"Fix the leader, fix the business". - Aaron Stokes, ShopFixAcademy
In this series, I've been talking about the natural evolution of a business...and the things that stop it from growing. The things that stop the business from evolving are usually inside the founder's head.
In the Systemize phase, the founder must get the operating instructions for the business out of their head and into the heads of their employees. If they don't, they've bought themselves a job instead of a business. They must overcome the Swamp of Perfection and the thought that they can "just do it better/faster myself."
In the Optimize phase, the founder must hire people who are more skilled at their particular skill than the founder can be. Founders are generalists--they're pretty okay at every part of the business--but they must hire specialists to take them to the next level. Specialists are expensive. And it's scary for the founder to say "I'm not the best person for this job." This is the Valley of Death.
If the founder can get out of their own way, they can reach some pretty respectable heights: multi-million-dollar businesses, run by excellent staff and polished systems. Their business is valuable and attractive to buyers for the first time, and could probably carry on for a decade if the founder doesn't make any big mistakes. It has momentum, and the founder's job is simply to keep pushing the team forward.
But to really scale--to reach the next level, where the business becomes self-replicating; the clients are self-referring; and the business becomes the default choice--the business must begin to generate its own momentum. That means the founder--who pushed the car up the hill alone, then pushed it faster with a team, and eventually got in to steer while his team pushed--must sometimes hand over the wheel.
Decisions should be led by data. The company must produce metrics and dashboards to understand its progress at a glance. For example, our dashboard includes leads, sales calls booked, sales calls showed, sales calls closed, conversions, ascensions, retention, client headcount, gross profit and net profit.
Historical performance should then be modelled into financial projections. Should the company increase pricing, or increase the marketing budget? The first step is to look at retention and conversion metrics, and then build financial projections to help the leaders decide.
Next, an executive team with high levels of trust should lead and manage their own specialties. At this level, these leaders should really run the company. If the founder disappeared, the staff might notice, but the key metrics would not change.
Many companies follow a "Traction" model for reporting and executive leadership.
The executive team might have managers to lead different departments or teams. For example, we have a head of Media and head of Sales (reporting to the CMO); a lead Mentor, app developer and lead curriculum developer (reporting to the COO). Their job is to manage quality of their team and work to improve it. If improvement is driven by the founder, the company doesn't have its own momentum yet. This is important, because if the founder is creating the product updates, they'll always be "tinkering" with the product instead of making decisions based on data.
When a business escapes the Quicksand of Control, it can become a movement.
However, if the owner still has the responsibility to inspire the movement and create energy and passion for the customers and team.
And if the owner relinquishes control too early, the business could lose momentum and slide backward. There are certainly days when every founder is...
