July 29, 2021

Leadership today is being redefined by the forces present in a fast-paced market. Changes brought on by unexpected economic trends, rapid technological adaptions, increased security threats, and a global pandemic have made us all rethink modern leadership models. This is especially true for leaders catalyzing rapid growth.

We (the authors) have had extensive opportunities to observe successful start-up leaders for many years. We have helped advise technology start-ups through fast paced funding cycles, complex exit events, and assisted them in navigating through periods of rapid growth.

Naturally, we have observed a broad range of leadership styles and habits. To be sure, much of the success we have witnessed was closely correlated with the technical insights and vision of the founders and their teams. However, looking beyond the technical innovations, we have also recognized leadership styles and habits that often correlate with successful exits for the founders and the investors. This article is an attempt to summarize some of our observational insights associated with leaders facing rapid growth.

1. Adhere to a Vision-Guided Business Plan

When leading in a constant growth environment, leaders must create a vision, evolve the vision, and then exercise the discipline to adhere to that vision. Sure, the vision will change as real market conditions change, and as business plans guided by the vision change. But distractions can become dangerous. They drain resources that could eventually decide the difference between success and failure.

How does a leader distinguish between a distraction and something that requires a healthy iteration in their business plan? Here are a few suggestions:

  • Developing criteria for what is outside the vision may be just as important as refining a working description of your vision.
  • Consult definitive evidence whenever practically possible.
  • When relevant evidence is not available, educated judgment may often be a practical substitute.

In our experience, expensive distractions most often arise from internal sources. For example, when teams favor traditional, historic solutions because that is what they know and understand, innovation is discouraged or isolated.

Our nature is to create and revise a vision around what we are good at, instead of creating business plans based on market observation and feedback. When business plans are distracted or revised by the magnetic pull of what a company is already good at, that company is in danger of becoming irrelevant in the marketplace. When this occurs, innovative solutions that could have created significant market advantages are often lost. Focusing on the security of outlived solutions just because you’re good at execution is a costly distraction. Rather than clinging to comfortable execution methods, the best leaders question and challenge them.

Definitive evidence is obtained by carefully listening to and observing the market (i.e., potential customers and business partners). Companies who evolve in sync with market feedback and observation rarely become irrelevant. Instead, they create value by using their informed vision to anticipate, and sometimes shape, market trends.

2. Talent Acquisition: Establish Clear Roles and Link them to Individualized Reward and Incentives Systems

Leaders catalyzing rapid growth make huge investments in recruiting talent. But often when the star talent shows up to work, the new team member perceives a disappointing disconnect between what was promised and their actual role. Generally, the problem is not an intentional “bait and switch,” or even an overpromise. It’s more about vaguely defined roles and a lack of planning before the hire. Even worse, it can be about a failure to connect the role to the collective company vision and plans. Our experience demonstrates this is common with companies who are attempting to compete through rapid employee acquisition.

Disconnection can be avoided or reversed though careful dialogue and education. But those steps can only happen if the new team member’s role was carefully designed before the hire. Failure to consider a role and then recruit the best candidate can lead to high turnover and a negative reputation in the labor market. Educating team members about their roles and the business plan is critical to full engagement.

Once a team member’s role is carefully defined and understood, the next step is designing a reward system that clearly correlates mutually understood efforts to potential rewards. Rewarding your employees for a job well done is a given, but it is not enough to simply recompense high performers.

Many reward systems we have observed are vague, meaning they lack a clear correlation between the desired behavior and obtaining the reward. To truly get the most out of an incentive system, employees must see a direct connection to how what they accomplish on a day-to-day basis affects their rewards. (This is equally true for short-term and long-term rewards.)

Many companies have reward systems that are too ambiguous. As a result, employees can’t connect how their efforts resulted in the bonus or other reward they received.

For example, we have been asked to educate employee groups on stock option plans. We generally begin those discussions by educating employees on the economics and tax consequences of owning options. However, it soon becomes obvious that while the employees appreciate participation in option plans, they are more interested in understanding why they received options, the amount they received, and how they can earn more.

