Building the Plane While Flying the Plane

Can you build a culture of continuous improvement?

I recently held a Q&A session with Michigan-based founders and the first questions were: What did working on the business look like for you during Duo Security’s growth? How did that evolve as the company scaled?

This is one of the hardest challenges founders face. What is the right balance between working in the business and on the business? You’ve absolutely got to deliver results every month, every quarter. If you don’t build the new features, you can’t attract more customers. If you can’t get enough new customers, you can’t raise money. If you can’t raise money…

Understandably, when a company is in its earliest stages there’s a lot of pressure to lean in and operate in founder mode to get things done quickly. Sometimes you just need to make the decision, write the code, close the deal.

But in order to scale a company, you’ve got to also build the systems and processes that enable you to close more customers and higher revenues next quarter, and the quarter after that, ad infinitum.

It’s a cliché, but it’s an apt one: you’re building the plan while flying the plane.

If you’re a founder or an executive (or aspire to be one) it’s not enough to deliver results. You must be making the business better every month, every quarter, every year. You can’t just work in the business, you have to work on the business.

A certain amount of chaos is unavoidable in early stage companies because you need to discover a path toward product / market fit. You cannot predict exactly how customers will respond to your product, your positioning, your pricing and so on. So the likelihood of getting it perfect is quite low. Instead, you need to be sufficiently agile to try things, observe the results and refine as you go. It requires deliberate experimentation.

It’s good to have regular review periods where you look back to consider what is working and what is not. It sounds simplistic, but often the best thing you can do is cut the things that aren’t working and double down on the things that are. Startups need to move quick, so if something isn’t working after 60 or 90 days, you don’t need to prolong the experiment, just make the call and try something else.

Ideally experimentation and learning become baked into the culture of the company. That means you have to measure results and accept that not everything is going to work.

It can be useful to review pipeline or deals weekly or monthly to understand what patterns are emerging and what new lessons you’ve learned that can improve execution.

Scaling at Duo Security

When we were doubling and tripling at Duo Security, I was always clear to the leaders of different functional areas that our sales growth didn’t mean that their particular teams or budgets would grow at the same rate. After all, we needed to improve our margins in order to get to profitability.

So, as an example, when working with Lisa Paul, our VP of Customer Success, I was clear that her team needed to get more efficient every quarter, every year. (Because if you’re not doing that, you’re getting worse, which is untenable!)

Of course, the number of customers, implementations, support tickets, would all double. When you don’t have the option of doubling the team, you need to get creative. Lisa Paul’s job as the CX leader was to make sure we could identify and operationalize improvements. Every quarter she would review the top ten customer support issues and take action.

• Get Engineering to improve those features so they were less error prone

• Create documentation to guide people through complex configuration options

• Develop videos or training content that to show best practices

• And so on…

Instead of just doubling the staff, a focus on efficiency forced us to be proactive rather than reactive. Sure it’s more work, but it is work that ultimately made us better. The result was we continuously improved our operations and thereby increased our customer satisfaction. Duo’s Net Promoter Score was routinely around 70 (Apple territory) and far above most SaaS companies. Most of the staff enjoyed working on projects which got them out of the daily grind of responding to customer support tickets.

Too Much Process?

In the early days of Duo (or in fact most successful startups) you’re going to reinvent the company about every nine to twelve months. The types of customers you sell to, the competitors you face, the leadership challenges will be changing and you need to evolve along with it. So just how much process should you create?

If you don’t put in place enough process, you end up stuck in reactive mode, constantly firefighting with little time to think about how to improve operations. But if you put in place too much process won’t that impede agility? Quite likely.

I have seen startup companies fossilize in their early stages by thinking that once they had $5m in revenues, they had perfect product/market fit. They then hired big company executives to maintain the status quo.

The executives were well meaning, but they’d never been at a startup during periods of rapid growth. They were brought in to maintain things and eke out 20 percent growth every year. The way you do that is you put more safeguards in play, more control and then you grind out more and more efficiency. Optimize pricing and consumption and renewals and don’t let anyone color outside the lines. It’s a perfectly acceptable playbook for a mature company. And it is precisely the wrong play for a startup.

In a startup, your goal is to add “just enough” process so that you can continue to improve, but not so much that it impedes your ability to listen to the market and try new things.

Getting Better All The Time

The goal is to build a lightweight, just-in-time process. The first time you put together a customer proposal, it might be a scramble, pulling in multiple people already busy with other tasks. The second time you do it, you might be able to streamline decision making and make it 10-15% easier. The third time, it should be a template-driven, repeatable process. That’s not to say every proposal will fit within cookie-cutter constraints, but you want enough process to efficiently deal with the most common elements.

Whenever you join a startup, there are things that are broken and areas that can be improved. Scaling is the art of fixing things so that they can continuously improve. Your goal is to get to the next stage of growth ready to evolve even further.

I have found that as organizations grow, you can get a lot more scale by leveling up middle managers and ensuring that they are making decisions, developing action plans and communicating effectively. They’re closer to the action than executives and many rise to the challenge when given more accountability.

If you need to close every deal or make every product decision in the first twelve months of the company, so be it. But if after that first year you don’t figure out a way to get yourself out of the critical path on these tasks, you might want to consider spending more time working on the business rather than in it.

What are the tradeoffs you’ve seen in working in the business versus on the business? How much process has been right for you? Share your comments below.