How you can retain the start-up magic

How do you balance the demands of an expanding business with the desire to retain the culture that made you successful?

When a start-up effort succeeds, company leaders typically respond, "Great. Now let's go bigger."

This provides affirmation, but it also presents the start-up team with two challenges: identifying newer markets and getting the right people.

In other words, the typical problems associated with scalability.

New markets cannot be scaled in a linear fashion. And adding more people adds complexity and bureaucracy, and stands in the way of the open communication and creativity.

"The biggest problem in scaling up is the founder's fear of losing control," says Debabrat Mishra, director, Hay Group India.

"The founder's mindset with its need for control and predictability are the first risks to growth and innovation. Then, if you start hiring stereotypes or people like yourself, and don't look for diversity of skill sets, you end up hiring clones and new ideas die. Even processes that need to be in place as you scale up can come in the way of experimentation."

So how does an enterprise maintain a start-up culture as the business grows?

How can it balance the demands of an expanding business with the desire to retain a great culture?

Experts say the first task for a start-up leader is to galvanise his team around certain values and guidelines so that they don't sacrifice the "can-do" attitude that made their organisation successful at the altar of circumspection.

So while change is inevitable, just like in business operations, product development, sales and marketing, changes in culture and the scale of operations should be planned by making it part of the overall corporate strategy.

Second, you need to keep the communication channels open and transparent.

As a company grows, different teams are formed, along with new offices and divisions.

Open communication can be a great reinforcement from the top down, and it is important to leave room for feedback at the individual and local level. And third, be prepared to try new things, fail and get back up.

While this may seem like time and energy that could be better spent on driving income/profit generating initiatives, in reality such investments reap long-term performance and financial rewards, and can safeguard your company's future in business.

As Supam Maheshwari, co-founder and CEO, FirstCry, puts it, "Entrepreneurship is a cult. It is about remaining in a high entropy state. It is driven right from the top."

The biggest learning for Maheshwari was how to build a strong architecture of people to drive the company's culture.

"My biggest learning was how to hire and groom people. We have to find people with attitude first and then aptitude. Remember you can build competence, but you can never change attitude."

Experts say the biggest mistakes companies commit while hiring is focusing on experts, and not learners, and expecting them to fit-in.

"When you bring people make sure you do not ask them to fit in. Bring in managers who are learners and look out for diversity in skills," says Mishra of Hay Group.

When you hire candidates for their past successes, they tend to replicate the same path over and over again.

If you are hiring people who come with a strong orientation to learn and take risks, they are a better fit and are good at sustaining the spirit of innovation in the organisation.

"Innovation needs diversity of experiences," Mishra adds. "It is about building a hacker mentality and constantly challenging the status quo."

To an extent, the right sort of incentives and awards can foster the right sort of culture, but, by itself, that is not enough.

At Freecharge, incentives are not limited to earning monetary benefits.

"Incentives serve as a platform to help employees become exceptional performers. We offer incentives and rewards for innovation, which in turn spur entrepreneurial activities," says Kunal Shah, co-founder and CEO.

The company organises regular hackathon events to encourage employees to come up with new product ideas/features.

The best ideas are rewarded.

To keep the spirit of innovation alive, Freecharge employees work in cross-functional teams.

The idea is to encourage employees to trained in competencies that are not limited to just their own domain.

At Hector Beverages, 80 per cent of the top leadership time is devoted to non-operational activities.

"The idea is to focus more on fostering engagement, thinking about new ideas," says Neeraj Kakkar, CEO and founder.

Design thinking and a lean start-up model are the two philosophies on which the company is based.

"It is critical to keep design at the core of everything you do -- right from product designing to branding etc. This makes hiring a critical process for us."

Technology start-up Hike Messenger has divided the company into independent autonomous cross-functional teams. This allows for experimentation and quick feedback.

"We are part of a highly competitive and volatile technology ecosystem," says Kavin Bharti Mittal, CEO, Hike.

"So we have developed multiple squads. Each squad has product leaders and a mission. So if messaging is our core, under messaging, we have several mini squads such as content, privacy etc."

The company has at least 20 squads running at any given time. This allows Hike to work fast and release at least 30 updates every six months.

To boost innovation and risk taking at all levels, Phillips Consumer Lifestyle has broken down its business into smaller units that are treated as independent businesses.

"As we introduce newer business we try and cocoon it like a start-up," says Krish Shankar, head of HR, Indian sub-continent at Philips.

"When we launched home healthcare, we built a separate business with a different marketing head and his team."

In sum, the key to retaining a start-up culture is commitment. While it is not a financial metric you can report to investors, it is the single most important ingredient to grow the business ... any business.

Illustration: Dominic Xavier/Rediff.com