Achieving success as a start-up founder feels great. Your baby is up and running. You're beginning to feel the benefits of product-market fit. More customers want what you can do. More requests for your business's products. More demand.
You are terrified:
"We can't possibly take on more clients."
"I don't have enough time - I'm already working over 70 hours per week to meet current demand."
"I know we need to get more market share to deliver what we promised to the investors, but we don't have the right [insert relevant challenge... people/systems/structure... you name it]!"
When success requires you to shift gears into scale-up, you've got to start to do things differently. Where you have plugged the gaps, rolled up your sleeves, and got into delivering whatever was needed, that's not going to work anymore.
At Work Extraordinary, we work with founders to manage the evolution from start-up founder(s) to scale-up leadership team.
When working with founders in going through this transition, we see five growth traps coming up time and again. In this article, we explore the five at a high level but lookout for future articles explaining each of them in more detail.
Founder evolution growth traps
1. Not getting over yourself
Challenge one is difficult. Up to this point, you have been the driving force behind everything in the business. It has been a massive labour of love for you. It is your brainchild; your ego and identity are in this business.
You don't want anyone else to f*ck it up for you.
Most likely, this stems from your drive to over-achieve. Combined with a (un)healthy dollop of perfectionism.
So, all decisions have to come through you. You know what is best for the business. You know exactly what your customer wants. New hires don't get it the way you do. How could they? They haven't been here from the start.
You put sign-offs in place.
You demand to see work before clients receive it.
You correct others' work.
Your ego is in the way. And your ego is a constraint on the business. As you grow and expand, you physically can't be everywhere or in everything. You may try to be. But you will fail. You will be a bottleneck, and your team will grow to resent your need to control.
This behaviour bugs the hell out of people.
I know because I have resented it in leaders when I have worked in founder-led growth businesses. And I have also seen people get extremely frustrated with me when I have done it to them. That undercurrent of frustration erodes trust and undermines the expertise of the team.
You will not retain people very long if this is your style and approach. Team loss can quickly become very expensive, burning through your capital investment, and leave you trapped working in the business instead of on it. Instead of growing it.
You've got to step back. Recognise your team's unique skills and talents. It's not all about you anymore. Let your team flourish. Let them do their best work for your customers.
Lesson #1: Lead without ego.
2. Driving a culture of high-pressure targets
For decades, the purpose of business has been to make money. Generate profit. Deliver shareholder value.
And fundamentally, your investors will expect returns. You have the term sheet and financial covenants to prove it.
So you are hugely motivated to hit your growth targets. And maybe other founding members with share options will be too.
But revenue targets are unlikely to inspire and engage your people. Particularly if you've got Gen Y or Z in the team. They want purpose. They want meaning in their work.
Defining your North Star Metric (NSM) can help. This singular goal unites the entire organisation around how you deliver value to your customers. But this gives clarity - it seldom inspires and excites.
If you can create an organisational culture where your teams contribute to a higher social purpose, then every day has meaning.
And by the way, this approach provides huge momentum and energy around your growth objectives and NSM. There is loads of research proving how much better purpose-led organisations are at growing, innovating, and retaining engaged employees.
Make purpose your competitive, growth advantage.
Lesson #2: Connect with purpose.
3. Not tolerating mistakes
This challenge is mainly rooted in fear of failure. While you don't want the business to fail, the fear of it can be hugely debilitating. Intolerance of failure or mistakes stops innovation, stops new thinking, and stops people striving to do better.
Sure, you want to make sure that you are not wasting resources. Clearly, you want to avoid mistakes where possible.
But let's think about failure for one minute.
Failure is a chance to learn.
Failure is an opportunity for the team to grow.
Failure makes success much sweeter.
The way you communicate and talk about failure affects the organisation's culture and your team's behaviours. Avoidance, frustration, anger, blame will all create a sense of fear in your teams. This fear gets in the way of experimentation, innovation, and openness about mistakes.
We have heard founders stopping teams from trying something because they think it will possibly fail. We have worked with teams who were scared to try new things. We have seen much wasted effort and resources going into trying to cover up mistakes.
All because founders were intolerant of mistakes.
Instead, leadership teams need to create a climate of trust and psychological safety. Value individual contributions. Listen to concerns. Support risk-taking.
Lesson #3: Create psychological safety.
4. Mistiming the scale
To benefit from the market opportunity, founders of a scale-up need to scale. Often this means rapidly building the operating model and aligning resources around leveraging the opportunity.
As a start-up, you could pivot. You probably did, at least once, if not more.
But in scale-up mode, the focus is predominantly on accelerated resources, speed, and efficiency. How can you optimise the business model to make the most of the current opportunity?
That works if the market stays where it is. But in the highly volatile, shifting, exponentially changing new tech environment, optimisation and efficiency might not be fast enough.
We must equip teams to scale AND adapt. As you grow, it is much more difficult to pivot in a rigid structure. Creating fluidity, adaptability, and market responsiveness are fundamental to survival and growth.
Lesson #4: Enable adaptability.
5. Chasing simple solutions
We desire things that are simple and straightforward. When so much in life is complex, simplicity appears nirvana.
But people, teams, and organisations are not simple. They are complex. And in a world that is becoming increasingly more complex, changeable, variable, survival is entirely dependent on accepting that organisations are complex, adaptive systems.
Meaning they are not easy to design, manage, or control.
So, instead of tight controls, constraints, carefully engineered processes, sign-off points, complicated reporting mechanisms, embrace complexity.
Enable experimentation and adaptation.
Create multiple feedback loops.
Engage teams in sensemaking.
There will be decisions and factors that you will face where you can follow a blueprint or use existing knowledge to make the right decision. But when it comes to creating innovative, entrepreneurial cultures and dynamic organisations, your best approach is in engaging your people in:
Joint problem-solving, and
Continuous strategic development and execution.
Lesson #5: Embrace complexity.
So, there you have it. These are five growth traps we see time and again when working with founders in the early stages of scale-up. In this article, we explored the five at a high level but lookout for future articles explaining each of them in more detail.
Recognise these? Think I'm missing something? Let me know.
Adapt. Grow. Inspire.