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Tips for Managing a Fast-Growing Company

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Tips for Managing a Fast-Growing Company
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Maya Raichura
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Tips for Managing a Fast-Growing Company - July 20th, 2012

It seems like any entrepreneur would kill for the chance to become an early leader in one of the many fast-growing global industries. Yet fast growth can lead to a wide range of problems, from human resources and managerial control to finance and information technology.

And when a company’s development is driven primarily by industry-wide expansion rather than the company’s innovation and operational excellence, you can be certain that the organization will experience its share of growing pains.

These challenges were the focus of Professor Michael Preston’s class, Managing the Growing Company. In this class we examined the common patterns that emerge when high-performing small and mid-sized companies outgrow their infrastructures. We studied many companies that successfully made this transition, including TheKnot.com and Mitchells & Richards, and some that did not.

Turns out that companies that grew successfully exhibited some of the same patterns:
1. The founders acknowledged their weaknesses and sought outside help. They were willing to consider that the people and processes that contributed the most to their growth in the start-up phase could be part of what was holding them back in the next phase.

2. When the organization grew, formal systems were put in place to manage functions like accounting and human resources that were once handled on an ad-hoc basis.

3. Founders avoided becoming a bottleneck by delegating important decisions. Trusted operational managers focused on day-to-day firefighting, while top executives focused on more strategic issues.

For the final class project, our team studied Did-It.com, a leader in search engine marketing (SEM). Over the past ten years, SEM has undergone wave after wave of upheaval and growth. Industry changes, which now occur almost daily, have left a long trail of shattered business models.

It was technological change that led Did-It.com to change its business model at least a half dozen times since it was founded in 1996. Each time the industry shifted, the company managed to move to an even stronger position. Over the past five years, the company recorded growth of 1,369 percent, landing it at number 137 on Inc. magazine’s list of the fastest-growing private companies in the United States.

How has Did-It.com remained so nimble? To find out, Jindra Zitek ’08 and I caught up with founder Kevin Lee at the company’s New York headquarters.

It became clear almost immediately that the leadership of Lee and his partner Dave Pasternack has been a huge factor in the company’s success. By constantly adapting their vision to both market realities and employee sentiments, they’ve kept their organization one step ahead of the curve.

For example, Lee told us that a few years ago he was walking around the office when he noticed that half of his employees were stressed-out and unhappy — employees focused on “organic” SEM. When this trend continued, he and Pasternak promptly closed this part of the business to focus on paid listings-management.

When asked about the defining factor that allowed Did-It.com to succeed where many rivals foundered, Lee cited his willingness to delegate responsibility. Employees are empowered to make important decisions without oversight, allowing them to deliver exceptional customer service while adapting quickly to whatever changes new technologies may bring.

“My employees don’t work for me,” Lee said. “They work for my customers.”


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