Devolving From Good To Bad

Lots of people have written about the challenges of managing growth.  Especially about the importance of working hard to maintain staff quality as you scale the organization.  There is little question that most organizations become worse in their ability to rapidly deliver consistent innovation as they grow, yet most people attribute this to staff quality and also process and communication issues of scale.  Some believe that this is unavoidable.

I normally write about how to evolve your organization from a weak product org to a strong one.  But in this article I want to talk about a pattern that I see in many companies that are actually doing very well, growing aggressively, yet they will sometimes, over time and unintentionally, replace their good behaviors with bad ones.

I have never seen this anti-pattern written about before, and I suspect it’s going to make more than a few people uncomfortable, but it’s a serious issue that I think needs to be out in the open, as it’s not hard to prevent if you’re aware.

The scenario is that you are probably a later stage startup or growth stage company.  You’ve probably achieved product/market fit, at least for an initial product, and to have accomplished that, you’ve probably done some important things right. But then you get some serious funding, or some board member strongly suggests that you need to bring on some “adult supervision,” or some experienced people from brand-name companies.

Here’s the thing, the new people you hire are often from those large, brand-name companies that have stopped growing, are often companies that have long since lost their ability to innovate, and have been living off their brand for many years. Because of this, they’re not on the trajectory they once were, and people leave.

No real problem so far.  Would you rather hire all your staff and leaders from Google, Netflix, Amazon and Apple? Sure, but these people are in very short supply and there is definitely lots of strong talent at other companies.

Here’s the problem.  Let’s say you are at a young, growth stage company, and you decide to hire a senior leader, maybe the head of product, or the head of engineering, or head of marketing, from a brand name like Oracle.  The board will probably like that. The issue is that unless you make this clear at the outset, that new leader may assume you’re hiring them for their knowledge of process and how to define and deliver products. And so they bring with them their views on how things should work. Even worse, they often then proceed to hire people that want to work in those ways.

Note that I’m picking on Oracle here as an example but they are certainly not the only one – there are actually a great many very strong people to hire from Oracle as they love to acquire companies, often very good companies, but those strong product, design and technology people they acquired rarely like Oracle’s ways of working.

Another common cause of this same problem is when the CEO hires one of the big management consulting firms for advice, and you end up adopting the practices of large consumer packaged goods (CPG) firms, which is their wheelhouse, rather than strong technology-powered companies.

A lot of people assume that companies slow down and lose their mojo as a direct result of hiring more people.  It’s true that larger organizations bring their own challenges, but the issue is not the number of people, it’s the culture of the company, it’s how these people work, and the skills and behaviors of their leaders.  As I’ve pointed out in many articles, some of the best (fastest and most consistently innovative) product companies in the world are actually very large.

I have seen this anti-pattern play out at every level of a company, from individual software developers all the way to CEO. It doesn’t happen overnight; it happens over years.  But I’ve seen it enough I’m convinced it’s an anti-pattern. Many people intuitively sense this problem but they usually just attribute it to “a big company person” but this is less about being from a big company and more about being from a company that’s not strong at product.

I know of two ways to prevent this problem from infecting your company:

The first is to have a very strong and very intentional product culture, and to have that culture very well established so that new hires know they’re joining a different type of company that takes pride in how they work and using best practices. When you join Netflix, or Airbnb, or Amazon, it’s something you figure out in your first days, and that’s by design.

The second way of preventing this is to make this explicit in the interview and on-boarding process. As part of my advisory work, I’m often on the interview team for senior positions, and when the person is coming from one of these types of companies, I’m really up front with the prospective hire, and we’ll talk about the reasons why their former company has not produced successful new products in many years, and I’ll emphasize to them that the new company is interested in them because of their mind and their talents, and of course they wouldn’t want to bring with them the bad practices of their former company.

In my experience, people are really good about this when you talk openly and honestly about it.  In fact, people often tell me it’s a major reason why they want to leave their former company.  It’s more about getting this to be something you and they are very aware of.  Keep in mind that people often revert to past behaviors when things get stressful.