I spend a lot of time talking to CEOs of small, medium and larger businesses. It’s one of the best parts of my job.
I love speaking to leaders at very different scales, but not just about what has worked. We also spend a lot of time talking about things that haven’t worked — places where problems have emerged as the organisation has grown.
As anyone who has grown a small business knows, your role as a leader changes dramatically as the organisation grows. So what are some of the key reasons that leaders fail to make this transition?
1. Failure to over-communicate
Yes you read that right. Failure to over-communicate.
As you scale up, the less and less time you spend with any one person in your business. And despite the fact you’re running from one meeting to the next saying the same things, people are hearing your message less and less.
The solution feels like over-communication. You’re communicating the same messages so many times that it feels like your employees could recite them back to you. And actually, that’s the point.
Did you ever hear about an employee leaving an organisation because of over-communication? No, me neither. I’m sure that there must be an employee somewhere; however I’m yet to find them. (Please reach out via Twitter @stevepell if you are this employee.)
It will feel like you are literally ramming the same, simple messages down people’s throats. But that’s what you have to do if you want to keep an increasingly large workforce aligned.
As one leader (who learnt this the hard way) put to me: “If you’re going somewhere that’s worth going, don’t keep it a secret.”
2. Failure to simplify
If you want to grow fast, you have to simplify. There’s a very clear trade off between speed and complexity — something that leaders who’ve navigated the path to scale seem to intuitively understand.
The best way to measure the amount of complexity embedded into your organisation is found in your corporate strategy document. Can you recite every word? Could every member of your team do the same?
This is so critical because scaling up means so many more decisions across the business. You’re going to have to trust other people to make critical decisions about the business. And if they don’t have your strategic framework in their head, chances are that they won’t make decisions that take you where you want to go. Here’s an example of a strategy statement:
“Cheapest prices, every day.” (Good)
“Committed to fulfilling service excellence and contributing to our community whilst adopting a customer focused mindset.” (Bad)
The first is powerful in that it’s a simple strategy statement that anyone in your company can use to make decisions. Whether the CEO is in the room or not, it’s easy for any employee to determine whether the specific decision is likely to lead to cheaper prices or not.
Clearly this isn’t the case with my second collection of buzzwords. In fact I’m confused just thinking about them!
“Cheapest prices” almost certainly won’t be the right words for you, but the lesson holds: Simplify your strategy to the point at which it is memorable, repeatable and decidable — by everyone in your company. Then start over-communicating.
If you think your business is too complex for this, my general advice would be your business is too complex to scale.
For another perspective here, this is a great article on how Airbnb spent months getting their entire corporate strategy down to half an A4 page.
Most of your scaling problems will start to fix themselves when you can get your strategy onto the back of your business card. Don’t believe me? Try it.
3. Failure to build process
As you start to scale, it’s critical to focus on reducing time spent reinventing the wheel. By nature, when you’re starting out this is what you spend most of your time doing — it’s a creative process of finding your market niche.
But once that niche is established and you’re scaling out, it’s time to get rigorous about the application of process.
Think about it this way. As your business scales up, more and more decisions need to be made. You (personally) will make less and less of these decisions. And everyone (including you) will get decisions wrong from time to time.
So if you want to scale successfully, you need to reduce the amount of decisions that are being made in your business on a per-employee basis. Otherwise you’ll end up like the public service. And nobody wants that.
The way to reduce the amount of decisions is to introduce process.
- “How do we on-board clients?”
- “Oh we have a process for that…”
- “A customer just complained?”
- “Yep we’ve got a process…”
- “Let’s get James set up and started?”
- “There’s a fire in the office”
- “That sounds like a unique situation that needs my attention.”
I’m getting carried away, but you can see how failure to introduce process adds so many decisions to the day-to-day.
The lesson here is once you’ve figured something out, you’ve got an asset. You’ve done all the hard work. So now turn it into a process so anyone in the organisation can take it off the shelf and apply. They don’t need to make a decision — they just need to apply a process.
And here’s the kicker: Decisions take up a huge amount of time and energy. We can only make so many good decisions a day (it’s known as “decision fatigue”). Save your team’s decisions for things that are high value, and relegate the rest to process.
4. Failure to trust the data
To recap: As the company scales up, there’s more decisions that need to be made. We’re getting rid of as many of these as possible with process (3), and we’ve got a simple strategy (2) that allows good decision making by all. But there’s still a load of decisions that do need to be made by someone in the business.
So how do we make sure that people are making good decisions, and that we’re on track? Basically there are two solutions: trust or data.
Trust means you believe your employees are fundamentally good people. Good people who want the business to succeed. They are good people who will make good decisions.
Data means you need to measure. You monitor the performance of the business so closely that you know if anything is going wrong.
Most businesses are closer to one end of this trust-data spectrum than the other. But what I find really interesting is that companies who scale fast are doing both simultaneously.
They have both a huge amount of trust across the business in employees and direction, but also a general recognition that everyone (including leadership) makes bad decisions from time to time. There’s a shared understanding across the business that data helps everyone assess their performance objectively.
As a great CEO of a medium-sized organisation put it to me recently: “The fact that we’ve got great real-time operating data gives me the confidence to put people into positions where they will fail occasionally… It doesn’t worry me because the data means we’re going to see it at an early stage and get other people across the business volunteering to help out.”
If you want a culture of trust, you need to have great data. And if you want to scale, you need both. I’d love to hear your thoughts. How do these four reasons that leaders fail to scale up compare to your experience?