Staying Small While Getting Big

Upon returning to Starbucks as CEO in 2007, Howard Shultz discovered that significant areas of his business had departed from the company’s earlier vision and level of quality, creating ‘sterile’ and ‘cookie cutter’ experiences for customers. The diagnosis? That Starbucks had slowly lost its way in the new millennium, and that the company needed to return to its roots. Later, Howard explained that, "in many ways the battle cry in the company is how do you get this big and stay small."

This probably sounds familiar. Most large companies that have amassed a significant number of employees, products, and process suffer some sort of existential crisis eventually. Some recover, others don’t. And others face these very challenges today.

For entrepreneurs and leaders in an exponentially-growing organization, it becomes far too easy to care about issues that were previously unfathomable: company politics, processes and bureaucracy. You start to move like molasses, paralyzed by your own success and scale. Almost anything can monopolize your attention and energy except for the actual work that got you to where you are in the first place. 

Some fortunate companies have solved this problem, though. It appears that the best run companies are those that are able to live in two worlds simultaneously: having the systems to operate at scale, while still acting like a startup. With nearly 4,000 employees, Facebook may very well be as nimble as it was at 400, or even 40. Steve Jobs notoriously led Apple like the world’s biggest startup.  

The Paradox of Scale

Scale is obviously desirable. It allows you to have much broader impact, you have far greater resources, and is generally a marker of significant achievement. But scale can also be dangerous, threatening the very success that enabled it.

Over time, scale corrupts how an organization operates: managers are the last to know about a trend on the front line; many of the best ideas go un-implemented because they don’t get buy-in from leadership; and worse, you stop hiring the risk-takers and start bringing on those who are good at maintaining the status quo.

This is the surest way to get disrupted.

Jeff Bezos has this figured out, “As companies grow, there is a danger that novel ideas get snuffed out by managers’ desire to conform and play it safe… You get social cohesion at the expense of truth.” Which is precisely counter to the startup mantra and advantage – take risks, fail fast – which makes it possible to disrupt major industries and incumbents. Yet we continue to forget how important it is that we build – and rebuild – our companies in such a way to support this velocity.

But scale doesn’t just corrupt the speed at which an organization moves, it also prevents organizations from thinking like startups about their products and services. 

In reference to how disruptive products like Facebook are built, Paul Graham, creator of the famous startup incubator YCombinator, notes that “the way to do really big things seems to be to start with deceptively small things... Want to make the universal web site? Start by building a site for Harvard undergrads to stalk one another.” And while the message was aimed at startups, this advice is equally relevant for big companies that are entering new markets or creating new products. 

The scale of a company is inversely proportional to your ability to execute on these small, narrow market disruptions that are essential to building up meaningful businesses. And often these dynamic structures are uncomfortably difficult to a big company’s bureaucracy, processes, and resource allocation process. It means diving into the most atomic of issues, building teams rapidly, and starting small and getting things done quickly – all tactics inconsistent with an organization of any scale.  Jeff Bezos implemented the concept of two-pizza teams at Amazon, making sure that, quite literally, “any team should be small enough that it could be fed with two pizzas.”

And of course, the quintessential example of this style of leadership was in Steve Jobs. Jobs famously declared that the original Macintosh team should be no larger than 100 people, and since this point, most teams and product and design groups at Apple have been similarly tight and high leveraged, much like its startup roots. 

Fighting Scale

Everyone wants to scale the way Apple did, but few are able to put the infrastructure and processes in place to do so. Business schools certainly don’t emphasize this. And it’s all too easy for it to be stamped out of organizations – as an enterprise scales, it’s nearly impossible to fight the inert forces that big beleaguered companies manifest. The time between decisions and execution can be months if not years; the gap separating feedback from a customer and implementation is as wide as the organization itself. Those who make it their competitive advantage to shorten these distances, break down any barriers, and compete externally instead of internally, at all costs, are those that win. 

The key to moving at startup speed is to execute like a startup. Keep teams small and accountable to results, early on and throughout every process. Hire the 100 employee, 1,000, and 10,000 employee like you would have hired the 10.  Create mechanisms for sharing ideas and knowledge beyond reporting lines. Have leaders spend a disproportionate amount of time in the ‘trenches’. Overall, it requires driving the bar higher, while consistently going in and checking on the individual elements that will get you there.

And yet, as intuitive as this seems, it’s not how the majority of businesses run, or what people have come to expect. In High Output Management, Andy Grove relayed the story of a middle manager that asked the then-CEO of Intel how he could teach company courses, visit manufacturing plants, deal with problems from people far-removed from the head office, and still have time to do his job. Andy’s reply? “I asked him what he thought my job was.”

Every CEO, manager, and individual at organizations of all sizes should constantly be fighting the scale and drowsy pace of companies as they grow. It’s not sufficient for this to be the role of a single individual or leader, but rather the purpose of anyone trying to keep their business moving forward. The key is to stay small while getting big.