Firms that want to grow must evolve leadership, systems, and culture or risk being outpaced and ultimately absorbed.
Architecture and engineering firms seem to fall into two camps. There are those focused on growth – organically, through M&A, or both. Then there are firms averse to growth, content with their size and station. Often referred to as lifestyle firms, they try to maintain the status quo. The latter sooner or later become targets of the former, either to acquire the whole enterprise or to pick off the best talent. You’re either the beneficiary of growth, or the victim of someone else’s.
An over-simplified characterization? Probably. But it’s not too far off. So, I ask you to play along. Given this scenario, the choice seems obvious. Grow, right? I think yes, but it’s not for the timid. Growth by any means presents big challenges.
Growth changes the game
Over time, growth shines a bright light on the weaknesses in an organization. Ineffective processes, procedures, and people don’t suddenly get better under pressure – issues are amplified.
There are obvious operational challenges that come with growth. Organizational and decision-making structures need to adapt. More capable accounting, HR, and IT systems are a must. Project delivery needs a more standardized approach to maintain consistent quality.
Many things that were once handled individually and with casual oversight now need to be organized and intentional. All of this is complex and time-consuming, but it’s relatively easy compared to the biggest growth challenge: your people. And leadership in particular.
When experience stops scaling
As an organization scales, the increasing complexity of the enterprise can quickly exceed the know-how of its leaders. This will stifle growth and frustrate everyone involved, staff and leaders alike.
As firms move from the seat-of-the-pants management style of the startup phase, through constant change during the growth phase, to the disciplined approach required to operate a larger organization, the knowledge, skills, and mindset needed from leadership change at each stage.
There’s a well-worn business maxim for this: the team that got you here can’t take you there.
Your current team knows your people, your clients, and your business inside and out. They can run the place in their sleep. But that institutional knowledge can also be the problem. It’s grounded in the small firm you’ve been, when what you need is more knowledge of how successful organizations operate further up the growth curve.
Culture vs. capability
Hiring outside talent can give you access to the know-how you need for the next stage of growth. But they will disrupt your culture with their imported approach. You also risk sending the message that the opportunities created by growth will go to outsiders and there’s no path for internal promotion. If that perception takes hold, your best people may quickly find the exit.
In hyper-growth companies like tech unicorns, it’s not uncommon to see startup leaders replaced entirely as growth accelerates, only to be replaced again by another set of leaders who can operate at scale.
While there may be logic to this approach, A/E firms are not tech unicorns. A complete substitution of leadership is almost certain to disrupt the carefully cultivated culture of a well-functioning professional firm. That turmoil will impact engagement and often ends with the loss of key talent.
I’m not a proponent of the purge-and-reload approach. Institutional knowledge isn’t a bad thing. It keeps you from repeating past mistakes and wasting time searching for information about how, what, and why. Internal leaders know your people, their strengths, and their motivations. They are carriers of institutional norms and protectors of company culture.
On the other hand, professionals from outside can bring knowledge born from experience you simply can’t grow from within. You don’t know what you don’t know.
These free agents have lived inside organizations and experienced firsthand what works and what doesn’t during different phases of growth. They create efficiencies by keeping you from reinventing wheels – wheels that others have already invented, tested, and refined.
Their knowledge of systems and implementation at scales you haven’t yet experienced can accelerate your path forward.
The both-and strategy
Can you have it both ways – the stability of leaders grown from within and the new energy of outside talent? Yes. But it takes intention and investment.
At Sanbell, growing our team is fundamental to who we are. In fact, our highest purpose as an organization is to “Grow a world class team of cool, smart, talented people.” Hiring only from the outside would send a devastating message to our team.
So, commit to helping your people grow. Let them know you have their back but also challenge them with meaningful opportunities. They will rise to the occasion if you provide the scaffolding for success.
Invest in high-level professional development and executive education. Engage outside experts. Help your leaders build peer networks with counterparts at firms of varying size and complexity. If they can’t experience it firsthand, they can learn from the experiences of others.
Peer networks are invaluable, as my Young Presidents’ Organization (YPO) network has been to me as a CEO. Not every position needs to be filled from within. Fill key gaps with extraordinary people who can inject experience and raise the bar for the entire team.
From the world of sports, think about a second-tier football team that fills a couple of key positions with all-pro talent and suddenly becomes a contender. Add a quarterback and a couple of offensive linemen and the whole offense improves. A hall-of-fame caliber linebacker and the entire defense rises to a new level.
Not every position needs replacing, but strategic roles filled with the right leaders can lift the performance of the whole organization. A blend of leaders grown from within and supplemented with key outside talent can strike the balance that expands capabilities and preserves culture. Catalyze growth while staying true to your history. Retain your people and still introduce new energy.
This both-and approach puts people first without sacrificing your goals for transformational growth.
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Michael Sanderson is CEO at Sanbell. Connect with him on LinkedIn. |