The 4 Stages of Growth and How to Lead Your Company Through Each
The way I see it, there are four stages of growth that serve as a roadmap to guide how your focus, priorities, and key decisions change as your company grows.
The first stage, the startup stage, is normally formed by one to five employees. Then you have a grow-up stage, with six to 15 employees. When the team needs to grow from there, the company turns into the scale-up stage, with 16 to 250 employees. Finally, when a company becomes the leader of the industry, it is in the dominant stage, with more than 250 employees.
Going from one stage to the next requires you to unlearn everything that got you there in the first place and learn new things to get to the next one. It's like driving a car-- once you reach a certain speed, you need to shift gears. If you don't, your engine will burn out.
To scale your company, understand what to expect at each stage and how to shift gears to the next one. Shifting through these four stages is called the dynamic growth model. You'll have different priorities at each stage.
The Startup Stage
For leaders with a startup with one to five employees, your priority is product development. You'll focus on validating the business model with the market; not just a business plan. The barrier is understanding market dynamics. Your most rewarding skills are marketing and connecting with potential customers. These skills are crucial to scale.
As a startup leader, you wear multiple hats. You could be juggling product development, technical work, selling, marketing, or even cleaning the restrooms. The people around may support you, but you are still doing the core work of everything.
The Grow-Up Stage
When you move on to the grow-up stage, you'll have fixed expenses (salaries, rent, etc.) and begin to face cash flow and leadership problems. Here, your focus is 100 percent on sales. Your priority is to hire the right team and have clarity of roles. Your focus is delegation, predictability, and creating repeatable systems to help grow.
During grow-up, you have to become a leader who delegates and defines direction. At this stage, you are leading people one-to-one, which is fairly easy because you can take the person out to lunch or dinner and really go deep into guiding them.
The Scale-Up Stage
During the scale-up stage, the leader needs to start investing in infrastructure to speed up growth and define the industry. With a larger staff of up to 250 employees, everyone's responsibilities must be aligned and processes must be streamlined for a company to achieve scale and become the most competitive player. An infrastructure to simplify operations is required. The success of the company relies on its leader's execution to build a well-oiled machine.
In a scale-up business, your role as a leader becomes significantly harder. When you were a grow-up leader, your leadership role was like playing checkers. Now, you are playing chess.
Each person on your team now has varying strengths and weaknesses. You have to be much more strategic with how you leverage each team member. You'll need to develop your coaching skills to help your people become the best team players they can be.
The Dominant Stage
When a company has an established brand, is beginning to win market segments, and salaries are getting fat, they dominate the industry. For such a company, with 250 or more employees, the priority is constant reinvention to continue growth and keep the dominant position. A common trap for these leaders is that they may settle into a comfort zone.
The leader of a dominant organization becomes a satellite around the organization. Your role as a leader is now more of a strategic innovator and change catalyst that sets a culture of growth and innovation, keeping the team out of the comfort zone, staying on top of trends, and consistently dominating your industry.
Remember, as your company grows through each stage, you have to evolve from entrepreneur to CEO. This is the leadership evolution.
The best thing you can do if you want to grow your company is to build a company that can run without you. Your goal at every stage of growth is to get your company ready for an exit, even if you don't want to sell it.
Put the right systems and people in place to build an asset that is worth something, even without you. This is the real secret to rapidly scale up and still have a life, without all the drama.