How business owners can bring start-up energy to larger companies - Sunday Times

Hiring young bosses helps bring fizz and fast decision making to firms

Whenever I’m working on the early Monday morning train from York to London, half the passengers are either asleep or staring out of the window. It always reminds me of a maxim that’s fundamental to business: “If you snooze, you lose.”

Successful start-ups that grow into large companies often end up with slowing growth caused by too many management layers and consequently a delay in decision-making. Instead of people feeling liberated to make the right decisions based on their experience and trusted instincts, they’re compelled to filter everything up the chain of command. Leadership gets overwhelmed and nothing gets done in time. They snooze and lose.

One reason I love working with young entrepreneurs is their infectious energy — their ability to stay agile, make decisions quickly, execute them at speed and pivot when things don’t go to plan. We need to bottle that can-do mentality for the medium and larger-sized organisations that are this nation’s engine of growth, so they can inspire their staff to accelerate actions and reactions.

Look at how newcomers such as BrewDog have challenged dominant players in brewing and hospitality to up their game. It has brought an audacious edge to sectors that were getting too comfortable: its two-floor work/rest/play pub at London’s Waterloo Station is a brilliant example.

Little wonder the company’s most recent reported annual revenues showed a 12 per cent rise to £320 million less than two decades after being founded. Just as fast-moving has been payments firm Klarna, which, after helping to revolutionise the finance world through retailer partnerships, is set for a $20 billion (£15.5 billion) flotation in the US.

It’s possible to inject some of that start-up energy by recruiting talent from smaller, more dynamic businesses: managers who are more skilled in shaping a cohesive, fast-acting business unit rather than insisting that decision-making must be a group effort. I did this by hiring Jambu Palaniappan from Uber Eats to run my business, Checkatrade. Just as I’d hoped, he brought the speed and agility he developed at the Uber start-up. Managers are given specific roles that don’t clash, they know what’s expected of them and they collaborate at speed to get the job done.

However, simply recruiting the best people isn’t enough. Leaders also need to give talented hires the chance to prove themselves, by handing them the authority to make decisions. I’m a fan of Patrick Lencioni’s book, The Five Dysfunctions of a Team, which explains how organisational politics limits effective decision-making. When there’s an absence of trust, fear of conflict, lack of commitment, avoidance of accountability and an inattention to results, business suffers. I’d also recommend Frank Slootman’s Amp It Up for advice about how to step up the pace, in particular preserving early-stage dynamism by always trying new things. I suspect this is something Unilever’s new chief executive, Hein Schumacher, meant when he urged the company to act with “speed and urgency” to inspire “faster growth”.

However, just as every new boss or departmental head wants acceleration, so should those who have been there longer. Change your perspective from insider to outsider — or, as Andy Grove, the ex-boss of Intel, famously said, imagine you’ve been sacked. You step in to the revolving door and spin around to return as the new chief executive. What would be the first thing you’d do differently? If you know what your more dynamic replacement would do, why aren’t you already doing it?

Such speed of thought and action means being comfortable with making decisions based on having only about 70 per cent of the requisite data. If you strive for perfection rather than follow gut instincts, your competitor will beat you to it. In my chairman and investor roles, I expect leadership teams to meet and discuss business-critical decisions that fall outside of day-to-day responsibilities, gather the best data possible and then decide, rather than delaying until another meeting weeks later. Prevarication is the enemy of good business. Give people responsibility and accountability and they will make things happen.

Mistakes might get made, but no business can be risk-free. I remember a Homeserve decision to get into warranties for furniture sold by third-party retailers. It failed, because it was two steps removed from our successful core offering. I quickly faced the brutal reality, sold the business and moved on — and I’d have been a worse chief exec if I’d been afraid to make decisions like that. Make it, get on with it, fix it. Indecision is the worst decision, so try to galvanise action rather than prevent it.

Moving fast means being unafraid of change and embracing constant evolution. We get stuck in our ways, so allow your business strategy to evolve. Since Brookfield acquired HomeServe, we’ve become a much faster-moving operation because, by splitting the company into separated businesses, we’ve given leaders more freedom to take decisions that they feel are best for their teams and customers. They operate with more agility than in a larger, publicly listed group.

The astonishing growth of our German operation, where Thomas Rebel has overseen 11 acquisitions in three years, is proof that if you give people more responsibility, they will put the pedal to the metal. Luckily, we’ve created the right culture to do just that. Invest in your teams so that everyone feels enabled to operate at speed, such as showing them how a two-minute pitch beats a 100-slide PowerPoint. Upping those skills is vital. Bring people with you so that they feel part of the decision-making, their role in it and why they need to hit targets.

The stronger that culture and the better you are at communicating the mission, the more eager colleagues will be to shoulder extra responsibilities. And the less likely they are to snooze and lose.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader magazine