Why scale-ups become screw-ups

“Speed kills. Kill your speed.”

Growing up, many adverts targeted drivers with messages like this. At one level it is an odd thing to have to spell out. It’s obvious that a few tonnes of metal are capable of doing irreparable damage in careless hands.

With one or two notorious exceptions, businesses don’t maim and kill. Which is good. But they are vehicles of sorts. They help people journey to specific destinations. They have mass and energy. They need training to handle. And they can do huge damage to the mental, physical and financial health of their people. The London Gazette is sustained by crashes both large and small. While not all bad driving involves speed, almost all speeding is bad driving.

Yet the vernacular of contemporary business celebrates speed to an almost fetishistic extent. Don’t believe us? We’d challenge you to pick up any business magazine at random and review the content. Speed is king. It now underpins almost all discussions on ‘disruption’, consumer behaviour, technological innovation, competitive strategy, investor relations, management protocols, and team behaviours – to name but a few. It’s even given rise to its own breed of bullshit bingo: “fail fast”, anyone? (Yeah, dude!)

There may be a strong evolutionary imperative at work here. Fear sells, and the fear of a faster-moving ‘other’ threatening us shifts units. We are simpler creatures than we like to admit.

Nowhere is the need for speed more front-of-mind than in the scale-up business. For our purposes, we’ll define a scale-up as a firm going through hyper-growth. This means that it’s far outstripping the OECD’s definition of 3 years of >+20% year-on-year return. Scale-ups are the insurgents whose teams often more than double in size each year. They are often supported by vast amounts of cash from unicorn-hunting investors. As a result, they are under immense pressure to deliver – and to do so before the runway disappears.

At Corporate Punk, besides our work with corporates, we partner with a lot of scale-ups. We do so direct and via Private Equity and Venture Capital partners. Many of our engagements start with a conversation like this one, which happened with a client a few years ago.

“I’ve always believed in moving fast and breaking things,” the CEO said.


“…And now my people, processes and platforms are all broken, and I don’t know what to do.”

The road to hell is paved with good intentions

This eternal truth applies to scale-ups as much as any other type of business. Here’s the kind of journey that we often encounter.

You start a business, and things go well. The proposition is clear. The market’s response is encouraging. Investors have their wallets open.

You want to scale. You take the money. Investor agendas mean that you have limited time to deliver results. You’re fine with that, at the start. But you don’t consider the long-term consequences of the expectations attached to the investment. Instead you believe that if you work fast enough, for long enough, the answers will come. The combination of your entrepreneurial drive and external expectations reinforce this.

Things keep going well, and your firm grows. This brings with it need for more capacity and new capabilities. You start hiring. Two things then occur. First, speed means that your recruitment processes lack diligence. Second, the increasing size of your organisation starts to diminish employee connectivity. In no time at all, there are too many new faces for anyone to keep track.

What used to be a small organisation becomes a more complex one. Plus, your people don’t know each other, and everything’s moving so fast. Chaos starts to emerge. This is psychologically uncomfortable and also threatens progress. So, you turn your attention to your structure and processes. You start to improvise fixes with your team. These fixes are quick and smart-looking. You feel good about them.

But you have designed the fixes without considering their impact on the whole. A quick fix over here starts to slow down progress over there. Your people are so busy moving at speed that the next solution involves piling another fix on the first. Fast becomes furious. The system starts to creak. Your lack of diligence in hiring means that your team aren’t as aligned as they should be. And they feel like strangers to each other, so constructive discussion becomes difficult.

Frustrated, people start to leave – including some of your earliest hires. Progress feels harder than before. Blind to their contribution to the problems, your investors are giving you hell. Every day you wake up exhausted. You hire some consultants. They talk about working ‘smarter not harder’ and suggest some superficial improvements. You make an all-hands presentation about ‘recovering our velocity’. But you’ve not understood how a failure of systems thinking, expectation management, values alignment and communication created your problems in the first place. So those problems keeping coming back around, until scale-up turns into plateau.

You have moved fast, and things have broken. Welcome to the growth graveyard.

Playing the blame game

In the situation described above, 99.9% of people would look first to the leader. And they’d be right to do so. But expectations of leaders deserve some proper examination.

We are often quick to haul leaders over the coals when they don’t have all the answers. This is understandable. Many people believe that having all the answers is why leaders are paid the big bucks. But leaders face the same human weaknesses and limitations that we all do. And they are not soothsayers. This is never truer than in complex environments like scale-ups. It is difficult to lead people across unmapped terrain.

It bears repeating: the road to hell is paved with good intentions. No leader got out of bed in the morning with the intention of making a mess. In fact, leaders’ misplaced attempts to make things better are a frequent cause of failure.

This should call into question our concept of leadership. No man or woman has super-human powers of knowledge or foresight. So is it reasonable to expect one individual to have all the answers to every difficult question? Or that they should expect this of themselves? The answer is no, of course. Instead, leaders should set the context in which other people can perform at their best. The job of leadership is not to find the answers, it is to enable the answers to be found.

