Why You’ll Hit the Wall Without MVV (Mission, Vision, and Values)
Since founding OpenView in 2006, we’ve been very lucky to partner with some fantastic entrepreneurs. Along the way, we’ve learned a bunch of interesting lessons on how to scale expansion-stage software companies.
One of the most critical lessons is that companies can’t efficiently scale without establishing, committing to, and communicating their mission, vision, and values (MVV) — and the earlier they do it, the better off they are.
A crystal clear MVV statement provides guideposts for the entire organization to follow, allowing employees to navigate around the common walls that often impede expansion-stage companies’ growth. More importantly, they can perform that navigation without their companies’ CEOs having to steer the ship for them.
When a company is in the startup phase, the CEO drives every decision, interviews every new employee, and sets the agenda for every planning session. But as a business moves to the expansion stage and begins to truly scale, that want for control and influence begins to cause friction.
CEOs are no longer able to touch, interact with, and impact every decision and person in their organization. If they try to, it significantly impedes the pace at which key decisions are made. And if the company lacks a clear mission, vision, and values statement, employees will inevitably lean towards analysis paralysis, resulting in one of two things (or both): ineffective processes or poor organizational alignment.
Ultimately, that lack of guidance fuels massive confusion and noise among the ranks as the resource game becomes more complex and daunting. Is the company focused on growth or profitability? Is the priority clients or capital efficiency? Where do we add sales people? How do we handle under performers? Where should marketing spend dollars? Should engineers be dedicating time to new products or improving existing products? Essentially, what does the company want to be when it grows up?
All of those questions could pretty easily be answered by establishing company-wide aspirations.
As one of my colleagues, George Roberts, wrote in a post earlier this year, the actual wording of your aspirations will likely be fluid as you grow. But the basic tenants never change. Here’s how George defines them:
- Mission: The fundamental purpose of an organization or an enterprise, or succinctly describing why it exists.
- Vision: The way an organization or enterprise will look in the future. For our purposes, we look for a Vision to be 3-4 years out.
- Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization’s culture and priorities and provide a framework through which decisions are made. They are crucial in helping a company hire personnel that match the its values, and support and build its desired culture.
The bottom line is that companies can grow without establishing their mission, vision, and values. But just because a ship has wind in its sails doesn’t mean it’s going somewhere meaningful — or in the right direction at all.
In that way, it’s the CEO’s job, with significant input from his crew, to clearly set the ship’s course with crystal clear mission, vision, and values. They need to give their team a North Star to navigate toward, lessening the likelihood that there will be any deviation from that path.
One really interesting example in our portfolio is Kareo. When we invested, the company had roughly 15 employees. By the end of 2012, it will be nearing 200.
Halfway through 2011, the CEO of Kareo, Dan Rodrigues, began to notice that the company was undergoing some significant growing pains.
Dan recognized that he was becoming an obstacle to Kareo’s ability to be nimble and move quickly. Dan was also becoming less efficient and effective because he was sucked into meetings and decisions that could have easily been handled by his direct reports. It became abundantly clear that Kareo was dependent on him for all critical decisions because he was the founder and initial guiding force.
At that point, Dan launched a 4-month process to solicit feedback from the entire company on what its MVV should be. This community-oriented approach was consistent with the culture he was building and the values he was about to establish. Because he approached this process by getting everyone’s buy-in, the aspirations bled into every daily activity and decision almost immediately. Today, the employees no longer depend on him, and Dan’s schedule has been freed up, enabling him to focus on critical CEO-related activities.
While Kareo’s situation was unique on some level, it’s actually quite common among expansion stage software companies. Some companies hit that inflection point at 30 employees, some at 50, some at 75. But they all hit it. And if you’re not prepared for it well in advance by establishing MVV, it can be a harsh and ugly reality when you slam into the wall.