Intentionally growing your company - The changing role of the CEO: CULTURE

Recently, I began teaser introductions to the following five topics.  I believe that each topic is a key issue for growing your company from 15 to 50 and then to 150 people or more.  So, here is my take on that Holy Grail, on what companies and my clients need to focus:

 Know Thy Self  

 Look at Your People 

 Culture

Processes/Systems

Business Model

Today, we are touching (and I do mean touching... this is a very large topic) on #3, Culture.  My experience with companies at the 15 and 50 stage is that culture is almost never an intentional act.  Most founders, and most of us, stand for beliefs.  In a company you may start with, “We are about unparalleled customer service.” So, you work 24/7 and every customer expectation is met or exceeded. You hire friends or others who are just as excited about cigars, pools/spas, making after market auto products or providing marketing services.  Everyone is in heroic mode (saving the day or making customers ecstatic). 

Then your company gets to $1M in sales (this might start earlier or later by $500K) and you begin hiring people rather than zealots.  In most cases, what happens is that the culture of heroics and zealotry starts falling apart.  I have experienced companies reaching up to $5M before they actually confront the failing culture.  For the ones that survive this first culture stage, three things become paramount: customer focus, developing their first systems and moving from holding knowledge as power (the important stuff is in people’s heads). 

So let’s assume you make it through this first stage, what is culture likely to be?  Most often, I find that the culture focuses on work harder.  The survivors have revisit customer focus again.  This time, they confront and develop a clear idea about who their best customer, who they serve best and what kills their ability to make money.  The culture shifts from personal relationships and anecdotal business practices to systems.  Either outsiders come in and begin this process or the owners find good consultants.  The first formation of a management team happens along the way and often it is populated by survivors (people who did well in the company up to now).  There is still little intention or conscious focus on what culture we live and what culture and values we want to live. 

At this stage, with fifty employees, the culture usually gets murky.  It is one of the signs that the company is, again, in a no man’s land and often G&A costs are rise to a point where the company must confront: whether their business model works anymore; too many mini-cultures often from having brought in more people; and why the owners are in business (asking why you are in business is often met with blank stares at this stage, when at $3M the answer was clear and crisp). 

At 150 employees, there is a need for systemic culture and often CEO’s who’s companies are troubled as they approach 120 million have not focused on two things: spending most of their time on coaching their direct reports and keeping their culture alive and central to all of the business. 

Weigh in here.... agree? Disagree?  What have been your experiences in getting the gap closing?