The Pathway to Predictability
For many years, our organization was incredibly flat. We had the founder, me, at the top—and then there was everybody else.
In practice, what that meant was that I was managing the development team. I was responsible for getting invoicing out the door. We had salespeople, but theoretically I was managing that team and driving customer relationships. I was even doing our accounting. We had great people who were all doing exactly what they were asked to do, but it was all tactical rather than strategic.
Five or six years ago, we made two key decisions. The first was to transition from an entrepreneurial-led organization to a team-led organization, and the second was to create processes and projections that give us better visibility into our organization at any moment. Both decisions were instrumental in radically transforming the way Kopis works—and setting up an accountability structure that results in greater predictability.
I had to begin by giving up a lot of control. Anyone who’s an entrepreneur knows that this isn’t as simple as it sounds. To start, we implemented a business management framework, described in the book Scaling Up by Verne Harnish. Secondly, and most importantly, we decided to bring people into the leadership team from the ranks of the organization, and hand over responsibility and accountability.
This was most evident in our annual budget and projections. With our new model, every line item has an owner and a budget. Rather than replacing one person making decisions in a vacuum with another, at the beginning of each period, Adam and Kevin submit their respective budgets for discussion amongst the team. Each person challenges assumptions and offers feedback before we finalize.
This new budgeting and management model has resulted in a level of financial responsibility at all levels of our organization, while also simplifying the decision-making process. When I was in charge of everything, I found it hard to make well-researched, informed decisions because I was too busy and stressed. When you’re in the weeds, you just want the problem to go away by whatever means necessary, and you end up overspending because you’re not looking at the financial side from a strategic viewpoint.
Creating Greater Visibility
The second bucket in this overhaul is closely related to the first and equally important: Visibility. Regardless of who is making the decisions, they can’t make solid decisions without all of the relevant information.
Before we even assigned responsibility for each P&L item, I knew we had visibility into our expenses, which remain fairly constant since we rarely use contract resources.
However, when it came to the revenue side, the delegation created blind spots. We realized it wouldn’t be fair to assign responsibility for revenue to one employee without creating the tools to make the job possible.
We are a professional services company, so our revenue is as simple as multiplying hours by rate once we have completed the work, but there are enough variables to present some challenges with projections. So, we set out on a path to create projections and build BI and dashboarding that would answer the question “Was yesterday a good day at Kopis?”
Answering that question would allow us to aggregate those results and ultimately project. In keeping with our new management style, we also wanted to empower employees to answer that question for themselves, because a good day for a developer looks different than a good day for a project manager.
This one area used to be a cause of major anxiety for me. There was never any point in the month when I felt like I knew how we were doing—whether we were going to have a good month or a bad month. In fact, we would be a week or so into the following month, when I had gotten out all the invoicing, before I realized how the month had gone. Now, with our projections and visualizations, we can quickly see at any moment how we think we’re going to end the month. More importantly, we can adjust our projections and course correct if we aren’t doing as well as we’d like.
What I’ve Learned (So Far)
Again, when I say this shift was painful, I’m not exaggerating. No entrepreneur enjoys the prospect of giving up the reins—this process takes time and it takes trust. In many ways, it’s also easier to not know where you stand at any moment, because knowing requires attention and action.
I say this to encourage anyone who is going through this process, whether as an entrepreneur, department manager, or any other leader of a growing business: the process of delegation must come with a minimum level of visibility, but the payoff is worth it. You lose a lot of anxiety and stress; you gain an objectivity about your business that wasn’t possible before; you get greater buy-in and an ownership mindset from your team; and you set your organization up for stronger leadership and success that outlives you.