Running a business, particularly one that has reached the milestone of $1 million in revenue, is a significant achievement. However, the journey from $1 million to $50 million in revenue is fraught with challenges that require careful navigation. One of the most common pitfalls that companies encounter during this stage of growth is making misinformed hiring decisions, particularly when bringing in high-hranking executives from much larger companies. While it might seem like a smart move to hire someone with experience in a $10 billion company, this can often backfire. Here’s why and how to avoid this mistake.
### The Allure of Big-Company Executives
When a company is poised for growth, it’s tempting to think that bringing in talent from a much larger, well-established company will provide the expertise needed to scale. After all, if an executive has helped drive success at a company worth billions, they should be able to do the same for your $50 million goal, right? Unfortunately, this is a misconception that many business owners fall into.
### The Disconnect: Big Company vs. Growing Company
One of the primary reasons this approach often fails is the significant difference in working environments between a startup or small business and a large corporation. Here are a few key differences:
1. **Responsibility and Accountability**:
– In a large corporation, executives often oversee vast teams with layers of management between them and the front lines. Their roles are more about maintaining and optimizing existing systems than directly driving revenue or growth.
– In a growing company, however, every leader needs to be hands-on. Executives in smaller companies often need to wear multiple hats and be directly involved in day-to-day operations. A big-company executive might struggle in this environment because they’re used to delegating rather than executing.
2. **Decision-Making and Speed**:
– Large companies are typically process-driven, with decisions moving through several layers of approval. This is because there are established protocols and risk mitigation strategies that have been honed over decades.
– In contrast, a growing company needs to move quickly, making decisions on the fly and adjusting strategies as they go. An executive from a large company might find this pace disorienting or overwhelming, leading to paralysis by analysis.
3. **Resource Availability**:
– Big companies have access to vast resources, both in terms of capital and manpower. Executives from these environments might be used to having multiple teams and a large budget at their disposal.
– Smaller companies operate with leaner teams and tighter budgets. Executives need to be resourceful and creative, often making do with limited resources. Someone used to the luxury of abundant resources might struggle to adapt.
4. **Cultural Fit**:
– Culture is a critical aspect of any company’s success. Executives from large corporations might be accustomed to a different corporate culture, one that doesn’t align with the values or the pace of a growing business.
– For example, an executive from a bureaucratic environment might not fit well in a culture that values agility, innovation, and direct communication.
### Avoiding the Mistake: What to Look for in a High-Ranking Hire
To avoid the pitfalls of hiring an executive from a much larger company, consider the following strategies:
1. **Focus on Cultural Fit**:
– Before looking at an executive’s resume, consider whether they will fit into your company’s culture. Are they adaptable? Do they have a track record of rolling up their sleeves and getting their hands dirty? Will they thrive in a fast-paced, ever-changing environment?
2. **Look for Proven Experience in Similar Growth Phases**:
– Instead of focusing on the size of the companies they’ve worked for, look at the stages those companies were at when the executive was there. Ideally, you want someone who has successfully navigated the $10 million to $100 million growth phase. They’ll understand the challenges of scaling a business, which is often more valuable than experience in a multi-billion-dollar company.
3. **Prioritize Execution Over Strategy**:
– While strategic thinking is important, what growing companies often need more is someone who can execute. Look for executives with a proven track record of delivering results, not just setting high-level strategies. In smaller companies, strategy and execution are often closely intertwined, so a hands-on approach is critical.
4. **Conduct Thorough Due Diligence**:
– Don’t just rely on the candidate’s latest experience. Speak with colleagues from their previous roles to get a sense of their work style, how they handle pressure, and whether they were truly instrumental in the success of the business. This can help you avoid hiring someone who was more of a passenger than a driver in their previous roles.
5. **Test for Agility and Adaptability**:
– During the interview process, pose scenarios that require quick thinking and resourcefulness. This can help you gauge whether the candidate can adapt to the less structured, more dynamic environment of a growing business.
### The Reality Check: Company Performance vs. Employee Performance
It’s important to remember that the performance of a company and the performance of an individual within that company are not the same thing. A high-performing company doesn’t automatically mean that every individual in a leadership position is a top performer. There are plenty of people who ride the wave of a company’s success without contributing significantly to it.
Therefore, when hiring, it’s crucial to differentiate between someone who has benefited from a company’s overall success and someone who has actively driven that success. The latter is what you need to help your business reach new heights.
### Conclusion: The Right Hire at the Right Time
The journey from $1 million to $50 million in revenue is an exciting yet challenging time for any company. Making the right hires is critical to achieving this growth. While it might be tempting to bring in big names from large corporations, this approach can backfire if those hires aren’t the right fit for your company’s current stage of growth.
By focusing on cultural fit, proven experience in similar growth phases, and a hands-on approach, you can build a leadership team that is well-equipped to take your company to the next level. Remember, the goal is to find someone who can contribute directly to your company’s success, not just someone with an impressive resume.
