Business development 13 May 2016

Three phases of change for startup CEOs

Only one quarter of non-HR business leaders believe that their organisation’s goals are being met by its current people management strategy.
Different things are demanded of the founding CEO as a startup moves through various stages of growth

As a business grows and changes shape, so must its leader. Small Business Charter chairman and ByBox head Stuart Miller writes about the changing role of the CEO as a company moves from startup to scale-up.

The die-hard DNA of entrepreneurs supposedly lets them work countless weeks without sleeping, fuelled on nothing but their grand vision and pizza. But once you get beyond the romance and razzle-dazzle of the first phase, startup CEOs will find that their job changes.

Subtly and stealthily, different things are demanded of the founding CEO as your business moves beyond startup stage. Identifying the phases and managing your way through is critical if you are to really fulfil your potential.

Phase 1: The salesman

British people are a funny lot. We seem to have a snooty reaction to anybody who admits to working in “sales”. It’s almost as if we think all sales people sell second-hand cars. Or, one way or another, are smartly dressed crooks. Americans don’t suffer from the same misconceptions. By default, they are admirers of the noble art of selling something.

That probably goes a long way to explaining why the US still has good form when it comes to startups. The reality is that CEOs of new ventures spend every waking hour selling: to investors, to the bank, to prospective customers. They sell to suppliers to get good credit terms, sell to new recruits to commit their soul to the cause for a couple of year, and sell the startup story to spouses in exchange for repeated leaves-of-absence from countless family commitments. Selling, selling, selling.

But this is not “sales” in the cheap sense of the word. Startup founders are not selling watches and cigarette lighters on street corners. Rather, they are constantly refining the narrative to transfer an idea from their head into the heads of their audience with as little static as possible. After all, they are hell-bent on changing a small part of the world and they are in a bit of a hurry. And as the old adage goes – nothing happens until somebody sells something.

Phase 2: The strategist

If you survive the chaos of Phase 1 and manage to actually sell something, things start to change pretty quickly. There is a real temptation to become over-excited about achieving your initial aims and share in the adrenalin rush of those early customer wins. But you absolutely must balance that with the critical work required to hatch a plan for your next set of goals. How are you really going to beat your competitors? Where is the ball bouncing next? How can you create a market edge that might take a year or so to materialise but will give you a truly unassailable lead if you get it right?

These are the fundamental questions that you – as the CEO – must commit time to answering as you embark on the scale-up phase of your venture. As hard as it is to leave other people to make the important decisions, you really have to trust your team to deliver while you lay the foundations for future success.

Phase 3: The statesman

So you have survived so far. Your competitors have struggled and, more than likely, reacted with some aggressive and panicked pricing attacks on your customers. Providing your service is excellent and your proposition is solid, you will stave off those short-term swipes – and you will now enter the third phase of growth as a CEO.

This is the stage for which none of us is really prepared. We have spent so long surviving and fighting during the precarious, but exhilarating, early phases that we never gave much thought to what would happen if we come out the other end.

You will probably feel battle-hardy and wiser in equal measure. You will have made some terrible decisions and some good ones and will be better for both experiences. It’s just that now the decisions carry more weight. They will determine whether or not you will really build the great company that you set out to create originally.

Your tribe will still look to you for true leadership, but now the outside world will start to pay attention to you and your business, too. You need to adopt a longer, broader view and be prepared to act not just as a leader of your business, but as an ambassador and a statesman for business and entrepreneurs in general.

How to transition from salesman to strategist to statesman

The answer can be distilled into three essential points. Firstly, you absolutely need to want to do it. Your inner compass must drive you inexorably towards building a truly purposeful enterprise beyond just your founding team. Secondly, you must be alert in order to see the next phase coming and re-calibrate your own expectations of how you will spend your time. And finally, you need to get a good chairman.

Stuart Miller is the CEO and founder of ByBox

 

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