As snakes grow they periodically shed their skin to make room for their larger bodies. In many ways, businesses go through a similar, natural process as they grow and mature. The team that led the business up to a certain point may not be the ideal team to foster growth to the next stage of business.
Early stage entrepreneur leaders possess drive and skills to get things going. They are the center of the universe for their company, and they can keep all of the facets of the business and every nuance in their head. As the company grows, more people join the team, and up to a point, a loose structure and minimal written plans and policies can work just fine. However, the level of complexity and the number of people involved soon requires more formality and structure. The business needs governance in addition to vision. Formal procedures and policies make the business predictable and scalable.
The leaders that surround the CEO in the early days may not have the skills or recognize the importance of introducing structure into the business. Key members of the early team tend to wear several hats and perform a range of roles. They thrive on multi-faceted challenges and their ability to make a difference. However, as the company grows, it hires specialists to lead each function, and the original team members’ roles either narrow or becomes redundant. The most important job for the CEO is to ensure that the right people are in the right seats to enable the company to reach its fullest potential. The struggle for the CEO is that the early leaders are colleagues and often friends, so loyalty and friendship are in conflict with the needs of the business. Some of the people that were instrumental to getting the company to where it is, are exactly the people that will keep it from getting to where it needs to go. It is never easy to make these changes, but it is often required for the ‘snake’ to shed some skin so the company can grow. The CEO’s challenge is to keep the entrepreneurial spirit alive while also laying the foundation for a scalable business.
The hardest transition of all is to change the CEO. It is a rare founder-CEO that can manage a growing business through all stages of growth. There are notable exceptions - Bill Gates, Jeff Bezos, Larry Ellison, and Elon Musk - to name a few billionaires. However, more often the skills that enabled the founder-CEO to succeed in the early days will not be adequate or the same skills needed for subsequent stages of the business. Some individuals are self aware enough to recognize the need to hire an experienced replacement. Some require a bit of a push from the board. A telling question for an entrepreneur is “do you want to be rich or king?” You may need to give up the role of king for the business to thrive and make you wealthy. Maybe it’s time for the snake to shed its skin.