Why Some Leaders Fail to Scale Their Business

self-reflective leadership

Most leaders today strive to scale their business. And why not? Bringing in more revenue and increasing the value of your enterprise without increasing operational costs is an ideal scenario for any business. However, scaling a business is easier said than done, and certain leaders are more equipped than others to lead the charge.

In our work helping middle market businesses scale, we’ve often found there’s one factor that separates leaders who can scale their business from those who can’t, and that’s a leadership style that’s focused on managing processes rather than managing people.

Why leaders need to establish a culture of collaboration

Scaling a business isn’t a simple activity or process. It requires a cultural shift, and that starts at the top. Leaders hoping to scale need to establish an environment that values an open exchange of ideas and fresh perspectives. They should lead the process of collaborative idea generation rather than driving idea generation themselves. This allows leaders to unlock more innovative strategies, tactics, products, and services, which ultimately leads to big results.

At FortéOne, we like to say the best leaders manage process and lead people.

The downfall of managing people

When leaders are too in the weeds managing people, rather than processes, it derails collaboration, obstructs creative thinking, and stymies bold action. That’s because when a leader’s focus is on managing people, they (sometimes unconsciously) advocate their own perspectives and smother collaborative processes. This results in dysfunctional team dynamics, risk avoidance, and an inability (or unwillingness) to come together to find a shared vision.

How to spot the warning signs of non-collaborative leadership styles

Many leaders claim to be collaborative, but it’s important to look closely at your leadership style to ensure you’re fostering a culture of collaboration. We conducted a study on organizations that fail to scale due to poor leadership, and through our interviews with employees, we found there are 20 tell-tale signs that a leader is too focused on managing people rather than processes.

Leaders who manage people rather than processes:

Lack Transparency – Aren’t always transparent and communicative with their staff.
Don’t Listen – Find it difficult to listen because they are often the one talking.
Dismiss Ideas – Often dismiss ideas that aren’t their own or take credit for others’ ideas.
Focus on Shortcomings – Are quick to identify the shortcomings of others rather than their potential.
Ego Driven – Have a bit of an ego and tend to spend a lot of time talking about themselves.
Hypercritical – Are often unsatisfied with the work of others, even when they shouldn’t be .
Lack Empathy – Struggle to understand the feelings and perspectives of others.
Don’t Value Investment in Employees – Don’t invest in employee education or growth plans.
Cost Focused – Focus on cost, not return on investment.
Emotional Attachment to Ideas – Map out ideas in their head and get angry when people don’t agree with them.
Close-minded – Tend to be closed-minded and unwilling to change their perspective.
Quick to Blame – Are often quick to blame others.
Inconsistent – Can be inconsistent and send mixed signals, creating confusion.
Slow to Adapt – Are slow to adapt to inputs which impedes forward velocity of the organization.
Arrogant – Are viewed by colleagues as arrogant.
Autocratic – If they have process documentation, it likely it wasn’t created by a team but by an individual who told others to follow it.
Lack Objectivity – Have surrounded themselves with “yes” people.
Avoid Conflict – Find it hard to deal with conflict.
Don’t Trust – Can’t trust others to do their work and often want to control everything.
Overly Optimistic – Are overly optimistic to the point that they fail to assess the risks that threaten their dreams and ideas.

It’s a challenging process to honestly evaluate yourself to determine if you possess these traits, but if three or more of these apply to you, please read on.

Why change is necessary for scale

Managing people instead of process is an idiosyncrasy of autocratic leadership. Many successful middle market companies have their roots in autocratic leadership simply because it was the default style of the founder. Autocratic leadership is successful in startup and early growth phases because it’s an efficient method of addressing team inexperience, handling crises, setting expectations, and guiding productivity. However, once a firm reaches the middle market, autocratic leadership regularly devolves into micromanagement, stifling creativity, creating a culture of distrust and standing in the way of scale. If employees become too dependent on the leader, the leader becomes a bottleneck, and the company becomes immobile.

Though it can be difficult for leaders to let go and trust employees to move the business forward, it’s essential to middle market growth, and eventually, scaling.

Can this type of leader change?

The vast majority of these leaders cannot change and will ultimately need to be replaced by their Board of Directors or Ownership Team. Alternatively, for the few that recognize their shortcomings, there is some hope. . As humans, we are creatures of habit and often prefer the convenience of hanging on to old behaviors over the complication of unlearning and adopting different ways of thinking and behaving. And questioning ourselves makes the world feel more uncertain — an uncomfortable feeling when you’re trying to lead a team. But if a leader is truly committed to the process (Read as: can see beyond themselves) and is willing to create major changes in themselves, adopting a new leadership style is possible.

One telling sign of possible change is when a leader conducts a self-assessment and walks away with the notion that they have burdened or constrained the organization’s growth. They are motivated by this realization and start to chart a personal development plan focused on collaboration. Very often they can see how their personal development plan ties in to their business vision and the new leadership style that emerges feeds their ability to scale the business.

Behavioral change also depends on the support network around the leader. While a leader can drive a culture of collaboration, he or she ultimately needs the people around him or her to be invested in collaboration as well. Change can happen, but it relies on a willingness of the whole team to take the plunge.

How to establish a leadership style focused on collaboration

The process of revamping your leadership style takes empathy and commitment. You and your team need to be supportive of one another as you develop shared aspirations and values. This process will deliver permanent results only if all involved have the humility to self-disclose so that self-awareness, collaboration skills, and technical capabilities are mastered.

At FortéOne, we help leaders transform through a facilitated, ongoing process that includes:

Establishing the current reality (where the team is starting) and a desired reality (where the team wants to get to).
Creating action plans with measurable outcomes for each individual and the team as a whole.
Defining rewards and consequences between parties.
Facilitating team development and individual coaching at regular intervals.
Regularly reviewing the process and outcomes.
Ensuring changes to team processes, roles and responsibilities are made as recognized.
Ensuring rewards and consequences are delivered as agreed.
Embedding this process into the organization’s standard operating procedures.