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This series explores how leadership focus and skills must evolve as a company grows from a raw startup to an expansion stage successful enterprise. Last time we looked at leadership challenges at the formation stage of a raw startup (If you missed the first part you can read it here.) This week we will look at the appropriate leadership style in more depth for a Stage 2 company. Stage #2 Leadership Focus Keys At this stage of a company's development the focus is shifting from product design and development into a mode of "selling" and delivering the product to the first customers. Convincing customers to take the higher risks to work with a new company is no easy task today. Since the bubble popped, corporate managers are reluctant to work with new companies because they have learned about the high failure rate the hard way. CEOs must have the ability to sell their vision to the target customers at this point. The CEO must lead the way and be directly involved in customer contact here. They must know all the information needed to prove the business model and make adjustments to the business and this only happens with direct customer contact. It is likely at this stage that there is still much to learn about the business and that lots of customer input will be needed to optimize the business model. You must make these decisions; no one else will have the breadth of experience and wisdom to do this as well.
The second additional leadership key at this stage is the ability to select the right people. This can only be learned through experience and if you have not learned to do it you probably should not be starting a company yet. However, there are ways to alleviate this risk using testing and the experience of others. You also need to correct mistakes in hiring very quickly. The first twenty people hired in a new company will determine the culture of the company for a long time to come. These people will hire others and lead by your example. Finding the first few experts in specific areas is actually easy compared to finding and hiring the right people across all disciplines that will set the appropriate tone and example. As Jim Collins so aptly state in the book Good to Great, "Getting the right people on the bus" is the key to success. There is no lack of proof and anecdotes showing that choosing your first people is among the most critical decisions you will make. It can even be life and death for the company. I would argue that the intelligence, personality, ethics and drive of these first people is even more important than their specific skill sets. Skill sets can be learned but personality, ethics, and drive can not be taught or forced. This leadership challenge is not just about people selection, but also about defining the right roles needed. There are many choices that must be made by the leader. Do we hire young, cheaper sales people, or do we need expensive six-figure proven superstars? Or could we do with something in between these two extremes? There are no pat answers as every situation is very different. Only wisdom and experience can manage this risk, with a good amount of testing too. There are many ways to skin a cat and many thousands of ways to design a corporate organization. I have seen people with this people selection skill succeed even though they lacked basic management skills. There is nothing more important at this stage of a company's development. Why is this part of leadership? Because you must sell the company, the idea, the culture, and yourself successfully to attract the best people. This is a leadership skill you are "selling the vision" to get employees, vendors, investors, and customers to see the benefits of working with you. This is the most sensitive time in forming a company, where even a single bad hire can mean failure, if not corrected quickly. Getting the first few people right is not that hard compared to finding twenty people that set the right example. Remember these people will effectively make all the future hiring decisions for you so weaknesses they have could be exaggerated tenfold later.
The CEO & Entrepreneur Boot Camp Next in This Series: "Stage #3 Leadership Focus Keys"
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