The Scale-Up Squeeze-Out

There often comes a time in every high-growth start-up when new executive leadership is hired –and sometimes, they replace or displace the stalwart early team members. I’ve heard this phase called “Scale-Up” as distinct from “start-up”.
When a start-up begins, it is usually one or two founders, and they work tirelessly to get things going.
That early team will eventually grow beyond the founder into a core team. During that scrappy phase, the team may invent ways to get things done that a more experienced executive would already know.  Whether it is one or five people, everyone is in on the ground floor, and therefore, involved in every consequential decision.

But eventually they’re not sufficient to the task at-hand and seasoned leadership is hired.

This is a version of the Peter Principle, in which people rise into a position based on past performance; but their new position demands skills they don’t have.

The original team-members still perform incredibly well. But the new stage of the organization demands a quantum difference in ability that only time would produce. But there isn’t time.

All of that makes sense. But, like so many things involving mere mortals, it can be challenging to accomplish well.

The “Adults” Are Here

Regardless of how good the rationale, the new executives are interlopers.

Lots of things change for the initial team. Their regular access to the CEO may be curtailed. They now report to a boss who hasn’t been there from the start. It feels like the new boss doesn’t understand “how things work”—and to compound the bruising, they now dictate how things go.

There are emotions and egos involved, and for the initial team members being squeezed out of the inner circle it can feel like the worst day of their lives. As one such employee told me, it’s like being sent “to the kid’s table”.

The worst part is that the new leadership often acts completely oblivious to all the angst. They come in hard, issuing edicts without regard either to the past that birthed the company, or to the earlier team’s relationship to that history.

Yes, change is needed. But it doesn’t have to be offensive and dismissive.

It often is.

So, if you are an incoming leader, stepping in between the CEO and a former function leader, is there a good way to handle it?

Starting Strong

It’s tempting to go for big, early wins. Consultants often have the same initial impulse. Start producing results quickly! That’s impressive. And, if your goal is simply to look awesome, do it. You may look like a hero.

Of course, you may also look like an ass.

Alienating –or even just neglecting or ignoring –those who are already there will make things harder later. Unless you are planning to leave in short order, you need to anticipate the future, in which you will want to produce wins on an ongoing basis. To do that, you need a team that respects and, yes, likes you.

That doesn’t mean you should do nothing. It’s more a question of how you do things than what you do.

Honor the Past

Your team was there before you –and they have knowledge and experience that you need. They know why some fixes weren’t made before now. If you don’t try to learn those reasons you will violate Chesterton’s Fence Law: Do not remove a fence until you know why it was put up in the first place.

The metaphor of the fence is simple to understand. Since any fence that exists was built by someone, it was put there for a reason. The reason may be good or bad, or obsolete. But, without knowing the reason, removing it could lead to unintended (bad) consequences.

This edict applies not just to the things you might kill, but also to the new processes or initiatives you might implement.

The early team knows all the bugs –whether organizational, operational, or technological –that will thwart your plans.

Pausing to learn the whys behind those things you plan to change may go some distance toward ensuring you avoid problems. That’s strategically smart.

Perspective Taking

But where real wisdom enters is in the way you approach the emotional landscape. You are baggage-free because you just got there. But, if someone else was moved out of the inner circle or a degree away from the CEO by virtue of your employment, they have psychological baggage. You can ignore it, but that may be to your peril.

Those consequences don’t seem big or important –after all, we’re all grownups and it’s not personal, just business…right? But the consequences of people feeling marginalized have legs and will likely cause mischief when you least expect it.

The person whose feelings are most likely to be hurt is the one who feels you replaced them. But even if you plan to lay off or replace that person, those who reported to them will remain. Hurt their boss, hurt them.

Cultural Debt

Offending, neglecting, or disrespecting the tenure, knowledge, and work that the early team did will undermine cohesion. Like technical debt, cultural debt needs to be paid somewhen.  And, since cultural debt is optional (in a way that technical debt may not be), why incur it? [Click to tweet this].

Maybe, instead of making immediate changes with neither inquiry nor sensitivity, you could pause. Take the time to persuade the marginalized team-members into being your allies.

It’s likely worth the nominal loss of speed today to avoid a more lasting loss of cohesion for months or years to come.

There’s another reason to be sensitive and honor those who were there before. It’s kind. Sometimes, in business, we forget that even when we’re working, the same moral imperatives apply. Kindness pays dividends in satisfaction and happiness. And as a bonus, it contributes to the cohesion that high-performance teams need.

Planting seeds of kindness and compassion now can help you reap rewards of loyalty and trust later.


PS: In a future article we’ll look at how the sidelined initial team can make the transition work for them.

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