Scaling Up Excellence

Huggy Rao & Robert I. Sutton Also available in audiobook: Download our app for free listening.

'Scaling Up Excellence' is a bestseller that addresses a major challenge faced by high growth companies: growing fast without losing excellence and efficiency. In his book, Robert I. Sutton and Huggy Rao use a variety of case studies, exemplifying their ideas and telling stories of companies that have succeeded or failed to climb. The authors present their analyzes to help you make the right decisions and climb healthily. They talk about the difficulties faced by organizations and the challenge of developing a winning business culture. The book goes through strategies to engage existing employees, hire the right people, and many other essentials to achieve true growth in your business. Let's learn how to scale our companies to the highest standards? Stick with us!

Prop the correct mentality in your organization

Climbing is not just a matter of putting your logo in everywhere. It's not about growing at high speed, just. To increase your scale, you need to change the way people think, feel, and act. You need to encourage a correct mindset. Only then will you be able to climb your company at high speed without losing your soul.

If you are looking to grow at high speed, you will need effort and determination. For this, you need to generate a profound and lasting desire for change in your employees. Efficient growth needs to make everyone believe and live with a new mindset.

Facebook is an excellent example of this. To get a job on Facebook, engineers need to go through several stages of challenging interviews. Once they go through all this and are hired, they need to go through six weeks of boot camp, where they perform small tasks going through twelve different departments. It is not uncommon for Facebook's senior engineers to be removed from their duties to work as mentors to new engineers at boot camp. This sometimes delays crucial projects, but it also indicates that Facebook's continued success is dependent on the people who live and breathe the culture of the company. The boot camp is where new employees learn the culture of Facebook.

There are two generic ways, inspired by the great religions, of spreading a mentality in an organization:

  • Catholicism works with replicas. You standardize your systems and get everyone to do the same things in the same way. The ultimate goal is to achieve economies of scale that would otherwise not be feasible.
  • Buddhism works with customization. You allow each unit to choose its approach and use it uniquely. The operation pattern of the procedures is more flexible and allows for local variations, experiments, and customizations.

Fortunately, growing up with excellence does not demand that you choose exclusively between the mentality of Catholicism or that of Buddhism. You can instead use both when they make sense. You can achieve a right balance between replicas and customizations and have the best of both approaches.

For example, compare the recent efforts of Home Depot and Yum! Entering the Chinese Market: In 2006, Home Depot opened twelve stores in China that were exact clones of American stores. In six years, all the stores closed. Why? Chinese consumers were not raised with a 'do it yourself' mentality. If they have money to buy at Home Depot, they have enough to pay someone to do things for them. Despite being successful in the US, Home Depot's Catholicism approach did not work very well in China.

Yum! Now has more than 4,000 KFCs and Pizza Huts in China. The company is growing because it allows each store to add custom items to the local audience. This Buddhist-style approach has worked great for Yum!

Involve all senses

Encourage the right mindset by adding posters, sounds, smells and clues that activate your employees' senses. Make room for people to live, breathe, and experience the results of right attitudes. The mentalities are always scattered and supported by the small clues that activate all the senses. Even the smells, sounds, and colors can have a profound impact on how people feel.

For example, researchers found that when supermarkets played French themed tunes, customers bought five times more French wine than German wine. Similarly, when German music was played, customers bought twice as much German wine.

To encourage the mindset, you are trying to replicate, use tools that encourage the use of multiple senses. Disney is an example of a specialist company in this. When you go to a Disney park, you come across smells, colors, uniforms, language and employee behavior that are aligned with the theme of "happiness," which is Disney's currency of exchange.

Some strategies to involve the senses are:

Give the problem a name - think of something catchy that serves as a call. For example, a nongovernmental organization has launched an 18-month initiative to reduce hospital deaths. The program was named "The Campaign of 100,000 Lives." More than 3,200 hospitals have joined the program that has saved more than 122,000 lives from the adoption of preventive measures.

