10 signs a startup leader needs to scaleup or step back
All startups, and the people leading them hit sticking points to their growth. The two are usually aligned and the experience is miserable for everyone involved. A significant factor in whether the company survives past it or not comes down to whether the leader is willing, able and enabled to scale as an individual, in order to grow beyond the business' current inflexion point.
Few founders, CEOs, or other startup leaders can transform themselves on their own. It is hard to invent your own best practice, especially if you don't have any external reference points. Harder still if you find yourself a leader without any prior experience of having been a manager. Leaders can often be lousy managers and too little time and effort goes into rectifying this.
One of the biggest myths of entrepreneurship is that startup leaders can thrive and grow without any knowledge of or interest in good management. Seriously? You think Hannibal got all those soldiers and elephants over the Alps using only charisma? The answer isn’t to insert external management hires into the gaps (the result is a top-heavy, hierarchical organisation that folds because it cannot support itself). The solution is to enable the leadership to develop and become fit for purpose for their next phase of growth.
To be clear, when I am talking about leaders I am not just talking about the founder/CEO or the person at the top of the organisational pyramid. I am also talking about all those people directly around them (from the board to direct executive reports) who are responsible for delivering the company's vision. The temptation is to single out just one person who needs to grow and to scale when, in fact, there is an entire complicit leadership team that need to evolve.
There are common signs when a startup leader (or wider leadership team) is struggling, and these are felt in almost every aspect of the business. When these signs become apparent, the leader ideally needs to be supported and enabled to fully develop for their next phase of personal growth, or they need to choose to step aside into a role that feels more manageable. As soon as even a few of these indicators appear, doing nothing is no longer an option:
1. Inconsistent or non-existent communication. Nobody is sure exactly where the company is headed, or why. Or what that latest urgent board/investor/sales/product/client meeting was all about. Fearfulness and suspicion increases. The board may have been debating strategy for weeks, but no one has asked the employees for input or communicated the rationale back in. So people are busy working on the wrong things. Reassuring messages are either not coming at all, or are not delivered with the transparent authenticity required if they are to be believed.
2. Doubling down on what used to work. It is so tempting to do more of what used to work, just better, and harder and lots more of it. But if it isn't working anymore, the old plans need to be ripped up and fast. Avoiding new ideas and new approaches limit the leader's and therefore the company's ability to learn and adapt.
3. Busy on the wrong things. It is a brave, and self-aware leader who has the guts to say everyone stop while we figure out what is the best thing to do next. And even when they do make that call, they are not always supported on it from above. It is so much easier to all be busy fools, running from thing to thing, making time-consuming tweaks and minor course adjustments. Hooray - you're all so, so busy making visible progress, checking things off the company to do list. Tempting - but delusional and dangerous.
4. Decision making becomes, capricious, arbitrary and temporary. U-turns are no longer a sign of systematic, evidence-based iterations, but of personal agendas and ill-thought through plans. People with key information are excluded or over-ruled, triggering more U-turns.
5. Scapegoating and the blame game starts at the top and quickly spreads. If finger-pointing and blaming is taking place at the top, the brave leader takes it all on the chin (and endangers their personal position), while the weak leader joins in the blame deflection and shifts the problem to the whole company. Both are indicators that the wider leadership team and their behaviours are dysfunctional and this dog eat dog culture usually spreads.
6. Core values, transparency and sometimes even ethics are compromised. Whether by neglect or calculation, decisions get made that erode core principles. Maybe its argued that a company in this position can't afford to be x, y, z... Under intense pressure, someone agrees to something they don't believe in. The second time it happens doesn't feel quite as bad. Transparency is deliberately reduced because, you know, good people might leave, clients might be lost. This is how companies and their leaders get themselves into serious ethical and legal trouble.
7. Confirmation bias. Experienced support is pushed away in preference for confirmation of assumptions or non-conflicting advice. After a few incidents of "shooting the messenger" any negative or contradictory information will get buried, as no one will risk the consequences of passing it on.
8. People problems, tensions and conflicts breakout and escalate. And at the same time, people start to walk on eggshells around the broader leadership. People are still following - for now - but because they have to, not because they choose to. Trust, collaboration and the willingness to surface new ideas completely disappear.
9. The word "thank you" disappears from the company vocabulary. Everyone except the leadership notices. The occasional showy attempt at gratitude or morale-boosting has the opposite effect, although that may not be outwardly apparent. Afterall, rocking the boat has negative consequences now, so most people don't.
