The 3 Biggest Leadership Challenges of Fast-Growth Companies

Biggest Leadership challenges

The fast-paced environment in which they thrive leaves many fast-growing companies facing three key leadership challenges. I call them the Three Cs – Capacity, Capability and Culture.

1. Capacity

If an organisation is to grow, it needs the right people and the right leadership. A shortage of leaders at every level is the biggest challenge to the organisation sustaining growth, even if it can create client demand.

Consider the scenario of a company where the local market is developing rapidly. Many would consider it to be in a lucky position with clients clamouring for its products and services. But with a lack of leadership capacity comes the risk of not delivering. And in a competitive market, a reputation for poor delivery is almost worse than a lack of demand.

In the words of one of my clients, ‘We have increasingly been able to build our demand, but ensuring we have the right people to deliver on this demand is really tough. There are brilliant potential employees, but understanding what leaders we need and how to get people up and running quickly, effectively and productively is our biggest challenge.’

2. Capability

Companies are also struggling with leaders lacking the critical skills they need to succeed.

Today’s employees are intelligent, educated and innovative. And they’re used to thinking about the world in digital terms and on a global scale. In a fast-growing company, talented employees often fast-track through promotions. Their innovative skills and abilities take root and bear profitable fruit. But there’s little chance to instil the foundations of the leadership needed to continue growth. They may have had limited exposure to management and leadership positions. And that means they lack skills, experience and confidence in leading themselves, others and the organisation.

Take one of my clients, for example, which is a fast-growing technology consultancy with seventeen global offices across twelve countries. Employees work on different projects for different clients. The project managers manage them on a day-to-day basis to deliver what the client needs, so each employee might work for several different managers during a twelve-month period. This approach works well from an operational perspective, but it is short-term and can be unsettling for employees. They can feel that there is no-one looking out for them as individuals and helping them develop their career.

When a consultancy is small, this approach works. But as the company grows, it’s no longer workable for the management team to manage everyone. That’s what happened with my client. The staff survey showed employees were uncertain what the future held for them. They felt they lacked recognition and development. And they didn’t know what they needed to do to progress.

So the company introduced a role that would be responsible for focusing on the individual, which is what most consultancies do when they grow beyond a certain size. The person in this role is responsible for keeping regular contact with named employees. They’re responsible for managing the performance of those employees across the different projects they work on and supporting their career development within the organisation. Those responsibilities need new skills and behaviours, and the new managers had limited experience.

I spoke to each of the managers about what they might need to develop. The overriding theme of their responses was that they are committed to the people they’re managing and want to do right by them. As one of them said, ‘I don’t want to be “just a manager”, I want to be a good manager.’ They recognised that their people are all different, realising that meant they needed to adapt their style, but they were unsure how to do that. And they were anxious about dealing with the tough stuff and having difficult conversations. One manager said, ‘It’s easy when everything’s going OK. But what about when things go wrong?’

Fast-growing companies face an urgent need to develop leaders at all levels. They need to bring young leaders on faster, develop leaders globally, keep senior leaders engaged and build new leadership pipelines at every level of the company.

3. Culture

Building leaders requires more than a portfolio of training programmes. It means having a culture of growth that everyone buys into to broaden the opportunity for leaders to develop in new ways. This means putting potential leaders in positions that stretch them beyond their current skill sets, coaching and supporting them so they build their capabilities rapidly.

Fast-growing companies also face the challenge of preserving the positives of their culture as they grow. I know from my experience at Avanade that company culture is generally formed early on by founding members and key management. These individuals work closely together, making it relatively easy to maintain company culture. But as the company adds new personalities (not to mention extra locations), it can be a real challenge to assimilate all these individuals and preserve the company culture.

One of my clients made a good point. He said, ‘We pride ourselves in having a good culture in the company and we talk about how we can preserve that when we’re growing, but personally I believe that culture is very much a reflection of the people in your organisation. That makes culture a living thing: a living organism that will change over time with the number of people and the teams that you put in place. The culture needs to mature and evolve too.’

Biggest Leadership Challenges – The 3 Cs

You Need All Three

For sustainable growth you need all three Cs. Having only two of the three will leave you vulnerable in different ways.

For example, if you have enough leaders (capacity) with the skills and confidence to lead the business (capability) but you lack the processes and practices to reinforce leadership throughout the organisation (culture), you might be fine in the short-term, but leadership will be limited to the current leaders and you won’t be able to sustain that leadership as you grow.

If, on the other hand, you have leadership capacity and a strong leadership culture but those leaders lack the skills to lead a fast-moving high-tech company, there is likely to be in-fighting, friction and resentment among colleagues as the business struggles to deliver in the face of high demand. And you will be vulnerable to attack by competitors. If you lack leadership capability, you will be too busy focusing on the day-to-day tasks and activities to concentrate on strategy for future growth.

Finally, if you have capable leaders and a strong leadership culture but you lack capacity, you run the risk of not being agile and responsive. You might be overflowing with ideas, but not have enough leaders to recruit and manage the teams to capture the good ones before the competition does.

Addressing the Challenge

To address these challenges, I designed the LEADER System, a practical six-step method for developing leaders in fast-growing companies. To find out more, download the free ebook LEADER – How to Develop Remarkable Leaders Who Deliver Amazing Results.

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