Anything that can go wrong will go wrong [in time] – rapid growth companies should operate under this fundamental assumption and solve problems accordingly.
A corporate culture that naturally pulls employees and senior executives back when they stray from fast, objective, analytical, and comprehensive decisions and actions is analogous to a well-functioning immune system – it fights detrimental incidents to protect all stakeholders. However, most small- and mid-sized companies don’t have this luxury unless work has been put into building this evolutionary maturity. So, it is optimal to consider every potential risk as a grave one and address it immediately.
We have all been there.. Have you observed a physical symptom in your body that could be a short-term aberration or a serious ailment.. and decided that “I am going to wait and see whether it just goes away!”? What was the subconscious rationale? Checking with a doctor to assess whether there is a significant problem might feel expensive (especially, if it turns out to be irrelevant), and more importantly, most of us are somewhat fearful of the doctor confirming that something awful is happening within us. This is a fair reaction for a short period of time because the human body is an amazing machine that is born with an immunity that conquers most natural aberrations.
In contrast, a similarly cost-conscious and fearful approach to diagnosing corporate aberrations is a very poor one. Businesses are never born with a natural immunity to correct itself or fight bad behaviors – it has to be developed. Very few businesses take the time and effort to build a culture that creates a natural resistance to suboptimal tendencies. It takes time for such a culture to take hold, even when companies prioritize it.
Predictably, this lack of immunity is especially relevant among small- and mid-sized companies, due to youth and maturity level. In such cases, symptoms of risk are often actual problems that require action. They will not just go away; they will likely manifest into bigger problems. Across all seniority levels at rapid growth companies, it is optimal to consider aberrations as major risks that require remediation.
What Does Immunity Imply?
Problems occur; mistakes happen; data may be unavailable; strategic choices may not be obvious – these are all part of operating a company. However, a company’s culture should influence employees and senior executives with a natural tendency to solve problems effectively, assess information objectively, choose root cause analyses over fighting symptoms, and operate proactively with a preventative-care mindset. This natural tendency is the immunity that a company should achieve quickly when scaling up. Without it, every aberration in strategy and operations will likely devolve into a major gap downstream.
Such a positively influential corporate culture is predicated on two aspects: 1) the Leadership Approach deployed by the CEO and senior executives, and 2) the maturity level of the company’s Objective & Analytical Culture. Both of these aspects combine to form an environment of accountability, objectivity, self-correction, and continuous improvement.
Senior executives must focus on developing a set of tailored guardrails that allow all employees to coexist effectively, while creating an environment where 1) top talent is enabled to deliver their best, is well-rewarded, and is incentivized to commit to the company, 2) mid-tier players strive to catch-up to top players, and 3) bottom-tier players self-select out of the company.
Objective & Analytical Culture
Developing an objective culture, where every employee and senior executive internalizes concepts such as cognitive biases, process, data, and analysis will create a natural skew towards fast and objective decision-making that ensures comprehensive and cohesive ideas and solutions rise to the top.
Usually, rapid growth companies do not have the organizational maturity that allows risks to solve themselves and often face a simple challenge of whether to prioritize fundamentals.
- How seriously should the company take obvious risks that are observable as operational gaps?
- Is it worth understanding the root-cause of these gaps?
- Is it worth solving these root causes?
- Will they just go away or can the company exit before those problems manifest into something much larger?
More often than not, these risks do not go away and they represent deeper problems that require remediation. Just like any natural phenomenon, these risks are easier to solve before they manifest into pervasive problems. So, the right answer is to fight cost-consciousness and fear of root cause identification to solve such risks early on.