- Leading a scale-up team requires a different skillset. Having the right leadership competencies forms one of the foundational pillars of a successful scale-up.
- This guide seeks to provide some useful tips on leading a scale-up.
While it is obvious that any scale-up cannot do without effective and sound leadership, the definition of good leadership seems forever elusive. The stock definition of a leader as someone who simply takes charge and manages or controls others by virtue of his or her position is at best out of touch with reality – and at worst – outright offensive. The age-old debate of what makes good leadership has spawned an entire industry trying desperately to reveal the mystery behind it.
What makes a good leader?
There is no one-size-fits-all winning formula that guarantees success. Each leadership signature is personal and unique. That said, there is a common misconception that leadership style only comes down to one’s personality instead of being a strategic choice made consciously and consistently. Although it is beyond the scope of this article to provide a fine-grained analysis of all the different leadership styles, there are several overarching capabilities that all leadership styles share:
- Sensemaking – the ability to understand the business environment in which the company is operating:
- Visioning – the ability to imagine what is possible and create a compelling picture of it that inspires others;
- Inventing – the ability to come up with new structures and processes to achieve that vision;
- Relating – the ability to establish trusting and supportive relationships across different networks; and
- Credibility – the ability to build credibility which acts as a lynchpin connecting the four elements above, since it results from and is necessary for the other four.
Credible leaders talk the talk and walk the walk.
Why are leadership skills particularly important in the scale-up journey?
The answer to this question harks back to the definition of a scale-up as a high-growth company. As much as we would like to believe that growth begets growth by itself, it is ultimately the leaders of an organisation that are at the helm when it comes to steering the engine of growth. Leadership competencies at scale form one of the foundational pillars of a successful scale-up. Despite their importance, leadership capabilities and people management skills are an often-overlooked, albeit crucial, piece of the puzzle, with investors attributing 65% of portfolio company failures to people and organisational issues.
According to the UK’s ScaleUp Institute, the development of leadership skills remains a top priority for the majority of scale-ups in 2022. While strides have been made in addressing the acute shortage, a leadership capacity gap – alongside a talent and skills gap – persist in the scale-up community.
Embracing and instilling new mindsets
There is no denying that embarking on a scale-up journey is not a run-of-the-mill agenda but one characterised by profound change. After putting a fresh spin on your business model, including updating your value proposition, you may find that the very identity of your company needs to undergo a revamp too. As a result, mindset shifts will need to occur across the board and should ideally precede the execution of any bold plans.
According to the Leadership at Scale Diamond framework pioneered by McKinsey, mindset shift belongs to one of the critical shifts that can create disproportionate value. For example, elevating the brand image or targeting a different customer segment would have an influence on the way in which salespeople sell a product or service. Rather than being solely focused on driving up sales figures, sales staff may now be required to approach their role with a markedly different attitude, for instance, as purveyors of the company’s values. By the same token, if the company decides to fervently pursue ESG (Environmental, Social and Governance) goals to create value, what is environmentally friendly, and socially and ethically responsible would become a prerequisite for doing business rather than merely being a side agenda.
Mindset shifts about how the company is to be run will also need to take place. In order to nurture creativity and entrepreneurship, and generate synergies in furtherance of growth, there should be an open exchange of information. Traditionally, the management structure had its roots in the military, following a very linear hierarchy, where information was only held by a few select individuals within the company. The danger is that when people need to resort to guesswork in decision-making, they may lose sight of the factors that are important to the overall strategy, thereby veering off course. In addition, leaders should instil a collaborative and experimentative mindset so that employees feel at ease when voicing their innovative and disruptive ideas. Not providing appropriate outlets for their expression would stifle creative thinking in the long run.
Time to hone leadership and management skills
Back in the days of being a start-up, the distance between top leadership and the rest of the company was probably barely noticeable; these dynamics played out well as the organisation was relatively small. But as the business scales, so too do leadership capabilities. An increase in headcount is usually accompanied by additional layers of management; therefore, a proactive approach must be taken to cultivate such capabilities. In order to ensure that they are implemented day in, day out at the workplace, best management practices drawing on a range of different management techniques and tools need to be established and embedded at the heart of the organisation.
