In building our Venture Security Program, we came across a fascinating study of startups from the California Management Review journal. This paragraph really stuck out:
“In many cases, management systems trail needs. Because of the demands on their limited resources, companies hardly ever develop systems ahead of their needs. Rather systems in place are either about right or, more often, are too primitive for the complexity that has to be managed. The learning point here is that in most startup companies adding more systems won’t stifle the entrepreneurial spirit but will sustain growth. Having no systems (chaos) is as damaging to a company as having too many (bureaucracy); and startup companies more often suffer from the former rather than the latter. Their managers tend to worry about avoiding bureaucracy but are blind to the danger of chaos.”
The same study found that more than 30% of high growth companies don’t have HR structures or a Code of Conduct – much less a security organization – after five years of existence. For some companies, this meant very few controls were in place despite 500+ employees and multi-billion dollar valuations. This lag between company growth and management control systems is at the heart of the Venture Security Program. PRG controls the danger of chaos, without the bureaucracy.
The study made clear that the adoption of management systems is associated with growth. Entrepreneurs may see this as counter-intuitive: why would a fast-moving company want more process and controls? The authors offered a useful metaphor:
“Think about a car: the faster it goes, the more sophisticated the technology required to keep it under control. At the very elite auto racing level, Formula 1 teams have highly complex and extensive systems infrastructure both on and off the track. The same logic applies to growth with startups. The faster they need to go, the more management systems infrastructure they need.”
Grow Fast. Stay Safe. That’s our motto. If you think the time is right for your company to control the chaos and sustain your growth, get in touch.