“We can’t grow, because my people can’t grow.” This is an actual quote from an entrepreneur we worked with a few years ago. While his company’s track record of growth clearly made a mockery of his assertion, he remained convinced—and stuck.
By any objective measure, his company was thriving. Its revenues were far higher than they had been at any point in its 20-year history, and earnings as a percentage of revenues were holding at only a fraction less than the industry benchmark. Yet because sales had not increased for two years, the CEO’s instinct was to blame his people for “taking their foot off the gas.”
Despite our best efforts to help him and his leadership team to seize the benefits of the company’s new scale and to invest in preparing for the next phase of growth, his frustration continued to grow. Sadly, his berating turned to bullying, soured the goodwill of his leadership team, and prompted us to resign from the account. It was the first time I’d fired a client.
Within a year, three of the six people on our client’s leadership team had also moved on to other businesses (all are now thriving in high growth enterprises), and his company had slipped on to a downward spiral, shrinking back to one-third its size, and eventually filing for bankruptcy protection. It was surely a hard lesson in the cold realities of business growth.
Don’t believe the myth of the hockey stick.
I mean, of course, the vaunted revenue graph—the one in so many startups’ business plans that indicates a period of hard work, followed by a near-infinite rate of growth, as the venture goes from groundhog to ‘unicorn.’ Our client was just one victim of this myth—one that can so easily turn a whole business inside out.
For most entrepreneurs, the growth curve is more like a staircase—a series of Herculean efforts at growth, followed by periods of systematization that look more like plateaus than curves. Businesses are generally healthier when leaders accept this reality: their people need the space to acclimatize to the new scale after an aggressive period of growth and to realize some of the benefits that accrue.
It’s when expectations are out of step with the practical realities of business that the trouble seems to start….
What should you do when your business reaches its next plateau?
It’s all too common to start by looking at the team—as our client did. Of course, blaming people for their burnout doesn’t help. More importantly, there’s always legitimate work to do to realign systems, work processes and teams, training and development, and so much more each time an enterprise achieves a new scale.
Instead, look first to your leadership. During a period of scaling up, everything must be aligned in pursuit of the growth goals, and to be successful, the whole organization and everyone in it must be pulling in the same direction. It’s your job to paint a picture of the future and rally your team to get there. Growth requires unrelenting focus.
Growth requires unrelenting focus. Adaptation requires unrelenting inclusiveness.
By contrast, during a period of adaptation, everything must be aligned to liberate the potential of the new organization, and to be successful, everyone’s wisdom and experience must be freed to realize the company’s new advantages. It’s your job to open space for your team to rally to develop new ideas and continue to do their best work. Adaptation requires unrelenting inclusiveness.
The most effective leaders—those who manage to grow their businesses from startup to significant scale—learn along the way that their own approach and style must evolve even more quickly than their business. This isn’t easy, but it’s invaluable work. You’ll need to build your sense of self-awareness, focus time and energy on self-improvement, and consistently demonstrate values that align with the culture you’re aiming to build.
This, of course, is just the beginning; there’s much more to navigating growth than just your approach to leadership. You’ll also need to maintain focus on a purpose beyond profit, review your business model, and grow a healthy culture as well as a healthy business. I’ll touch on each of these in future posts, and we’ll talk about all of this alongside my friend Urszula Lipsztajn during our entrepreneurs’ retreat this September. Will you join us for Business Inside Out?
Mike Rowlands is President & CEO at Junxion. He will lead Business Inside Out at Hollyhock September 16 – 19, alongside leadership coach Urszula Lipsztajn. Designed for leaders of social purpose and technology ventures, Business Inside Out will be an intensive retreat to accelerate personal leadership and business growth. Attendees will envision their next 10 years, and leave with the tools, skills and support to ensure their success. Registration is open.