From Founder/CEO to Transformational Leader

What qualities, skills, and behaviors do successful entrepreneurs need to scale their leadership in order to successfully scale their companies? RHR International Senior Partner and Chief Commercial Officer Joanna Starek and Partner Eden Abrahams explore the “crucial four” that founders can cultivate to become transformational leaders.

Scale-up founders live in the shadow of existential threats, but the last 16 months have been especially trying for leaders of venture capital- and private equity-backed companies. Inflation and interest rates are up, deal volume is down, valuation perspectives are misaligned, and ongoing fears of a recession continue to make investors skittish. Given the challenging fundraising environment and tough operational headwinds, many start-ups and scale-ups have had to reduce their operating costs significantly to avoid running out of cash. On the talent front, this has meant reductions in force (RIFs)—in some cases, more than one round.

Founder/CEOs and their teams are also grappling with what return to work should look like at their companies and how strictly to enforce it. Navigating so many challenges at once can feel like a high-wire act, but the best founders know that in an adverse environment, maintaining focus on growing as leaders and getting leverage from their teams is essential.

Here are four strategies all founders should have in their playbooks:

1) Keep sharing your vision but develop other evangelists, too. Founders are often the best people to engage and galvanize their team members and other stakeholders around a shared sense of purpose. After all, they’re the original visionaries. But as the company grows, even the most inspirational founders need to deputize additional messengers who can extend and amplify their vision and bring it to a wider audience.

2) Stay clear on your values and be open to evolving them over time. Many company founders have similar tendencies and values, such as a bias toward action (“move fast and break things”), an emphasis on loyalty, or a preference for improvisation over rigor. These values can be empowering and inspiring in early-stage growth. As the company scales and attracts a larger, more diverse employee base, founders should consider revisiting whether the values need to be adapted to reflect new realities. For example, they may want to emphasize shared accountability over loyalty.

“Seek additional communicators empowered to become visionaries themselves.”

3) It’s no longer a solo act—leading at scale is a team endeavor. Founder/CEOs who achieve successful exits understand that one of the secrets to achieving scale is developing the ability to drive growth through others. This means gradually moving away from the hub-and-spoke decision-making model, with the founder at the center, that is often a hallmark of early-stage companies. As the leadership bench matures, founders need to harness the diverse functional expertise and experience of their executive teams to help them set strategic priorities and cascade them down through the company and maintain accountability to drive results. This requires a commitment to continuously optimize the capabilities and composition of senior team members (not an easy task) and greater delegation. It also requires founders to get comfortable with the company’s personality becoming less a reflection of their own.

4) Embrace the multigenerational reality and surface new leaders. With four generations in the workplace, founders can find themselves experiencing friction with employees who may have radically different views about authority, how and to what extent their work should align with their personal beliefs, and how the company should respond to important social, political, and cultural trends. Rather than fighting against it, founders can tap into this diversity by cultivating networks that promote respectful sharing of different generational values and create a pipeline for emerging leaders. Founders should also master the skills required to facilitate difficult conversations, manage conflict, and promote a true culture of belonging.

“A hypergrowth company can’t continue to grow off the force of founder personality alone.”

A partner on the journey

At RHR International, we believe it’s a privilege to work with entrepreneurs trying to upend the status quo, redefine industries, and believe in a dream sufficiently to take on the outsized risks associated with starting a company. We have decades of experience partnering with private equity and venture capital firms and their portfolio companies. Our private market solutions can help you master the mindset and skills necessary to achieve a successful exit.