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The Dark Side of Growth

Goran Kalanj, CEO

In the last year – according to many, a very challenging year – Serengeti has done a great job. We got 8 new clients and entered 2021 as if we were only picking up momentum in 2020. Since 2013, the company has been continuously achieving exponential growth, which in some years amounted to 70-80%. We are recognized as one of the fastest growing IT companies in Europe and we have been placed on Deloitte's list of the fastest growing technology companies in Central Europe several times.

Each new milestone comes with new challenges – this means new challenges and new opportunities for us. For example, in the last few years, our growth was closely followed by a growth in the number of competitors. Clients often believe that many software companies have begun to turn a complex business into a convenience because all the businesses are aiming for the position of the best, healthiest and most desirable software development company. Instead of looking at each new competitor as a threat, we decided to welcome the competition because it actually increases the overall consumer demand and challenges us to put emphasis on quality and client education.

Quality work and a satisfied client have always been the basis that helped us win new projects and clients. Growth was simply an inevitable consequence.

As the company’s CEO, every new project is both a pleasure and a challenge for me; but it makes me especially happy when we win new projects from existing clients. This usually means that we take on jobs with more responsibility, contract larger projects, expand competencies and specializations in certain areas, and influence the possibilities of bigger investments in R&D. For us, this means a greater chance of progress and development of employees. Other than this, an oral recommendation is like an existing client giving us a public compliment. We had the luck of having both of these cases happen to us recently. With one client, we expanded our engagement on an existing project and thanks to our work and relationships so far, we have realized two additional projects. The second client came as a result of the recommendation of one existing client who was extremely satisfied with our cooperation.

When speaking of software companies that have emerged almost traditionally in living rooms or garages, rapid growth often causes shock. Owners and directors time and again do not notice that the company has outgrown them. This is where problems arise – they continue running the company like it is still in the garage or the living room phase. Lots of elements depend on the director or founder of the company and their ability to accept the fact that they must change their approach to allow the company to grow healthily and ensure that focus on clients, quality of delivery, and employee care are not lost.

Beginnings are both the hardest and the easiest part. It depends on our perspective.

When the company has approximately 20 employees, the focus is on cash flow, finding a sufficient number of jobs and the collection of accounts receivables on time. If the company uses its own resources to remain on the market, every day can be a struggle for survival, and the costs that the company is able to bear must be kept at the necessary levels.

The good news is that, at this stage of development, no large costs are needed. Generally speaking, a single manager can run the company and find jobs. Soon enough, when the company reaches 20-30 employees, it is necessary to introduce an additional management structure in the organization that will split people management and cooperation with clients among several people in the company. It is a huge challenge to find the right people, to introduce them to the job and to make sure they are accepted by other employees. My experience has shown that it is best to promote from within.

However, it sometimes happens that employees do not accept a colleague who has done the same job as them as their new superior or an authority. This depends on the maturity of the employees, on the maturity of the company and often, on the maturity of the director. Again, this is a kind of trigger that suggests that culture is built from within, and that the director must be the one to promote values ​​and show the path to progress. The saying “Culture eats Strategy for breakfast” holds true. If this part is not done properly, the foundations of a bad company culture are often created, and they can have long-term negative consequences. Furthermore, if the culture and values ​​that a company nurtures have taken an unfortunate turn, it is very difficult to turn them back around.

Structure is both the form and the story

The next milestone is when the company has about 70-80 employees. This is when it is necessary to start forming professional departments that will be focused on their jobs. The formation of the departments includes the organization of work, division of responsibilities, interdependence, setting goals for each department, bonus schemes, etc. To some extent, this was present before, but at this stage of the company's development it is necessary to organize these parts much better. Then departments are formed – HR, marketing, sales, accounting, etc. It is also necessary to create functional units within the development department that will deal with specific areas. I personally believe these are the most challenging moments apart from starting a company in the first place.

The initial phase determines whether the company will survive the first 5 years of business at all, and these moments of creating an organization determine whether the company will continue its success or stagnate. The initial challenge in creating an organization is to first accept that an organization with functional departments is really needed. Companies of this size often do not understand the importance of creating individual departments, so they don’t create them – which is a major limiting factor in the future development of the company.

A company is like a living organism in which each department is important and has its own function – the company usually functions like its weakest department. Building a high-functioning department such as marketing, HR or controlling is a multiannual job that involves a lot of trial and error. In doing so, one should look at the experiences of others who have already gone through this process and try to learn from them, but it is not possible or desirable to copy their way of working.

Every company is different, which is why every company must find its own way that works best for it. This is not possible without significant investments and without multiple trials and errors. If this part is done well, the company is ready to grow further and conquer new markets without its own success taking it a few steps back.

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