Part 14: Going Corporate

NEW YORK, United States — As in life, the time comes when every company needs to grow up. It's an amazing but challenging process. Young start-ups are like babies: unrestricted by rules, processes or systems and constantly learning, adapting and growing. But as your company grows and takes on more and more employees, it suddenly starts to become an adult. And the lack of structure that was critical to fostering experimentation and growth at the company's early stages becomes an obstacle to long-term efficiency, prosperity and success.
Suddenly, you find yourself going corporate.

As the CEO of Moda Operandi (M’O), I found myself facing “corporate adulthood” earlier than expected. But, as in life, I came to realise that growing up really isn’t so bad. Actually, corporate adulthood has a lot of benefits.

But what exactly does it mean to go corporate and how do you know when the time has come to face and make this transition?

When to go corporate?

The signs that your company needs to transition to a more corporate mentality and culture don't come all at once. They creep up on you gradually. So if you anticipate this change, you can make small incremental adjustments to ease into it. If not, you may one day wake up, look in the mirror and be shocked at the pimply awkward company staring back at you.
One telltale sign that you need to go corporate is when the company's founders are no longer able to spend time with each team member every day. Our very first M'O office had only four desks (and no windows). Mary Beth, our first intern (and now a merchandising assistant), sat next to me and I knew exactly what she was working on and where she needed help. I also knew where she was going to dinner in the evening and what her weekend plans were. But as more and more employees join a company, it becomes impossible to have this level of interaction with everybody. I no longer had access to everybody's day-to-day feedback, nor could I directly share my experience and values with the whole office by simply turning around in my chair.

Another sign is when it becomes more difficult to communicate strategy and priorities to employees. One of the beauties of a start-up is that this kind of communication happens naturally and effortlessly. Business goals are clear to everyone. Everyone is on top of the numbers. We held a monthly “guess how much revenue we did” competition and people were always close. So I was very surprised when I heard for the first time that some of our employees weren’t clear on business priorities. As you grow, communication needs to grow with you, deliberately and carefully (and loudly).

When functional experts take over the role of generalists, change is in the air. This means fewer people playing multiple roles within the organisation. For example, in M’O’s first few months, our chief technology officer oversaw logistics, negotiated insurance contracts and reconciled bank statements. Today we have experts in charge of each of these areas. And as functional expertise starts to solidify within the company, employees will start to ponder their career trajectories within the organisation. This is another sign that your company is growing up: your people want to grow up with it.

Finally, and perhaps most markedly, you know your company is going corporate when you start hiring corporate people to work there. Early innings hires tend to be individuals who love and embrace a start-up mentality. They live to multitask, to be jacks of all trades. However, they often lack experience — experience that can be injected by hiring individuals who come from established corporate backgrounds. But in order for these new people to be most productive and efficient, they often need defined structure and processes, where roles and lines are clear and specific. When you find yourself adjusting to these needs, you know you are reaching corporate adulthood.

How to go corporate?

Okay, so you’re becoming corporate. What are some of the steps to make the transition a success?

First, prepare a mission statement and a culture statement. You may have always thought these things are hokey but they’re not. People need to know what the company is all about. That’s what new people are asking about in the kitchen. Then, put in place forums for communication: employee meetings, cross functional meetings, CEO “open hours.” Never underestimate how much you need to overcommunicate even the simplest of things.

You’ll also need to clarify organisational structures and roles. Perhaps half of employee malaise stems from employees (wilfully or not) stepping on each other’s toes. Create an “org chart” and get everyone crystal clear on what he or she is and isn’t supposed to be doing.

Next, define career paths. Put in place a clear performance management system: performance targets and metrics, performance reviews, bonus systems, career progression. Just like your investors hold you to your targets, your employees need to be held to theirs. That means they need to understand goals and expectations.

Set expense policies. This one is key. Becoming an adult means creating accountability for what is and isn’t acceptable spending. Set a code of conduct. And create cross-functional teams to tackle various corporate issues.

So what does this all mean? Is instilling a corporate culture the kiss of death? Will people run for the hills? Of course not. The reality is: although some of these steps require a change in approach, they generally lead to more efficient business processes and smoother day-to-day operations. And people like smooth. For example, having functional experts lead each part of the organisation is typically a relief for everybody. My CTO and I were pretty clueless about warehouses when we chose the one we did in the autumn of 2010. It simply wasn’t within our area of expertise and it made the ride bumpy. Now, I have a COO who has personally overseen the setup of three warehouses from scratch. No turbulence, smooth sailing.

Furthermore, going corporate doesn’t mean abandoning the “fun factor” of your former start-up self. Make sure you work hard to maintain the elements of your company that made it an awesome place to work in the first place. For M’O, this means Friday happy hours, an active ping-pong table, a puppy in the office (Olive), the annual cocktail making (and drinking) competition. Whatever you were, don’t lose it.

Try to combine the best of each world. Try to marry the flexibility, fun and personal interactions of start-up culture with the operational benefits and efficiencies of a corporate environment. It takes work to do this, but it is achievable.

And, as always, success starts at the top. In our new office, which we are moving into next month (our fourth to date), my desk will be in the middle of the floor. This means I will have easy access to our employees and our ping-pong table — and, of course, to Olive, who has been part of the M’O family since the day she was born.

Previous articles in the Finding Your MO series:

Part 1: From Big Idea to Launch
Part 2: The Need for Speed
Part 3: The Business Plan is Your Roadmap
Part 4: Making the Most of Mentorship
Part 5: How to Choose the Right Investors
Part 6: How Wise is Conventional Wisdom?
Part 7: Going International
Part 8: Managing Investors
Part 9: Acquiring Customers
Part 10: Building the Team
Part 11: Motivating and Retaining Talent
Part 12: Re-inventing Yourself
Part 13: Planning Your Time

Áslaug Magnúsdóttir is co-founder and former CEO of Moda Operandi.