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How to retain the agility of a start-up while scaling up

How to retain the agility of a start-up while scaling up
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First Published: Wed, Aug 19 2009. 09 27 PM IST

Updated: Wed, Aug 19 2009. 09 27 PM IST
One of the issues that we constantly struggle with in Naukri is trying to protect the culture of innovation as the organization grows larger.
The company is no longer a start-up. We employ at least 1,600 people and have offices in at least 40 cities. There are at least 200 people engaged in building and maintaining the product offering. There was a time 10 years ago, when that number was three.
The top management is no longer engaged with the nuts and bolts as much as it was earlier. There is an organization to be managed. Large teams are complex animals and managing them does take up time.
Most business managers are now working in a matrix— while they do have teams reporting to them, more often than not, they have to get work done from people who are not reporting to them—people who are their peers.
There are departments—engineering, product, analytics, legal, finance, sales, marketing, UI (user interface) and QA (quality assurance). And there are processes, a prioritized product pipeline and review and coordination meetings. Decision making cycles are longer than before—idea to implementation and final release to the consumer can take weeks or, for a large job, even months. It can get frustrating at times for the people engaged in this task.
We are beginning to understand the complexities of innovating in a large organization. This problem is not unique—others have faced it before.
Big companies have advantages. They can throw more resources at a problem. They can sustain losses for a longer time. It now takes us five years to get a new business to break even and costs us Rs40-50 crore in investments in that time period.
Barriers to entry in our business are, therefore, higher now and that’s a good thing for us. The servant quarter above the garage days are over—unless you have something totally new and disruptive.
Small organizations have their advantages too—they find it easier to innovate because decision-making is quicker. They are focused and agile, with small cohesive teams. They move fast. They are not encumbered by complex processes, matrix structures and departments. Frequently, they are more capital-efficient.
But they do not have the kind of resources or knowledge that large organizations do—our new businesses benefit a lot from our learning in the older businesses. It is the large revenue streams and profits of Naukri that enable us to build high-quality teams in analytics, algorithms and QA—expensive overheads that most start-ups in India would not usually invest in. Our smaller businesses and our start-up investee companies use this capability to create more value for their customers and compete better in the market.
Large businesses, by contrast, have legacy revenues to defend and would not want to disrupt their existing successful business models. We know this because we have benefited precisely because of this against print publications that have tried, but not really made a mark on the Internet.
Further, a small business in a large organization gets dwarfed. All senior management attention and focus is on the main big business. It takes a courageous manager to head a start-up business in an existing large company.
All too frequently, the best talent is not moved to the start-up. After all, conventional wisdom says that you must put your best talent on to your largest and most profitable business.
The challenge for any start-up as it scales, therefore, is to retain the ability of a small organization, while simultaneously enjoying the advantages of a big one.
How have we tackled that problem at Naukri?
The task for any top management is to recognize this problem and then take a few bold steps proactively to resolve it.
First, ensure that there is an adequate talent pipeline at the second and third levels in every department within the company. Wherever required, get high-quality talent from outside the company. Basically, invest in a talent bench.
When a new business starts, move some of the best talent there and give that business senior management attention. This gives everyone career growth, at the same time giving the start-up business a real chance of success, without compromising on the prospects of the existing large business.
Reward for milestones other than revenue early on—remember that on a revenue comparison, the older, larger business will always outshine a new business.
If the system ensures that business managers use only revenue and profits as a measure of their self-worth in a start-up business in a large organization, they will be demotivated and probably quit. Celebrate innovations. Punish incompetence and lack of commitment, but do not punish failure.
When innovating on products within a large business, have small, high-quality teams and empower them. You need to ensure that you have the agility, focus and quick decision cycles of a start-up—essentially have many start-ups within a large company.
All this is easy to write in an 800-word column; it is a lot harder to execute. But that story is for another time.
The author is co-founder and chief executive officer, InfoEdge (India) Ltd, which runs the Web portal Naukri.com. He writes a monthly column on careers and enterprise.
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First Published: Wed, Aug 19 2009. 09 27 PM IST