Name Your Enemy - When Apple came along, its employees called IBM a "dictatorial company that wanted to dominate the world." For them, Microsoft was the company that "had no taste." When you name your enemy, you can make people commit to work and can inspire everyone to do their best.

Do things in public, where everyone can see what is happening - By being transparent, you can position yourself and show that you are engaged. Public commitments demonstrate the responsibility of the people in your organization. They will strive to do the best job and prevent you from being embarrassed for not keeping your promises.

Go Against Assumptions-A good example of this is IDEO CEO Tim Brown who, instead of having a private room, is accessible to anyone sitting in the center of the office, sending clear signals that he is willing to break traditions. When Tim Brown tells his ideas to IDEO employees, everyone can criticize them and say something, they know he's open to it.

Create a compelling and different experience - When the CEO of Fiat took over Chrysler in 2009, everyone thought he would get rid of the company and sell only parts. Marchionne managed the Detroit plant and, instead of closing it, he paid employees to repair it and paint it. He created a different experience for people to believe that Chrysler had a bright future and that's what happened. Employees were more proud of their jobs and took Chrysler to success again. A good transition experience can serve as a tool for developing a new mindset and creating a new reality.

Use Rituals - Rituals are ideal for creating a new mindset. At Omnicell, a systems provider for health insurance providers, the CEO has created a ritual in which managers hang their jackets on a hook every morning as a sign that they are symbolically leaving their egos at the door. Every time executives saw the hooks; they were reminded that they were trying to work collaboratively to achieve the company's goals.

Rely on people who do not give up on change - Charlotte Beers did this and became the CEO of Ogilvy in 1990. At the time, Ogilvy suffered from losses from large accounts such as American Express and Campbell's Soup. She has handpicked nine executives and generated an informal "thirst for change" group that reinvented the agency. This group has persuaded Ogilvy's 272 Ogilvy employees around the world to embrace the idea and live a more expansive mindset. Within a few years, Ogilvy regained the American Express account and many others.

Seek balance to grow

Few managers can ensure that short-term things are well done while keeping prospects in mind. To grow with excellence, you need to find ways to connect the realities of the now with the dreams of the future.

To grow with excellence, you need to add new rules, processes, and technologies at high speed. You also need to position your people on new tasks. All this will create a 'cognitive overload' - in which people feel oppressed and confused about what is happening. One of the tools to reduce this overhead is a hierarchy.

More hierarchy is a natural consequence of high growth companies. Hierarchies are good because they create a framework for the decision-making process. The downside is that hierarchies delay innovation, introduce new costs, and create greater complexity. Growing up is always an act of balance. You are always trying to reach a balance point between much and little complexity. You want your employees to do more, but at the same time, you do not want to drown them in too many details.

Achieving balance is difficult and depends on the stage of development of your company. For example: In the beginning, everyone tends to be generalists. The need for communication is minimized, and there are no communication problems.

When the company grows from 30 to 40 people, people begin to become experts. This is good because everyone gets good at something, but it's bad because you need more people for it and the communication problems show up. Conflicts can arise as senior managers begin to lose contact with customers and the rest of the company.

With the growth of the company, you need to ensure your immunity to the disease called "The Big Dumb Company" The big dumb company has so much bureaucracy that it slows down all the processes. Sometimes people can get so caught up in processes and structures that their jobs lose their importance.

Contract employees that are business 'owners'

Growth only works when you can develop the feeling of "I own this place, and that place is my master." The more people feel the responsibility, the faster their growth initiatives will advance. To grow efficiently, you need to create two conditions:

You need to bring in more people with the 'right traits' - that is, with the right training and skills.

You need to make your employees feel responsible - and therefore driven to do things that are in the best interest of the organization.

Talent and responsibility alone are not enough. You need both or excellence will not survive. In practical terms, you need people who feel like they own the place and at the same time feel that the place owns them as well.

