To cut to the chase, here it is:
“Most founders make the mistake of hiring people to get tasks and projects done – not to make more decisions. They focus on getting more hands and feet, while they themselves remain in charge of all the decision-making,” says Fredrik Palm.
After a while, you end up with all these hands and feet working on so many tasks and projects that it becomes overwhelming for the founder.
“Many founders are involved in everything from strategy to what kind of tea to buy. It might be an exaggeration, but that’s usually how it is.”
He is not criticizing, rather describing a pattern he has noticed throughout the years, after having taken the lead from founders in six different companies so far. When asked if he has learned anything that other founders could benefit from, if there is something that would help them grow and scale, this is his answer.
“To be fair, being involved in all decisions is one of those things that often contributes to a company’s success in the beginning. Companies take off because of that attention to detail and that passion and engagement. But that same thing can become a weakness when you’re ready to take the next step, to start scaling.”
“I mean, here at Desenio we now have more than 70 employees, having grown from 29 nine months ago, and there are many projects, tasks and decisions happening that I’m not even aware of anymore.”
Fredrik Palm mentions his motto, from the famous Formula One race driver Mario Andretti: “If everything seems under control, you’re not going fast enough.”
“Many believe speed is scary, but you can get used to it. You need to come to a point where you can see an employee completing things you didn’t know about and enjoy the satisfaction of not having spent a minute on it yourself.”
One of the first things Fredrik did when he came to the company in 2016 – then with eight employees – was to enable the staff to make important decisions without involving him.
How did you go about empowering the employees to make decisions?
“To make that work there needs to be a shared understanding about what we stand for, who we are and how we communicate internally and with customers. It started with a workshop where we defined our values, and we come back to them all the time. Personally, I believe two things are the most important: Lead by example, and Always be closing.”
Always be closing? You mean the sales principle? How does that come into play in an e-commerce organization?
“To me that means focusing on completing what you are up to. For example, if you have started 20 projects but none of them are complete, you haven’t made any difference yet. Focus on completing two of them instead. Always be closing.”
What other principles are you implementing in order to scale?
“It’s very important that everybody knows exactly what their area of responsibility is. That becomes more challenging as you grow. Then, every manager must break down the goals and ask team members questions like ‘what do you believe you should do to achieve this?’. Those are just a couple of examples.”
What advice can you share to founders who are seriously considering bringing in a CEO? What can they do to make that transition as smooth and effective as possible?
“It’s extremely important to be on the same page about where the company is heading. Come to a shared vision: we are going here, and this is how. Agree on ‘this, not that’ when it comes to the future of the company, and a shared understanding of how to get there. But first, you need to be clear about where you personally stand on those things, so you can bring direction to these discussions. You also need clarity about who will be responsible for making different decisions, and who is supposed to do what.”
When you compare the e-commerce businesses you have been involved with, how are they different?
“It comes back to the same two things: conversion and logistics. No matter what you sell. The high-level growth strategy may be different though. When I came to the toy and children’s product e-commerce business Lekmer, they were at pretty much the same stage as Desenio was, with a revenue of 2.5 to 3 million euro and a few employees. Lekmer’s revenue increased to almost 50 million euro in four years by developing their range of products within the existing market. Desenio’s growth came faster. We focused on expanding internationally within the niche, only adjusting the designs to match the taste of each market.”
This is the sixth company where you have taken over as CEO from the founders. Why just these kinds of companies?
“In my mind, it becomes less fun when you go below 100 percent annual growth. I like the fact that the companies at least double in size every year.”
Fredrik Palm, CEO of Desenio
Resumé: CEO of Desenio, Lekmer, Room 21 and Tretti, among others.
The number of employees: 70 (September 2018). In June 2016 they were 8, and by December 2017 they were 29.
Sales: 24 million euro 2017, 10 million euro 2016.
Profit margin: 30+ percent
My first online purchase: A book from Amazon, I would guess.
Number of store items: 10,000 SKUs. 1.5 percent are frames and the rest is print.
Shopping platform: Askås.