Talking with a venture capitalist in the tech sector recently, she told me about a conversation she had with the founder and CEO of a tech company where one sentence stood out: “I’m the only person in this company who has the time to learn on the job, the rest need to know what you are doing,” he said.
It is a statement every founder or CEO should have tattooed on their forehead.
The discussion I was having with the venture capitalist was about why so many good small businesses fail to scale, and what stops them from reaching their potential.
After much discussion, we agreed it is the world of unknowns that often get in the way of businesses being able to scale and reaching the dizzying heights of success.
And for many businesses, one of the biggest unknowns is not knowing what they need in an executive to help them grow their business to the next level.
It is a fact in business that no company can ever exceed the combined capability of its leadership team.
However, when you have never managed a larger business before, how can you possibly be expected to know the leadership capability needed to bring your ambitions to fruition?
How do you know what the required skill-sets are? What is the right attitude, experience and aptitude needed by your leadership team?
Having founded a company myself and with experience as a CEO and business coach, the lack of awareness about what you need in your leadership team is the number one reason small businesses do not grow to reach their potential.
I recall once hearing Jack Welch, the then CEO of General Electric (GE), saying one of his key learnings was, if they had a $15 million business unit and they wanted to grow it to $300 million. The trick was simple – invest in some $300 million leaders, when it was still a $15 million business unit.
He instinctively knew that if he did not do this, the business would never grow to be the $300 million success it was.
And for Jack Welch, who was already running a huge business, he knew exactly what to look for in executives to build the company to a $300 million concern and he made sure he had a whole leadership pipeline full of them.
As a founder and CEO, if you can’t surround yourself with people who know more about how to grow a business to the next level than you do, it can be dangerous, short-sighted and detrimental to the long-term success of your business. At the very least, it will set your business up to not be as successful as it could and should have been.
It is incumbent upon CEOs and managers to work diligently and conscientiously to acquire the knowledge about what level of executives we need and how to find them.
It is an embarrassing admission but I was the founder and CEO of a recruitment and HR consulting business and I made the same mistakes I see others making today.
If I had my time again, I would have done it differently, starting with finding someone who could help me identify the mistakes I was making and other problems I may not have recognised. In other words, I would have sought out someone to help me convert the unknown unknowns into known unknowns.
The answer is in education. That means networking in your industry, finding the right mentors and being open to other ways of working.
Next week, we will look at what some of these unknowns are and how to identify and address them to allow your business to be truly successful.
Rob Davidson, Executive Coach and Founder, Davidson WP
