What does your business need from you?
As many as four in five start-ups will fail in their first three years. Of those businesses that secure venture capital (VC), only one or two in ten will produce substantial returns. Even if a business makes it through these hurdles, the founder may not. Only 25% of companies holding an initial public offering retain their founder as CEO.
Market trends, competition and failures of marketing, product and pricing all play a part in this picture, but up to a quarter of VC-backed start-ups fail for reasons of leadership. The leaders burn out or lose focus, they don’t attract and retain the right team, or they don’t manage underperforming teams or disgruntled stakeholders.
A founder may not be able to change the market or the competition, but they can change their leadership and performance. Founders can scale their leadership as their business develops from start-up to scale-up to grown-up.
And it’s worth it, for both the founder and the business. Having poured their heart and soul into their start-up, founders are devastated if they are shoved out to make way for ‘a professional CEO’. Meanwhile, research suggests there is both a performance and cultural benefit to the business of retaining founders as leaders.
What does it take to be a successful founder of a growing business?
Let’s imagine our founder as a professional tennis player who dreams of becoming Wimbledon champion. If they have a killer forehand shot, they may win a couple of games, but unless they also have a decent serve, they’re not going to get far.
With a killer forehand and a decent serve, they might win more games, maybe even the odd local tournament. But to be a champion tennis player, they will also need a serviceable backhand and to be able to lob and volley.
With a killer forehand, a decent serve, a serviceable backhand, lob and volley they will be a formidable player on the circuit. Their killer forehand may still be the strongest shot in their repertoire, but they now have a range of techniques they can call on as they face different opponents on their way to grand slam victory.
Most founders have a couple of killer shots in their arsenal. They are typically innovative, determined and convincing and will use these shots to try to win every match – whether they are the right shots or not. Whatever problems they or their business are facing, their tendency will be to come up with more new ideas, push and work even harder or convince others of their point of view.
Your killer shots are your greatest asset, but they become your greatest liability if they are all you have and you overuse them. As your business grows, you will need to have different techniques – different ways of leading, communicating and operating – if you are going to continue being an effective founder. If, like the pro-tennis player, you want to be a champion, you’ll need to consider the match and player you are facing at any given time and adapt your play accordingly. You will use your killer shots whenever you possibly can, but if you need to play a backhand or lob you will be able to.
Champion tennis players depend on more than their shot repertoire to achieve success. They also know that the inner game is as important as the outer game. To win a championship, they need their head in the right place. They know that if they walk onto a court feeling doubtful and insecure, or if they lose their temper and throw their racket around, they will lose matches. They know that if they don’t sleep or eat well, their performance will be hampered. Champion tennis players take great care of their physical, psychological and emotional needs to ensure they can show up to each tournament match-fit and formidable. Successful founders need to do the same.
In my work with founders, it’s rare that I meet anyone who has all these bases covered. Even with founders who know how to play all the shots, their unmet psychological needs, beliefs or habits will often be the cause of self-sabotage. For some, it’s the massive ego they needed to get the business off the ground that becomes their kryptonite as they scale. For others, it’s the need for control or approval that trips them up. For still others, it’s the ten shots of espresso followed by the bottle of wine. There’s nothing inherently wrong with having a big ego, a need for approval or a caffeine habit, but if you want to successfully scale your business and still be part of the business once it’s scaled, you’ll likely need to master these things too.
What stage of growth is your business in?
To understand what your business needs from you as a founder, you must first understand the stage of growth your business is in, and the unique leadership needs of that stage. In the business literature and research there are many definitions of these stages, but for the sake of ease, let’s boil these down to three:
1. Start-up
2. Scale-up
3. Grown-up
You can’t easily define these stages by organisational age, turnover or even staff numbers. Many of those characteristics are determined by your business model and approach to funding. Broadly, though, we can define each stage as follows:
Start-up
You directly manage almost everyone in the organisation.
You are involved in almost all decisions.
You are making some money.
You are bootstrapping early growth or working with early seed capital.
Your priorities are product/service development, sales and investment.
Scale-up
You employ more people than can sit around a dining room table.
You have functional managers who are responsible for key duties and manage sub-teams.
You are no longer involved in every decision and don’t know everything that’s happening.
You are experiencing significant year-on-year growth in turnover.
You are funding growth through VC investment or by reinvesting profits.
Your priorities are funding growth, attracting talent, delegation and improving effectiveness.
Grown-up
You employ hundreds of people, often in multiple locations.
You have, or need, a management structure that can sustain growth.
You depend on an executive team and senior leaders to run most of the business.
You have, or need, extensive and well-developed systems.
You likely have a governance structure or board of directors.
Your priorities are keeping up with competition, innovation and market changes, organisational health and culture, and growing organisational value.
What your business needs from you at different stages of growth
Depending on the stage of business you are at, or the challenge you are facing, your business may require very different things from you as a leader. For example:
Obviously, this is oversimplified. There may be times during start-up when you need to inspire large groups, and there may be times in a grown-up business when you need to be a brilliant tactician. As a founder, you need to be able to cycle between these different ways of thinking and behaving on a regular basis. That’s not easy, and no founder I have ever worked with is brilliant at all of them.
Of course, you’ll build a team, delegate, and aim to play from your strengths and preferences, but you will still need to develop adaptable leadership skills and know when to deploy them. You’ll need to know when to focus on new ideas and inspiring people and when to help your team focus on the considered implementation of a plan. You’ll need to know when to jump in and fix a problem yourself and when to pull back and let your team take ownership. To do that effectively, you will need the self-awareness to know when a leadership strength has become a vulnerability, and when to adapt your style to the challenge you’re facing.
This is all beginning to sound a bit difficult, isn’t it? It’s simpler than it sounds – simple, but not easy. It requires determination, humility and bravery. But the alternatives are much worse. No founder wants their business to fail. Nor do they want to stunt the growth of their business, and they certainly don’t want to be forced out of the business they launched.
If you want to give your business the best chance of not just surviving but thriving, and if you want to be there to see it thrive, you must scale your leadership.
This is an extract from The Founder’s Survival Guide by Rachel Turner.
