So many factors go into a successful scale-up; it is always hard to pick a crucial one. But when a business struggles to scale, my experience is that it is down to one critical failure. That failure is the lack of an outstanding senior team, preventing the founder from developing CEO skills.
Part of the need for a senior team is to manage people. There is simply a limit to how many people one individual can line manage; this is the principle old-style business structures worked on. On the surface, that looks sound. You line-manage x number of people, and they each manage x number of people, and you get growth.
This system leads you straight into the trap that both I and so many businesses fell into. We assume the original people at the top both want and can grow along with the company and share the load as you expand.
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However, if they were not employed as management within a fast-growth company, there is no reason to suppose they will change. Indeed, why should they? Yet, we promote them in hope for several reasons. It often feels the right, the fair thing to do to reward the team's original key members. We may be afraid that they will feel threatened, take offence and leave if we bring in people above them. Bringing in new senior-level management also requires getting out of our comfort zones, being open to trusting new people, and being assessed by unknown people.
In an ideal world, we recognise this need for a top team very early in our business's life and make finding that right team at the top an early decision. There are two hurdles to this. One is finding them; the second is having the money to pay them. My experience is that most successful senior teams are found through networking, and that takes time and dedication. Time to network, find, hire, and embed someone new until they know the business inside out is a significant investment. You have to be very sure of that person, which means copious amounts of reference checking through official and unofficial channels.
Most founders do not have much prior experience in growing a company themselves to make any growth sustainable. The ideal senior team needs to bring that experience you lack to the table and be willing and flexible to learn new ways. Especially when you are in a traditional sector, glittering CVs full of managerial brilliance may float across your desk. However, those people may be deeply entrenched in their views and unable to adapt and learn new ways, and you can all too easily acquire an over expensive dinosaur.
A first-class senior team will deliver first-class performance. But pre-supposing you can find these gems, how do you afford them? The answer lies in inspiring them with your vision of the future, both for the company, its increased value, how that could realise and how they could develop with it.
If you can set out an inspirational and achievable vision of how you will build the company, you take your management with you. Getting total buy-in almost certainly involves giving them some equity or share options, much easier to do now than it once was. Then it is indeed "their company" as well, and when the company gains, so do they.
Founders are often reluctant to share their vision of an eventual sale, believing people will fear losing their jobs. However, the reverse is true if people see that they will realise sufficient profit from it combined with career development on the journey.
Let's look at what happens if you don't embed that top team to understand why companies who fail to do this right fail to scale successfully.
Firstly, founders get stuck in the day job. There will be no hope of you developing to work on the business because something will fall apart every time you step back. No matter how many great systems and manuals you put in, there is still only going to be you at the top; you who steps in when one person is off sick or decides to leave, or you to deal with every crisis, minor or major.
Yet, at the same time, it will be you doing your old day job, trying the impossible search for exemplary people available in a hurry, dealing with customers, and being inspirational to the team. Small surprise that you end up too exhausted to inspire the family dog, let alone a team.
There is no time for you to develop the new skills you need to grow the company. If you have had little previous experience of doing so, you need to learn them somewhere. And a nod in that direction doesn't prepare you.
I remember learning to ride in the safety of a riding school and then being plonked on a contrary donkey on the top of Scarborough's cliffs when the damn thing bolted.
Being in charge of a mega-fast-growing company without the time to develop your skills alongside is precisely like that. Without you growing yourself alongside the company, the growth stops.
You or the company will then run out of steam. It will erode the passion you once had because you become a victim to the company's demands, too exhausted and too busy firefighting that to accept your role as a glorified employee.
You will also have a company that has little value to anyone else. It relies on you to function, and without you, therefore, has little value. All those years, all the blood, sweat, and tears are for nothing.
A sound plan that realises value involves bringing in an exceptional top team early, who buy into your vision for the future and aim to reap their share in the same rewards. The next skill is to stand back and let them fly.
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