Business Lifecycle and Leadership Fit
By Eric HansenWednesday, November 11th 2015
Rare is the leader who, like a Reed Hastings or a Bill Gates, has the desire and competence to take a business from start-up to grow-up. Yet we see many leaders trying. And many are failing.
Recently we’ve worked with a number of smaller, but rapidly growing businesses. Some are stand-alone businesses and others are living within the protective framework of larger parent organizations. Most of these businesses resulted from remarkable entrepreneurial insights. These leaders had foresight into potentially disruptive opportunities amid rapidly evolving market conditions.
Then the idea catches on and the business grows—slow and steady at first, but then at an increasingly accelerated pace. If all goes well, demand begins to outpace capacity. The existing business systems and processes become bottlenecked and loyal employees find themselves in a constant scramble to plug holes and fill gaps. What once felt fresh and energizing now feels a bit out of control and overwhelming as the entrepreneurial leader doubles down on personal hours worked and on similar expectations from others. It is into this environment that we are often invited. We typically find a reluctant entrepreneur in deep denial and struggling to make sense of their own limitations and their contribution to the organization’s current pinch. Or, we are introduced to a successor with the unenviable task of honoring an organization’s history while forging a different organizational path forward. Regardless, the question that these leaders are asking of themselves is “what kind of leader does this company need now?”
It isn’t only a matter of being a great leader. Rather, it is great leaders whose abilities fit with the current lifecycle stage of your business.
The full cycle follows a path typical to the image here.
If we know anything about leadership, it is this: Context matters, a lot. While some leadership competencies may be fungible from one situation to another, it is in clearly understanding and applying those skills to fit the current situation where exceptional leaders find success. The most successful leaders we have worked with, described below, acknowledge that each life cycle stage of an organization demands a distinct mindset and set of actions from its senior-most leaders.
Visionary/Innovators: Emerging, startup organizations often originate with leaders who see things others don’t. They live in the world of ideas and have an uncanny ability to see patterns and connect seemingly disparate data points, including a monetary connection to the market. They rally others to the cause with deep passion, zeal, and unwavering conviction to the merits and possibilities for their ideas—perhaps even to the point of eccentricity and impracticality.
Evangelists/Politicians: As the idea takes shape and a stable business model begins to emerge, these leaders demonstrate deep tenacity and commitment to success at all costs. This stage of the lifecycle draws heavily on a persuasive communication skill set and the ability to build broad coalitions of support and customer relationships. Where they lack, they enlist others. Although most startups don't survive much beyond the Early Growth stage, those that do are indebted to leaders who are able to build a strong foundation of stakeholder support and, often through force of will, lay out a business model and rudimentary infrastructure through which their solution is initially delivered to the market.
Conqueror/Builder: As the business gets traction and growth accelerates, leaders must remain relentlessly focused on expansion and conquering adjacent spaces. This demands that they break down conventional organization constructs and build out a new, scalable and adaptive organization capable of delivering the strategy and sustaining growth. Effective leaders in this phase redefine processes, governance and structure, and implement policies to enable effective coordination—moving the company toward a more mainline functionality. It is here that many entrepreneurs personally struggle to remain engaged and, in turn, the organization struggles with them.
Explorer/Administrator: As intensity and excitement relent to maturity, effective leaders continually seek for what is next and to pursue additional investment capital to fuel growth. Still, the focus tends to shift to rules, systems, and relentless pursuit of efficiencies, but the most talented executives running these businesses carefully guard against adopting a wholesale administrative mindset. They actively resist allowing bureaucratic tendencies to set in, knowing that a firmly entrenched bureaucracy isolates senior leaders from market realities, enticing them into the comforts of passivity and onto the path toward becoming aloof, elite, out of touch and destined for decline and extinction. So while market maturation is an eventuality, the most effective leaders relentlessly explore new possibilities to revitalize top-line growth, while actively managing the cost structure.
While it may be tempting to identify yourself in all of these leader descriptions—equally able to maneuver and effectively lead through the vicissitudes of each phase, the reality is that you’re probably not that rare. The most important question you must first answer is “what phase is my organization in?” Without understanding this, you are blind to the kind of leader you need to be, and if perhaps, you are even the leader that your organization needs.
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