The value of process improvement for scaling up your startup

Part Two: Improving your processes and setting the course for scaling up

///This is part two of the three part series: “The 10 most important things I learned, while building my first startup”. In the first part we talked about the importance of the founding team, the vital effect of early employees and the impact that those people will have on your personal working routine.///

Today I want to dig a bit deeper into the topic of performance tracking and improvement of both, your processes and your team. Before we start, lets recap the 3 learnings from the first part:

  1. Founding team: Starting with a skill-diversified founding team helped us to build a MVP, run marketing campaigns and coordinate fund-raising activities by ourselves. We did not depend on 3rd parties or agencies, which both added speed and saved us tones of money. Settle formalities such as vesting schemes, decision processes and share distribution early on, so nobody jumps ships once does questions arise.
  2. Early Employees: You really want to go without hiring for as long as possible. Hiring good people takes time and money. Also once your team grows you can not dedicate 100% of your time to the things you were working on before. You rather have to spend your time on training and leading your teams. Working in a small team with independent members is much more productive than leading a huge team early on. If you do have to hire, go for people that add value and are better in at least one area than you.
  3. Keeping up productivity: It is important to understand that your overall team performance and productivity will drop until your team works as a unit. It takes time and resources to establish effective team structures. Don’t underestimate the effort you have to put into forming a team from scratch.

After reading part, you hopefully understand how hard it is to attract young talent to your company. But let’s say you got the hang out of it and you are having a crew sitting in front of you, ready to change the world.

However, even before you have time to order new tables at Ikea, some of them are already leaving your company again. What is happening?

4. Transparency and Trust

Well, as a young start-up you are fighting a constant battle against insignificance. It’s likely that your sales numbers are small and your team has not found their productivity sweet spot yet.

So what, that is how it is, right? Right. But people are afraid of the unknown. Small sales, many problems and a seemingly chaotic way of working raise doubts if your organisation has any chance to survive. Because what you have to understand is: your employees number one concern is simply: “Am I going to be paid next month?”

The moment they are questioning this, they are looking for new opportunities. They know 9 out of 10 start-ups fail in their first year. So there is a 90% chance they are currently working for one of them. Scary.

Very much at the beginning of our journey we had a PR manager working with us, who used to say: “Nobody cares about a small start-up with two sales a day”. She was right. Also she was gone soon after.

For me as a young founder it was fine that things were not 100% as we expected them to work. I saw the big picture in front of me every day. I knew where to steer the ship and got used to the fact that everything looks broken all the time.

 

goal communication as team building
Keeping the team in the loop, while keep them motivated throughout the process. Sharing good and bad news, acts as a team building activity.

 

It took me a couple of months to realise, that I made it unnecessarily hard for my team to understand that things are actually improving. I wasn’t sharing the small successes and the progress we were doing. They literally were in the dark, not knowing how important their contribution was towards the bigger goal.

In our early stage there was a time where we almost weekly changed strategy one way or the other. I understand now that this looks like the founders have no idea what they are doing and how scary this seems. Our solution was to have an all hands on deck meeting once a week, where we explained the situation, what changed and how we want to react to certain developments. Let your team participate and share their ideas. They often have a better understanding on what is going on, than you think.

Celebrate wins, explain shifts in strategy and let them know how you are doing overall. Even if you are going through a tough phase, explain what is going on. Your team will pay back your transparency with trust and loyalty.

5. Teach a structured way of working and cook with a recipe

One important thing I understood pretty early on was, if you bring a bunch of people with different background in one room and expect them to work together efficiently, you will be in for a surprise.

What makes a good start-up so great, is its ability to move faster and change focus quicker than big organisations. At least on paper. Smaller teams, little bureaucracy, short ways of communication. Young enterprises have everything larger corporations are dreaming of. Yet, many don’t take advantage of this situation.

My engineering background helped me a lot to structure bigger projects and manage my time well. I can analyse a given task and quantify and identify the necessary steps in order to successfully finish the task in a short time.

I never really appreciated this, until I realised, some people (regardless of how skilled they might be in other areas) lack this ability. So I made it my duty to teach this way of working to everyone that collaborated with me in one way or another.

I follow a very simple mantra:

  • A/B test whenever possible
  • document everything you do
  • analyse your data
  • take your learnings and write them down

By doing so, not only do you proactively focus on details but also ensure that no learnings get lost.

Over time we put those learnings into guidelines, handbooks, playbooks – or how I call them: recipes. Recipes in that sense, that when given to someone who has never worked in that context before this person is able to reproduce the same results in a structured and productive way.

Let’s take McDonalds as a good example. Imagine its’s your first day at McDonalds and you have no idea how to flip burgers. One of the first things they are going to do, is to give you a standardised handbook. Within two hours you will be as good in preparing burgers as a fellow McDonald employee in Sydney at the other end of the world, who worked their for 5 years. Sounds logical, right?