This is not easy. For one thing, leadership of this type requires humility. This is not second nature for many entrepreneurs. The challenge is to balance the confidence needed to establish a business with the humility needed to surrender to it. This can create cognitive dissonance in the minds of all but the most mature people. What’s more, the journey requires leaders to change states. The migration from entrepreneur to CEO involves shifting from creator to enabler. Further, the shift is often from creating things to enabling people. This can butt up against natural working styles and preferences. Finally, there is the ability to live within limits: your own, and everyone else’s. There is wisdom in accepting that the speed of the journey matters less than arriving intact. But ego has a horrible way of fogging up the windscreen.

The transition here is emotional, and it is often lonely. To manage it, leaders need to elevate out of their firms while still remaining connected to them. The friendships that tend to characterise early stage businesses need replacing. A sort of esprit de corps needs to arise in their place. (Another way of putting this is to say that ‘team’ needs to take the place of ‘family’.) Then the job is to get out of your people’s way so that they can do their best work. The heavy lifting is done in the grey areas where these transitions take place.

When a leader fails to do this, the problems can be staggering. Here’s a story to file under ‘sad but true’. At Corporate Punk, we know a CEO who wasn’t coping with the shifting dynamics of his circumstances. He began a termination email – yes, email – with the following lines: “Hey mate… I still think you’re a most excellent dude, but…”. It fast became an internal legend. Just imagine the negative impact of that.

This example is proof positive (if you need any) that a title does not a leader make. In fact, the debasing of job titles by the start-up community has itself become a problem. An inexperienced operator self-identifying as ‘CEO’ is narcissistic, even downright delusional. Endorsing that narcissism only hinders the potential for meaningful leadership development.

Effective leadership is table-stakes for developing and managing any complex organisation – scale-ups included. Without it, you can all but guarantee system-wide failures of strategy, expectation management, people alignment and communication. With it, you stand a chance of being able to avoid them.

To sum up so far, then: stop moving so fast – and fix yourself first.

Five things you can do

None of the above is to argue in favour of an automatic slowing down in business management. But it is to assert that good leadership is about setting speed limits. It is also about how well you drive within those limits. An obvious point, but you will get to your destination faster if you don’t keep crashing along the way.

What do we mean by driving well? All organisations are different. But – on top of the suggestion that leaders fix themselves first – here are five broad recommendations that have helped many scale-ups to grow up. As a bonus, they have also helped corporates to rediscover their scale-up spirit.

1. Understand that culture is a core part of your corporate strategy

Culture is the operating system of any business. Your OS will predict how your company perceives competitive threats, and economic upheaval. Whether your people lean into problems and remain open to leadership. Whether they have the courage to be inventive in the face of difficulties. Whether they collaborate to solve problems. The job of the leader is to make sure that the OS can support new applications, and not keep crashing along the way.

Acknowledging the business value of culture is the first step. Next you need to put language and data around it. Then it helps to build a dashboard to benchmark and measure your culture. And now you’re in a position to discuss how you want to measure and manage it. (Warning: do not devolve responsibility for cultural management to junior personnel.)

2. Hire first on values as well as skill-set

Would you like to turn a complex business into a complicated one, and harm everyone in the process? Easy: make sure that your people have disparate wants, needs and values.

The single biggest mistake every organisation makes when hiring is not checking values. If you do this at first interview, you will build a more efficient hiring process. Struggling to know how to check your values? Ignore your brand consultancy. Identify all the reasons why you fired the last half dozen people who left. Remove any instances of gross misconduct. Those are your values in action. Express their sentiments as positives, and embed them within your interview questions.

3. Treat governance as a welcome source of constructive conflict 

Investor management has a habit of throwing sand in the gears of even mature businesses. A lot of it is to do with confusion and tension around autonomy and accountability.

That’s a matter for a separate article. But for now, it’s worth stating that whether you like the people on your Board is irrelevant. It is far more important that you respect them and can resolve tensions to best effect. Too many firms treat their Boards as inconveniences. If you don’t feel that your Board is your Mastermind group, examine where the problem lies and make changes. (Remember that if you meet six idiots in a week, the idiot is likely to be you.)

4. Use and empower system-wide thinking and design capabilities

Problems are going to arise. Whether the solutions you develop are complete or counter-productive is the smart question.

Any fix needs to take into account the impact on the whole organisation. For this reason, quick fixes generally don’t work. Solving a problem well means solving it once; it is easy to speed up when you have done this. A systems-wide thinking and design approach will enable this. Working this way can be slow and frustrating. That doesn’t mean it’s unnecessary.

5. Communicate about context – monthly as standard, and weekly at inflection points

The start point of enabling people is to make sure that they feel secure. This is hard but essential emotional labour.

Fail to communicate and your people will always believe the worst or weirdest thing. Gossip is by far the biggest sapper of emotional energy and organisational momentum. You need to talk to your people more than you could ever imagine about the changes that are occurring. Then you need to do it again, and again. Done that? Good. Now do it again.

All this is not easy, then. That’s part of the reason why the journey of growth is so brilliant and so ball-busting. But what’s better than moving fast and breaking things? You’ve got it: moving fast and not breaking things.