The Four Key Shifts from a Startup to a Scaleup

Identifying the Right Problems

Einstein shared that if he had an hour to solve a problem, he’d spend 55 minutes thinking about the problem and 5 minutes thinking about the solution. As your company grows, the problems you face fundamentally shift. And if your perspective does not also change, you may find yourself trying to fix the wrong problems with the wrong toolset.

We spoke with Gravitas Impact coach Josephine Too on her experience coaching CEOs through this critical shift. “I see a lot of CEOs who, because they have a hammer, everything they see is a nail. Instead they should be changing the tool to respond to new issues effectively.”

“A company at a different growth stage has different needs and challenges, and leaders need to be sure that they utilize the right levers and tools for the right stage,” Too shares.

Four Key Shifts

Too outlined the four key shifts that need to happen as you lead a growing company:

1. Transition from relying on the competence of the Founder(s) to a company being run by a Strong Leadership Team. “As a CEO, make sure you are delegating ownership of the issues and holding the leadership team members accountable and resolving the conflicts between functions. In most of the companies we see, the transition isn’t a conscious one and it creates a lot of frustrations. The CEO’s focus needs to be on building an effective and cohesive leadership team and the connections between the functions, instead of managing what needs to be done from individuals or stepping in too much.

2. Shifting focus from driving Sales to creating a differentiating Strategy. “This is a key transition. In the Startup stage, you need to focus on sales to validate the product to market fit and demonstrate traction via repeatable sales. As a Scaleup, you begin to build a sales operation and hire a sales head. But by this point, market dynamics might have shifted with increased intense competition and clients demanding discounts. If revenue growth is stalling or slowing, as a CEO, instead of managing sales resources or using geographical expansion as the only growth lever, you need to focus on crafting a truly differentiated strategy and position for sustainable revenue growth.

3. Moving from Individual Productivity to scalable Execution Systems. “In the startup stage, you want to hire highly productive people who can get things done. Once you cross the 20 employees mark and organize people in teams, your focus as a CEO needs to be about what is the best structure, process and systems to help get these productive individuals to hit the company goals and priorities consistently. It’s about how efficiently you are converting revenue into profits; your worst nightmare is everyone working hard but spinning around in circles that don’t move the company forward.

4. Changing the financial driver from Revenue to Profit and Cash. “As a startup, revenue is about commercial validation that you provide value and the business model works. When you are pivoting to scale, you are now focusing on the right model and direction that will give you the profitable growth so that you have cash to fuel growth. The mistake I see, is to continuously focus only on revenue growth that does not result in any profit, which then defeats the function of a company and is not sustainable.”

Is It the Same Plane?

Founders who are aware of the stage their companies are better able to identify both the issues within the company and the right tools with which to address them. Too asks, “Are you focused on solving the right problems with the right levers? If not, you might need to re-evaluate where you are at on this journey from startup to scale-up.”

“In the end, it’s really about shifting from a product design mindset to a company design one,” Too shares. “You are actually flying a different plane when you are a scaleup; not only did your destination change, but the controls you’re used to aren’t working anymore. You need to change the levers to get unstuck.”