1 Managing Growth Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado

2 Managing Growth Today’s Agenda – Managing Growth  HiveLive  What problems are caused by growth?  How to build a management team?  How do you create a culture?  How do you communicate?

3 Managing Growth Next Week  Feasibility Plan presentation  7 minutes present  3 minutes questions  Get there early to load slides  Hand-in  Part III Venture Analysis DECK format ~ 17 slides  Appendix  Parts I & II  Other opportunities considered – pros & cons  Customer surveys – who talked to & conclusions  Competitive matrix  Profitability assumptions

4 Managing Growth Growth Issues  Management team must evolve  Systems & controls in place before problems develop  Founder capabilities & desire  Funding - depends on how well execute

5 Managing Growth Managing Growth is Structured Chaos  Uncertain – future is not clear  Unpredictable – trial & error  Inefficient – make mistakes  Increasing levels of complexity  Can’t make major mistakes “Structured Chaos”, Kathleen Eisenhardt “Structured Chaos”, Kathleen Eisenhardt

6 Managing Growth What Problems Are Caused by Growth?  Too many opportunities - venture strays from goals  Complexity  Lack of controls: costs & cash flow  Communication barriers between departments & people  Training & employee development get little attention  Bottlenecks in decision making created by founder’s failure to delegate  Leads to stress & burnout  Covers up  Poor planning  Wasted resources  Weak management, but not for long

7 Managing Growth How Build a Management Team?  What determines your management team?  Recruiting  Large company managers  Peter Principal in reverse - Stolze’s Law  Hiring and firing  Compensation  Team needs to evolve  Where go for help?

8 Managing Growth How Do You Create a Culture?  Shared set of attitudes, beliefs and behavior  Can you design your culture?  In your image (whether you want it or not)  Oh yes, what about ……….

9 Managing Growth How Do You Walk the Talk?  How you treat employees, customers, investors  What type of employees do you hire  How hard you work  How make decisions  What do you do when things go wrong?  What do you do when things go right?  Little things

Managing Growth Communications  What is going on here?  3 Levels  Organized  Informal  Style

Managing Growth Organized Communications  Organized  Organization charts, policies  Newsletters,  Meetings “Device to substitute the pleasures of companionship for the loneliness of toil and dreariness of endless debate.” “Committees are a group of the unfit, appointed by the unwilling to do the unnecessary.”  Your management approach

Managing Growth Informal Communication  Two kinds of information  Gossip and rumor  Information that can’t or won’t go through formal channels  70% of communication - can not ignore  What can an entrepreneur do?  Listen  Walk about  Understand the language  Open contacts to outside world

13 Managing Growth Style  Character  Essence of you

14 Managing Growth CCG: Decided Before Started  Everyone own shares in company  Everyone has access to information on company situation  Financial: Income Statement, Cash Flow  Orders & sales  Customer problems: delivery, quality  Everyone has access to founders  Door is always open?  Walk about  Single status – all employees have same benefits

15 Managing Growth How Cultivate Innovation?  Relish ambiguity  Tolerance of the impractical  Take calculated risks  Accept that mistakes will happen  Conflict is good  Respond rapidly to change  Focus on ends, not means “There isn’t any business that a Harvard MBA cannot analyze out to existence.” George Doriot, father of US venture capital and Harvard prof.

16 Managing Growth Structured Chaos by Eisenhardt  There are three areas of focus:  Current business: Improvisation  Future business: Experimentation  Link entrepreneurial strategies to past, present and future together: Patching  They are certainly appropriate for high growth and high tech businesses where:  High growth can mitigate mistakes that companies might make  Plentiful venture capital to fund new ventures and the accompanying pressure to quickly do deals results in resources to experiment and improvise  Suspension of requirement to make a profit encourages experimentation in real time