Expansion Stage CEOs: Understand the Power of 3!

Expansion stage businesses are continually building their employees, growing their experience, and including additional capabilities to get to best practices and create competitive advantage. I believe that you need three able people in a unit, as well as a capable manager to actually have a working and strong operating capability that can withstand absences and turnover expanding the unit more easily. This article provides the whys and hows of the Power of 3.

As illustrations of building capabilities for execution, you may want to assemble a capable unit for the following:

implementing a content marketing strategy
building a lead nurturing program
constantly improving against conversion optimization
developing an outbound prospecting program
putting strategic consulting services in place
establishing an indirect sales method
bettering the capabilities in product and growth (e.g. constant integration, automated testing, UX, etc.)

From my point of view, spending on expansion stage organizations for over a decade as part of a growth venture capital firm, I have observed many capabilities added to businesses, but every profitable company has also had failures along the way. A number of operating capabilities had never been developed. Others had been built and then fell apart because the management team never designed the capability to a point that it had 3 capable individuals plus a manager executing against the capability.

One of the (pretty simple) points that I make to all CEOs is that if they genuinely want to successfully add a capability to their company, then they should have at the bare minimum three individuals executing against the capability (ideally full time). It’s the fastest method to get to a best practice and have the redundancy necessary to permit for vacations and conquer issues like weak performers or attrition.

This is what I call the Power of 3: get three capable people that can perform in the operating unit plus an able manager, and you could have a unit that can perform, expand and manage through staff absences and turnovers.

Why 3 people?

Three individuals are essential for a number of factors:

- If you assign only one, there is a good probability you will not be successful. This is true for a number of reasons. Firstly , because you don’t have the capability, there is a good chance that you don’t know what skills are the right skills to create and execute your program. Secondly, when the person is sick or goes on a holiday, you won’t have coverage of that capability. Third, if the person ever leaves your organization, that capability walks out the door with them (even if you have your capability fully codified). Finally, you don’t have anybody to compare this person’s execution against and the individual doesn’t have anyone to “compare notes” with or study from.

- If you assign two, there is a much better probability of success and you will improve against the points above, but there is still a fair chance that one of the people will be qualified enough to do the job, but not good enough to replicate the capability in case the better person departs from the organization. Moreover, if one of the people do leave the company, you fall back to the issues of having only one person.

- If you assign three people, you essentially triple your chances of success, double up
your redundancy, and double up the number of people that each person can “compare notes” with and learn from. If you designate somewhat different types of people, you triple your chances of finding out what type of person is best suited for the activities involved. Finally, you triple the odds of two of the people really connecting and forming the neucleous of a team that you can build from.

What if you can’t afford 3 people?

Most early and early expansion stage companies can’t afford assigning three people to a capability, particularly if you wish to just check out an idea or get started out quickly, so here are a couple of ideas to get you as close as possible:

- Put one of your most gifted and reliable people on building the capability. You will be able to check whether the capability is helpful and will have a beginning point to build from.

- Start by hiring a manager for the unit that will “role up his/her sleeves” to execute and build the methodology before employing the three people in the unit.

- Cross-train one or two other people to be able to carry out the work and step in during absences and/or during a gap in staffing brought about by turnover.

While these approaches could help you to check your ideas and get a unit started, you will still want to attempt to get to the point that you have three able people plus a capable manager as you develop your company.

In Summary – You Need 3!

If you really want to include a long-term robust capability in your organization, you will need to have assigned at least 3 people to perform the activity.

Scott Maxwell partners with management teams, boards, and investors to help build great companies.

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