When the Company Outgrows the Founder’s Brain

I was recently asked how I got comfort that CCAW was moving in the right direction without being involved in everything.

A little context: Founders often build companies from scratch. They’re the glue that holds things together in the early days. Everything is in their head and they know how all the pieces work together. They’re intimately involved in most aspects of the business because they have to be. Resources are so limited that if they aren’t involved, it may not get done.

Growing businesses will reach a point where it’s no longer a good idea for the founders to be the glue. It hurts more than it helps. This often happens after a product–market fit is found.

CCAW had thousands of monthly customers and a high level of operational complexity. As we grew, it was impossible for me to be involved, but I needed to know if the business was thriving or dying. Over time we created three or four metrics, updated daily, for every functional area. For example, every morning our accounting system delivered to my inbox our net cash balance, month-to-date revenue, and month-to-date gross profit. The operations leader and I received daily reports on the number of unshipped orders, feedback from dissatisfied customers, and unresolved customer cases.

I wasn’t the only one with access to this data. The entire team got daily reports on these metrics. We further simplified each metric by using a green–yellow–red system to gauge our health. If key metrics were green, I knew all was well. If metrics were yellow or red for an extended period, I offered my support in resolving the issue to the functional leader and also communicated my expectation that we would get back to green. (A carrot and a stick, you might be thinking.)

We didn’t establish these metrics and reporting procedures overnight. It took time to figure out what mattered most in each function and how to measure it effectively. Once they were in place and visible, the team could focus on what mattered most. I didn’t need to be the glue. The team was empowered. I was always informed about the company’s direction and health. Win–win!