpdf, examples of relevant KPIs are the number of processed documents, the number of customers, and the percentage of micro-businesses that fit the Ideal Customer Profile (ICP) to ensure sustainable growth.
Clear Strategy and KPIs: Creating Alignment from Top to Bottom
To create a KPI framework, start by identifying market opportunities and structuring the product or domains around them to align with the company's ambitions, then build the most important map for the teams using those domains. Next to context-focused domains, supporting teams such as growth, demand, and sales should be aligned with the company's go-to-market strategy. Their relative importance will depend on the company's belief in their progress. Show your team weekly numbers, make them aware of where you need to go, and focus on the quality of users.
In conclusion, building a scalable and high-performing organization requires a balance of autonomy and alignment, a clear strategy, and relevant KPIs. By implementing these strategies and striving for maximum efficiency, businesses can differentiate themselves and achieve long-term success.
About Dennis Just
Dennis Just is a seasoned entrepreneur and manager with an obsession for beautiful products, scalable services, and growth.
At the age of 16, he founded his first company in the e-sports sector, which he sold three years later after finishing school. After studying at the Technical University (TU) in Berlin, Dennis founded, managed (and sold) several companies before he joined Smallpdf as CEO in 2019 where he's (among other things) responsible for their industry-leading efficiency metrics.
