As a business enterprise grows the more people it employs and correspondingly it comprises greater diversity in skill and knowledge. In short, the enterprise becomes more complex. Unfortunately all too often as it grows a shift in the businesses’ purpose-in-practice occurs, especially if it becomes a publically traded business. Yes of course Wall Street adds its requirements! The resultant organization will be quite different from the entrepreneurial enterprise from which it grew.
The critical difference is not in regards to its physical dimensions—though these are quite apparent—but in regards to management’s system of orientation which impacts the businesses’ psychological/cultural dimension. Accordingly, with misguided and mismanaged growth the organization will become far less vibrant. There will be trouble in paradise.
Google as Illustration
Let’s consider Google for illustrative purposes. Recently Eric Schmidt (Google’s CEO) admitted feeling worried when saying, “There was a time when three people at Google could build a world-class product and deliver it, and it is gone. So I think it’s absolutely harder to get things out the door.” The shift could be occurring within Google.
Those in authority at Google seem to be feeling the pressure just a bit from people leaving, as evidenced by a recently announced 10% across the board raise. As noted in a recent post if the company is doing well, then everyone should benefit; so this across the board raise encourages a cooperative (win-win) culture that can only contribute to continued collaboration among people to the benefit of the organization. However if those in authority believe the way to retain people is through monetary inducement—more accurately bribery—then management is ignoring the underlying cause and setting the organization up for failure. A focus on results—the number of people one retains—rather than what is causing people to seriously consider leaving simply glosses over the real problem.
Schmidt admitted that in part the motivation for providing the 10% increase was a tactic in the war for talent. Persuading people to stay by offering them a seven-figure bonus has retained 80% of those considering leaving. However the question is, how long will the pleasure of more money in the present keep the thirst to create and innovate at bay in the future? How much more will have to be offered and how often? This is clearly not a sound strategy for employee retention, let alone for sustaining a competitive advantage.
As described in a recent New York Times article Google has seemingly grown itself into a “bureaucracy”, a “big, lumbering incumbent.” Reportedly the number of people required to approve a creative initiative has, in the words of a former Google product manager, ballooned; “Google’s gotten to be a lot bigger and slower-moving of a company.” Seemingly the processes and procedures are a frustration to those in the organization who still have a thirst for entrepreneurial work.
Big Shouldn’t Mean Slow
Does to grow necessarily mean to grow slower, or to grow rigid, or to grow out of ideas, or to grow harmful to the entrepreneurial spirit? Absolutely not! It seems reasonable to assume that with more people you increase the diversity of knowledge within the organization and therefore the opportunity for ideas to emerge should increase not decrease. Since creativity emerges with the interplay of different minds, you could expect with more minds exchanging and exploring ideas the more fertile the environment will be for new ideas.
Unavoidably, with an increase in the number of employees and products and services an enterprise takes a more hierarchical form. This in and of itself is not a bad thing. The operative word here is not hierarchy but form; that is hierarchy is form not function. Hierarchy need not diminish capability, though it will if the purpose of the organizing and management structure is to exact greater control through the hierarchy. Clearly, the focus and orientation of management-in-practice is what makes the difference.
Consequently those in authority must attend to creating a workplace environment—through structure, policy and management practice—wherein the unending thirsts for creativity and innovation can be satisfied and sustained. By following evolutionary design principles those in authority can sustain the viability and enhance the capability of the enterprise. But this requires a different understanding of the business of business.