There is a common belief that to be a successful entrepreneur, you need a great idea. But a great idea on its own is not enough. At the heart of every success, you will find people. Companies are made of people. Successful companies are made of talented people, at every level of the organisation.
Looking at companies like Google, Facebook, LinkedIn, Netflix, Zappos, these successes are rightfully attributed to their inspiring founders’ vision and leadership. These founders saw a gap. They came up with a smart and innovative idea to fill this gap. And they developed the right strategies to make it happen: the right business strategy, the right go-to-market strategy, the right marketing strategy … and the right people strategy.
Without a strong people strategy, it is not possible for founders to move from an idea (no matter how exceptional and revolutionary it is) to a unicorn, let alone to a successful and sustainable business over time. Founders cannot do it all by themselves. If they want to scale, they have to rely on other people as the company grows. And these people have to be equally talented, if not more so!
The terrible reality is that 90% of startups fail and there is a common set of reasons why. In a 2019 study, CB Insights compiled a list of the Top 20 Reasons Startups Fail. The top nine are:
1. No market need
2. Ran out of cash
3. Not the right team
4. Got outcompeted
5. Pricing/cost issue
6. Poor product
7. Need/lack business model
8. Poor marketing
9. Ignore customers
Each of these is linked in one way or another to a failure in leadership and human capital. We could even argue that the issues related to the product, marketing and go-to-market strategy highlight a broader capability issue at the team level, an inability of the leaders to build a strong team and to drive a business effectively.
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As a business gets started, things may seem rather simple because you, as the founder, are in control: the company is small and you can react to issues as you encounter them. You can hire and fire fast. You can keep an eye on the quality of employees hired in the team and their level of performance delivery. But this becomes more challenging from the moment you grow beyond the point where the founding team has regular contact with all employees.
The quality of the people in your organisation defines the quality and sustainability of your business. The quality of the strategies will only be as good as the people developing them. The execution of the strategies will only be as good as the people in the teams who do the actual work. And the quality of the talent you can attract and hire will only be as good as the people already working in your company.
It’s not even about getting ahead. It’s a matter of survival. Particularly in times of crisis, like the COVID-19 pandemic, having all this in place is not a luxury. Too many founders who are worried about the survival of their company only focus on the financial aspect of the business, but it is those who successfully navigate their crew through hard times that come out stronger. When the boat is rocking on a stormy sea, you need everyone to roll up their sleeves and row in the same direction. How can a disoriented crew do that if the founder isn’t captaining the ship? Indeed, making it through a crisis is the real stress test of your organisation.
Companies with a good people strategy enjoy a special status in their chosen field too. You probably already know who these are in your industry. Their names come up in conversation … in positive ways. They are known for their positive work environment. They attract and hire the best talent. Their employees (and even candidates) speak highly of them. These companies are in demand. People want to work there, people want to stay there, people are committed and deliver at a high standard.
Most founders think that people strategy is something you only have to worry about once you reach a critical number of employees. Usually around 150-200 employees when the first people issues really start to show. They then hire a Human Resources team to handle it. But there are plenty of companies with well-qualified HR professionals that do not come close to the status of ‘best company to work for’. They have a recruiting team, they have cool videos on their career page, they have fun employee engagement initiatives, they even offer free food in a full-stocked pantry … but still the reviews on Glassdoor do not do their
effort justice.
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So, what is the secret sauce? What do Google, Facebook, LinkedIn, Netflix or Zappos do differently? How come Google has been on Fortune’s ‘Best Company To Work For’ list for 11 years and landed in the top spot for 6 years in a row? How has Zappos managed to be consistently rated as one of the ‘Best Places To Work
For’? How does LinkedIn constantly reach one of the highest scores on Glassdoor?
The common factor is that their employees are happy, dedicated and safe at work. These companies have a high volume of applications and low attrition rates. Their employees recognise and value these companies’ investment in their wellbeing. They have a clear employee value proposition and clear idea of the type of people that best fit their organisation, which are achieved through the development of a clear people strategy.
We know of these companies now, but they did not become like that overnight. They were built like that. They articulated the people strategy early and translated it into the right work environment for them from the beginning. Google had their values and key people management principles set within the first two years.
Google founders’ altruistic principles and ‘societal goals’ were clearly articulated in their mission and values from the launch of the company in 1998, and the famous OKRs were in place by 2000.
All companies have a different story. They do not go through the same stages of growth at the exact same time. They do not experience the same challenges. They do not share the same beliefs and culture. However, good people strategy underpins the success of these companies, and there are some similarities and trends that you need to know in order to build your organisation – starting now.
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Anne Caron is an international speaker, author and consultant. Drawing on her 10 years’ experience as a senior HR executive at Google, she set up her consulting practice in 2015 to support founders in building high performing and positive organisations.
Through her experience working with entrepreneurs, she developed a methodology for startups to grow the right organisation and team, which she describes in her book From Zero to 1,000.
This story has been excerpted by courtesy of the publisher from From Zero to 1,000 by Anne Caron (Anne Caron, 2020).
To purchase the book, please visit this site. The paper version is available at Amazon from July 25.
Image Credit: Damir Kopezhanov on Unsplash
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