Tech Growth: Hang on Tight

December 17, 2014 Tim Hewat

You’re the leader of a fast-growing tech company. Your company’s services are at the forefront of your marketplace and your brand is growing quickly, not only in North America but in Europe and Asia Pacific. Business is good right now.

A week before you’re due to present the company’s three-year plan to the board, the chair drops by and poses a question that stops you in your tracks: do we have the right people to get the job done?

The technology business is changing so quickly that many leaders find it impossible to keep up on the human capital implications.

High-growth technology companies face critical external challenges such as competition for capital, disruptive technologies, and increasing customer expectations. In Knightsbridge Human Capital Solutions’ experience, many companies put tremendous effort into building great services, creating unique differentiators, and obtaining funding while neglecting the one strategy that will fuel all others: the talent strategy. 

Leadership Requirements Continually Changing

Technology companies experience accelerated and shorter business cycles than most sectors.  This environment requires agile and fluid leadership strategies that can anticipate changes and respond quickly. As tech companies grow and mature, CEO’s often find themselves asking their leaders to take on initiatives that may now be beyond their abilities. 

One example is a high-growth company that was well regarded by the market for their innovative and unique software products. Unfortunately, the company plateaued as technology advanced from traditional software distribution to Software as a Service (SaaS). The new software licensing and delivery model completely changed this organization’s go-to-market approach. 

The company’s market share eroded as competitors began to approach their customers with more advanced solutions. As a result, the board replaced its CEO and the incoming CEO faced the painful task of radically restructuring and re-focusing the entire organization on a new business strategy. When the dust settled, the company embarked on a new era – one with a long and difficult reinvention.

Moving to the Next ‘Era’

Eras are the natural stages in the lifecycle of a business. They include the initial foundation period when the business is formed; the boom when sales start to take-off; the plateau when more competitors have entered the market and competition makes growth difficult; and finally decline, when the organization is no longer able to stay ahead of its customers’ needs. At this point, the business may face a final phase – extinction – if it does not re-invent itself and begin a new era.

 

What can be unsettling is trying to determine objectively if the same leaders are still the right leaders for the next era. Do they have the capabilities, the will, and the experience to be successful in the future?

In many instances, a leader who took the company from $50M to $100M is not capable of adapting to the next step of taking the company from $100M to $500M. These new eras inevitably bring substantially greater complexity, creating new and greater demands on leaders at all levels.

Right Talent ≠ Right Team

Author Jim Collins says that for an organization to move from good to great, it needs to get the right people on the bus. While that is certainly true, it’s only half the equation. According to Knightsbridge’s Dr. Liane Davey, author of New York Times bestseller You First, the next step is to get the right people working effectively as a team, and this takes work.

“Just because you have the right people, it doesn’t mean that they are going to work effectively as a team. You can see many examples of this in the professional sports environment – teams that have tried to “buy” the top talent but failed because they weren’t working as a team,” said Davey. According to her research, she describes effective teams this way:

  • Aligned on their mandate: not as individual leaders but as a leadership team. Well-aligned teams can articulate the unique value-add the team delivers through its work together. Alignment results in a whole that is greater than the sum of its parts.
  • Engage in healthy conflict: effective teams are not homogenous, but rather embrace diversity of thought. Team members will challenge each other constructively for the good of the organization.
  • Unified front: effective teams present a united front to the broader employee base, and team members trust each other to have each other’s backs.

The Role of HR

As a key member of the executive team, human resources leaders in every industry need to ask challenging questions around what capabilities and attributes an ideal leader needs to be suited to the current era. This often takes the form of redefining leadership requirements against evolving strategy, assessing the gaps, and then developing a leadership plan that will be effective now and as requirements change in the mid- and longer term.

However, HR leaders in the rapid-change technology sector have an added challenge: they need to determine how market trends will impact strategy and therefore what capabilities will be needed not just in the current era, but in the next one.

For example, one of our clients was bringing an advanced technology solution to market and had developed a strategy to drive high growth over the next three years. They then realized that they did not have the right leader in place. We worked with them to determine what capabilities were needed in their next leader; one who would be taking them into a new era that would include defending against a number of new entrants to their space.

As a result, we suspended work to mentor a more junior employee into the role in favour of going to market to get the proven capability to drive growth in step with the new strategic plan. This was a tough decision, but one that was entirely consistent with the growth plan in which they had invested.

Developing the right leadership capacity is often one of the more complicated elements of really getting traction on the growth strategy, where staying ahead of competitors and customers is critical. Add in the complexity, unpredictability, and speed of change in the technology industry, and the question “do we have the right people?” becomes even more challenging to answer.

About the Author

Tim Hewat

Tim is a Partner at Lee Hecht Harrison Knightsbridge Executive Search with over 26 years of management experience leading Marketing and Sales teams in a number of industries including Technology, Financial Services and Commercial Real Estate.

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