The trials and tribulations of high-growth companies
Every June, for six years, 50 Colorado companies have been recognized for their success—in dollar terms, representing more than $600 million to our state’s economy in 2014 alone. Celebrating the success of these companies is tremendous fun in itself. Hearing how they “struggled here, struggled there, and almost died there …” as Frank Gray, President and CEO of the Castle Rock Economic Development Council, put it in his welcome remarks at the Colorado Companies to Watch event, is an added education.
Ninety-five percent of companies fail in their first five years. Each year, the Colorado Companies to Watch Gala Awards Dinner recognizes 50 Colorado companies that overcame those odds. It’s probably the most exciting and inspiring business event of the year. Fifty high-growth companies, with exuberant, shouting teams at each table, are recognized for their success by an enthusiastic audience of hundreds of people, including former award winners. They’ve grown from seed (meaning funded by friends, family and credit card) to second stage (where they’ve moved up to bank and investor funding). If they haven’t yet reached profitability, they have succeeded in achieving product stability and sustained revenue generation for a few years or more. They have grown from the issues of survival to the issues of growth.
Mark Sirangelo, State of Colorado Chief Innovation Officer, put it this way at the awards ceremony: “These are the companies that asked ‘Why not?’ instead of ‘Why?’ These are the people who believe in the idea of sunrise.” He used Mahatma Gandhi’s words, based on Gandhi’s personal experience as an innovator, as example of what many of these companies experience on their way to success: “First they ignore you, then they laugh at you, then they fight you, then you win.”
Judging from the laughter coming from every corner of the room, each company’s story, no matter the industry, could tell a version of Gandhi’s experience. So, what are high-growth environments like? In my experience, they share a few common issues:
• You develop a sense of being infallible, based on your success up to this point. Your strategies have worked well so far and you quit paying close enough attention to your encroaching competitors.
• Instant size means you outgrow your staff, creating problems of disaffection and no-longer adequate skills. These are the people who grew your company to this point, and some may be family and friends, but they may simply not have the background and skills to get you beyond Gandhi’s laughing stage.
• You wait too long to hire people with the experience and skills you need, out of loyalty to the people who got you to where you are. Innovation, quality and overall performance suffer.
• The stream of new people you do hire don’t know one another, or much about your company. As a result, communication suffers, decision-making becomes difficult, turf battles abound, and people burn out.
• You don’t have the right systems to grow your company, whether you’re talking investing in sales or customer service software or production processes. And you try to make do to save money.
• Your cash flow is near zero and you don’t see how you can fund your growth in production, sales or service—or any combination of the three.
• You can’t keep up with demand for your product, which could mean: not enough skilled people in your market to hire; not enough money to pay the skilled people you need; not enough money for training; not enough resources (people or money) for increasing production or fulfillment—or not enough bandwidth to manage it all.
• Management is ineffective—and it could mean that you are the problem. You, or others, may need to move up or out.
For solutions to these issues, we look to Penny Lewandowski, Vice President Entrepreneurship & Strategic Direction, for the Edward Lowe Foundation, which founded the Companies to Watch program. Every year, Penny has sage and memorable advice for the 50 companies and everyone else in the room—delivered with passion and humor. She began her remarks by pointing out that you might have to hit bottom before you really change. But what kind of leader can take things from what is to what could be?
According to Penny, it takes leaders who are willing to stick their neck out and do things differently. What motivates leaders, when things are going well, to do things differently? In Penny’s view, it takes someone who is a little bit crazy. People who have no respect for status quo. You can’t ignore these people; they are the ones who change the world. Being willing to go first does not make you crazy, as many entrepreneurs have track records to prove. Entrepreneurs get up every morning and run toward something—maybe innovation—and they push things to the limit every day. They run toward change.
Penny’s advice? Figure out what your company stands for, get outside of yourself, and do something different. You don’t just do business, you improve humanity. No matter who you are or how big your company is, you have the power to make a difference. People have power—to be one of the crazy ones.
As it often turns out, the people who care the most are the crazy ones. Ask yourself: Would somebody like me do something like that? If the answer is “no,” then go for it. This crazy thinking is what moves us forward—and wins awards.