There comes a time in the life of a scaling business when the leadership team needs to make decisions about how it will be run in the future. It’s often a maturity thing, expressed as, “we’ve done great things so far, but how do we accelerate growth and get to the next level?”
The founder/MD may have got to a point where they’ve been managing the company for 15/20 years and would quite like a change in role or rhythm. They may be bored or even tired and want someone else to step up when things go wrong. As they get older, they might decide to prioritise their health and reduce major stressors, putting in place a structure that allows the business “to run itself”. Anyone who’s been an entrepreneur during the last 17 years has been toughing it out through constant turmoil, including financial crisis, austerity, covid and today’s permacrisis.
Giving yourself options
Sometimes it’s simply about flexibility and building in choices. The founder/leadership team might be considering some sort of event a couple of years out. They may not know what that event is, but they’ll want to prepare so that a range of options will be open to them that will drive ongoing value creation.
Or they may want to know that should a financial offer appear out of the blue, they will be in a strong position to take advantage of it. All of this will inevitably mean changing up how the business is managed and thinking hard about the development journey that it needs to go on.
Too much focus on the individual, not the brand
There may be one single point of contact for every key decision, i.e. a founder or MD. If the agency is to be run like a business, not a start-up, then that needs to change and responsibilities be spread more broadly. When you are a £5M turnover company you can’t afford to have one person at the top who is involved at every touchpoint, without impacting your prospects in some way.
There’s a useful litmus test to assess if that’s your business. Is your personal brand stronger than the agency’s? Is the reaction is: “Oh yes, I know that agency, that’s John/Jane Doe’s outfit. If that’s the case, it’s time to bolster the leadership team and succession so the founder/lead’s name is disassociated from the business and the agency brand name builds value, especially as it scales.
Ensuring the future of the business
When heads of mature agencies come to us for advice on how to work through these kinds of scenarios, we always start by drilling down into their ambitions, both personally and for the organisation.
Often the focus will be on embedding a robust succession plan, building competencies and capabilities of future leaders to ensure the ongoing stability of the organisation. Carefully planned to take place over time, this allows the founder/owner to step away from the day to day and concentrate more on the strategic running of the business and value creation, perhaps with a future sale or exit in sight.
Future leaders may well have been identified and assigned responsibilities, but there’s often a journey to go on and a fair amount of work and support required, on both sides, until a founder/owner feels comfortable enough to relinquish responsibility. The latter may also have been burned in the past, having stepped away only to find the team wasn’t ready. In this situation, things can easily take a wrong turn, with founders finding themselves back in the hot seat, in crisis mode and with an even bigger job on their hands than the one they were looking to remove themselves from.
What stepping back looks like
Often founders/owners who’ve been in place for many years will want to take on a more ambassadorial role. That might include some networking or some content development to promote the business. Almost certainly they won’t be doing a nine to five, five day a week where they’re always visible in the office.
And their motives may or may not be geared around an exit; some owners will be more driven by lifestyle, ensuring that business continuation is in place, so that they can earn dividends and enjoy other benefits they’ve worked hard for. But to do this, that vital succession planning needs to have delivered a trusted second tier of management to steer the ship.
….while staying in the loop
As the owner/founder transitions to a new kind of role and relinquishes control, it’s important that they find a way to remain in tune with what’s happening across the organisation.
Without the detailed oversight they previously had, it can be hard to keep on top of things especially when they’re spending less time directly in the business. However, it’s vital that they are able to head off any governance issues that may emerge. This requires building a strong infrastructure, strong processes and strong reporting lines.
Looking at how private equity firms who are newly invested in a company do this can be helpful. The key insight is that it’s all about being involved in a business that you own, rather than one that you run.
