5 leadership skills that break at scale

As the founder of a high-growth SaaS business, Evan was the quintessential entrepreneur. Ideas and innovation were his strength, and they led to his success in attracting investors and inspiring his early hires. With the infusion of investment capital, the company entered a new stage of growth. 

To scale successfully, the business needed to standardize operations and develop repeatable processes to reliably deliver services to its customers. But these were not Evan’s strengths. With a near-constant flow of ideas and a desire to resource them, he soon earned a new nickname among his team: “chief distraction officer.” Eventually, investors grew tired of Evan’s lack of focus and replaced him with a seasoned operator who had the operational capabilities necessary to grow. 

The skills that make founders successful often become liabilities as a business builds. As executive coach Marshall Goldsmith says, “What got you here won’t get you there.” Here are five leadership behaviors that break at scale—and where the fixes lie. 

1. Creativity over Discipline

Evan was a perfect example of someone whose creativity and passion were a perfect fit for a founder. As his business progressed to the next stage of growth, the primary skill required was the ability to build out processes, to “systematize” the product so that it would be delivered to clients consistently every time. But highly entrepreneurial leaders often find it draining to limit their focus to only the one or two proven products.

What’s the solution for the mismatch of a founder’s talents to this later stage of growth? The most successful ones recognize new skills are needed, have the humility to accept their own limitations, find a great COO, and get out of that person’s way.

2. High Appetite for Risk

When starting out, it’s important to take risks, try new things, learn from your mistakes, and try again. As companies scale, though, the focus should turn to building stability and predictability. Sudden shifts in strategy and focus cause uncertainty and inconsistency, which erode the trust and confidence of customers, employees, and investors. 

How do leaders balance the need for continuous innovation with stability and predictability? Former Google executives Eric Schmidt and Jonathan Rosenberg offer a great framework for continuing to innovate as you scale: the 70/20/10 rule. The idea calls for allocating 70% of capital to the core business, 20% to emerging products and services, and 10% to the cutting-edge, higher-risk ideas. This framework ensures that innovation is always happening—but not at the expense of the core business. 

3. Command-and-Control Leadership 

Founders are notorious for having their hands in every decision, from product development and pricing to the paint color of the office. As the company scales, this level of involvement is no longer possible. Founders have to bring on new leaders to mobilize, motivate, and manage a larger number of employees. But bringing in leaders is the easy part: Moving to distributed leadership, where the company is truly led by a team instead of an individual, is harder. 

Distributed leadership calls for founder CEOs to step out of the day-to-day operational decisions, delegate, trust, and empower those on their team to drive results. Allowing others to share the management responsibilities pays enormous dividends. Beside the obvious—having others to lean on for their knowledge and expertise—it also helps to ensure the stability and continuity of the business. Only by distributing leadership will CEOs be able to elevate their role to focus more on leading strategy.

4. Open-Door Communication

Early-stage leaders enjoy the close proximity of their team and the ability to communicate in real time. It can be really challenging for CEOs to break the habit of communicating informally and directly with everyone at the company. 

To scale successfully, a CEO needs to shift to more measured and intentional communication. As Google was growing rapidly in the early 2000s, founders Larry Page and Sergey Brin faced the challenge of shifting from being player-coaches who shared an office with fellow software engineers to becoming key executives of a publicly traded company. To help them—and their employees—enforce new and necessary boundaries, the two hired a key executive assistant. That new hire served as a filter for their email and a bouncer for their office, with their role empowered to moderate the flow of people in and out so the executives could be more disciplined with their time and focus. 

5. Valuing Relationships over Accountability

A key ingredient to building a successful company is a high-performing team—and most startups don’t begin with one. Founder CEOs often describe their initial team as a “family” who have bonded with each other through the intense challenges of the startup experience. Sometimes, early employees are actual family—siblings, spouses, and children are often part of the act, bringing all of their relationship dynamics with them. 

High-performing teams, by contrast, run on accountability. Those who are not able to deliver the required results won’t make it, regardless of their relationship to the founder. Adding accountability structures like job descriptions, goal-setting, and performance management helps to ensure the team is on track to execute. These processes also help to shine a light on anyone who is unable to adapt to the new demands of the larger and more complex organization. Inevitably, founders will be forced to make some difficult decisions regarding some of the early team members to make way for new talent who can drive results and take the business to the next level.  

Building a sustainable, stable growth engine with double-digit year-over-year growth is hard. Each new stage of growth brings new challenges that require a different set of skills. The most successful leaders are those who understand the need to adapt their behaviors to meet the next stage—and what it demands.

View the full article