Coordinating Input from Investors and Clients
Hypergrowth companies maintain a trajectory on the steep part of the growth curve for longer than usual and are able to solve key challenges through close management of their stakeholders. All companies face challenges, but successful hypergrowth companies emphasize developing relationships with key stakeholders, such as the board, investors, partners, employees and others. Engaging these stakeholders and synchronizing them to the speed of transformation within the business cultivates opportunities for utilizing their experience as growth challenges occur.
Open communication with key stakeholders is a standard approach. For more distant stakeholders, approaches vary and in some cases companies might not offer any detailed information to the public. Some, however, apply 100% openness and all communication is offered simultaneously, internally and externally.
Challenges and mistakes are confronted with a positive and constructive approach as valued learnings and are discussed with key stakeholders as they approach. Hypergrowth companies often exhibit a healthy level of honest self-reflection. Since hypergrowth has no roadmap, no company is able to solve every challenge on its own at the pace hypergrowth requires. With potential failures considered as necessary to advancement and a constructive outlook, stakeholders do not need to be shown every item in the best light. Instead, advisers, board members and other experts can be engaged to co-opt solutions and provide input for complex problems and execution issues.
Boards are treated as a more integrated part of the team. They are engaged on an operational level for support for any urgent issues and as a regular sounding board for strategic issues. Stakeholder management is viewed as an everyday process of communication and conflicts are avoided by maintaining a mix of the right chemistry, contribution and competencies in the team.
Stakeholder Management, solution examples
Key Growth challenge
6.1 Finding matching patterns
Time management during hypergrowth phase
Use key stakeholders to find solutions to a variety of issues by connecting the management team to other companies with matching patterns
Unicorn, Silicon Valley, Founder
“We are in the craziest hypergrowth phase. Our management is focused on delivering solutions to various challenges. But as we have plenty of them, and have very limited time, we needed to come up with a solution. Our solution is to find matching patterns through our networks. We talk to the people who actually have solved the issues we are dealing with. At hypergrowth, there is no time to create all of your solutions yourself; there are simply too many things going on at the same time. It might not be the same issue but a matching pattern. Our solution utilizes our investors and board’s networks in addition to our own networks. Hypergrowth requires new markets and capacity to leverage the latest trends, but many of the growth challenges might have appeared earlier in a different domain.”
6.2 Onboarding the board
Solving day-to-day growth challenges on the operational level
Use the board’s experience and networks for operational issues
Technology, Silicon Valley, Co-Founder
“We never thought about the governance models as we worked with our board. We have had a very open relationship with the board. They help us with any operational and execution issues with their contacts, experience and partners. This happens constantly in between the meetings. In the boardroom, they help us by taking the role of the sounding board, mainly by asking questions on the roadmap level and following up on the items we have planned for. The key thing they expect from the management team is that we share everything: equally, the good and bad news.”
6.3 Raising funds when there is no need for it
Fundraising smart money
Raise money when it is not needed to help “pick” the best investors
Technology, Bay Area, Co-Founder
“Venture capital is usually the backbone of high growth. What I’ve noticed is that still many companies ask for additional rounds, as they start running out of money. I have taken a quite different approach: talking to investors when the company does not need the money. Founders should be thinking about raising funds all the time and use the best opportunities to pick the best investors. This approach has given me the opportunity to select the best investors and board members. Also, the valuations are more favourable when you can position the pitch more long-term. Shotgun weddings are not a solution for our firm.”