TRANSCRIPT:
Today, I’m gonna share with you
4 key shifts from start-up to scaleup
1, from Founders Competence to a company being run by an Effective & Cohesive Leadership Team.
This is one of the most difficult to shift because it's counterintuitive and needs a change in behavior that has made you successful. From being the smartest person in the room to be the dumbest.
It also need you to fight against the tyranny of urgency and focus on this subtle and important shift to learn new skills of building healthy teams.
2. From focused on Sales to working on a differentiated Strategy for sustainable revenue growth
Sales is a function of your strategy, sometimes, revenue is not growing even if you have the best sales team because your strategy is not clear or aligned.
Think of strategy as a formula, as a CEO, you are accountable to get that formula right, to regularly review it based on market conditions and to ensure the team are aligned and executing on it.
3. Moving from Individual Productivity to Scalable Human Execution Systems.
It's easy when you have 15 people, you feel the drag when you hit 50, and after 150, the lost in translation syndrome kicks in.
Most understand they need to invest in technology infrastructure to increase productivity,
but only a few know how to create the human execution systems of structure, process, culture and accountability to hit goals and priorities consistently.
4. Changing the financial driver from Revenue Growth to growth with Profit and Cash.
There are only 3 ways to fund your growth; debt, equity or cash from profits.
So, unless you are a unicorn, who has unlimited cash to fund fast growth without needing the commercials to stack up,
its best to re-oriented the financial driver to look at how to achieve profitable growth so as to optimize cash to reinvest into growth.
ARTICLE:
Identifying the Right Problems
Einstein shared that if he had an hour to solve a problem, he’d spend 55 minutes thinking about the problem and 5 minutes thinking about the solution. As your company grows, the problems you face fundamentally shift. And if your perspective does not also change, you may find yourself trying to fix the wrong problems with the wrong toolset.
We spoke with Gravitas Impact coach Josephine Too on her experience coaching CEOs through this critical shift. “I see a lot of CEOs who, because they have a hammer, everything they see is a nail. Instead they should be changing the tool to respond to new issues effectively.”
“A company at a different growth stage has different needs and challenges, and leaders need to be sure that they utilize the right levers and tools for the right stage,” Too shares.
Four Key Shifts
Too outlined the four key shifts that need to happen as you lead a growing company:
1. Transition from relying on the competence of the Founder(s) to a company being run by a Strong Leadership Team. “As a CEO, make sure you are delegating ownership of the issues and holding the leadership team members accountable and resolving the conflicts between functions. In most of the companies we see, the transition isn’t a conscious one and it creates a lot of frustrations. The CEO’s focus needs to be on building an effective and cohesive leadership team and the connections between the functions, instead of managing what needs to be done from individuals or stepping in too much.
2. Shifting focus from driving Sales to creating a differentiating Strategy. “This is a key transition. In the Startup stage, you need to focus on sales to validate the product to market fit and demonstrate traction via repeatable sales. As a Scaleup, you begin to build a sales operation and hire a sales head. But by this point, market dynamics might have shifted with increased intense competition and clients demanding discounts. If revenue growth is stalling or slowing, as a CEO, instead of managing sales resources or using geographical expansion as the only growth lever, you need to focus on crafting a truly differentiated strategy and position for sustainable revenue growth.
3. Moving from Individual Productivity to scalable Execution Systems. “In the startup stage, you want to hire highly productive people who can get things done. Once you cross the 20 employees mark and organize people in teams, your focus as a CEO needs to be about what is the best structure, process and systems to help get these productive individuals to hit the company goals and priorities consistently. It’s about how efficiently you are converting revenue into profits; your worst nightmare is everyone working hard but spinning around in circles that don’t move the company forward.
4. Changing the financial driver from Revenue to Profit and Cash. “As a startup, revenue is about commercial validation that you provide value and the business model works. When you are pivoting to scale, you are now focusing on the right model and direction that will give you the profitable growth so that you have cash to fuel growth. The mistake I see, is to continuously focus only on revenue growth that does not result in any profit, which then defeats the function of a company and is not sustainable.”
Is It the Same Plane?
Founders who are aware of the stage their companies are better able to identify both the issues within the company and the right tools with which to address them. Too asks, “Are you focused on solving the right problems with the right levers? If not, you might need to re-evaluate where you are at on this journey from startup to scale-up.”
“In the end, it’s really about shifting from a product design mindset to a company design one,” (see attached diagram) Too shares. “You are actually flying a different plane when you are a scaleup; not only did your destination change, but the controls you’re used to aren’t working anymore. You need to change the levers to get unstuck.”
This article was recently featured by my coaching organization, Gravitas Impact, here https://www.gravitasimpact.com/the-four-key-shifts-from-a-startup-to-a-scaleup/
