Leading a Business Through Its Stages of Growth
In the past 10 years it has become increasingly clear that the quality of leadership is one of the key determinants of the success of an enterprise.
In the past 10 years it has become increasingly clear that the quality of leadership is one of the key determinants of the success of an enterprise. It is rare now when any enterprise can long maintain a significant advantage in technology or information or product. Yet some companies are able to sustain superior performance over a long term. Research has consistently demonstrated that these companies have superiority in leadership and the ability to motivate employees and customers.
But leadership can appear differently at different stages of corporate growth. This article attempts to define the characteristics of leadership that produce superior results at each stage of a company’s development.
Once upon a time change came slowly enough that businesses could thrive by setting up systems and managing to be sure that people in the company followed rules and procedures. However, in the fast-changing environment that nearly every company now experiences, managing is no longer sufficient, and leadership is the key to persistent performance.
Management vs Leadership
What Managers do:
What leaders do:
Vision the future
Appeal to basic human values & emotions
As companies grow through different stages, they need to call on different leadership skills to continue to thrive.
1. For a company in its earliest stage, the key leadership skills are inspiring confidence in the vision that the business will succeed for investors, employees, and customers. This is the stage where a single individual can usually lead the company with great success. The interpersonal skills of a leader at this stage can often be overlooked if they are creating enough momentum.
2. As the company moves past its launch and begins to focus on growth, things often start to break down. This is the emerging stage. One person can no longer manage all the critical functions much less lead the business through this stage. The effective leader at this stage needs to pull together a team and define roles for them so that he can focus on keeping the business profitable and growing.
3. In its third stage a company encounters accelerating complexities. To thrive in this period there needs to be a strong team who are motivated by the vision of the leader. The business needs more formal systems at this point but the systems need to be managed by an executive team not by one leader.
4. In its fourth stage, the enterprise is now a large enough company that it needs mature systems and a well aligned leadership team. They all need to be focused on driving vision and building competitive advantage. This stage requires a different type of leader than the stages before.
It is extremely rare that a single founder can lead an organization smoothly through all the stages of growth. At each stage the existing leadership needs to do an honest assessment of what skills they have and what gaps need to be filled. The most common stumbling point is for a company founder who is not able to see their own weaknesses as they evolve into an emerging or mature organization. Most business founders do not realize that the leadership assets that helped them start a business, likely won’t meet the eventual needs of their emerging enterprise.
At each transition point, an outside trusted advisor or new internal leaders are invaluable to bring the perspectives needed to successfully navigate and deliver continuing success. Many business founders don’t realize that their leadership assets likely won’t meet the eventual needs of their emerging enterprise and if they do not find appropriate people to ask for help, they will usually experience more pain than they could anticipate.
* Andy Snider is a Standish Letter guest contributor. He is an executive coach and consultant with decades of effective leadership and organization building experience. Andy can be reached at his business advisory practice Andy@SniderAssociates.com. www.sniderassociates.com