Trent Innes was recently named Managing Director of the Year at the Australian Executive of the Year Awards. His company, Xero’s yearly growth rate — over 40 per cent in both revenue and customers — has shot the brand into the ranks of Australia’s largest listed tech companies.
So what are the important lessons Trent Innes learned when scaling Xero, a business whose revenue, subscriber and employee numbers jumped tenfold in four years, yielding a half-million customers? Trent shares his lessons from the journey.
As our business grows and we add people, one question I’m asked is: How do you keep everyone focused and heading in the right direction? It gets harder as an organisation gets bigger. When we were at 35 people, I could talk to everyone almost every day. I can’t do that with 350 people. The solution we’ve found is to instil purpose. If you can get your people aligned, so they understand why they do what they do, a company can remain focused even at scale. In our case, it’s about empowering small business. We’re here to help them create growth and jobs. Our bottom line is an outcome of pursuing that goal. At every induction for new employees, we talk about our 500,000 subscribers. And we note there’s likely another 500,000 people behind the back of those subscribers. We showcase these businesses through storytelling, for example on our blog, where we profile small business owners.
Hire for attitude
We look for three things in job candidates: Attitude, skills and knowledge. For me, attitude trumps skills and knowledge. There are roles that require a minimum skill level. But we sometimes will opt for a candidate with lesser skills and a positive, can-do attitude. People can enhance their skills and acquire knowledge, but they generally won’t change their attitude. One of our most successful marketing managers has no university degree. You might not think you could get that role without a degree, but that person had the right attitude. When we talk about culture, we are looking for people who are values-driven.
Purpose plus values produce success
When you have values, you need fewer rules. It creates an autonomous workforce that can move at speed and make decisions in the moment. If you have to implement more and more rules, you’re probably starting to struggle a bit. Few people want to work for a rules-based organisation anymore. I don’t. I would rather people ask for forgiveness than request permission. If our people have to constantly seek permission, it means we’re hiring candidates scared to make a decision. I believe if you back yourself, you’ll be right 90% of the time. Company awards are one way of communicating that people doing a good job. But it people should be empowered around a set of values, they’ll tend to know themselves whether they’re doing a good job.
Leverage the network effect
When Xero launched in 2006, it built a cloud-based platform that let accountants and small businesses work together in real-time. We were rewarded with quick growth from both groups. But we immediately saw it would be difficult to maintain our speed of innovation alone. We decided nine years ago to create an open API, allowing third parties to create apps that integrate with Xero. That has evolved into an open ecosystem with 600 app partners today innovating on top of our platform, including 40,000 external developers. There’s no way we could innovate at that speed by ourselves. We also leverage the network effect with banks and government to streamline the process for business customers of obtaining instant business loans and connecting to essential services such as the Australian Tax Office.
Love your customer
We put our customers first in everything we do, and we don’t flinch from criticism when we fall short. We actively look for unsolicited feedback on how we can improve. Social media can be a friend in this endeavour, and we listen. This is where a lot of incumbents go off the rails: they take their customers for granted. You should be rewarding long-term customers and over-delivering on their expectations. Many of our ads are testimonials from customers, much of it unsolicited. But we never take that praise for granted and are always looking to deliver more.
Innovate or be disrupted
Cloud software has been around for over 10 years. It’s powerful technology and remains a disruptive one for established providers of accounting software. But innovation lies elsewhere today. That’s why we’ve ventured into machine learning and artificial intelligence — to provide the next advance in online accounting and bookkeeping. It promises to automate the most mundane aspects of accounting, saving users precious hours and allowing them to focus on the things they love, whether it’s growing their business or spending time with their family. People talk a lot about getting disrupted. Generally, you get disrupted only if you don’t innovate. It’s important to look out in front, see what technology is coming and think about how it can serve your customer.