Bob Herbold was executive vice president and chief operating officer of Microsoft from 1994-2001, a period during which Microsoft's sales grew four-fold and profits rose six-fold. Before that he was a senior advertising executive at Procter & Gample for 26 years. So he knows something about how to run organizations in fast-moving markets. Now head of a consulting firm that bears his name, Herbold has written a new book, What's Holding You Back? 10 Bold Steps that Define Gutsy Leaders, which offers insights into how big companies get sidetracked and how their leaders can keep them on course.

I spoke to Herbold recently about how big-company best practices can be used by small and growing companies to help them avoid major mistakes as they grow. Here are some of the highlights.

• Reality Bites: The most important thing an entrepreneur can do with her company is to face reality and develop a game plan to deal with it. "When you are going down a path as an entrepreneur and you find the world has changed, you need to make a turn, seize the moment and get on with life. You need to be constantly paranoid about change." How many times have you (or entrepreneurs you know) ignored the marketplace realities because you (or they) were married to their brilliant idea more than to the idea of success and survival?
• Talent is Key: "When you start hiring for a new venture, you have to staff for success. You have to get people who are winners. Focus on picking the right talent. It takes guts to wait for the right candidate."
• Forget Consensus. "As small organizations start to get large, they make decisions by consensus, which is the kiss of death. Great ideas are made by individuals. Consensus takes a great idea and makes it average." (Want a completely different view on consensus in the workplace? Check out what Whole Foods CEO John Mackay has to say about it.

• Sloppiness Kills: Another kiss of death is that managers "always want to hire more people," and often the additional headcount is to cover up their own sloppiness and lack of operational discipline. "Stop the sloppiness. Cut the organization to its bare minimum." Herbold points out that when he was at Microsoft, the company was growing 50% a year so it had no chance of hiring and assimilating enough people fast enough. Therefore, the company always had to be as lean as possible and learn to grow without adding as much headcount as it may have liked.
• Conflict Avoidance: "Many managers don't provide leadership. They avoid conflict. They want to strive for certainty and search for more data to make decisions. They lack self-confidence and a sense of urgency."
• Innovator's Dilemma: Perhaps the toughest part of growing a company is the "innovator's dilemma," Herbold notes. Kodak is the prototypical example. It created the market for film and then sat on the sidelines while digital media destroyed its marketplace. "When you think that your bright idea is going to change the marketplace, don't forget the marketplace may change." Of course, Herbold's former employer has made some of the same missteps as other innovators. Microsoft has suffered in markets like search engine advertising and smart phones because it has so much invested in its core innovation, Windows.