So many factors go into a successful scale-up, But, in my own experience, there is one critical one that stands out in the challenges to scaling up.
That problem is the lack of an outstanding senior team. Not only does it hamper the company’s growth, but it also prevents the founder from developing CEO skills.
Without one – this happens
Why a senior team so essential to scaling up
Part of the need for a senior team is to manage people. There is simply a limit to how many people one individual can do that properly with. Hence the formation of old-fashioned triangular-shaped business models. On the surface, that looks sound. You line-manage x number of people, and they each supervise x number of people, and you get on with scaling up.
This system leads you straight into the trap that both I and so many businesses fell into. We assume the original people who were with you early on both want and have the ability to grow along with the company. If they don’t, they will not fully commit to sharing the load because they are not buying in.
However, if they have not held a management position within a company that is scaling fast, there is no reason to suppose they will change. Indeed, why should they when they are entirely content doing their original job? 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 offense 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 a perfect world, we would plan to find the senior team from the start when the mere idea of scaling up flicks through our brains. There are two hurdles to this. One is finding them; the second is having the money to pay them.
The problems of finding and paying them
My experience is that most successful senior teams are found through networking, and that takes time and dedication. Time to network, discover, 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 previous experience in scaling a company. The ideal senior team needs to bring that experience while, at the same time, being willing and flexible to learn new ways. Glittering CVs full of managerial brilliance may float across your desk. However, if those people are so deeply entrenched in their views that they cannot adapt and learn new ways, all you acquire is 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 then afford them if you are bootstrapping scaling? The answer lies in inspiring them with your vision of the future, both for the company, its increased value, how that could realize and how they could develop with it. If you can set out an inspirational and achievable vision of building the company, you take your management with you on the scaling journey.
Getting total buy-in almost certainly involves giving them some equity or share options, much easier to do now than it once was. Then becomes “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 realize sufficient profit from it combined with career development on the journey.
If you don’t embed that top team successfully, it will be impossible for the company 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.
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 rest of the team.
Small surprise when you end up too exhausted to inspire the family dog, leave alone a team.
There is no time for you to develop the new skills you need for scaling up. If you have had little previous experience of doing so, you too need to learn them somewhere. And a nod in that direction doesn’t prepare you.
If you fail in this, you fail to scale
When I think about scaling up, I remember having been taught 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 for scaling that realizes value is one that involves you 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.
For easy ways of share options, you might be interested in reading my interview with Vestd’s founder Ifty Nasir who talks about easy ways to do this.