June 15, 2017

Organizational Development

One of the most critical aspects of the CEO role is to focus on organizational development.  That means understanding where the company is headed, what roles need to be filled, how the organization will operate, how organizational effectiveness will be measured and how to best on-board and train new employees.  It is a lot to think about, especially when you are in the heat of battle trying to deal with short-term sales or product or cash issues.  But your company’s success hinges on this.

A good CEO should always have “organizational development” as one of his/her top 5 priorities.  He/she should always be thinking about what is working in the organization, what is not working in the organization, what the future organizational needs are, adjust the organization as needed but not constantly and radically change the structure.  Many domain expert founders/CEOs are good at building a product and can effectively run a homogeneous product development organization, but have little knowledge and experience at building a multifaceted organization.  In addition, they have never structured a cross-functional communications plan or even determined precisely who might be responsible for what in an organization.  Another issue tends to be that many founders want to be part of every function and don’t know how to let go of key functions, like sales or marketing or client services.  In some cases, they may not even value key functions like sales, finance or HR.  Finally, if they do manage to build a reasonable organization, they don’t hold the team members accountable for results.

This is all part of organizational development and not understanding or dealing with this, all leads to constant organizational chaos and completely stunts the growth of the company.

When building out an organization, it is time to focus less on product innovation and more focus on company scalability.  Founder/CEOs often do not appreciate this and this can even lead to potential investors backing away from investing since they are fearful that the founder/CEO won’t be able to fully take advantage of the opportunity because of the above issues.  This confuses these founder/CEOs since they believe that the investor will focus on the product idea.  They completely underestimate the need to execute on the product idea which requires a strong organization.  These entrepreneurs are wrong in their beliefs.  It’s the execution that drives the value and the execution comes from building and running a great organization.

So, what’s the solution?  Here are some ideas to help:

  • Recognize that you will be valued based on execution and execution requires a great team
  • Know what you know and what you don’t know about building an organization and the requirements of the functions that go into this
  • Think through your short and long-term organizational needs
  • If you don’t know how to do this, find a mentor
  • Use a professional and trusted recruiting firm to help fill positions
  • Hire great talent, set performance objectives, hold people accountable and let go of the functions at the appropriate time (and know the appropriate time)
  • Develop a strategy/plan and know the metrics that drive that strategy/plan and which team members are accountable for which metrics
  • Hire for culture as much as for talent
  • Make sure you are hiring people who can fit your current business and also scale
  • Use your board to help (if you have one)
  • Think through how teams will work together, what their individual team-member roles are and how communications will work between them
  • Set performance guidelines and expectations for everyone
  • Manage to these expectations without wavering
  • Build a personnel development plan for all employees
  • Think through and build a formal on-boarding program to help improve the odds of employee success

For more information on how to build an organizational development plan, contact Arbor Dakota below. Arbor Dakota is committed to helping CEO’s grow their great ideas into great companies.