Dean Leffingwell | Crain's Denver

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Dean Leffingwell

Background:  

Based in Boulder, Scaled Agile is an education business focusing on knowledge workers that build some of the world’s most complex systems. It builds a framework and education around how large enterprises can apply lean and agile principles to develop systems of scale. Scaled Agile publishes a free knowledge base called the Scaled Agile Framework.

The Mistake:

I only hired the people I thought I could afford.

Scaled Agile is my fifth startup. Four of them have been big successes, and I’m proud of them all.

I literally borrowed $2,500 from the bank to pay the incorporation fees for my first business, and it was a service business. I was bootstrapping hand-to-mouth, so cash was everything; cost was everything.

As I approached that marketplace, I had the perspective that I should hire the people who could do the work that I could afford. That meant that if I was hiring, I might get three or four candidates. One with a lot more experience who was head and shoulders above the rest might cost $20,000 more annually. The person next to them would be competent, maybe without the same level of experience.

Instead of extrapolating and thinking about what that great person could do for the company, I would routinely hire the person that I thought I could afford based on the current company profile.

After eight or 10 years of that, it was pretty painful. I had some great people, but I also had some that really didn’t fit. That created a crisis because as you grow, you come up against people’s limitations.

I remember during that time, one or two people came along that I didn’t even have a specific role for. One had tremendous skills in our area. He was expensive, and I didn’t have a role for him, but I said, “I’ve made this mistake before,” and I hired [him].

He went about finding gaps in the company, making his own work. He more than paid for himself.

The way to compete is simply to have the best talent.

The Lesson:

There’s nothing like having the right people on your team.

It’s a very competitive market out there. We all come from the same gene pool. The way to compete is simply to have the best talent.

The best talent will find the best strategy, solve the most problems and persist longer through a time of crisis.

As I hire now, I think about it differently. We bring people on who are truly unique. They don’t fit into traditional laddering plans, but they can contribute.

If the talent is right, you’ve got to make that move.

That puts its own pressure on your system because people won’t always fit into your salary or bonus structure. In my later career, though, I’ve been more liberal and aggressive about saying, “This person is really good and if she costs more, she’s probably worth more.”

Consequently, I’ve had a lot less stress in my last few companies. It doesn’t make the problems go away, but I’ve had a lot more success.

You can follow Leffingwell on Twitter at @deanleffingwell.

Photo courtesy of Scaled Agile

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