In the last 14-odd years, I have been working with a lot of intensity for multiple startups in different phases of growth. Different phases of growth presented entirely different sets of problems. In the beginning, the relationship between the nature of the problem and the growth phase wasn't evident, but gradually, patterns began emerging, and it was possible to anticipate the kind of issues one would have had to grapple with if the growth trajectory continued. At about the same time, I accidentally came across an HBR article by Larry Greiner that described this process very elegantly. If there was something called principled envy, I wish I was the one who had figured this out. The accidental discovery of this HBR piece made me realise that pretty much anything that matters in any domain has already been understood, articulated, commented upon…and eventually forgotten…to be rediscovered serendipitously by someone at a time where its relevance again matters!
In this post, I will talk about what startups, and more so the founders, need to do to navigate the scale-up journey.
• A founder (by him/herself or with the help of a co-founder) always starts off with an interesting idea that either solves a problem or helps people do something new altogether. At this stage, it is the idea that matters. The founder must demonstrate an ability to hire the people that can build and market the product. The skills needed boil down to having the basic knowledge of how to build a product, and having the networks to bring in the people who could create and market a prototype. This is really the first phase, namely, “growth thru’ an idea”.
• By the time there is a reasonably good product-market fit, the founder would have invariably learnt several lessons – on what works and what doesn’t. Getting the product-market fit is the first success. This success has come about because the founder took some correct decisions, made some great calls, and also made some mistakes along the way. This process typically infuses a lot of confidence in the founder/s, and this is when the seeds of culture (“this is the way we do things around here”) begin to take root. Culture is built on success. Always. By this time the startup has successfully navigated the first stage of growth, and entered the next phase - “growth thru’ direction”. In this phase, you have a confident founder (sometimes may come across as a little cocky) surrounded by a bunch of smart doers who look up to the founder for direction and guidance. The decision-making process is still as quick as in the first phase even though the founder continues to be the key decision maker. This is largely because the organisation is still small, and there is not sufficient debate or contrarian points of view that need to be addressed. There is no one with a contrarian point of view. The founder’s word is gospel at this stage. No leader with a mind of his/her own would like to be a part of the firm at this stage. To get to the next phase, the firm must be able to attract leaders whose point of view is shaped by their own experiences, can push back, and can accelerate the journey by multiplying the thinking and execution horsepower.
• If the product-market fit is great, and resonates well with the users, they can actively advocate the product,and if the team executes well, the startup begins to move into the scale-up phase. The next three phases are the different nuances of the scale journey. Those interested in what each of these three phases specifically entail can read this
As a founder, what should I do to manage this transition?
The skills needed to create a company are clearly very different from the skills needed to nurture a company through adulthood. Some of these skills can be learnt. Sometimes, the founder might take a call that he/she is not the right person to lead in the next phase even though he/she may have done an outstanding job in the first phase, and hand over the baton to another person and take on a different role in the organisation. While the first phase is about create and conquer, the next phase is about empire building.
Identifying the best-ever is a favorite pastime for many people (e.g. the ten most talented soccer players of all times or the all-time-best baseball players). Once in school, our history teacher asked us to come up with a list of the ten best kings. When we debated this, we soon concluded that for a king to be on this list, he must have demonstrated two abilities – an ability to think unconventionally and drive change as well as an ability to build institutions and coalitions that result in longevity of the empire. We found examples of kings who were good at one and not at the other. There were a handful that were good at both and they were the ones that made the list. This exercise was extremely satisfying and illuminating, because of the broader lessons it held.
Making the transition for a founder is about learning to be an empire builder from being a creator/conqueror, without losing touch with the skills that can create and conquer!
I have put together a table that describes specifically (as specific as possible) what founders need to do to manage this transition.
As a founder, this knowledge may not necessarily equip you with the know how to make a smooth transition, but knowing what it takes to bridge the gap makes the journey far more simple.