At Notion we’re reasonably obsessed with leadership. Of course we invest in software trends and their accompanying emerging technologies, but the leaders of the businesses that we work with are usually the ultimate piece of the decision-to-invest puzzle.
“The increasingly fast moving and competitive environment we [face] in the twenty-first century demands more leadership from more people to make enterprises prosper” – John P Kotter, Emeritus Professor, Harvard Business School
So how do we assess the strength of leadership teams of our portfolio, not only at investment stage but throughout the startup to exit journey, and how do we isolate the areas in the leadership teams that need support?
We look at a number of different dimensions, two of which are leadership debt and leadership gap.
Leadership debt is a measure of the ability to execute. It’s the debt between getting things done competently and getting things done at a speed and quality that’ll take you from $0 to $100m ARR in six to ten years. If that seems like an arbitrary choice of timescale, it isn’t – our friends over at Play Bigger explain it really well here.
The Leadership Debt is largely about the stretch of the individual; is your CMO able to amp up their action to capture a billion dollar category whilst keeping the plates of sales leads and digital marketing campaigns (and everything else) spinning? When the founder tells you he’s hiring a CRO and pushing the GTM does he do it? Debt can be measured in the style of NPS: ‘What do you score this person from 0 to 10?”.
Leadership gap is a measure of competency blind spots. Which elements of the org chart have world class talent, and which don’t? Does your CPO have amazing abilities to understand customer needs but struggles with prioritisation? Even more obviously, are you simply missing a CPO and your CTO/CEO/COO can’t cover the product needs? Should we bring in a chairperson?
The gap is a question of the individual and the team combined, which makes it harder to measure than debt. It doesn’t always require the hiring of new people, which also makes it tricky but not impossible to figure out.
Fluid vs Fixed
The above model has a mix of fluid and fixed requirements.
The fluid aspect considers that every founder should be constantly evolving the team as the business scales through various stages. Having an ARR sub $10m will likely need a different mix of skillsets to that of >$30m, for example, as will the needs of expansion into different geographies.
With regards to the fixed element: there is always a need to map debts and gaps accurately at every point in the growth trajectory. Being able to fill the leadership shortfalls with new hires or training is, as a founder, is one of the most valuable things you can do; it’ll reduce your blind spots and give you the headspace you need to do your job: raise the next round and take the business global. But that’s another topic for another blog….