XERO AUSTRALIA BOSS: Sometimes you’ve got to break a few rules

Leading an entrepreneurial culture to drive growth means several traditional business rules need to be broken.

The internet is driving a rocketing pace of change in traditional industries like accounting, which means there are a few old rules which can be pitched out so your business can thrive in an innovative world.

We’ve been on a mission establishing Xero as a global software company, we’ve had a very singular focus and we’ve concentrated on keeping it real so small businesses, which generate 42% of Australia’s GDP, can thrive.

When we first launched, we found the software accountants, bookkeepers and small business owners were using, lacked innovation.

We have a team which is full of great people who work really hard to create beautiful, innovative software which we think can change the world for small businesses by making them more efficient. But we’ve had to break a few stale, old rules along the way to get here.

By doing that, we’ve very quickly gone from disrupter to market leader in Australia.

Here are some of this things I’ve learned from the journey so far.

Failure isn’t a dirty word

If we’re going to keep moving forward, there are going to be a lot of things that aren’t going to work.

The trick is to realise when something isn’t working, fast. Learn what you can from it, then move onto the next thing.

Getting comfortable with failures should be something you’re working towards. Especially if you’re a small business that is trialling new ways of doing things or attempting to reach new markets.

Get comfortable with taking risks and making quick decisions

The sheer pace of business nowadays means many owners or managers don’t have the luxury of sitting down and taking the time to perfectly plan the next move. By the time they do that, often, the opportunity has passed.

This means that learning to make decisions quickly and taking calculated risks is a norm in business.

It also means sometimes you’re going to get stuff wrong. For example, back in 2011 we released a payrun function and it was a big miss on what the market wanted.

We quickly responded to concerns from partners and considered building payroll but it was such a complicated feature. So we decided, if we wanted to get to market quickly, we would need to acquire a solution.

The process of deciding to acquire Paycycle, a little startup based in Melbourne, to standing on stage announcing the deal took just 8.5 weeks. In most big companies you’d barely have a business case up for review in that timeframe. It was a good combination of taking risks and going with your instinct.

Chris Ridd.

Get to the point, fast

Small business owners are time poor. With sales, marketing, lead generation, customer management and almost everything else falling to the owner, they’ve got limited resources available.

Being able to communicate, especially as systems and processes change, is a critical skill you need to develop.

Getting to the point quickly, with a hint of charisma, is a skill which has come in handy as we’ve grown.

Learn to identify what you need in your team

As a business grows or matures, its needs change. You may find that sometimes the people who started the journey, aren’t the right ones to continue it.

As your business scales, you need people who are able to deal with change. Hire people with the core leadership skills who can handle that growth. It’s the hardest leadership lesson I’ve learned so far.

But bringing in the right leaders and learning how to identify what that looks like, has been one of the most valuable skills I’ve acquired.

Saying no is ok

When a business starts to take off, you’ll find plenty of doors start opening. And if your company is like Xero, packed full of ideas people, the windows will fly open as well.

While innovating is critical, it requires leadership to figure out which ideas should be transformed into reality.

The problem we had was that there wasn’t a lack of ideas floating around, it was making sure we ditched the wrong ones and pushed ahead with the right ones.

Staying true to your mission and surrounding yourself with the right team, or group of mentors, have been the key ingredients in the secret Xero sauce. Having the confidence to work outside the traditional square is what’s pushed us into first place.

Getty/ Mario Tama

The old way doesn’t make it the right way

Just because you’ve done something a certain way for a long time, doesn’t mean it’s necessarily the right way.

Back in 2008 we broke the mould in the accounting software game when we shifted the model from one which kept customers and accountants very separate, to one which transformed the two groups into a collaborative team.

To do this, we gave our cloud accounting software away to advisors so they could get comfortable with it. We chose to work with them and establish a partner relationship. Our Australian partner base has since grown from 180 in early 2011 to more than 16,000 accountants and bookkeepers today.

You don’t have to be everything to everyone

Building our platform with open APIs meant we were never going to be a traditional software company. It’s always been about bringing our partners and other software companies along for the crazy ride.

It also meant that while our competitors grew through acquisition, bogged down by having to monetise bits of software and ending up with legacy code that doesn’t integrate, we were able to skip ahead and create an ecosystem which enables startups and other software solution providers to grow.

We could also leverage other third party apps to offer better solutions and more choice for small business. It’s a strategy which has thrived. Since 2011 we’ve grown from 25 add-ons to more than 440 today.

The lesson: Don’t try to own everything. Understand the value of partnerships and the network effect in growing your business.

Do away with traditional hierarchies, it stifles innovation

A bunch of our executives have come from big corporates and while we’ve learned a lot from that environment, there are many practices we won’t be replicating.

The bigger you get, the more you seem to slow down. So while we’re getting much bigger, we’ve empowered the people at Xero to challenge everything. We’ve also fostered a culture where no idea is a silly one. Some of the best ideas have come from our employees going out into the wild and that wouldn’t happen if we let hierarchies develop.

Leaders need to think of themselves as peers. Look at yourself as being on a team of equals. No hierarchy. No egos. I prefer a relaxed and informal setting because people come forward with ideas. They don’t feel threatened by speaking up.

Just because your employees are in the office, doesn’t mean they’re working

I think we still have many organisations out there that value time in the office. We need to break that mentality of clock-in, clock-out and reward people based on output and results.

Tech developments like the new iPad Pro could be a true productivity machine for those people who need mobility above all else.
We need to embrace this tech and develop workplaces that are truly mobile. It is a boon for productivity.

Be honest, straight up and have a bit of fun

Technology is making business playful. It’s no longer people wearing serious suits, sitting in boardrooms.

This cultural shift in the business world means you can do away with a lot of the tired old tradition and by doing that, it can open the way for innovation.

At Xero, it’s helped to have a very open CEO and founder, Rod Drury, who lives by those playful, innovative values and has managed to build an informal and fun culture.

As an open company, we focus on giving our staff complete transparency.

Rod will often speak his mind on issues, discuss the undiscussables and confront issues and conflict head on. People appreciate honesty and often leaders don’t feel comfortable with that. If feedback comes through, we accept it and discuss it openly.

What rules need to be broken next?

Progressive organisations and the great innovative cultures of tomorrow will be based on some of the leadership traits that we know are effective today. It starts with giving everyone a fair voice.

Leaders can do this by demonstrating vulnerability. The admission that they don’t have all the answers. The outward demonstration of comfort when they don’t know what the solution is and the humility for them to seek help from their people.

It is incredibly empowering when the people in an organisation, regardless of tenure or title, feel that they are being asked to contribute to that next product strategy, or a campaign that doesn’t look quite right, or that not-so-obvious next competitive move. And interestingly, they are often the very ones with the answers because they are closer to the action and the customer.

It comes down to tapping into the collective IP and experience that exists across the organisation. Communications, technologies and processes can facilitate this. But ultimately it’s about setting a positive and open tone across the company that makes people feel confident in speaking up, rewarded for sharing ideas and given the permission to take risks.

Chris Ridd is the Managing Director of Xero Australia. Under Ridd, Xero has become Australia’s largest cloud accounting software and won CeBIT’s ICT Excellence award.

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