 

Standarised processes are the key of a functioning organisation
Do you want fries with that?

 

Build recipes.

By doing so, you save significant time when it comes to on boarding and training. Besides that, we treat our recipes as living documents. Whenever someone finds a better way of a solving a certain problem, the handbook gets updated.

Everybody is involved in making GetYourHero a better company – every day.

6. Test Everything

This brings me to the next learning:  A/B Testing. What is it, you ask? Frankly, it is an overused term used by every self-declared marketing guru, who wants to sound smart. Just like this one guy that always draws Venn diagrams in meetings and talks about sweet spots. Well that’s a topic for another day.

But if I had to describe it in few words it would be: you test multiple hypothesis against each other and track which one produces the wanted results from your real customer base.

 

A/B testing to improve conversion
A/B Testing framework in a nutshell Source: http://fistfuloftalent.com/

 

Let’s say you want to find the best converting heading for a landing page. You could now scrabble down 2-3 different variations and ask everyone in the office which one they prefer. And to a certain degree that’s already an A/B. The downside is, you only asked a very limited number of people. On top of that they are somewhat biased. They already know your product and assume something work-related when you ask them for advice.

Much better is to create those 2 or 3 landing pages with the different headings and send real traffic to those pages. There are dozens of great tools out there that help you to create that pages quickly and mostly even with very little technical knowledge required. The traffic gets distributed equally between the pages and after a couple of days you can read the results.

What I love about that: it’s hard data.

Given that you used a big-enough sample group of people you will see which campaign outperformed the others. Ladies and Gentleman we do have a winner.

And now? Now, you start all over again. You take the winner, develop a new hypothesis and A/B-Test the next scenario. If you keep doing this, you learn a great deal about your customers, their preferences and how they want to use your product.

The beauty is this works for all parts of your organisation where results can be measured in numbers: online marketing, product features, customer service … you get the idea.

After all, I keep it with Barksdale, who said: “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”

I actually love this quote so much, I have it printed over the wall in my office. Whenever someone dares to come to me with an idea without sufficient data to back it up, I refer to it (with a smug smile on my face).

By doing so I have a great running gag going on plus I encourage my team to test their hypothesis and take the guess work out of the equation.

7. The beauty of tracking your performance

GetYourHero is a high-growth start-up. What does that mean? We grow. Fast. In the number of cleanings, cities, customers and of course, revenue.

This is necessary and challenging for multiple reason, which I will cover in a different article. In fact, things are moving so fast at some times, that it is extremely easy to lose track what is going on, and why. To counter this, we set performance goals. A lot of them.

We define exactly where we want to stand at the end of the year, the month, the week, well even at the end of the day. This helps us the evaluate how fast we are really growing and if we assign our resources to the right means. Now all you have to do is track all kind of performance indicators and compare them with your set targets.

During the last 18 months we have undergone quite some major strategy shifts, such as getting rid of a significant chunk of our customer base. At this time, we analysed their consumer behaviour and found that this specific kind of customer created more incidents than they generated in revenue. By removing those toxic customers, we did drop in the numbers of executed cleanings for 3 months. However, in the same time the number of customer complaints and refunds went down by 80%. This strategic decision allowed us to deliver better service to our high-value customers and freed up customer service resources. Based on our customer data we got a better understanding of our target customer group and were able to reach them better. Deciding to let them go at this point was a risky move (which paid out very well for us, which you can see in the months following August). However, those decisions can only be taken and justified if you have the numbers to support your theories.

 

key performance indicator report
You see the fall in customers from June to August? Well, we actively decided to let a certain kind of customers go in order to concentrate on the ones that actually generate revenue for us.

 

Furthermore, when your goals are communicated well, everyone in your team sees how things are progressing. When the numbers go up you create a hype. On the other hand, when numbers are not pointing in the right direction, everyone knows he has to put one, two coals more in the fire to achieve the goals.

For that reason, we have a TV screen hanging in our office showing all the incoming bookings. Every time a daily milestone is hit a record is played.

Setting and communicating clear targets also helps you to evaluate your team members’ performance. It’s hard to argue against hard data. If helps them understand where they are good at and in which areas they need to improve.

Everything that you do on a daily basis, generates data that can be measured. Don’t waste this opportunity. Track it, identify bottleneck and fix them. Before you even think about scaling your startup you have to optimize the underlying processes related to customer acquisition, customer retention, supply chain management and many more. Gathering and analysing all relevant data is crucial part of understanding all moving parts of your business. Otherwise you fly blind and might just throw your money out the window.

Continue with the final part of the series and learn to build what your customers really want.