Almost without fail, the stock-offering employers lack definitive answers to what matters to the employees beyond the generic economic mechanics. When we consult with the leaders, they’ll state they offer options because competing employers do. And the grants do, in fact, mirror those of their competitors. However, little thought has been invested into helping employees see definitive correlations between individual effort and reward.

Another difficult challenge for a leader in a high-growth environment involves recognizing that employees respond to, and are motivated by, different rewards. Balancing individual motivational differences and the perception of fairness, creates challenges that can only be resolved through innovation and significant leader effort. We have found the most successful reward programs involve leaders who spend one-on-one time with each team member to understand what is important to them. Some wish to maximize their income, others value more time off to enjoy family or hobbies, others may perceive opportunities for new experiences as a reward, and almost everyone values the experience of sincere leaders who express heartfelt appreciation for their unique contribution.

Creating individualized incentive programs offers many rewards for both the employer and the employees. One-on-one dialogues give leaders a chance to discuss performance barriers and challenges. And, they can yield significantly higher levels of engagement and create opportunities for team members to bond with their leaders.

3. Lead Dialogues; Minimize Monologues

In our experience, companies built on a “monologue” culture rarely succeed. This typically occurs when the founder/leaders are highly controlling and overvalue their own ideas and leadership style. In contrast, dialogue cultures encourage many voices to present their ideas and feedback. Team innovation (generally the most valuable form of innovation) is nearly impossible in a monologue culture, whose environments tend to favor tradition and historical methods and discourage innovation and change.

Effective leaders know that no matter how charismatic, entertaining, and persuasive they are, sustainable growth and adaptation can’t occur without meaningful, authentic dialogue happening at every level. Leaders who spend most of their days delivering monologues and “updating” the employees, rarely inspire the kind of teams that can respond quickly and effectively to the rate of change that high growth requires.

Monologues lead to exclusion, and team members who do not feel heard will not engage. Growth and adaptation are best fostered and embraced when everyone brings their best ideas to the conversation. The DNA of game-changing solutions generally includes elements that evolved from collective efforts and ideas. Since high-growth companies must compete daily to attract and obtain the best talent, leadership must cultivate active dialogue.

4. Embrace the Art of Listening

For years, we have read books and articles on the importance of listening. It seems to be ubiquitous. Yet, it’s a fact that when leaders are overwhelmed with rapid growth or other complexities, they often revert to their own habitual instincts and ignore input from others. In hindsight, we have seen opportunities missed in tragic ways.

Given time and practice, the habit of objective listening can become the most powerful tool in any leader’s skillset. Listen to the market, listen to employees, listen to advisors, and listen to your peers in other similar leadership roles. Cast your listening net wide. Why invest in great talent and then not trust them enough to listen to them?

History is full of inspiration originating from unexpected sources. Ideas can come from anywhere once a leader develops the habit of listening. We are frequently surprised when we ask our clients, “What inspired you?” Often their epiphanies were triggered by inspiration from sources they would not have expected.

Bottom Line: Leadership Is Especially Difficult During Rapid Growth, but the Rewards are Great

As the economy continues to recover, many business leaders are challenged with rapid growth. Adherence to company vision and a well-thought-out business plan can help avoid the costs of distraction. Making quick, innovative adjustments in response to market observation and feedback is more important than focusing on preserving relevance for existing skills.

Growth generally requires talent acquisition. Clearly defining new roles before recruiting, and offering employees individualized reward systems, will result in higher job satisfaction, retention, and productivity. When team members are clear on how their efforts are essential to the collective success of the team, they are happier and more engaged.

And finally, leaders can gain advantages by eliminating monologue styles and developing authentic listening skills. Bringing everyone to the table for a chance to be heard opens up new ideas and avenues for further growth.

This article is part of the Learning, Adapting, and Growing: Leadership Perspectives series, which explores the role of leadership from a diverse array of perspectives. Each article is written by a Clark Nuber leader who shares their ideas on the unique challenges and opportunities they have experienced, and the lessons they’ve learned along the way.

© Clark Nuber PS and Leadership Perspectives, 2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Leadership Perspectives with appropriate and specific direction to the original content.

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.