Leading a rapidly growing start-up presents distinct challenges. Developing the leaders to effectively lead hypergrowth organizations requires founders and senior executives to answer four key questions.
Imagine two talented entrepreneurs developing a groundbreaking, solar-powered flying car to revolutionize sustainable mobility. Propelled mainly by entrepreneurial spirit, charisma, and business savvy, their start-up builds a following as quickly as their electric vertical takeoff and landing (eVTOL) prototype grabs headlines and dazzles consumers. Orders pour in from across the globe.
Now comes a critical inflection point. Can our hypothetical company scale from building a handful of bespoke eVTOL prototypes to establishing a global assembly line without losing the innovative edge at the heart of its appeal? The founders cannot afford to wait, but start-ups face obvious challenges, including securing capital, maintaining differentiation in an emerging market, and contending with competition from more prominent players. A less obvious challenge—but no less essential to success—is bringing new leaders into the ranks and undertaking rapid, effective leadership development to avoid the pitfalls that keep 80 percent of start-ups from succeeding.
Intentionally investing in leadership development can help hypergrowth companies counter the forces that may otherwise stand in their way, such as limited management skill sets, less experienced talent, and relative inexperience leading larger teams. Once start-ups manage to emerge from the early stages in which many fail, they need sustainable leadership capabilities to give the organization the flex and muscle required to adapt as growth continues.
Leadership development is not optional
Well-developed, high-quality leadership has a profound positive impact on an organization and its operating model. McKinsey research shows that the EBITDA of organizations performing in the top quartile of leadership is almost double that of others, while organizations are 1.9 times more likely to have above-median financial performance when the leadership team has a shared, meaningful, and engaging vision.
Four essential questions to guide leadership development
As the founders of our imaginary eVTOL start-up grapple with the challenges of growing their successful enterprise, they often ponder big questions that get to the heart of the company’s present and future:
- Who leads?
Expand focus beyond the early few leaders to the top 40 to 50 critical roles and build capabilities early. - How do we empower leaders?
Give leaders authority as a way to expand their strengths and confidence. - How do we keep the entrepreneurial spirit alive?
Create a “founder mentality” throughout the organization and infuse the energy of the early days throughout all layers. - What’s needed from us?
Founders and top leaders need to shift priorities from building to managing relationships with shareholders and investors and preparing for a potential IPO or challenging times ahead.
Conclusion
While every company is unique, all must adapt as they grow. Leaders who discern and articulate meaningful answers to these four questions may derive tremendous value for their organizations. This simple checklist provides founders with an effective way to assess their own leadership health, as well as that of their top teams, ensuring they can continue to scale while maintaining the innovative spirit that made them successful.
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