As the layer of middle managers grows, one of the biggest hurdles that confronts leaders is learning to manage managers. Middle managers have often been unjustly portrayed as “mediocre”, “unexceptional”, being “sandwiched” between the leadership and the rest of the employees. However, research has shown that they are in fact the ones who play a vital role in oiling the wheels of the entire organisation by facilitating seamless operation between the different hierarchical layers.
To overcome this hurdle, leaders will need to acquire a different skillset and mindset. In sum, their responsibility is two-fold: firstly, to ensure that managers are doing a good job at supporting their teams; secondly, to ensure that they are producing high-quality output like any other employee. As mentioned in our recent article that provides tips for scaling a business, in the progressing phase of a scale-up, the founder CEO’s distinct leadership persona is imparted to teams so that managers can emulate it and apply it consistently throughout the organisation.
Watch out for burnout
According to research conducted from 2020 to 2021, middle managers are at the greatest risk of suffering from a burnout, who reported, besides being subjected to higher levels of stress and burnout, “worse physical well-being and work-life balance than the people they manage.” More alarmingly, managers are quitting at higher rates than other employees in non-managerial roles. Especially over the past few years, managers have been expected to take up challenge after challenge – most oftentimes barehanded without the necessary skillsets.
To make things worse, managers are stuck in the middle between those higher up and those they manage. For example, their subordinates may demand a deadline extension due to an onerous workload and time pressure, while their superiors may insist on on-time completion. Having little say in the matter, managers are forced to resign themselves to a state of defeat and powerlessness. This has the unintended but very concerning consequence of impacting negatively on managers’ mental health, owing to “their position of authority without strategic power”.
Managers working at scale-ups are more vulnerable to this plight, as there is often a mismatch between the pace at which their skills are scaling and the pace at which the business is scaling. Furthermore, rapidly growing organisations start to increasingly shift their reliance on systems rather than relationships, and without timely corrective action, organisational inefficiencies may begin to crop up. These conditions unfortunately provide an ideal breeding ground for burnout. It is, therefore, imperative for leaders to watch out for signs of burnout, which include a slump in the quality of work produced, apathy and disengagement, and an increased frequency of complaining, with employees being generally disgruntled.
Learn to delegate
Scale-up leaders must learn to unlearn certain behavioural patterns characteristic of start-up leaders, in particular, the tendency to micromanage. A fully hands-on and direct approach is simply untenable as the business scales. It is time to let go of the reins and delegate. In the highly dynamic scale-up journey, a leader’s attention and energy should be redirected elsewhere – to tasks that enrich the company’s value in the long term and on the broader picture.
Micromanaging employees is not a productive activity that generates long-term value; thus, leaders should steer clear of it. Delegation is also integral to the process of training future leaders who acquire and hone their skills through practice, which in turn requires a degree of autonomy. Top leaders know the importance of distributing power downwards, for it is through the empowerment of others that hidden pockets of creativity and wisdom outside the conventional decision-making structure come to light.
Make sure the leadership is aligned with the top team
Leaders should be mindful of jumping the gun by presuming that the entire organisation is on board when it comes to scaling up. Having an aligned founder CEO and top team is another key ingredient in successfully scaling a business. While it is understandable that founders have a personal stake in the growth of the company, it is important for them not to fall into the trap of self-centeredness by conflating their personal vision and calling with that of the whole organisation. It is, therefore, necessary to have candid conversations with the top team to ensure that the desire to scale up is not just one-sided wishful thinking and is indeed shared by the rest of the employees.
A leader’s job in a nutshell
Brian Halligan, Co-Founder of HubSpot, has come up with a very apt analogy to sum up a leader’s job vividly by likening it to a bus. First and foremost, the leader must know the direction in which the bus is headed; secondly, the leader must ensure that the bus is filled with the right people who are travelling in the same direction; and thirdly, the leader must ensure that the tank has enough petrol (i.e., resources) to arrive at its destination. Now that is some food for thought.
What CW can do for you
To enable you to focus 100% of your effort, time and attention on your scaling-up endeavours, we can be your trusted partner in carrying out time-consuming administrative tasks on your behalf, including errand-running, data entry, research, records management, word processing, translation, document scanning and filing. In addition, we can help you transit to your next phase of development, from strategic preparation to implementation, and take care of the various structural requirements that underpin the scaling-up. Contact us today.