In the early phases of an organization, a company’s vision comes directly from its early leaders; it is very much their personal vision. To become great, however, a company must progress past excessive dependence on one or a few key individuals. The vision must become shared as a community, and become identified primarily with the organization, rather than with certain individuals running the organization. The vision must actually transcend the founders.

Making Decentralization Work

We don’t have the space here to cover in immense detail all the specifics of a decentralized structure. Nonetheless, there are some general principles about making a decentralized structure work:

• Link to vision. If your vision (values, purpose, and mission) is clear, people or groups operating autonomously can self-regulate themselves relative to the shared overall vision. They can all sight on the same guiding star, yet be in separate vehicles heading toward that star. Shared vision is the crucial link in making decentralization work.

• Overcome lack of centralized control with increased communication and informal coordination. People need to know what other decentralized subunits are doing so that they can act in concert with them. At Patagonia, for example, product line directors meet at least once per month to coordinate. Another way to gain increased communication and coordination without the burden of increased bureaucracy is to use electronic communications— electronic mail, voice mail, computer networks, tele-conferencing, etc.

• Facilitate the transferring of valuable knowledge between sub-units. Hold internal seminars where members from different sub-units share ideas, present papers, and learn from each other’s experiences. Grant prestigious awards to those who contribute a significant idea, invention, or other valuable assistance to another sub-unit.

• Have an open system. People operating autonomously can make good decisions only if they have good information. One of the best ways to achieve this is to make lots of information available to people—even traditionally sensitive information. At NeXT, for example, any employee can get access to any piece of information—even people’s salary levels and internal financial information. Although you may not feel comfortable going to this extreme, we urge you to head in this direction. Again, compare centralized, secretive societies like the Soviet Union (and how terribly inefficient they are) with open systems like the United States. The same principle applies to companies.

• Avoid matrix structures. In an attempt to have the best of both worlds, some companies make the mistake of creating matrix organizations. Don’t do this. Matrix structures remove the fire of personal ownership, not to mention accountability.

I’ve seen way too many people come out of the corporate world, decide to start a company, and be completely unprepared for what it takes. If they’ve never been on a small team starting from scratch, they’re often a fish out of water. They spend too much money too fast. Hire too many people. Don’t put in the time, don’t have the startup mentality, can’t make hard decisions, are buried by consensus thinking. They end up making mediocre products or

nothing at all.

Don’t let that be your story. If you want to start a company, if you want to start anything, to create something new, then you need to be ready to push for greatness. And greatness doesn’t come from nothing. You have to prepare. You have to know where you’re headed and remember where you came from. You have to make hard decisions and be the mission-driven “asshole.” [See also: Chapter 2.3: Assholes: Mission-driven “assholes.”]

So do the work. Know what you’re getting into. Trust your gut.

And when the time comes, you’ll be ready.

Marshall Haas, cofounder of Need/Want, used to think that a company needs to scale in proportion to the revenue it generates. Thus, a $100 million business needs to have at least hundreds of employees and several layers of bureaucratic managerial hierarchy. What he’s found in practice, though, is that, with fewer than ten employees, his company can grow very slowly and still increase revenue—which is currently at nearly $10 million.

Our pet peeve is when a company’s leaders think it should grow regardless of profit. This is just reckless, unless you’re a venture-backed firm pioneering new territory. For everyone else, we recommend getting profitable with the work you have, proving you can get to 15% profitability (based on our adjusted Simple Numbers), adding labor to knock profit back

to 10%, and then growing to 15% again. Lather, rinse, and repeat.