Countless business gurus suggest that if you hire the most skilled and motivated people, you'll get exceptional performances. This is not true. You also need to figure out how to make your exceptional employees work well with others.

The seven ways you have in your organization people who have the required talents but who are also responsible are:

End the Law of Least Effort - If a person contributes less than he is capable and still enjoys the efforts of others, you need to end it. You need to make it clear that helping others succeed is an essential component of your culture. You also need to signal that anyone will be judged on their own merits and that you are prepared to dismiss anyone who does not work well in a team.

Promote collective pride - Use emotions to generate unity against the common enemy. When British Petroleum (BP) senior managers noted that the company's internal units were fighting with each other, they spread a new motto: 'Beat the mollusk.' "This mote reminded everyone that they needed to beat Shell, which is known for its shell-shaped logo. By making everyone focus on beating Shell, internal struggles in BP have become irrelevant.

Engage some leaders with emotional intelligence - Seek out people who will put the highest good above their own goals and glory. You want leaders who are aware and feel bad about any past mistakes and want to compensate by taking preventative measures. At the beginning of Pixar, co-founders Ed Catmull and Alvy Ray Smith heard from LucasFilm president Doug Norby that they would have to fire some employees to cut costs. Catmull and Smith fought, but Norby declined and gave them a 24-hour ultimatum to hand over a list of names. The next day, Catmull and Smith presented Norby with only two names: Ed Catmull and Alvy Ray Smith. Norby understood, and Pixar was sold to Steve Jobs with all employees. Not surprisingly, Pixar employees are known for their sense of responsibility.

Send out some signs that others are watching and observing - This causes everyone to be doing or seeking to do the right things. A famous social experiment proves that putting on a poster with a pair of eyes facing you in a coffee shop makes you 50% less likely to leave without clearing your place and throwing your trash out. People feel the pressure to act the right way when they think someone is watching them.

Hire the Right People - Experienced organizations hire the right people and provide ongoing and formal training to develop skills. These trainings cultivate the right beliefs, behaviors, and abilities. Indian software company, Tata Consultancy Service, grew to $ 11.6 billion in annual revenue and 280,000 employees when CEO Natarajan Chandrasekaran separated the company into sixty units, each with a president and a CFO. In doing so, he gave many employees an executive experience and created a production line for future CEOs.

Use other organizations like your HR department - Just as an airline hires pilots who have had military training in Silicon Valley, many high-tech firms use Stanford University as their HR department, especially the engineering school and the department of computer science.

Hire people who are predestined to fit into your mindset - Seek out people who have personality, skill, and values ​​that you think fit well into your company.

Let excellence flow

To grow successfully, you need to discover or create groups of excellence and then generate a chain of dominoes, where excellence flows from one person to another. You want the energy generated by one falling domino to activate the next and so on. Eventually, the effect will be felt by all.

For this domino effect to happen, you need to make everyone constructive to reiterate the desired effect. Keeping falling dominoes requires a sustainable work effort.

The seven tools to generate a domino effect are:

Use a top-down approach - Make people at the top of the hierarchy adopt and live the mindset you want to spread. Be sure that leaders preach this and that they set an example for everyone.

Take every opportunity to spread your message - Make sure all your webinars, flyers and emails send the same message. Use each type of communication that you can support.

Teach each one individually - use coaches who live, breathe and give examples of the mindset you want and incorporate it into all of your teams, units, and departments. Let them model the right behavior, teach and train those who work with them, and give encouragement and constant direction.

Get people to work together when they get the message - That means you let people move from student to teacher. When they learn, you will have mentors for those who still do not understand the mindset. By letting your employees persuade others to think in this way, you can define any implementation challenges that may arise. It works great using people who are already trusted and admired internally. It's like a virus spreading.

Have a group of determined people - While helping your colleagues do what they need to do, they can also encourage the new mindset.

