Small businesses can implement big business practices to help drive growth.
Practices traditionally associated with larger companies like Objectives and Key Results (OKRs) and self-management can be adapted for entrepreneurial organisations.
We spoke to two tech leaders about how big business practices were successfully integrated into their small businesses from goal setting to culture, the benefits for company culture and the pitfalls to avoid.
Objectives and Key Result goal setting
Tech Will Save Us was founded in 2012 by Bethany Koby and Daniel Hirschmann. The company makes do-it-yourself tech kits for children to learn about coding and technology, and currently has 40 employees.
As CEO Koby explains, the strategy they decided to use was OKRs – a framework for setting and measuring objectives and their outcomes. OKRs are a popular tool for big businesses.
“John Doerr brought OKRs to Google and they became central to Google’s culture. The goal is to focus efforts across the board on the same important issues,” Koby explained.
Tech Will Save Us made the decision to implement OKRs in 2015 after it was suggested by one of their investors. The investor had seen several businesses use OKRs successfully to align their teams around common goals. The suggestion came at a critical time, too – the business had a small team of 10 but was growing fast.
“We wanted to align our teams around common goals, KPIs and the work that needed to be done. It was important to choose a way that was transparent and allowed for ownership, autonomy, accountability and ensured clear prioritisation,” said Koby.
Carry out in-depth research
She researched the idea in depth, talking to other businesses that had used OKRs, in an effort to understand its processes, pitfalls, challenges, and benefits. The decision to implement OKRs was quickly agreed and kicked off.
“It took us about a year to get it right and make refinements. We worked out what the process needed to be in our business to get to clear OKRs every quarter,” Koby explained.
Now, she can’t imagine running the business without them.
“OKRs are a fundamental part of how we run the business. They feed into our culture of transparency and accountability, and ensure the whole business is aligned on the most important objectives every quarter. They have helped us to communicate better, catch ourselves when we’re being distracted by things that aren’t a priority, and collaborate more.”
The challenges unique to SMEs
However, small businesses might not always understand best practice as well as larger corporations, reflects Koby.
“Not everything needs to be reinvented, and in a small business this can happen too much.”
Her advice to other SME leaders looking at big business practices? Remember that all processes require a clear objective.
“What are you trying to achieve or improve by implementing this process? The answers should help you decide if it’s the right process to do that.”
Second, all processes should feel owned by your business. The values and behaviours should be evident in how the process works. The norms and rituals it creates should strengthen your values as well as the outcome.
Third, Koby advises that processes should be regularly reviewed, iterated and improved, as things move fast and change often in SMEs.
Experimenting with self-management
Jason Trost is CEO and co-founder of online trading exchange, Smarkets. Smarkets was founded in 2008 and has 120 employees in London, Los Angeles, and Malta. Trost has taken on the radical big business practice of self-management, as championed by Frederic Laloux is his book “Reinventing Organisations”.
“Laloux showed that the concept can shape the next generation of organisations and human evolution – and isn’t just some crazy, far-fetched philosophy,” Trost explained. “Companies like Valve and Zappos implemented a self-management system while successfully growing their businesses. I’m naturally curious and wanted to explore the possibilities around it.”
In the past, Trost had worked in a traditional hierarchical management model in banking. It’s partly what compelled him to investigate big business practices and self-management further.
“I also wanted to set up a company where engineers are seen as first-class citizens and aren’t subordinate to the business guys,” Trost explained.
“A self-managed system tears down those barriers. What’s really different is that the power structure is bottom-up and not top-down. This is important because it allows our staff to tap into their creativity and not be confined to a specific role, team or set of defined responsibilities. They can think and perform outside of the box.”
Make big business practices work for your culture
In the beginning, implementing self-management was relatively simple for Trost. “When your company is small, it’s pretty organic to operate a flat system,” he said.
The challenge comes as the business scales and the headcount grows. This is when most organisations start to build structures and hierarchies to manage the process.
“I resisted that temptation from the start and was able to experiment with the concept. In doing so, I tried to create this network of interchangeable teams, stripped away what I saw as unnecessary layers of bureaucracy, and made the company transparent at its core. As the company grow we’ve made adjustments so that it works for us, our culture, and our people,” Trost explained.
One area that Smarkets have experimented with is salary transparency. The company publishes all salaries on an internal wiki and lets staff set their own salary every six months, as decided by a peer review process.
“While it may sound radical, it’s a really fair system that empowers people to take control of their career,” Trost said.
Like Koby, Trost also recommends implementing your big business practices in a way that works for your organisation and enhances what you do.
“I believe that company culture is absolutely critical. It’s something that should never be compromised on when incorporating new ideas or approaches, even if it impacts the bottom line.”
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