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5 Fatal Mistakes: How Big Companies Lose What Made Them Great

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This article is more than 9 years old.

Most of us believe that when any great company gets to be a certain size, it will inevitably lose its soul. We've all seen it over and over again: the company that has a truly wonderful product, or extraordinary customer support, or provides a needed service in a way no one else does, that grows dramatically (usually based on the power of what it does well) and then loses its uniqueness on the altar of scalability.

A number of our client companies are wrestling with this: I just spent two days with the senior team of a 50-year old company that has experienced a surge in growth over the past five years, and is having to put a great deal of time and energy into trying to figure out how to keep their core brand value and their unusual culture as they become an ever-larger entity.

In fact, many growth companies are actively engaged in addressing this; trying to figure out if there's a way to maintain and build on what makes them uniquely great, no matter how big they get.   Google seems to be quite serious about doing this (I just read a nicely written article in SFGate about what they're doing to keep their "googliness"), as do Bain & Co , Twitter , and LinkedIn , among others.

Here are some of the key pitfalls - the fatal mistakes they're figuring out how to avoid:

Mistake #1: Don't worry about what makes you great. Unless you can say pretty precisely what distinguishes you from your competitors, it will be difficult to impossible to make sure you're doing what's needed to maintain that.  For example, Google recognizes that an important part of their "googliness" lies in a focus on continuous adaptation.  Knowing that, they've focused on making sure that the greater number of rules and policies required to operate the $60B they've become doesn't mean the death of adaptation.  To that purpose, Google has instituted "the big scrub" - a quarterly effort to give employees a forum for adapting company rules to best serve evolving company needs.

Mistake #2: Don't admit when you're losing your greatness.  Unless you're willing to say, "You know what?  That decision/policy/approach is going to erode our core wonderfulness," you're doomed to have your wonderfulness eroded. At Bain & Co, which recently topped Glassdoor's list of 2014 Best Places to Work, senior executives regularly review how they're doing in supporting their key imperatives of great client results and a strong, supportive internal culture - and they're quick to acknowledge when something's off, and to figure out how to change it. Which brings us to the next mistake...

Mistake #3: Make it tough to course-correct.  One major greatness-killer: often when large companies start drifting away from what has made them great, they can't easily get back on track because the processes for change have become cumbersome.  Execs at LinkedIn saw that it was getting increasingly complicated and time-consuming to make needed changes to their customer interface, so they hugely simplified the process.  They now estimate that LinkedIn engineers quickly make hundreds of small and large changes a month in order to keep their platform responsive to users' evolving needs.

Mistake #4: Don't focus on your people.  Once you know your secret sauce, make sure it's baked into all your people processes: who you hire and how you hire them; how you support and grow them once they're there. A couple of years ago at Twitter, for instance, they created a hilarious recruitment video that captured the essence of what they offer while being hugely tongue-in-cheek (also part of their culture). In other words, create people processes that ensure you're bringing in people who will keep you great, that will support them to be great once they're there - and that do it in a way that reflects your unique flavor of greatness.

Mistake #5: Make financial return your mission. I've noted before that I believe 'shareholder return' and its equivalent in privately held companies is a lousy singular focus for success, and has not proven itself otherwise, even though it's become the holy grail for a lot of CEOs and consultants. As soon as financial return becomes the sole driver of decision-making, a company will lose its unique value and become commoditized; any decision that promotes long-term value to the customer at the expense of near-term financial results will get vetoed. If a company wants to maintain its unique value as it grows, executives need to balance their focus on financial results with a focus on delivering to their customers those things that catalyzed their company's growth in the first place. In the words of Henry Ford, "A business absolutely devoted to service will have only one worry about profits.  They will be embarrassingly large."  

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