Bring Agents of Outreach - Get them to transfer information, run training, and spread expertise and ideas that align with your new mindset. Consultants work best when they are viewed as unbiased people who are there for the duration of a project. There is a certain mystery about these people that can work for you when you try to spread excellence.

Create meetings where your staff can connect and discuss - These meetings can come in different formats and sizes and may include demo days, trade shows, daily or weekly briefings, meetings, and so on. Create some informal meetings where people can talk and build new connections.

Eliminate destructive behavior

Growth does not just require you to start doing things better, but also stop you from doing things that are not useful. You need to constantly remind yourself that "what brought you here may not be able to take you to where you want to be in the future."

The reality of growth with excellence is that destructive behaviors usually have a greater impact than constructive behaviors. Understand that "bad is stronger than good." The two biggest causes of bad behavior tend to be phrases like:

That's not my problem!

I'm not paid to do this! "And that's what I'll keep doing."

There are eight solutions that leaders use to prevent and eliminate these destructive behaviors:

  1. End destructive behavior - Good bosses should eliminate bad behavior while treating people with dignity.
  2. Get rid of your rotten apples - Cut ruthlessly anyone who is lazy, arrogant, evil, incompetent or negative. Doing so enables people with a more productive mindset to develop. If you can not do this, at least put all the rotten apples on the same team, so they do not infect other people.
  3. Get everyone focused on doing simple things well done - Before they try more advanced challenges, you have to master the simplest tasks. There is no reason to inspire your staff to move forward if they are still stuck in the mud. Take them out of the mud first and then move them forward.
  4. Never forget the fact that great leaders are masters of the obvious - They eliminate bad behaviors before trying to generate good behaviors. You can only exceed expectations if you first meet expectations. Make sure you deliver your promises before you start offering extra things.
  5. Enlist Energetic People - Use them to identify and eliminate bad behaviors. Have good examples and have them model the behavior you are trying to generate.
  6. End bad behavior - Make it fun for people to do productive and useful things. A sawmill was having problems with its equipment and found that its employees were amusing themselves by stealing the tools of the company without being caught. To solve the problem, the company created a stock of equipment in which anyone could use the equipment for personal use at any time. Theft rate dropped to zero. There were no more reasons to steal the equipment.
  7. Get people to think productively about the future - They should focus on who they are becoming, not who they are now. Create a vivid picture of success in the future and then challenge your employees to achieve this. This eliminates the negative approach and accentuates the positive approach, working in many other areas as well.
  8. Focus on creating better experiences for everyone - An interesting example is the airline JetBlue, which did a survey of its customers and discovered that they hated waiting to pick up their luggage at the airport. As a result, JetBlue added a baggage handling team that was in charge of welcoming arriving customers, helping them, answering questions and reassuring them while they waited for their bags. To increase effectiveness, you need to find ways to improve people's experience with your business.

Use the premortem strategy

At some point, you need to stop doing things automatically and doing different and better things consciously. From time to time, you need to remind people to stop relying on their instincts and start acting differently. One of the best and most effective ways to increase your climbing ability is to maintain a "premortem" strategy.

Imagine a future where it has been a year since you began to execute your growth strategy; Take your team of collaborators and divide it into two teams; Have a team imagine that the growth strategy was a great success. Ask them to write a story about how this success happened; Get the other team to imagine that the growth strategy was a major disaster. Have them develop a story that examines the reasons for failure; Join the teams and present each one's stories; Work together to develop a growth plan that leverages the benefits of the first group and minimizes the risks of the second group.

With this strategy, you observe your company through two prospects and use this to develop a plan to achieve your goals.

Final Notes

When you conclude that accelerated growth strategy makes sense, you should always keep in mind a few points:

Focus on what you can do now and move on to build from there;

Use your culture as a guide, but be ready to expand or renew your ideas to increase your growth;

There will always be restrictions, and you need to learn to turn them into virtues. Build a better organizational system with better communication and confidence, work with people you trust, and encourage a sense of responsibility in your employees to succeed!

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