Letting go while staying in control
Steve Cordiner’s monthly Challenger column looks at the challenges facing fast-growth businesses as they rapidly scale. In this month’s column he looks at how founders can make the transition to CEO, building a team around them and delegating whilst holding teams to account.
Sooner or later, every successful entrepreneur faces a dilemma: the business grows to a size where you can no longer manage it alone but letting go of responsibility for the business you’ve built can feel very uncomfortable.
Difficult though it can be, it is crucial to confront this dilemma. In a fast-growing business, it’s all too easy for the founder to become the bottleneck that slows progress down. For one thing, one person only has so much capacity – there aren’t enough hours in the day to do everything yourself. For another, as the business scales up, it will need more specialist skills and the benefits that can come from recruiting specialists can be invaluable to opening up an opportunity.
How do founders start to let go of some responsibility while staying in control of the direction of the business? The first step – often the hardest – is to face up to the problem. The move from founder to CEO should include an assessment of the skill gaps in their business, so roles can be delegated more effectively. This view of the business should be a functional one – if you are building an executive what will be imperative to its growth? What skill sets are lacking? It may be useful to bring in an organisational design consultant to help assess this. It is also a key benefit of having a non-exec or chair; if they have seen a similar business before, they will be able to provide guidance as to the key priority areas. They will be able to help you answer whether you need a finance professional or a marketing guru, a sales director or a product developer, and if you do need to hire these roles, what that individual might look like.
This sort of counsel is invaluable when growing a business and developing this structure for the first time. As well as bringing in a chairman or a non-exec, a founder can also find that there are also peers with similar challenges in business networks or business mentors who can provide help. Investors may also be able to offer advice or make important introductions. Leverage the support that works best for you.
Once you’ve found the right executive structure, it doesn’t mean taking a back seat. Successful delegation means working out exactly what you want someone to do, setting them clear targets, and then monitoring performance to ensure the business’s objectives are being achieved. In order to delegate and stay in control as the business grows and teams develop, stay focused on accountability. Create performance management processes throughout the business that provide people with an opportunity to take responsibility while ensuring they are continuing to move the business forward.
As any business scales, it is important to have systems and processes that give an entrepreneur visibility over the business. As business complexity increases, for example with new legal entities or overseas territories, this visibility will become increasingly opaque. You will need to ensure your finance department can provide a clear, single view of where the business is making its money and what the margins look like. Different businesses will have different metrics around customer activity and engagement, and you need to ensure you have the right metrics for you to be able to understand where your business is succeeding against targets and where it’s falling behind. If these performance indicators are well thought through and well managed it will free the founder to focus on driving profitable growth whilst understanding what is happening in the business without micro-managing different processes.
Get this right and your business stands a better chance of flourishing. The best leaders surround themselves with talented people who have the ability to accelerate growth. They’re not afraid to delegate responsibility because they build structures that enable them to retain control, offer more autonomy where performance merits it, and continue to hold people to account.
Steve Cordiner is an Investment Director at Livingbridge, an independent, specialist asset management firm of over 80 people in the UK and Australia with over £1bn to invest in fast growing companies over the next five years