How to Survive Organizational Breakpoints

Last month, I was in Toronto for one of the bi-annual get togethers we do through Small Giants.  

For two days, we essentially go on a field trip to other like-minded businesses where we get to learn how they managed their growth and what they have learned along the way.

With this latest trip, we visited FreshBooks, an SMB accounting software company, and Zulu Alpha Kilo, an advertising agency.

We always walk away with some great advice and actionable concepts to bring to our business, but in our visit to FreshBooks, Co-Founder and CEO, Mike McDerment, highlighted a huge concept that gave a name to some of the challenges we’ve faced over the last couple years.

Mike spoke about the usual story you think of when you think about a startup scaling -- they started with a couple guys in a basement and grew their company to a team of 300 people.

What was different in his story was how he diagnosed the huge hurdles we all face as we grow.

When they hit 20 people, he couldn’t manage everyone on his own. When they hit 40 people, he realized not everyone knew what was going on and communication needed to change.

The more they grew, the more their older tools and processes, or even people in his case, didn’t scale with the company.

He called these moments of inflection, “organizational breakpoints.”

Oh yea, IMPACT has had its share of organizational breakpoints

As a leader who is typically responsible for figuring out “the how” of what the rest of our leadership team, CEO and COO want to see, and with our rapid growth rate, I have found myself in constant repair mode for the last year.

Our older structure didn’t work as we added more people and types of positions to the company.

Our old way of keeping client records broke as we added more clients, services and headcount.

Our old way of training our team also broke as we got too big and more remote to shove everyone in a training room.

But we’ve come out the other side with each of these challenges, stronger and more poised for the future.

In fact, in the last 2 quarters, we’ve changed faster than we ever have - a pretty amazing feat considering we’re also the largest we’ve ever been.

But why is that the case? Isn’t that the opposite of what’s supposed to happen?

I started to think deeply about these very questions on the plane ride back to Houston.

I couldn’t come up with a snazzy odd number list, but I did identify two very important things our team did that has led to our survival - scratch that - our thriving past our organizational breakpoints.

You must build for the break and multiply your team.

Build for the Break

Hoping and praying that everything will work out as you grow is a waste of time.

You have to be clear that most likely the systems, structures and tools you use today won’t scale at a certain point in your growth.

Here are a few examples that played out on our team.

Team structure

At the end of last year, I wrote about how we realized our latest and greatest restructure was a big massive failure.

We had built a structure that caused bottlenecks and overload on certain team members. This killed us when we needed to increase revenue to maximize the rest of the team.

That meant the few who are tied to the bottleneck between new business and service was working on overdrive. It wasn’t sustainable or scalable.

After we had determined we needed to make a change to our structure to solve for this and other issues, we knew we needed to create a team structure that could continue to scale with us and allow us to easily change as our teams/services/customer needs’ changed.

Enter the Spotify model.

To get a good sense of the Spotify model if you’re unfamiliar, check out this video and this video.

The highlights for the purpose of this example is that Spotify has a model where an employee is a member of a team comprised of cross-functional roles that can solve end-to-end for the customers on their team.

That same employee is also a member of a “chapter,” which is comprised of all the employees with the same job function. The Chapter Lead is typically the manager of everyone in the chapter.

This is building for the break.

When we deploy employees to a certain team, should whatever they’re working on either be phased out or should it grow to where we now need two teams to service the work, team members can move freely without ever having to change their manager or job role.

We know we will change again, and now we can do so in the least disruptive way for our clients and our team members.

Client data management

Another example is how we are managing our Services department data.

We like to track/manage things like:

• Our monthly revenue
• Of our revenue, how much is from inbound services vs. other services
• Client happiness so we can be proactive vs. reactive
• An active client email list (shockingly, we’ve never been able to maintain this well)
• And about 25 other things

When we were small and only sold two things - inbound marketing retainers and websites - we didn’t have a need for anything complex to understand how our revenue broke out between services and average lifetime value of a client.

We also all worked with all the clients, so we didn’t need anything formal or official.

As we expanded both in the complexity of our offerings, as well as in the amount of clients we now have, a spreadsheet wasn’t cutting it.

Actually that’s a joke. We didn’t have just one spreadsheet.

Several people were managing several spreadsheets, tracking duplicate information, and there was no single source of truth for our services team.

This became an even bigger pain point as we introduced open book financial management and realized we weren’t super great as tracking and projecting our data.

So, how did we build something that will break?

If I had a million dollars, I would have loved for us to get some fancy CSM software to automate much more of what we’re tracking.

Since that’s not in the budget, and really is more than we need right now, we have made large incremental improvement by using Airtable.

