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From founder to leader to CEO - an extraordinary journey

For the founders we invest in the transition from founder to leader and CEO - perhaps ultimately of a listed company - will surely be one of the most profound transformations they will undergo. Some will have previously held significant leadership roles but for others, this will be the first time. And few, if any, will have successfully navigated the the kind of journey they anticipate when they take investment, perhaps growing a business from ten people in a single room to more than 1,000 people on multiple continents.

Laying the leadership foundations for high performing teams

At an early stage, the fundamental principles of a high performing team are clearly visible. The small fast moving start-up with 10 to 20 incredibly smart people are in the same room - perhaps at the same table - and healthy debate abounds as they rapidly test, learn and iterate. Their commitment is through the roof. Everyone knows who’s doing what and delivery is everything.

More importantly they all know why they are at that table and what problem they are setting out to solve. They all know what needs to be done, work incredibly well and hard together and there is little or no confusion. Of course, none of this is written down. Why would it be, it’s implicitly understood.

Then the team raises money and new and senior people join the leadership team, the company grows fast and many new employees start. As the business scales, new employees may not even be in the same country, let alone around the same table. Now what was implicit and obvious, is lost.

“As the company grows, so too does temptation. We want to get things done, but we forget that more people are joining every day, and we lose the attentiveness we need to the core behaviours that are critical to our success”, says Mike Snelling, Principal at The Table Group.

“Leadership and teamwork is not about mastering sophisticated theories, it’s about applying common sense with uncommon discipline. When we see companies growing fast, that uncommon discipline can start to wane.”

Freedom in a framework

Building teams and leading companies that are designed to win while growing fast is not just about how smart any one one person is, or even how smart the collective are. It’s not even about how innovative the product, or how great the salespeople are. It’s about giving people the freedom to make decisions and to get things done in line with the company’s goals and behaviours. It’s about trusting people on the leadership team, and more importantly the wider organisation, to make decisions with the freedom to act within a framework that is critical to success.

Taking care of the people comes first and foremost and is by far the hardest part of scaling a business. Creating the “freedom in a framework” is predicated on four questions and accompanying mental models designed to make what was implicitly understood, explicit:

1. How do we build cohesive teams?
2. How do we create clarity?
3. How do we maintain clarity as the company grows?
4. How do we remove obstacles and distractions?

“One of the problems we see is that incredibly intelligent and articulate leaders try and over intellectualise leadership. If you are aligned on a set of principles you can hire brilliant people and say - “anything you do in line with these principles and within this framework it’s up to you, we trust you”. That’s how you create scale, that’s how you create lift and align a large, fast growing and widely distributed organisation without being pulled into operational problems.” Mike Snelling.

• BUILDING COHESIVE LEADERSHIP TEAMS

The starting point is to reflect on the behaviours of that founding team, sitting around the kitchen table.

1. Build trust: that founding team was small (less than ten people) had complete trust in each other, built on openness and vulnerability. They’d seen each other sweat. They’d demonstrated vulnerability through the honesty to say “I don’t know” or “I made a mistake”. That level of trust is hard won and the foundation of any great team, but easily lost.
2. Encourage open and honest conflict: They trusted each other so they naturally entered into the honest unfiltered debate, which is vital in order to stress test decisions and move fast.
3. Commitment: everyone had the chance to be heard, have been given the opportunity to debate and discuss and so it was simple to gain commitment. NB This is another reason why leadership teams should be small enough to give everyone the room to be heard.
4. Accountability: they held themselves to account. Decisions have been discussed and debated, commitments made, so action needs to be taken.
5. Results: as a team they focused on collective results of the organisation, not just their own area of responsibility.

More insights on building a cohesive leadership team from The Table Group.

Trust is the foundation, without that the level of communication and work required to align a team is enormous if not impossible, and then consider how that plays out across a wider organisation. So these aren’t just principles to apply to the senior team, they apply across the organisation.

2. CREATING CLARITY

The ability to convey a simple and profound message is a characteristic we associate with great leaders from history, such Winston Churchill or Martin Luther King - their words echo loud and clear down through the years. But this ability to communicate clearly on what really matters to you and your business is not about great oratory, it is about focusing attention on what needs to be understood and then making sure it’s heard.

These are deeply personal and human skills that will help you attract great employees, customers and investors. Again turning to The Table Group, their playbook for ensuring the leadership team is intellectually and emotionally aligned is as simple as it is concise:

1. Why does the organisation exist?
2. How do we as a team behave?
3. What do we do?
4. How will we succeed?
5. What is most important, right now?
6. Who does what?

More on creating clarity here.

Being explicit about your vision means you are far more likely not to deviate and allows to create the clarity that will resonate two to three layers down in the organisation.

This framework is also particularly helpful for very early stage companies who are scaling their leadership teams and facing the challenge of title inflation - the CRO, CMO, CTO, CPO - this framework focuses the team on the strategy to succeed, the things that really matter and only then who does what.

3. COMMUNICATE, COMMUNICATE, COMMUNICATE

Thinking back to great leaders one is often struck by the repetitive nature - how often a speech is repeated and how often the message within a speech is reiterated.

So the simple call to action here is to communicate to employees over and over and over and over and over and over and over again. It is reported by The Table Group, that employees won’t believe a leader’s message until they’ve heard it seven times, we are all of us sceptical about what we hear unless we hear it repeatedly over time.

How do you know when your over-communicating? Simple – when your reports can do a great impression of you then you will know its about right.

So top down, bottom up and side to side, communication and transparency built on trust are critical.

Many companies will communicate decisions made by the board down through the business - the simple discipline beforehand is to always gain commitment and alignment from the board before cascading messages across the organisation.

“As a company grows, communication becomes it’s biggest challenge...But without trust communication breaks…” says Ben Horowitz, from The Hard Thing about Hard Things. He goes on to elaborate that communication isn’t only for the good stuff, he urges CEOs to share the bad news too.

“In order to build a great technology business you need to hire lots of incredibly smart people. It’s a total waste to have lots of big brains but not let them work on your biggest problems.”

4. GET OUT OF THE WAY

You’ve hired great people and built a business based on trust, transparency and communication. You’ve provided a framework within which people can make decisions. So what now? “Simple”, says Mike, “get out of their way to let them run the day to day business and focus on the big stuff”

“Every leadership team needs to work itself into a position of idleness. Not to get the golf handicap down, because you have such cohesive teams that are incredibly clear and an incredible space in which people can get things done. And then as a leadership team you can have the most incredible conversations about the future of the business and solve incredibly hard - but different - sets of problems.

How do the best founders make the transformation?

1. Find people to listen to. Don’t think you need to exist in a bubble. Listen to others with relative experiences and build a strong network of mentors and advisors.
2. Keep your leadership teams small. There is plenty of research that demonstrates that teams of 8 to 10 are ideal.
3. Surround yourself with smart people and then focus on creating a healthy organisation - minimal politics and minimal confusion, high morale and high productivity, low turnover and low stress.