Thursday 16 August 2018

Alan O'Neill: Getting the growth mix right by investing in new people

Even the biggest company in the world - Apple - started in a garage, and it got to where it is by getting the basics right from early on

Steve Jobs in Apple's early days with co-founder Steve Wozniak.
Steve Jobs in Apple's early days with co-founder Steve Wozniak.

Alan O'Neill

Just recently it was announced that Apple had become the first company in the world to be valued just past the trillion-dollar mark. Now the largest tech company in the world with 115,000 employees, I can only imagine what its organisation structure charts look like.

But let's not forget that the company that was founded by Steve Jobs, Steve Wozniak and Ron Wayne started in a garage.

Undoubtedly, back in 1977 they did literally everything themselves, working crazy hours and raiding their own piggy banks to get it off the ground.

The early years for SMEs

The 200,000 SMEs in Ireland can make similar claims. Killowen yogurt started around a kitchen table and is still run from that same room.

While that is cute and adds to the charm of the business, the day will come when investment in a bigger office will be essential to accommodate more people and enable growth.

Before the investment in offices, Killowen needs to invest in key people. The business is of a size and scale now where senior and more experienced managers need to be brought on board.

That can be tough when it brings change for people who may have been around since the beginning.

Typically, those early joiners are committed Sherpas who do everything for the good of the company, with a commitment and application that is exemplary. They often acquire their knowledge and skills by discovery, which is fine in the early days.

But as a business grows in size it needs to be managed with a level of skill that is not always evident in the startup crew. That is not at all a criticism, just a hard reality.

The People and Growth Challenge

As of now, Nicholas Dunne and his core team are doing everything themselves. He still milks 200 cows each morning. He cherishes that, as it's his time to think and plan ahead. While I appreciate that has some merit, it's also quite a physical commitment.

What's the cost of that in terms of energy and time? If he freed up those 12 hours per week, what other more productive tasks could he be doing in that time? Would the extra cost of paying a farm labourer justify the free time for more productive work?

Likewise, there may also be other jobs that Nicholas and others are doing to an okay standard, but a more experienced person might do them even better.

Tips for Investing in People

Before we start, I always push my clients to be clear on their 'north star' and to have a clearly-defined strategy. That then becomes the framework and standard for all decisions about people, product, route to market, etc. But let's assume for today that Killowen has such a plan.

1 In thinking about hiring people, get your head into the right frame of mind. Some roles, such as sales, have outputs that are clearly measurable. It's easy to calculate the extra sales required to justify that cost.

Other roles, however, such as finance, operations, marketing, etc, are often seen as 'a cost' to the business. That's obviously not fair and it just means that you have to find ways to measure the value that they bring.

For example, let's say you hire an experienced operations manager to do the work that you yourself have been doing. If you calculate the number of hours it frees you up to do other tasks, like selling… then that is one good measure.

The extra benefit is in the added value that this person might bring. Consider the possibility of improved efficiencies, cost saving, waste reduction, quality improvement, people motivation, etc.

2 Unless you are working with an external financial injection, start slowly. Perhaps hire just one manager at first until you develop comfort, a new rhythm and norm. A new senior person in a small team will change the culture, so watch for that.

3 Be very clear on the new person's roles, responsibilities, objectives and measures of success. Don't expect them to be an overnight success as settling in will take time. Be sure to give them every support necessary to succeed.

4 Inform the existing team in an honest and respectful way. Communication is critical, as without context and openness your very good and committed people might feel hurt and offended. That will just create a morale issue for you that will result in poor productivity.

Summary

As a non-executive director, I regularly see this dilemma about hiring the right team early on. The key is to see it as an investment rather than a cost. I do appreciate it's a big decision, both emotionally and financially. Be willing to go with your gut, as payback is not always immediately measurable.

A fly-wheel requires a lot of pushing in the beginning to get it going. At a certain point, the momentum of the wheel itself propels it forward.

Every now and then it just needs a little extra push to get it going a little faster. Get your people right in the beginning and your fly-wheel will take off. That surely happened for Apple too.

Sunday Indo Business

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