Leadership is pivotal to any growth strategy. Without it, there is little chance of turning strategy into action or vision into value. Yet leadership is an elusive quality. You can’t buy it in a box; no off-the-shelf system exists. It is up to each organisation to create its own model in a way that reflects its internal culture and its external challenges.
For Philip Verity, head of mid-corporates at Mazars, it boils down to finding the right people and getting the best out of them. ‘When entrepreneurs get stretched, they limit themselves. You don’t want to start things you can’t finish. Truly great leaders focus on people as much as their ideas.’ But avoid taking too clinical an approach, says Robert Drew at TEC, a network of 620 chief executives. ‘Too much time is spent on theories of leadership. You have to live it.’
Moreover, different types of leadership are required at different points of the growth cycle. Ambition and drive at the beginning, a professional manager once you’re established and a change specialist as the business matures. Each role demands a different approach.
Leadership styles are never set in stone, says Lee Weavers at Ramesses, a consultancy that advises executives on the personal and operational risks that they are likely to face as their business develops. ‘At times you need to be an autocrat and exercise central control. At others you want to be a democrat and let things take their course. The skill lies in being able to drop into the right mode at the right time.’
When a significant spurt in growth does occur, Weavers has found it useful for leaders to stand back and question themselves about quality and service. His advice is to adopt a performance framework. ‘Even if your sales are £1 million, you can start to think about the implications of being at £20 million.’
Related: Leading a fast-growth business
Similarly, leaders should always have a clear idea about how they would like their growth cycle to end, says Alex Woodfield, a specialist in buying and selling companies at Field Fisher Waterhouse, the legal advisers.
‘On an issue like tax, shareholders can get in a real tangle, finding themselves paying 40 per cent on income instead of ten per cent on capital gains. It really is worth gritting your teeth and getting your shareholder structure right early.’
Leadership through the cycle
Chris Lundie has experienced the changing demands of leadership first-hand. Five years ago he was working in the NHS. Today, he is running a security and cleaning business in Dundee with sales of £1.5 million and his clients include NCR and RBS. To take the Covert Group beyond start-up, he had to pick up a number of leadership skills. ‘When you have £300,000 turnover you need to be a good man manager, but at £1.5 million you have to be more decisive and more confident. It’s a question of thinking on your feet while understanding all the implications.’
He’s had to learn to delegate and back that up with support. ‘As a leader, you have to make sure that people have the skills to complete any task. Every day in large organisations people are given things to do that they have no idea how to approach. Good delegation doesn’t just mean passing the buck, it means enabling and empowering people to complete tasks you give them.’
With help from a coach, he is encouraging his 62 employees to share his beliefs and values. As a result, any questions about Covert should be answered consistently. ‘There is nothing worse than giving a false impression or contradictory messages.’
Lundie is apparently winning every pitch he makes for new business and in the next three years he’s aiming to take sales up to £10 million. ‘My role will change, becoming more strategic, and I will be less involved with clients day-to-day. My next step is to take a course on my own personal development and priorities.’
Building the top team
Changing your leadership approach as your business grows may mean adapting to accommodate a management team. Jeremy Williman, 38, is in New York closing an acquisition to buy his US distributor. He has been working on the deal almost exclusively for six months secure in the knowledge that his top team are able to run his main operations in the UK. But it was not always so easy. He bought out Tensator in 1999, when it was selling £5 million worth of ribbing and posts for managing queues at airports and in shops. ‘The reality was that I was the main driver of the business and ended up getting sucked into day-to-day issues,’ he recalls.
‘As you grow, you realise that, like in football, having one player doesn’t make a good team. Yes, you have to watch your cash, but ultimately you have to let go and equip yourself with talent.’
He spent nearly three years sifting through people and trying out different structures, experiencing numerous disappointments with candidates who were well schooled in interviewing, but whose capabilities never quite matched their promise.
After being introduced to his finance director by his business advisers at Mazars, he realised that the best way of finding people was to keep an eye on characters in the industry. ‘Get to know them on a personal level and see how they operate. By approaching it this way, we’ve had a 100 per cent success rate.’
