So you’ve bootstrapped your way through your first few years. Quite possibly it’s longer. Grinded out 12-18 hour days, sacrificing weekends, kids soccer games, meeting friends for lunch. Your relationship with your partner has even felt on the rocks at times…… But you’ve succeeded! Your business has now reached the multi 7-figure mark in revenue.
But as with anything, each level of progress brings with it new levels of problems. The systems are creaking. The new hires are keen, but sometimes it feels like they all pull in different directions. What you were hoping would be less work has brought with it a whole host of new challenges.
From Hustle to High Growth
The proportion of small firms expanding their workforce decreased by 40% between 2012 and 2022, but for those that do they have to overcome hurdles many haven’t faced before.
One of the biggest reasons that scaling businesses fail, other than running out of money, is due to hiring ‘the wrong fit’ with new staff and diseconomies of scale driven by poor communication. In the early days, founders could interview every person and they were personally responsible for getting the right people in. But as businesses scale, this task has to be delegated. With so few people in the business, action was the word of the hour and in a small organisation, there is nowhere to hide. If you aren’t pulling your weight and adding value, it’s much easier to spot. But as the business scales and you get 10, 20, 50 new starters in at a time, the founder(s) simply can’t be responsible for this.
In 2023 I interviewed 26 individuals from across the VC and PE space ranging from 6 figure private investors all the way up to series B/C funding rounds and one thing from that research paper that became clearly evident……as you scale, vision, mission and culture become much more important (almost overnight!)
Those (comparatively) simple channels of communication you had, e.g. from founder to operational staff, now have multiple new layers in. You often have a senior leadership team, managers and more defined structures or departments. What was a quick, easy and simple way to convey information via a single simple team meeting, becomes layered, matrixed and undoubtedly more complex.
Vision, Culture, and Communication: The Backbone of Success
Working as a senior product management consultant in a number of larger organisations such as O2, BT, RS Components and Eurostar, the importance of communication and stakeholder management cannot be understated. Top down, you often have to repeatedly say the same thing, often multiple different ways, to ensure that messages are conveyed to the organisation effectively. You also, in many cases, have the advent of bottom up communication. Messages need to be shared in a timely fashion, with adequate levels of data/insight, but often without all of the detail.
The three most important elements when considering communication for a scaling business in my experience are:
- Who are you pivot people that can communicate to the whole organisation.
- If the founder is not a natural communicator, he may need a deputy.
- Ensure the channels of communication are clear and keep pace with growth of the organisation to maintain operational efficiency.
Maintain a strong vision that is both clear, inspiring and regularly communicated. The organisations that perform poorly, or stagnate their own growth are those that fail to get to grips quickly with the new levels of communication required and communication governance whilst maintaining quick, agile and bold decision making.
But maybe you’ve cracked communication, what else can sucker punch you on your road to sustained success?
The Art of Letting Go
Chris Hill, Managing Director at Edenbase – a technology venture capital firm says:
A consistent theme with companies at [series B/C funding rounds] stage is how successful the CEO is at moving from being an individual contributor to being a manager leader and his or her willingness to delegate and actually accept the outcome of that delegation.
Hold the reigns too tightly and you risk stifling innovation and creating a bottleneck or decision fatigue. Outsource everything from day 1 and entrust unqualified members of your teams with high stakes decisions early on and you potentially risk catastrophic errors. It’s a delicate balancing act of delegation and empowerment.
Finally the word that’s most mis-used in my opinion in business.
Culture to me, means the collective thoughts, feelings, values and standards or behaviour imprinted by the founder and senior leadership team(s) within an organisation and augmented by additional team members. When an organisation is small, it’s easier to imprint culture. When it grows at pace, without the right initiatives, it can be hugely harmful.
Last year I coached the CEO of a successful legal firm. He had a number of individuals that worked for the firm that were his top earners. However, they were also the most vocal and non-supportive members of the team, criticizing him at every turn. They were toxic, whispering in the ears of other team members and sewing seeds of discontent. A bold decision to serve these individuals with their notice made room for new top earners and allowed the leadership team to establish and communicate ‘who was the right cultural fit’ once again with a clear message – love us or leave us!
Before it gets to this stage there are tools that you can use though. For example, mapping individual and organisational values to ensure alignment and a shared vision that drives a positive culture. Effective leaders also have a part to play here, by demonstrating how they live organisational values in their lives, but also being vulnerable enough to share with their team when they’re not having the best day also.
Where is your organisation versus its growth ambitions? Can you spot any of the above mentioned in your business?