Growth, Depth and Breadth

Both employees and organizations can be thought of in terms of the dimensions of breadth (the number and variety of skills they exercise) and depth (the depth of specialization and expertise with those skills).  As companies grow and evolve, the inflection points at which they change their own position on the breadth/depth spectrum and those at which their expectations of their employees change present particular challenges for the organization.

Stage 1: Startup Phase

In the evolution of a company, it often begins in quadrant 1 noted below, with employees who perform activities across a broad array of functions, but an organizational identity that is distinguished within a narrow niche.   This is primarily due to resource constraints than intent; startups generally lack the resources to have significantly specialized functions, and the employees or owners who wish to build their small business will find themselves doing whatever is necessary to support the operations of the organization.  Due to the same limitation of resources, the successful startup will generally have identified a narrow niche of opportunity in which it can compete and hope to win.

Stage 2:  Development

If the organization is successful within its niche, it will likely at some point develop more internal structure, as roles are more clearly defined and some functions that were outsourced are brought in-house.  This may happen due to regulatory/accounting requirements if the organization has changed form (e.g., from sole proprietorship/partnership to corporation) or simply due to improved predictability of cash flow and revenues, enabling the organization to judiciously hire additional permanent staff.  The first wave of employees may be grateful for the opportunity to focus on the attributes of the business at which they excel rather than being perpetual jacks-of-all-trades, and their vision can expand from proving that their concept had merit, to building an enduring organization.  There are two sources of risk of underperformance for the organization at this stage of growth:

First, the existing employees may have little experience in identifying elite talent in these corporate functions, and are therefore likely to hire those with whom they have already worked, rather than conducting a genuine search for those positions.  Leadership should consider that the first hirees into each of these roles are likely to be leaders of functional groups and teams as the organization continues to grow, and the accountant who was capable at handling the affairs of a small shop may be in over her head when she is declared CFO.  Organizations that have aspirations of expanding to stage three are well-served to consider that desired growth in their hiring in stage 2, and seek talent that will be capable of leading that transition.  Transparency between management and all employees about the aspirational trajectory of the firm is also essential at this stage; future resentment can be mitigated if a young hiree who still feels that he is joining a rapidly-growing organization has been alerted to the likelihood of sharing leadership with a more experienced manager for a larger team as the organization grows.

Secondly, leaders should be humble in the face of the new management challenges that they will face in this stage.  The intellectual and emotional challenges of identifying an underserved market opportunity and convincing others of its value are distinct from those of financial management, reputation protection, and defense against deep-pocketed competitors who have a new interest in the sector.  The existing employees who have personally experienced a wide range of aspects of the business may feel that the newer hires lack perspective, while the new employees may fear that the organization lacks clear direction as the leaders find their footing.

These cultural challenges can be mitigated by extreme honesty with the employees (both existing and new) about the management team’s strategy to improve their own skills and articulation of a plan for employee growth.  Separate meetings (no less frequent than monthly) can be instituted for the new employees and the original team with senior leadership, so that each audience’s concerns are heard independently and recognized as the organization finds its new identity.

Stage 3: Expansion

Successful firms will often seek to expand into new areas for reasons including pursuit of additional growth, differentiation from competitors, protection of a strategic asset, reinforcement of a reputation for innovative thinking, or diversification of revenue sources.  Many large firms undergo this expansion and stay at this stage, institutionalizing their corporate functions, and continually seeking new opportunities as they arise.  Unfortunately, this can lead both the talent pool and the organization to stagnate in the long term, unless it actively seeks to recruit diverse talent and continues to press for refinements to its (presumably successful) products.  The organization may have the resources to hire experienced professionals, and as a result seek out only those who have deep expertise in the specific functions of the roles which need to be filled.  I served a company that had a strong bias in hiring for those with extensive experience in its industry (and even within the industry, preferred to hire those from a small subset within the industry).  Though some roles require significant expertise, if the hiring pool is overly homogenized it institutionalizes conventional wisdom.  At a minimum, this can make the firm a less interesting and stimulating environment in which to work, and if the industry undergoes significant disruption, an institution comprising only deep experts may find itself without the ability to respond to new threats or the loss of key employees.

Stage 4: Broad Excellence

The organizations with the most sustainable competitive advantages include a range of depth and breadth in their own functions and in their employees’ skills.  Prudent managers will consider their employees’ skill sets with the same eye to diversification that they seek in their firm’s investment portfolio, with depth in areas of present necessity as well as general intellectual and professional breadth.  That breadth serves the dual purpose of increasing the likelihood of identifying new opportunities as well as improving the group’s ability to weather threats to the existing business model.  Leaders can evaluate their hiring programs for their success in building such a diversified portfolio of human resources, considering breadth across such factors as previous industries/roles in which employees worked, educational backgrounds and international expertise.
To maintain and build depth of skills among employees, consider setting aside time for continuing education coursework or research to ensure that employees’ skills are not only sufficient to perform their daily tasks, but consistently elite.  Bringing in outside experts to teach courses or maintaining a library of recommended reading for employees based on role can provide a source of advantage for the organization and improve morale, as employees feel supported and can recognize their professional development.  Less frequently addressed are tactics to ensure sufficient breadth among employees who are already deep within their skill sets.  Formal rotation programs work for some organizations, but are inapplicable (or too expensive) for many.  An internal “Book Club” can be a successful and inexpensive tactic to encourage employees to think broadly and critically, so long as the books selected are not directly linked to the day-to-day operations of the business.  Biographies of historical figures can provide interesting sources of insight into the sources of good and bad decision-making, while managers seeking to encourage greater creativity or empathy among their employees may want to recommend a novel.  While tech companies have gained significant press for encouraging employees to spend substantial time working on side projects, any organization can encourage its employees to grow by building new skill acquisition into their periodic reviews.  Employees can be deemed to have met this skill requirement by learning a new language, a new physical activity, or a new craft.  Linking a small portion of the employee’s success at the organization to his/her overall growth and development as a person will improve employees’ loyalty, their ability to effectively relate to customers/clients, and overall office culture, positively differentiating both the organization and its employees from its competitors.

Organizations can, of course, choose to remain at any of the previous stages and find success.  This evolution can also be somewhat cyclical; a stage 4 organization may choose to spin off elements that will act more like stage 1 startups, or scale its focus back to act more like a stage 2 firm.  My contention is not that firms must evolve in this way, but that the sequence I have delineated is one which an organization may find itself following due to the momentum of its success, and that identifying their firm’s current and desired positions along these dimensions can help leaders prepare themselves and their teams for more effective and comfortable transitions.

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