Sales at Tensator are now £35 million a year and it has a full executive board with a chief executive, a chief operating officer, a finance director, an IT director and a group engineer. ‘You have to make a conscious effort to let go, but I can now assign a task and know it will be completed without having to get involved.’
That leaves Williman free to continue the global expansion of Tensator through further international acquisitions, and by 2009 he is aiming for sales of £60 million.
Turning managers into leaders
You can also look inside your organisation to improve leadership capability. For example, if you had walked into educational publisher Nelson Thornes last year, you would have found people waiting for directors to tell them what to do. Energy levels were low and there was no sense of creative buzz. In partnership with the Institute of Leadership and Management, Nelson Thornes created a programme or ‘a journey’ to turn its 24 project managers into leaders. They were sent on three two-day events, surprising themselves with how well they were able to work together.
Decisions are now being made more quickly and people have the confidence to challenge directors. ‘The crucial difference in being a leader,’ says Ben Arnold, the HR manager who helped to develop the leadership programme, ‘is asking why, not when. We want people to be more challenging and less accepting.’
The effect of such changes is only likely to be seen long-term, believes Arnold, although after the end of the leadership journey Nelson Thornes agreed an exclusive partnership with one of the UK’s main examining bodies, the AQA.
‘Our new company-wide leadership skills may or may not have contributed to winning the contract,’ he says, ‘but they will be vital in handling the volumes of business that we are expecting.’
Taking the bull by the horns
After merging cheese biscuits with Italian breadsticks to create Garma Foods, Chris Lane was on his way to lifting sales from £5 million to £30 million in six years. He clearly saw how to build the business, but knew that he had to attract people to execute his strategy as professionally as possible.
First, he says, make sure you don’t have the wrong people in the wrong jobs. ‘To sort out our losses in breadsticks, we had to take some harsh, quick decisions and move some staff on, but within two months we were back in profit.’ Then, like any small business, he faced the problem of attracting good leaders for management positions. ‘I get around this by trading on my own record in major consumer brands and in running enterprises with a clear growth trajectory.’
Once you have filled senior positions, you have to keep people under review. ‘People in the top team can’t always grow with the business. You have to be a bit ruthless. If you don’t have the right people, they will let you and the business down. Everyone has to be on board and moving at the same pace.
‘Of course, as you attract better and better people, you can’t be as hands-on because key staff need the space to fulfil their responsibilities and make decisions. In any case, you can’t lead a £25 million business in the same way as a £5 million one.’
After selling Garma Foods 18 months ago, Lane is looking to repeat this cycle of growth. He might be 62, but he considers himself a youngster compared to American entrepreneurs still active in their 70s and 80s. So, he has set up a healthy eating company, Balance Foods, and has accounts with previous customers like Tesco and Sainsbury. This year, he is planning four product launches and is looking for the right company to buy. Several of his former managers have joined him on a part-time basis and will become fully involved again once the business reaches critical mass.
Asking the unaskable questions
Leaders of growing businesses have a tendency to play their cards close to their chests and keep key staff out of the loop. But as a business grows, it’s important the team grows with it. The key to this is openness and shared vision.
Last year, the International Petroleum Exchange (IPE) was moving from open outcry to electronic trading. It was an immense change, fiercely resisted by many traders on the floor. But for the exchange’s American owners, ICE, it was an inevitable move towards more efficient ways of working.
The IPE’s leadership was caught in the middle, charged with the complex task of explaining the implications to staff and City institutions. To facilitate the process, Charlie Irvine, a change specialist at QoD, was asked to run a question-and-answer panel. ‘I played a role halfway between Jeremy Paxman and Graham Norton,’ he says. ‘It gave me the chance to ask some unaskable questions. “What is really happening? Are you lying? Why change at all when we are already so profitable?”
‘The company’s leaders were quite clear about what they did and didn’t know. There was no blueprint, they were feeling their way. It was going to be a period of uncertainty for everyone. By being honest in this way, you give people a measure of security.
‘A lot of leaders want to be liked when they have to take tough decisions, or they make someone else into a demon. But by never shying away from difficult conversations and being open, the leadership team at the IPE ensured a hugely successful transition to the new system.’