Stages of Company Maturity
A framework to identify issues to unblock growth.
Photo by Suzanne D. Williams on Unsplash
One cause of friction or failure (ahem, learning opportunities) that I’ve repeatedly encountered in companies, is a mismatch between the process being applied and the stage of the company. Think of startups implementing the playbooks of Big Tech which in turn slows them down. Or late stage companies continuing to be "scrappy", at cost to customer satisfaction. The tools used do not match the needs of the situation. The result can lead to the creation of an operating mode that limits growth rather than generates it.
So why does this happen? We’re all likely familiar with the lifecycle stages of a successful tech company:
Early Stage (MVP - startup) > Growth (scale-up) > Late Stage > Public
There are industry accepted criteria that define what good looks like, from a growth and revenue perspective, at each lifecycle stage. This can be a helpful benchmark, particularly if fundraising. However, these stages don’t always reflect the inner nature of an organisation. Companies don't always operate in a way that aligns with their lifecycle classification across the board. Take for example, a company like Stripe. They are a late stage multi-product organisation. Some of there products are in beta (startup mode), while others are well developed. Additionally, the markets they operate in are at various stages of maturity. Some barely addressed beyond self-serve sales, others highly penetrated. Within the company itself teams will also fluctuate in stages of maturity. Newly formed functions, teams and roles will be fledgling beings within the greater body of the org.
Examining performance through a maturity lens helps identify opportunities and issues given the state of that particular team/product/market etc, without it being tainted by the expectations of the overall company stage.
How this can help
Below I’ve outlined an approach for assessing company maturity using a tripart framework focused on product, GTM and organisational maturity. This framework can be applied to early stage startups in their entirety, or at a market/function/business unit level for more scaled organisations. The aim is to help identify:
stage of maturity so that the most appropriate operating models can be applied
the root causes of issues more seamlessly
This in turn should allow companies to better serve their users and grow more rapidly.
Stages of company maturity
Imagine each of the 3 criteria pillars, Product, GTM and Org, as legs of a stool. Ideally each leg is of even height. This allows it to sturdily hold whatever is needed (in this case it’s increasing user volumes). Each leg can continue to grow (perhaps this is some sort of stool tree), and as long as the legs grow in tandem the success metrics of choice are safe. However, there may at times be an imbalance. Imagine an organisation with a great sales and marketing team who have created such demand that the product is struggling with performance issues as it scales to meet increased usage volumes. This leads to a lopsided stool, which while functioning, is not operating in manner which enables the org to capitalise on growth potential. If the product issues are not rectified, this could result in churn, reputational damage and a negative growth trajectory. Imbalance leads to lost opportunities.
There are 4 stages of maturity within each pillar (these could be broken down further, however, I've kept them high level for simplicity).
Pre-Product: Product not yet available.
Early Iterations: MVP or early versions of product available for use, on a free or paid basis. Serves initial use case(s) to a certain extent.
Advanced Features: Feature set of core product developing. Potentially some moat in existence. Readily serves intended use case(s). May be developing new products.
Comprehensive & Scaled: Core product(s) well developed and adopted at scale. Likely a multi-product company.
No Active Users: External users not using the product. May be generating waitlist.
Non-Scaleable Motions: Early stage GTM motions being explored and developed. Non-scaleable and highly custom e.g. founder led sales. Testing distribution channels.
Optimising: Understand key value prop. Focussed on driving efficiencies in GTM approach and scaling reach. Teams solidifying.
Repeatable & Scalable: Repeatable GTM motions in place. Reach has likely scaled to a significant user base.
(Leadership considered a subset of this).
Founding Team: Fluid roles and responsibilities. Focus on getting things done rather than company building.
Early Hires: Starting to hire additional team members. Typically generalists. Org structure forming with an increased focus on roles/teams, titles and culture.
Org Scaling: Core functions in place or being hired. Teams scaling and org becoming defined. Frequent re-orgs. Leadership capabilities and seniority varying across teams.
Structured & Stable: Org structure mostly solidified. Experienced leaders in place across all functions. Hires specialists.
When the operating pillars are in harmony, progress can feel smooth (or as smooth as things can feel in ambiguous environments). The various pillars complement each other. One example of harmony is growing a waitlist through minimum viable marketing, and conducting user research with waitlist users while building out the early iteration of the product. A mutual feedback loop is created between the GTM and Product work. This allows both sides to grow in tandem. Another is understanding what is required to successfully launch a new feature (usually learned through trial and error) with the appropriate DRIs and resources (marketing campaigns, sales enablement, support collateral etc) in place to maximise early adoption. The org is clear on what success looks like and the levers they can manage to achieve it.
When friction occurs within a company it can be due to the pillars being out of sync. We’ve all likely heard the cautionary tale of hiring leaders from big tech into startups who are unable or unwilling to get into the weeds and over-hire to compensate. There is a mismatch between how they operate and what the company needs at that stage of maturity. This leads them to be ineffective in their roles. Discrepancies in org maturity can also occur when the addition of expertise into a company aren’t uniform (which is nearly always the case). Imagine a company that has hired a Commercial leader whose background is exclusively sales. They may scale their sales teams considerably as this is their zone of comfort, without simultaneously investing in marketing headcount to make the sales teams more efficient. Over time this could lead to a large, costly, commercial org that is ineffective from a LTV/CAC perspective. Similarly, if the Commercial leader is more experienced and effective at advocating their points internally than their Product counterpart, the org may end up in a scenario where the Commercial team have disproportionate influence over the product roadmap, sacrificing long term vision for short-term revenue. Imbalance can hamper long term growth.
Using the framework in practice
As mentioned earlier, the aim of using this framework is to help identify which areas of an organisation are operating effectively and those which may need to be optimised. There are many ways that you could approach this. One simple approach is to apply a red-amber-green status to each team in the org (or subteams within a function). This should help identify the most pressing problem areas which should be investigated further. Conversely, this can also help identify approaches to execution that are working well that can be further exploited or replicated elsewhere.
Below is an example of a hypothetical one product, early stage company, including the probing questions that were used to assess this, based on the expected stage of maturity, and the 3 priority areas selected (*) to focus on. (In this case it’s clear that product focussed teams, are less mature than their GTM counterparts).
Strategy & Planning
Does the team have a strategy in place? Is there a clear focus?
Is this known to the rest of the org? Is it aligned with business priorities?
How bought into the strategy are the team and rest of the company?
How would you rate execution? Is the team delivering what’s need to drive growth at the pace that’s required?
What is going well? What isn’t? What does good look like here for best in class companies?
Is the team’s focus aligned with business goals/KPIs? Is there a clear sense of direction?
Does this team have a good operating rhythm/cadence?
What is the balance of manual vs automated work? Are they building for the next phase of growth?
Are there clear opportunities to improve efficiency?
Headcount: Are there too few or too many people in this team? Is the required skillset in place?
Leadership: Does the team and the business have confidence in team leadership? Are they working towards improving their team's strategy and execution capabilities?
Team structure: Is the org structure helping or hindering decision making for this team? Where are their gaps and overlaps in ownership?
In reality, a company is never going to grow at a perfectly uniform pace. The aim of this exercise is to help mitigate serious issues that can arise from the unavoidable imbalances that will occur during scaling. In turn, this should enable the company to be in the best position to grow.
Thanks for reading Ways of Working. If you found this article interesting, please share!