Biz Doc: It Has Come To This

Crossing The Chasm Into Mid-Stage Growth

August 2014

I was recently encouraged to elaborate on the shift a startup CEO goes through when their company has reached the meaningful revenue-generation stage and can see profitability on the horizon.  That’s a book!  Nonetheless, in response to that urging, here’s a basic top-line look at my perspective on the topic.

For those that know me, some of this is repetitive or verbatim from the About Page of my blog.  Anyway, one of my passions is to enable founder CEOs to calibrate their focus and execution as they drive the enterprise value of their business past the early stages of its life.  These CEOs typically started out with an idea and about three years later, perhaps after a pivot, are successful but feel trapped inside the business by HR, Operations, Finance, etc.  These leaders often express a desire to get back to personally driving a key part of the business “like in the early days.”

For founders, this point is often where the start-up has become a ‘going concern’ and is growing in its sector rather than blazing the initial trail.

In the life cycle of any business, there are a number of perfectly normal chasms to be crossed.  For start-ups that are moving into mid-stage life as established firms, this often means crossing the chasm from early stage team to an organization optimized for growth.  It also may mean that it is time for the CEO to think about a COO.  Why a COO?  I elaborated on the importance of a #2 in a previous post found here.

NOTE: optimizing the organization does not mean suddenly hiring a bunch of people and spending tons of money (which can also cause investors and board members to hyperventilate over the new burn-rate).  It does mean, however, that the org chart may require distinct changes to be prepared for next-stage growth.  Egos must be set aside as the skills of everyone in the organization are objectively considered in addressing two key issues:

  1. TEAM NEEDED: What additional skills are required to deliver specific results one-year and two-years from now?  This requires a careful and realistic preparation and review of a strategic growth plan to assess what the most effective AND dollar-efficient organization looks like.  This also may mean re-drawing the org chart with fresh eyes and seeking external perspectives.
  2. SKILLS AVAILABLE: With #1 on the table, evaluate if the needed skills are present among the current team.  Can they reasonably and objectively be developed in the near term?  If not, what are the best roles for those current team members?   This is sensitive, particularly in the face of the great temptation to reward early participants with titles and roles that are often beyond their skills and capabilities vs. placing them in the optimal positions.

If executed properly, three things happen:

  1. The CEO is sequentially and meaningfully enabled to devote more and more of their time to what they do best – be it product or business development – and drive the value of the enterprise from those role(s).
  2. The CEO is also freed-up to ‘be the CEO’and lead the team including the important casting of the business vision and mission without being distracted or embroiled in more granular operational issues.
  3. The management team has a specific organizational hiring plan that is aligned with the strategic growth plan (typically labelled “Rev 27” ha, ha) and they are accountable to the CEO to execute it.

In stepping back, the foregoing may seem like an over simplification.  In reality, this process must be carefully managed as myriad issues loom around the reasonable feelings of early stage participants and introduction of new team members, often in senior positions. Sensitivity and communication in the planning process is vital.  This should include 1:1 lunches with key individuals where clear decisions are presented along with highly encouraging feedback.  A little patience is in order as well – my experience is that the process takes 60 to 90 days from start to full buy-in by the management team.

The foregoing should a long way to ensure the trip across this particular chasm is a success.


Leave A Reply

Your email address will not be published. Required fields are marked *