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The 7 Deadly Sins of Scaling Up Your Business

Posted by Cristina Filippo on 02/17/2016

As most of you know, our company is all about walking the talk. If we are discussing a certain concept with you, we are practicing it ourselves. We attempt to do all of the right things…make sure we are clear in our core purpose, that our decisions are aligned with our values, growing our leadership capabilities, taking good care of our staff, deliver an excellent experience to our customers…with all of this, hopefully, equating to a positive impact and GROWTH!  

However, most businesses fail to grow…a vast majority remaining tiny, either one- or two-person shops. In fact, only about 5% of businesses break the $1 million revenue mark and only about one in eight of those reach $10 million, according to recent data.  That being said, even if a business isn’t destined to be the next Google, Amazon, or Facebook, it can still become a thriving, mid-market company. In our own journey growing our company, as well as the experiences we have with our clients growing their companies, we outline seven barriers to growth that need to be worked through if you want your business to scale up.

The 7 Deadly Sins
1.    Sloth:  Physical or spiritual laziness.

In the beginning, there is just the founder and an assistant with an idea on the back of a napkin.  This start-up situation represents two channels of communication (degrees of complexity); and we all know that two person interactions are difficult enough. Add a third person (or customer or location or product) and the degree of complexity triples from two to six. Add a fourth and it quadruples to 24. Expanding from three to four people has only grown the team 33%, yet complexity has increased 400%. And the complexity just keeps growing exponentially.  To deal with this increasing complexity, the company must grow the capabilities of the leadership team.  Not investing in your leadership team’s development will result in ineffectiveness and suboptimal outcomes. You have to continually push for growth and with that comes some discomfort. Remember, the organization simply cannot outperform the collective effectiveness of its leaders.

2.    Greed:  The excessive hoarding of materials or objects.
Senior leaders know they have succeeded in building an organization that can scale (and is really fun to run) when they are the dumbest people in the room.  If a leader believes they hold most of the answers, it will lead to a bottleneck, organizational silence, the exacerbation of blind spots, and guarantees that the leadership team will end up carrying the entire load of the company on their backs.  The best leaders ask the right questions, mine the answers and trust their team to execute.  Every business is more valuable to the degree that it does not rely on the leader.

3.    Lust:  An intense and uncontrolled desire.
As a company scales, it may become evident that there are vanity projects still being funded by the founders.  Maybe it is an original location, or a certain community served, or an idea that just didn’t quite take off.  It is important for leadership to take a clear-eyed, objective look at all areas of the company.  It may make sense to give these “untouchable” projects the axe and focus on the stronger product or redeploy assets to a more profitable area. Breaking it off with a pet project, especially when it consumes a large part of your time, can be hard for anyone. But, in the long-term, letting go of a failed idea is the only way that growth can happen.

4.    Envy:  Discontent towards someone's traits, status, abilities, or rewards.
The right place for competition is the marketplace, and the wrong place is inside a leadership team.  The second you begin competing with team members and business partners, you lose value.  Put simply, the same behavior that can create value externally can cost a company big-time internally. Competition is kind of like ozone. Ozone benefits us by reducing the sun's harmful ultraviolet rays outside the Earth's atmosphere. But inside the atmosphere, ozone wreaks havoc by creating air pollution and damaging our lungs. Similarly, competition damages your businesses when it manifests internally and with business partners.

5.    Gluttony:  The overindulgence of anything to the point of waste.
It's imperative that companies ramp up the systems and structures to handle the communication and decision complexities that come with growth…think gaining efficiency almost to the point of breakage. Without enough focus on scaling up processes, the company will find itself throwing people at problems and frustrating both employees and customers due to the increasing amount of chaos created by the lack of systems and structure to the business.  

6.    Pride.  Believing that one is essentially better than others.
There is a certain charm and many benefits to the founding team sticking together and scaling with the start-up. The culture remains true to the founding core values, the young talented employees get growth opportunities, and there's an appeal to minimizing the disruption that outsiders bring.  Yet, frequently, the talented founding team that gets you to the point of scaling is not the right team to lead the scaling process.  The best companies build teams for scale early on (hiring great VPs who can be both effective players and coaches as their department grows) and work hard to select for cultural fit.        

7.  Wrath.  Self-destructiveness and hate that may provoke feuds.
Few companies last forever and fewer founders can successfully navigate the transition from leading a small, dynamic company to one that grows into a big player, employing hundreds. In fact, the skills that lead to success in the first kind of venture (think entrepreneur) often are the exact opposite of the kind that lead to success later (think CEO). So many partnerships turn sour if the founders do not proactively create their endgame.  Make sure that you know when you have to ride off into your “Happily Ever After” and leave the company better off than when you launched it.

When you can navigate past these Seven Deadly Sins, the weight that has been dragging down your business growth will turn into the wind at your back.  It is your responsibility as a leader in your company to avoid the de-railers and make it happen. To scale up a business from a handful of employees to a company that puts a dent in the universe and dominates an industry is significant…and well worth the hard work.

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