10. Strategic focus, if it exists at all, is reactive and short term. In some cases, a strategy continues to be pursued, long after evidence is in to demonstrate that at a minimum, a new focus is required. The wheels are falling off the plan, but no one seems to have a better one. More commonly - but worse still, there can be a temptation (especially within software development) to see lack of focus as a strength for long after it ceases to be. Strategy is either neglected entirely in day-to-day decision making or changes with the wind. You can’t simply MVP and iterate your way to a strategy - there need to be clear constraints for people to be able to focus and execute. Frequent, reactive strategy shifts communicate desperation to the wider team and say "the leadership doesn’t know where we are going”. If that is true, then stop - busy chaos isn’t helping anyone.
So if you're thinking "oh God that's me, she knows, she's outing me - Vicky must die!" Hold up... (Please?!)
The question is not how did I know? The question is what can you do about it? Provided the investor and board support around you is no worse than mildly neutral, I do believe a leader can successfully scale themselves - provided they accept help from a suitably experienced peer or three.
Insisting on intensive management training and leadership coaching is neither a weakness nor a distraction. Working extensively with a peer mentor, and shadowing more experienced leaders - especially in their workplaces - is often a revelation. I always craved executive level work experience so I could directly learn from others and so was fascinated to hear from Mark Logan how Skyscanner did exactly that, specifically to make sure their senior people are always learning from the best, globally.
Don't tell yourself, or let yourself be told, that you don't have time for or the luxury of personal development right now. It is the most important thing you can do - because the old way simply isn't working for you, your company or your employees anymore. Time to change yourself.
But - if the board is against you, your choices are very limited and likely a major contributor to the problems you are having. Sleep. Read. Self examine. Try and get peer shadowing and mentoring if you can. Read some more. But the reality is you may not get to develop yourself in this business. Don't let them break you - there are always more businesses.
And what are the options when a leader either doesn't have board support, or doesn't recognise they have a problem?
If you're recognising your own leader here, but your power and influence are limited, you probably can't fix this problem. Working hard and making your boss look like a hero is all well and good in theory, but if your boss is melting down on an epic scale, hiding in the bathroom or acting like a Roman tyrant, your chances of success are limited. But nor should you self-doubt or beat yourself up if you become the scapegoat and get fired or if you quit because you feel unable to tolerate the situation. It is no surprise that staff churn, plunging morale and increased absence is a symptom of leadership development challenges.
I do believe it is the responsibility of the board and major external investor representatives (usually the same group) to at least try to enable a leader to scale before they go for the usual route and replace them. And they must recognise that the fear of imminent replacement may be contributing to and escalating the leader's performance issues.
Bringing in someone who has the leader's back - rather than having a sharp knife aimed at the target on it - may help. Be realistic about whether the wider leadership team - including you - is still fit for purpose, or just too many steps ahead or behind to add the required support. Given startup founders are usually smart and fast learners, the right intensive management training and leadership coaching is also likely to work. A mentor of their choice and a mentor of your choice is likely to expand horizons - but ensure you allow them to make the regular time commitment required and give them space to implement what they learn. Try and get them into other businesses so they can see what good, best, or simply a few steps further ahead, actually looks like.
Unless it is your immediate intention to replace them - in which case just get on with it, and make sure you get it right - do not undermine them or treat them as a failing leader in front of their team. Do not forget that as the board, you too embody the leadership of the company to its employees and the outside world. Are you really setting your executive leader and their team the right example?
In the end, I think most startup founder/CEOs and leaders have the capability to scale. What they may not have is the time, the methodology, the support, the initial self-awareness or ultimately the desire. The first four are solvable - especially when you look at the alternative of doing nothing. The last one - the desire - is the key to teachability and critical to there being any chance of success.
If you don't have the desire to grow and learn to be a better leader and be ready to work as hard as you possibly can on developing yourself - then for your company to grow despite you, you need to step aside.
But if the desire is there, and your board and staff will stick with you for just a little bit longer while you learn like crazy, then it is all yours for the win!
Entrepreneur Agony Aunt podcast episodes on this theme:
Founder focus and the MVP trap with Mark Logan
Delivering 10x solutions with Tom Adeyoola
Hyperfocus, urgency and founding for scale with Denis Mortensen
Management challenges and how to tackle them with Mark Logan