Airtable is not a spreadsheet. It’s a database.

The use of a database has eliminated the duplicate information tracking, and centralized all of the information everyone across the company wants to know.

I know full well this may not be our solution forever, and the ease of a software exit strategy was one of my main criteria in evaluating a solution.

A reason I like Airtable is it’s easy to export all your data, so we’re not trapped and it won’t be expensive or time consuming to make a change if we ever need to.

We can move at any time as soon as we outgrow it.

Team training

Back in the day, we used to train our team by huddling everyone up in our in-office training room and doing some kind of presentation + exercise.

As we grew and introduced more remote employees - more than half the team is remote - this broke.

We tried a few different methods over the last few years, but in general communication has been a challenge with that many people in that many places.

In 2019, we’ve launched a major initiative around communication training. Chris Duprey, our COO, developed a comprehensive program that solved for our remote challenges, while also solving for the typical issue our trainings had - follow through.

Rather than everyone hop on a Zoom call, we broke out the company into groups and had each group come in the office for a full-day workshop.

Following the workshop, each group was invited to a dedicated group slack channel. Every week, Chris puts out a new video ask of the team that forces us to constantly remember to implement the training we had and share how we’ve done it.

In addition to the weekly touchpoint, Chris also started up a monthly small group coaching session. This is a more intimate way to get personal coaching and support from your other group coaching team members.

Because of this comprehensive training program, we’ve been able to ingrain the training we received in January into our everyday lives, and it has affected real, positive change for the team.

All within a few short months.

Now, what we know will probably break with this method is the scalability of Chris’ time.

However, the structure and program still works, so we know when that time comes, we can develop other trainers as needed to assist Chris.

All three of these examples illustrate how we recognized we were hitting an organizational breakpoint, and how we reconfigured for future growth. We know it will break again (in a good way!) and we’ll be able to more flexibility to adjust as needed.

However, the system is just half the equation. Maximizing your team is the second half.

Multiply Your Team

If you’ve never read the book, Multipliers, I strongly urge you to do so.

Part of the concept of the book is to maximize the team you currently have for even greater value vs. looking to add more headcount.

When we were experiencing the bottleneck issue in our previous structure, the easy answer would have been to hire more people, but it would not have solved the root issue.

I thought we were doing a good job of utilizing our team members in a way that let them flourish, but I had no idea how much more we could have been doing that until we did move to the Spotify model.

The reason we’ve been able to change for the better so rapidly is because our very smart people are now able to autonomously improve their team and the company.

As leaders, we took a step back from “the how.” We articulated “the what” and “the why” and got out of our team’s way.

The best example of this is how our new website team went from not knowing how this new structure and their new team would all work at the end of December, to now going 70% over their revenue goal in just 3 months.

As leadership, we set the conditions and guardrails for the website team to accomplish what we need from a business standpoint, and then let them figure out the best way for them to hit their goals.

The team built their own capacity calculator with formulas I will never understand (I am spreadsheet illiterate, for reals), and determined how they could meet their goal and not be overworked as a team.

They also developed a new introductory product for prospects who are looking to get a new website but don’t want to commit without knowing exactly what they’re going to get.

By offering this, they have been able to convert more prospects to customers on a smaller offer, and then continue the relationship when the client agrees to do the whole website with us.

Not to mention, they solved for the customer first, which was one of their guardrails put in place by leadership.

In addition, now that they’re over their goal by quite a bit, they are cross-training other teams on how to do the introductory offer so they can help other teams hit their revenue goals.

All of this in 3 months.

(Shoutout to everyone on that team!!)

This all happened because we put the right people in the right seats, and let them do their thing.

We eliminated the red tape it would have required to get approval and enabled the website team to make their own decisions, so long as it didn't sub-optimize another team or the overall company goals.

We do this for all our teams, and each one has made a monumental improvement in the service they provide and in their overall work-life balance. It’s been a total win-win-win for the team, the company and our clients.

To pull back in the “build for the break” concept, we also know full well that as the website team continues to do well, we will need to scale that team.

Because of the way we’ve built our structure, we can easily spin out a new website team as our current one hits their capacity ceiling.

So, what will break next?

In addition to the examples I provided above, there will be more things that break and team members who aren’t fully utilized.

You will experience this too.

Aside from offering a different perspective to complex organizational breakpoint issues, if there’s one thing I could urge you to start doing today, it’s to take a pause and list out what will need to be addressed in the next 6 months in your business.

Then you can start proactively figuring out how to reconfigure what you know will break, before you’re in the thick of it, scrambling to fix it.

You can also be removed enough to build anything you need to restructure/re-tool for the future break, and integrate your people to fully multiply your collective team strength.