Organizational Management Key to Scaling a Tech Company
Rapid growth is not just about software engineering, but organizational engineering. Here's what we've done at Betterment.
Work in priority order and follow this pattern all the way down to the tasks done daily.
Focus on the team, not the individual. The team is accountable for success.
When a successful startup hits growth mode—say after a substantial round of venture capital funding—it becomes necessary to grow the organization quickly to meet the demand of more product features, more customers, and a larger company overall.
But it’s not always easy to preserve a company’s original culture while moving so quickly. I liken it to changing the tires on a car—maybe more accurately, swapping out the chassis and the engine—while traveling at 100 miles per hour.
It’s why one of the most frequent questions I get during the interview process is how many of the original team we’ve retained during our recent growth. The answer at Betterment? Almost 100%.
Rapid growth is not just about software engineering, but organizational engineering. As I explain below, it’s important to understand how to set up an organization—specifically a startup— in order to grow quickly and increase the pace of new product development. That’s just the beginning—you also need to do everything else a growing business needs to get done. At Betterment, engineering comprises about 40% of the company.
I have listed some of the ways we are navigating this at Betterment, where I head up our engineering team. However, these guidelines can apply to any growing company.
Early days are a sandbox
A startup is a magical thing. Quite literally. In most cases, in order to survive to the point where they’re able to think about scaling, the team that’s in place has defied—and even created—their own laws of physics.
Many startups begin with a tightly knit team that works and plays together. They exemplify all the best traits of a group of friends—and they just happen to be professional colleagues as well.
Work is planned informally. If you need something, you walk over to the person you think could help you, and ask for that thing to be done. Easy. That’s process.
We’ll call this approach to organizational design the Sandbox. Joaquin Roca has a great blog post on the topic of formal vs. informal organizational design that reinforced much of my thinking and intuition on the topic.
But this informal approach to planning and executing work can create some stress fractures that can open up when the company grows fast—for example, growing 5x in eight months.
What do you do to get ready for the change? To use Joaquin’s language, you move the organization from the Sandbox to the Hive, which will better support the coming growth without ruining the culture.
Focus on process, not hierarchy
First, focus on defining a process for getting work done with the people you currently have in the organization, while anticipating the size of the company you want to have a year from now. The hierarchy you need to increase efficiency will become obvious.
Many startups, including some that I’ve been at, attempted to solve their growing pains through titles. Lots and lots of fancy titles for people that had even fancier resumes. And what did we get? A lot of titles that still couldn’t get anything done, and a lot of people that worked really hard to get the company to the its current stage left feeling passed over. I like to call this scaling technique ‘organizational Jenga.’
One of our board members has a saying that sums up nicely what can happen at a hierarchy-loving startup: “Don’t break the glass box.” While the board member conveyed it in the context of building a product, I’m using it in the context of the team culture and dynamics.
The most valuable thing a startup has besides its product (sometimes despite its product) is its company culture. Culture is a fragile thing. If you mishandle it, you can easily break it, and it’s nearly impossible to repair. Just like a glass box.
Stop starting projects and start finishing them
Your team-oriented process should produce efficient communication and collaboration within small groups that have all the tools they need to solve a problem. We’re not seeking a Six Sigma set of checks-and-balances in this effort, but a simple, repeatable pattern of sequencing and delivering work in a growing organization.
A company needs just enough structure and ritual to ensure the right conversations are happening. We like to think about planning at Betterment in terms of teams, and scheduling in terms of projects. As we mature, we’re moving from project-centric planning to a goal-oriented system, but I’ve found it hard for teams to jump to this second phase as a first step.
When you focus on process first, you focus your efforts on making your current employees, the ones that have gotten you to the point you’re currently at, happier and more effective in their daily jobs. This paradigm also has the best chance at preserving the culture through high-growth since these are the people that ‘got it’ without having to be taught it.
You’ll need to decide if you need all the ritual of Scrum, or prefer something less formalized. Whether you estimate, or not. Run iterations, or go freeform.
The most important aspects of a process like this to get right are:
- Work in priority order. Focus everyone in the company on the most important work to be done, and follow this pattern all the way down to the tasks done daily. At Betterment, we maintain a 60-day company-wide backlog of projects.
- Minimize the amount of work in progress. Stop starting, and start finishing. The goal is to appropriately staff each project so that we can complete it as fast as possible.
- Focus on the team, not the individual. The team is accountable for success.
- Have a mechanism for deciding ‘done.’ This is often best served through demonstration, rather than specification. You’ll leave features on the cutting room floor, but trust your prioritization to ensure those were the features you didn’t need, yet.
Minimize the cost of change
Rapid growth is continuous change. If the cost of change is too high, growth will be painful for your team, and will ultimately hurt your chances at startup success and slowing growth in any number of ways from attrition to low-quality execution to a general lack of alignment with company goals. We attacked this problem in a few different ways at Betterment while covering two very costly areas of growth: adding new people, and increasing the pace of change in the product.
Adding new hires is necessary for growth. That’s obvious. What might not be so obvious is that adding those people is the most time consuming thing your company does. The following three steps are engineering specific, but I feel they apply to any function of a company that is up against significant growth.
Streamline the hiring process
Interviewing and hiring is hard work. Simplify, streamline, make sure everyone knows what their role is in the interview process, how to objectively grade the candidates, and how to stop the process quickly if the candidate just isn’t a fit.
Formalize an onboarding ‘boot camp’
Onboarding is especially costly in engineering, so we’ve formalized a two-week program to familiarize our new hires with how our system works. This obviously helps to incorporate new hires into the team, but it’s also a great impetus for pulling out all of the tribal knowledge buried in the minds of your existing hires.
Automate everything you can
Reading documentation is slow. Writing it is slower. Maintaining it…doesn’t happen. This is another blog post of its own, but the summary is that we’ve invested heavily in removing as many manual processes as possible, from engineering to operations. We have set a goal in engineering that every new hire is completely setup and productive within a day. Productive means writing code that’ll ship to production.
We’re getting closer, and a big part of that effort is automating everything about setting up an engineers’ development environment and being ready to push code to production on the first day. Automate everything you can.
A version of this column also appeared in Information Week.
Interested in engineering at Betterment? Betterment is an engineering-driven company that has developed the most-trusted online financial advisor based on the principles of optimization and efficiency. You can learn more about engineering jobs and our culture here.
Determination of most trusted automated investment service reflects Betterment LLC’s distinction of having the most customers in the industry, made in reliance on customer counts, self-reported pursuant to SEC rules, across all online-only registered investment advisors.
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