Do you have the right shoes?

You can buy the most expensive shoes but you will not be comfortable if they are not the right size or if they are not suitable for your sport and surface.

I was the CEO of a small start-up over twenty years ago. We were small but we prided ourselves on being nimble and responsive.

At 9 AM on a Tuesday, I saw an email from a customer asking us if we could reduce the current 12-hour lag and send them the daily report at 6 PM the same day (within an hour of their workday ending). I mentioned earlier, we were small. This meant I knew why it would not be possible for us to meet their demand immediately. The procedure took a long time to run, and we needed a larger and more powerful server for computing. Remember, this was at a time before the cloud became ubiquitous. So, I called the IT folks into my room – the programming lead confirmed the code was optimised and we needed more computing power to get this done faster. The system administrator confirmed we did not have any servers to spare, and we needed a new one. I called our regular hardware supplier and described our requirement and he faxed me his offer. With the offer in hand, I called our Finance head and confirmed we had the required bank credit. We called a couple of other vendors to ensure our regular vendor’s price was reasonable. We placed the order at 11 AM the same day and had the server up and running in a few days. The server cost us $30,000 and the client was happy with the results at the end of the week.

Similar speed and simplicity in decision making could also lead to another outcome. Rajesh (name changed) and his two friends were co-founders at a tech start-up that had raised around $5M at Series A. They needed to build a strong team quickly and asked their new VP of Sales whom they had just hired from a Fortune 50 firm, to go ahead and hire his team ASAP. The VP engaged a head hunter who helped them get some good talent on board, but then the bills came due – over $400,000! In the “let’s get it done mindset”, no one noticed these expenses mounting till it was too late and a small company frittered away nearly 10% of its Series A funding on head hunters. Sales was an important focus of the founders’ strategy to be sure, but money was also sorely required for product development and other critical initiatives. The company ended up having to raise its next round of funding earlier than planned, and the founders’ stake was needlessly diluted further.

Whether it is people, software, processes or practices, there is a time limit on the usefulness of successful ideas. As companies grow, it is easy to drop a practice that did not prove to be useful, but it is equally important to drop practices that have proved useful in the past but have outlived their usefulness. Adapting your operations and everything that goes with it to your evolving circumstances can prove unnerving, but let me assure you that those who fail to do so are destined to fail.

While simplicity is seductive and simple organisations are nimble, knowing how much complexity is needed as the organisation grows is critical. Too much too soon and the organisation becomes sluggish, and overheads increase. Too little and one loses control and money is wasted.

Always remember to wear the right shoes!