How to bridge the leadership gap post series C?
The talent transition required to support your growth and prevent culture cracks during accelerated scaling.
If you are transiting to Series C or D, congratulations – you are ready to scale significantly, compete on a whole new level and challenge incumbent businesses. With the fresh injection of funds, the clock now ticks faster to expand the team to keep pace with your growth.
One of the most common growing pains at this stage is hiring, retaining and managing performance, says Alex Png, Chief People Officer of Intrepid Group Asia. Because you are scaling so quickly, the challenge is to “attract great new talent while taking care not to alienate those who started and stuck with you,” he explains.
Finding the perfect balance between existing talent and new talent is key because at this stage, your leadership team will lay the organisation’s foundation, set important processes and develop your company culture. This will either pave the way for exponential growth or tank your company in the days to come.
Developing Existing Talent
“it often pays off to support effective internal promotions rather than rush to hire too many new talents to fill the gap”
- Iwan Kurniawan, Chief Growth Officer/Co-Founder of Funding Societies
As your company grows, your founding team will naturally expect to grow with the company and move to more senior roles. In fact, such internal promotions are advantageous because they not only help to retain staff, but support your scaling goals.
“Especially since you are growing so fast, you want people with inside knowledge of how the product and company work to deliver the greatest impact,” shares Iwan Kurniawan, Chief Growth Officer/Co-Founder of Funding Societies which just raised $144m in Series C recently.
Internal promotions however, come with their own set of challenges. The founding team will have to learn how to manage a substantially larger team, work to meet bigger goals and targets, and manage the increasing complexities of Series C and D companies, which naturally affect time management, Kurniawan explains.
Often, senior executives who have only worked in start-ups may lack the experience to implement the right processes and tame the chaos as the company expands to above 50 or hundreds of employees. Kurniawan, however, believes that these management and leadership competencies can be acquired in most cases via a carefully designed programme.
In fact, it often pays off to support effective internal promotions rather than rush to hire too many new talents to fill the gap, he notes. “The wrong balance of new and old, with new people who may not be able to navigate and role-model your values, can throw you off balance and dilute your culture and impact,” he stresses.
Hiring New Talent
“Indeed, one of the things that frequently stunts growth at Series C and beyond is “not knowing when to take the leap of faith and let new leaders or talents take control,”
- Alex Png, Chief People Officer of Intrepid Group Asia
However, as your organisation grows, new senior hires are necessary. This need is exacerbated by the trend of many original Series A and B founders and senior executives, such as those from Lazada, Rocket, Grab and Gojek, moving on to found other new start-ups rather than moving on to help another startup scale with their experience.
Indeed, one of the things that frequently stunts growth at Series C and beyond is “not knowing when to take the leap of faith and let new leaders or talents take control,” says Png.
“As a company expands across multiple markets and increases in employee headcount, deep experience and expertise in organisation design is needed to ensure that the company is able to stay aligned and scale at speed. Scalable processes, such as a playbook for new market expansions or more robust hiring processes, take on increasing importance,” explains Isaac Timothy Tay, VP of Product at ShopBack.
Tay adds that domain experts are also crucial at this point. “When building a company early in a new space, such as e-commerce in Southeast Asia in the last decade, there are often few incumbent players, and the depth of domain knowledge needed to thrive is low,” he says.
However, “for start-ups that mature and expand into other verticals, it is necessary to recruit new employees with domain expertise in these verticals. Senior hires are likely to be the ones that bring in the intellectual capital, as well as social capital via their professional networks necessary for success” he explains.
From Corporate To Start-Up
Despite the necessity, you can expect an influx of new leaders to disrupt status quo. And in some cases, it can even cause culture fractures. In fact, Tay likens senior hires to an organ transplant. “There is a danger of the immune system identifying the donor organ as ‘foreign’ and the organ is rejected,” he reflects.
“Culture fit comes first; competency next. It’s better to have an aligned and culturally coherent team who are less capable individually, than a team of superstar divas undermining each other ceaselessly.”
- Darius Cheung, CEO of 99.co
This may be especially true for experienced leaders without start-up background who are joining a start-up. “There might be a mentality or mindset mismatch, where some experienced leaders may feel powerless or lost when operating in a resource-strapped environment very different from what they were used to,” explains Png.
Two other challenges are culture fit and leadership style, notes Kurniawan. Experienced leaders with corporate backgrounds sometimes find it hard to adapt to the fast pace of start-ups. They may also introduce corporate politics to a closely-knit start-up team, or take an authoritative based leadership approach, which may not work in a younger start-up environment which requires positive leadership and charisma, he explains.
The misalignment of attitude and value between new leaders and the founding team may contribute to friction and tension as well.
Darius Cheung, CEO of 99.co explains: “Culture fit comes first; competency next. It’s better to have an aligned and culturally coherent team who are less capable individually, than a team of superstar divas undermining each other ceaselessly. Ideal case is to have both but unfortunately, this is really hard as in our markets there are not enough senior executives with experience and competency, who are also good culture fits for start-ups in general.”
Bridging The Gap
One way to address these issues is to look for senior hires with both start-up and corporate experience, notes Kurniawan. “Since Series C companies act as both a start-up and larger corporate, this ensures your senior hires thrive in such an environment,” he explains.
Indeed Cheung also highlights the difference between building and running an organisation. “Many [senior executives from large companies] have an extensive playbook and the ability to run large organisations, but few have actually built it – those are different skills!” he says.
He urges founders and CEOs to look beneath the surface when hiring. “Senior executives from large companies almost always sound better. Run hands-on tests to see if they can actually execute and are not just powerpoint warriors! Don’t shy away from tests just because they are senior – the people you want are those who are willing to be tested,” he notes.
“It is important to understand that what got us here may not necessarily be what takes us further, and to constantly seek new reservoirs of knowledge, experience, and wisdom. Existing leaders must foster a culture of humility and curiosity to learn from these new hires.”
- Isaac Timothy Tay, VP of Product at ShopBack
That is not to say that start-up experience is always necessary. Tay notes that in most cases, mindset is more important than what is on the resume.
Diversity is another consideration – companies may benefit from a mix of leaders with start-up background, as well as those with corporate background. “A single-minded approach to hiring will result in loss of diversity at the top, adversely impacting group success by promoting groupthink,” Png explains.
In fact, he recommends that start-ups build in parameters at the hiring stage to guard against hiring too many leaders from similar backgrounds. “This can be done by proactively mapping out leader backgrounds, expertise, skills and knowledge, networks and more, which can be compared against an ideal state thereby highlighting the gaps. From there, a clearer candidate profile emerges, one which will add diversity and therefore value to the mix,” he shares.
Indeed, the new processes, culture shift and healthy debate that comes with new leadership at Series C and beyond is often necessary for the organisation to flourish at this level. To support this crucial transition, company leaders should take an active role in onboarding and assimilating new hires, and accelerate leadership and management training for existing talents.
“It is important to understand that what got us here may not necessarily be what takes us further, and to constantly seek new reservoirs of knowledge, experience, and wisdom. Existing leaders must foster a culture of humility and curiosity to learn from these new hires,” says Tay.