Scalability – the potential of a business to continue to function effectively as its size increases – is essential for sustainable business growth. Scalability therefore looms large in any discussion about business models. If you want to grow your business, the first question is: do you have a scalable business model?
Companies pursuing scalability typically focus on financial, technological or physical resources. However, discussions about scalability often fail to address the human side of scaling a business. We believe that the financial, technical and physical resources required to scale a business, although certainly not easily obtained, are more available than the most scarce resource today – talent.
Scarcity and the price of talent
For years, we've been imploring clients to aggressively compete for talent. Apparently business leaders have now understood, because talent is becoming increasingly scarce. And we all know what scarcity will do to the price of talent.
This is all the more reason for CEOs – especially those concerned about scalability – to commit to developing their people through coaching and teaching.
Why the CEO must be a leader of leaders
One of the six major roles of the CEO is that of coach, which involves all the ways that you can help your people develop professionally. And for key executives, as with the CEO, one of the major challenges is to become better leaders.
Scalability requires the CEO to become a leader of leaders; to not only practise leadership but to teach leadership as well. For many, this means learning a whole new skill set and developing the willingness to go beyond their comfort zones.
But for entrepreneurial business leaders, the reward for this clarity, focus and commitment to the CEO role is the ability to continually scale or grow your business.
The good news is that numerous resources are available to help CEOs accomplish this challenging task of becoming a leader of leaders, thus ensuring the scalability of their business.
Six key roles of the key executive
Like CEOs, key executives in entrepreneurial companies have six essential roles. Some of these coincide with the six essential roles of the CEO, while others reflect the more operational nature of the position.
- Co-strategist. First and foremost, key executives must contribute to the development of strategy. They must use the knowledge and information they gain from their critical vantage points to help set the future direction of the company.
- Team leader. Like the CEO, key executives must make the difficult transition from functional expert to leader. They may go kicking and screaming, but you must drag them out of their familiar, comfortable, functional roles and into this new, ambiguous and demanding role of team leader.
- Content expert. In their specific areas of knowledge or expertise, key executives need to bring global best practices to bear on the current, everyday practices of the company.
- Champion of change. Key executives need to beat the drum, wave the flag and point their people in the right direction, while constantly reinforcing the vision of why the company must go forward.
- Role model. Key executives must march shoulder to shoulder with the CEO, living the values that are spoken for the company.
- Student. As with the CEO, key executives must engage in continuing professional development – but as students of leadership, not of the technical/functional turf they manage within the organisation.
The true drivers of scalability
To scale the business, CEOs need the input and contributions of key managers and executives.
If your key executives are not sharing ideas and giving suggestions for new products and services or new markets and distribution channels, their lack of input should become a major topic for discussion in your CEO/direct report one-to-ones.
Make sure that the one-to-one is used for discussion of strategy, both long term and big picture, and not just for day-to-day operational issues. A major challenge for key executives (and indeed the rest of us) is that we can become victims of our own success. We want to continue doing what has worked for us in the past.
As CEO, you need to challenge your key executives to get outside their comfort zone and technical/functional ability and move more into the leadership role. The one-to-one is the ideal place to have that conversation.
Scalability and middle management
Another major challenge to scalability is the middle management team below the senior team members. A major bottleneck for growth can occur if talent development, coaching and supervision are not used at this level.
To prevent this bottleneck and improve scalability, senior executives must do with their own team members what the CEO is doing with them: focus on developing their people beyond their technical/functional roles.
Driving communication and speed
For growth to occur, decision making must be pushed further and deeper into the company. That means more decisions, better decisions and quicker decisions. This will drive communication and speed to the customer, and contribute to developing a culture with a strong sense of urgency. It will also allow for a major strategic differentiation of speed with quality, which will be a leading contributor to the scalability of the business.
We don't equate teams with good morale or improved satisfaction or any of the other common descriptors. Instead, we equate teams with the degree to which the group can diagnose a situation, make a decision, take action, and learn from the results. In order to perform at this level, the team must surpass the barriers to communication of mistrust, lack of candour, politics and other interpersonal issues. Such an environment allows for decisions to be made, for the customer to be the focus, and for execution to be the norm.
Ultimately, innovation, strategy and execution drive scalability.
However, these can only occur on a consistent basis when leadership, talent and talent development are inherent ingredients of the culture. Because the CEO is the architect of the culture, it comes full circle to the clarity, focus and commitment he or she has to the true role of the CEO.
Overcoming the psychological barriers to scalability
The question immediately arises: if the benefits to scalability of clarity, focus and commitment are so strong, why aren't more CEOs involved in this process? We believe the answer has to do with the psychological barriers CEOs face as they attempt to scale or transition their business.
Personal change often gives rise to doubt, procrastination and projection. As human beings, we much prefer to go back to where it feels comfortable and where we know what we're doing.
How can you get past this human tendency to retreat into that safe space? Through introspection, candour and responsibility. This involves four steps.
- Create your high performance profile. Have a "fierce conversation" (to quote Susan Scott's book title) with yourself. Identify your personal leadership style by looking at your career as a leader. Pinpoint three of your successes and three of your failures, especially relating to major transitions in a company, department or assignment. Analyse these experiences for their commonalities and ask: "What kind of patterns emerge? What consistencies are present?"
- Test your profile for accuracy. Take your profile to people who know you well and can be brutally honest with you. See if your profile corresponds with how others actually see you. Make sure you are creating a real and not a hoped-for or idealistic profile.
- Understand your scalability challenges. Use your profile to analyse and understand the challenges of scalability that you face. What are the strengths you bring to the situation? What are the limitations? Where are your doubts and anxieties likely to occur? Does this lead to procrastination on your part? Do you have a tendency to project blame onto others rather than taking responsibility for yourself?
- Forget about what other CEOs would feel or do in this situation. This is about you. A basic premise of psychology is that once you own a feeling state, you have much more choice in what you do with it. Denial clouds the process and is a leading contributor to procrastination.
- Create and commit to an action plan. Once you understand your personal leadership challenges, share them with your trusted advisors. Have them help you create a realistic action plan and invite them to hold you accountable to the plan.
Keep in mind that progress will not always be linear or rational, but it will occur as long as you stick with it.
When you stay resilient and committed, the rewards can be profound and enormous. You can become a true CEO, a leader of leaders. Most of all, you can continually scale your business and have the success you want and deserve as a CEO.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
