Some years ago, I was advising two of the most impressive entrepreneurs in the country. They had built an amazing national brand and were going from strength to strength in terms of geographic coverage, revenue and customer numbers. But, they were having challenges managing the business now that it was so large.
They explained: “We’re not having fun anymore. Running a business from this stage onwards isn’t what we’re good at.” They ended up selling the business and embarking on a startup journey in a different sector. I was shocked, but I came to realise they knew who they were and had made exactly the right choice.
Recognising your strengths and weaknesses as a leader is vital to the success of any entrepreneur, and knowing what kind of leadership skills are required for each stage of your business is central to this.
The five stages of business development
While selling won’t be the right decision for every entrepreneur, businesses tend to move through five, healthy stages.
Firstly, there is emergence. This is simply about having a vision, something you care about creating. At this stage, you don’t even need proof that the business can succeed. Passion and imagination are enough.
The second stage is viability. This is all about winning enough revenue and bringing in enough cash to cover your ever-mounting, short-term liabilities. It is essential at this stage to sharpen your customer value proposition, and have the energy and hunger to go out chasing customer growth.
Then comes the sustainability stage. Matters such as organising, human resources and capital often become very important at this stage.
The fourth stage is maturity. The dominant concerns here are budget, and ensuring that everything is underpinned by robust systems and processes.
The fifth is less obvious, but faced by most organisations – reinvention. This comes from the recognition that the company is at risk of moving from maturity to decline or decay. In a sense, it is a return to the stages of emergence and viability – creating new vision and new customer value.
As your business evolves through each stage, your centre of gravity moves and there are new requirements for leadership. Emergence requires visionary leaders. Viability requires adventurous leaders with a hunger for customer acquisition. Sustainability needs explorers and builders, the kind of people who can design something for ongoing health. And maturity requires administrators – people who can make things safe, smooth and efficient.
When you move to reinvention, you may need to shed some administrators to make room for visionaries. When Apple fired Steve Jobs, they were essentially abandoning his visionary nature for the organisation’s stage of maturity. This was a mistake. There is a need for visionaries at every stage of business life – it’s more a question of what centre of gravity you need. When Apple re-hired Steve Jobs, they recognised that it was time to reinvent. This required applying the defibrillators to an almost dead patient – in other words, replacing some of the administrators with an exceptionally visionary person, and shocking the organisation back to the style of business associated with emergence and viability.
Knowing when to take a step back
Some entrepreneurs can go all the way on this journey. The likes of Bill Gates and Richard Branson are visionaries who also have the versatility to embrace other leadership styles, and to ensure they update their leadership team to match the next stage of maturation for their leadership.
Some entrepreneurs can stay with the business, but should stop at being the CEO. A business colleague of mine was the CEO of a tech startup. He had been the mastermind of the core software, and was a compelling speaker to customers and international private equity firms. But the more the company grew, the more it needed strengths associated with managing systems, processes and tasks that were difficult, but required little by way of vision. He and his funders realised that while he would remain the leader of the organisation, someone else should be brought in to be the centre. This was central to the eventual, global success of the business.
Finally, some entrepreneurs should leave the company altogether. This is not a failure. This is a recognition that very few of us are suited to running a company in every stage of its life.
Working out when you should stay or go requires awareness in two ways. First, you need empathy for your business. You need to understand that its requirements are not static. Your business is your child and you need to appreciate that the way you raised it as an infant must change as it becomes a child, an adolescent and finally an adult. You may not like administration, but there are essential systems and processes for an organisation with 5,000 employees, that weren’t required for your start-up. Failure to appreciate this will either constrain or doom the company.
The second is self-awareness. You must understand what life stages of a business you are suited to leading and how narrow or broad your range is. There is no shame in recognising that your style means you can go all the way as CEO, but will need complementary members of your leadership team, or that you should move sideways so that a CEO can come in, or that you should leave altogether. Some great business creators just aren’t CEOs. And some who are great small/young company CEOs are lousy large/mature company CEOs. (It’s also true the other way around.)
Recognising who you are as a leader and what your company needs for its prosperity, then implementing the most suitable leadership team for those circumstances, is a mark of wisdom and self-insight. It is doing what is best for both your business and yourself.
About the author
Anthony Mitchell is the co-founder and Chief Potential Officer of Bendelta, focusing on designing organisations and leaders for the cyber-physical age. He is also Chairman of the Aurora Education Foundation, providing accelerated development opportunities for Australia’s most promising Indigenous scholars, and a member of the Amnesty International 2020 Council.