When talking about business reinvention, we tend to focus on the big company’s need to rethink their strategy. The fact is that even young companies have to face the challenge of “transform or die”.

When a company is first started, it often focuses a lot on survival and how to find enough customers to sustain its business. Only 4% of the U.S. companies ever reach $1 million in sales. The few who

make it to the next phase soon realize that they have other challenges that are equally daunting, such as “how to scale up the company to meet the growing demand and navigate increasing complexity?” Leaders have to find new ways to drive and manage growth while making sure the organization that is growing in size is moving in sync.

The Don’ts

But are all businesses scalable? Juli Between, Managing Partner of Pivot Point Partners doesn’t think so. She pointed out on the Business Reinvention show that companies sometimes fail to scale up because they made the mistake of focusing only on products and not enough on building necessary infrastructure to support the growth, or favoring loyalty over performance. Good leaders understand the importance of diversity and don’t not just hire people who are similar to themselves.

At early-stage companies, the leaders often have to wear multiple hats and work on tactical issues. But as the company grows and new talents are brought in, the leader must shift their focus to develop strategic and system thinking while delegating more and more of the tasks to his or her team. This is one of the biggest leadership challenges I observe when working with fast-growing companies. Leaders who are unwilling to delegate could risk being too task-oriented and failing to see the big picture and set a long-term vision to drive growth. When leaders spread too thin, they slow down the decision-making process and prevent their companies from responding to the market change quickly. This often demotivates their best performers who are eager to help the company make the leap to the next level and hungry for new challenges. Leaders risk losing their best performers when they don’t delegate and give the employees the opportunity to grow by taking on new responsibilities.

The Do’s

1. Establish Key Performance Indicators – Having a scoreboard builds a great foundation for the leaders to communicate their visions, create alignment, identify opportunities and set priorities.

Betwee suggests that companies track financial indicators, customer satisfaction which includes customer adoption and retention, operations efficiency, technology performance and talent management. Because having great talent is the key to growth strategy, I also encourage leaders to review their leadership team and ask if they would rehire the executives – why and why not. This helps the leaders identify the organizational gaps as well as talent development needs.

2. Develop System Thinking – I once asked Craig Barrett who was the CEO and Chairman of Intel, how to keep a company innovative. “Get out of their way!” was his answer. It may sound over-simplified and counter-intuitive but it is in fact words of wisdom from an executive who successfully positioned Intel to be the market leader following the dotcom bust in 2000. This is particularly relevant to executives who are leading company transition from a small organization to a growth engine. As the company grows, the leader’s job is to make sure the company has the infrastructure to support business growth as well as talent development so the employees can do what they do best and focus on growing the company.

Leaders should shift from “telling to listening”, said Nanette Miller, West-Coast Partner-in-Charge at Marcum LLP who has worked closely with start-up and emerging companies. Listening to and learning from employees and customers help leaders develop peripheral vision to understand the overall market and company dynamics. Having system thinking is the key to developing strategic thinking and essential to creating a winning long-term vision for the company. Empower your employees to do the other tasks so you can focus on the big picture and not get buried in the details. Include your leadership team when working on the overall company strategy.

3. Hire Slowly and Fire Quickly – A good strategy only accounts for a small percentage of your success. What’s even more important is how well the strategy is executed, and having the right talent is the first step to ensuring successful implementation.

Great leaders know how to pick the right talent who shares the same values and can complement their own strengths and weaknesses. They “look for people who are better than they are but share a common set of values”, said Daniel Isenberg, Adjunct Professor at Columbia School of Business.

Many companies rush to hire new talent to cope with the increasing demand. Few take the time to craft a good job description and think through qualifications and qualities needed to succeed in the job. In some cases, companies fail to redefine the job and continue to use old job description after the role has evolved. If you don’t know what you are looking for, chances are you won’t find what you need.

Another challenge growth-stage companies may face is that they sometimes outgrow their employees. Some employees or leaders thrive in a small-business environment but struggle in a more complex organization. As the company grows, they are no longer the right talent for the jobs that they have been in. Sometimes an employee’s performance goes from good to bad because (s)he does not understand the changing need, or does not have the skills needed for the new role. The manager needs to step in and help develop new skills by providing coaching or training programs.

If the employee is not coachable or is not interested in the new skills or responsibilities, the company can offer job rotation opportunities to move the employee into a role that is more suitable for him. If there are no other opportunities for the employee, the company may have to consider letting the employee go. This is a very uncomfortable situation. Some leaders choose not to deal with the problem. Over time, the low performance affects the morale and efficiency, and creates a toxic environment. Instead of fearing the potential consequence of firing an employee, the leader must also consider the price the company has to pay for not dealing with the problem.

4. Strengthen Leadership Skills – Most discussions about growth strategy focuses on management skills and financial discipline. What’s also critical is for the executive’s capacity to  adapt to change and take on new challenges.

Developing a strong self-awareness is the foundation to great leadership, particularly in the time of change. As the company begins to experience growing pains, the leader has to be alert and sense when the old way of doing things is no longer effective. If the growth is changing your organization, it’s not hard to understand why the leader may also need to adjust themselves along the way, either their management style, the frequency of communication, or the way of they look at the market. Leaders have to tune in to the internal and external environments around them so they can be aware when the need for change arises. It also helps to work with an executive coach who help leaders see their blind spots and serve as a thought leader.

In addition to trust and team building, leaders should also hone in their skills to inspire others. In a fast-growing environment, the employees are often asked to do more with less so the leader must be able to communicate a compelling vision to motivate the team to work towards the goals despite lack of resources and certainty.

But most importantly, enjoy the incredible journey.  Scaling your business will not only teach you about leadership but also help you grow as a person.


About the Author: Nancy Lin  is an executive coach and a business consultant at Change Agent SF.  She is also the host of the Business Reinvention show on Voice America Business channel. She works with leaders at growth-stage companies to transform the way they look at their business and leadership. Nancy brings to her executive coaching and podcast a strong understanding of business, having worked for Yahoo, DHL, Johnson & Johnson and Pepsi. You can reach her on Twitter @BizReinvention