How to manage and scale people while building high-growth companies

By Peter Josty

Peter Josty is Executive Director of the Centre for Innovation Studies in Calgary.

Canada has a serious economic growth and productivity problem, as identified by the OECD. Canada is ranked last among G20 countries in GDP per capital growth in the period 2030 to 2060.

High-growth firms are an important way to improve growth and productivity. They represent a small fraction of all firms, but they create a disproportionate share of new jobs.

Most research on high-growth firms has been in Europe and is statistical in nature. There has been very little research on how high-growth firms are actually managed and what approaches work best.

That is why a recent book by Claire Hughes Johnson is so interesting. (Scaling People: Tactics for Management and Company Building, Stripe Press, San Francisco) Johnson was chief operating officer of Stripe, a San Francisco-based online payments platform company, from 2014 to 2021 while it grew from 200 to more than 7,000 employees. She was also an executive at Google.

Her book is a detailed “how to” manual on her management practices during that period. In 500 pages she describes in great detail the management strategies she used. The emphasis throughout is on how to manage people to get the best results.

What is Johnson’s approach?

My first surprise on reading the book was how systematic Johnson’s approach was. One of her main topics is building what she calls the right operating system. By this she means the policies, procedures and methods to apply to the key areas of the company. She applies this systematic approach to four topics:

• Planning for growth and resources
• Comprehensive approach to hiring
• Intentional team development
• Feedback and performance mechanisms

This systematic approach is the exact opposite of the typical image of an entrepreneur winging it and making it up as they go along.

Johnson uses a quote from Picasso: “When art critics get together, they talk about Form and Structure and Meaning. When painters get together, they talk about where you can buy cheap turpentine.” This book is about the nitty gritty of managing a growth company, or, as Johnson puts it, “management turpentine.”

Planning for growth and resources

One of the first issues discussed in the book is the preparation of founding documents. These detail the plans for the entire enterprise, including the company’s long-term goals and the principles of the company philosophy. Johnson says these should be prepared early on as soon as the company has achieved some traction.

After these documents are prepared, she recommends building the “operating system.” This includes the company mission (why you exist), along with the company’s long-term goals and values.

The values establish the culture that enables you to work towards these goals. Strategic and financial planning comes next. This planning is about making choices, and often ends up disappointing customers and employees, but it is essential as you cannot prioritize everything at once.

Comprehensive approach to hiring

Johnson uses a very rigorous hiring process that balances the need to hire quickly with the need to hire the most successful person for the role. Early on, practically everyone in the company is involved in the hiring process. They will be recruiting their new colleagues.

The hiring and onboarding approach needs to change as the company grows. Early on the founder did the final interview, but as the company grew the approach became more focused and customized to the role.

Johnson feels it is especially important to model, or demonstrate, company values during the interview process. The company needs to build a hiring funnel by generating awareness of your company among potential talent. Early on you can use the personal network of the founders to do this, but this approach does not scale as the company grows larger.

Intentional team development

Johnson distinguishes between “teams,” “projects” and “working groups.” Working groups and projects are shorter-term groupings, while teams have a long-term mission, lasting for more than a year.

At Stripe they used a structure called “Code Yellow” to assemble a short-term project team to address high-risk or existential threats. People in these teams were given special powers and privileges to accomplish their goal.

Teams can be organized around a function (such as sales or product engineering) or by product or business line. Johnson emphasizes the hard work of building a high-functioning team, especially establishing mutual understanding of the task and among team members.

Feedback and performance mechanisms

Managers fall on a continuum, from “extreme coach” to “forgot-to-coach.” The extreme coach provides endless feedback, the forgot-to-coach is clear about the objectives but unclear how to help the people reporting directly to the manager achieve the objectives. Most managers fall somewhere in between.

Johnson distinguishes between formal and informal feedback and says that “praise publicly and criticize privately” is a good approach. She is a believer in having a formal performance review process with a performance rating linked to compensation and making the process as transparent as possible. The process should include peer reviews, self-assessment and manager reviews, and should be done at least quarterly or biannually.

I’ve only touched on how much useful material there is in Johnson’s 500-page how-to guide. It is well worth reading for anyone who manages people.

Johnson talks about her approach in an hour-long discussion, “Tactics for Management & Company Building,” a Google video available on YouTube

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