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Quote of the Week: Avoid the Scale Fail

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April 24, 2014

Revenue grows faster than talent. Discuss…. Founders find they can’t keep relying on the original team to step into every breach. They need to recruit professionals; they need to introduce systems. And so the founders move from heroes to systems and professionals.

 

Who said it: James Allen, Senior Partner, Bain & Co  Founders Mentality Blog

 

In Context: Bain & Co runs workshops in Mumbai and Shanghai, among other locations, on business management. Its Founders Mentality series, for example, teaches founders how to navigate the typical phases that they will encounter when trying to scale their talent and their organizations. Bain says there is the time of heroes. As a founder-led company scales in its first phase, the leadership team closes most of the gaps in its organization through heroics. Everyone works 80 hours a week, some marriages suffer, but during this time of heroes, a winning company is born and legendary stories of heroes become the foundation of the culture. It’s a familiar story. “But then the head of sales burns out and fails miserably to manage a salesforce. The IT manager fails spectacularly at managing the rollout of a big enterprise-management software project,” says Allen. At this point PE will often have a chance to buy into the company and take it to the next level.

Regardless of the corporate finance background activity, Bain says that it is also crucial at this point to hire the right executives, choose a black sheep over a bureaucrat and employ people that can embrace chaos. More ideas and rationale can be found in the article. It is worth reading for anyone growing a business or interested in understanding why some business fail to scale.

 

Where we found it: From a Time of Heroes

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