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9 Ways to Fail When You Scale

A co-founder of one of the companies I work with teaches business for engineers in an MBA program at Simon Fraser University, in Vancouver. When he asked me to come and give advice to those who wanted to run their own companies, we chose How to Fail When You Scale, as a topic.

Here are nine things that could dramatically impede the success of your company when you're trying to scale:

1. People Need to Like You

An effective leader sometimes has to do things that make people uncomfortable – to challenge them, hold them accountable or require them to solve their own problems. We all want people to like us, but it gets in the way of a leader’s ability to make tough calls or deal with situations in a way that causes growth for the people who work with us. Growth generally hurts in some way.

Performance requires tension and the best managers create positive tension.

2. In Love with Your Idea/Product

It's important to believe in what you do but, if you're madly in love with your own ideas, you might not be open to changes that need to be made, or things that need to be cut to truly make the most out of your product.

Try, Lose and Learn. You need to continually be open to learn and do something better versus being obsessed with your initial idea. It will probably change dramatically, anyway, by the time you scale it.

3. Trust the Spreadsheet

I haven't seen a business idea that didn't look good in a spreadsheet. Excel is spectacular at helping to rationalize and sell your thinking to other people.

As a basic premise, when you're looking at a new and unproven idea, you need to apply some critical thinking. If it is proven and you have replicated a very similar thing in your company, in the past, it's much easier to project the future because you have a notable history. That's not what we're talking about. This is about new ideas that your company has not done before - more in the ‘what could be possible?’ realm.

Expect 2X the Cost, .2X the Revenue. This is a simple rule of thumb to evaluate whether you want to try it or not. Expect it'll cost twice as much as your initial thinking and produce 20% of the forecasted revenue.

At that point, if you still think it's worth a try, then proceed. And make sure you're willing to lose all the money in that investment and chalk it up to good learning.

4. Hire Friends & Family

There's nothing wrong with working with friends and there are some spectacular family businesses on the planet. And it’s not for everyone. The day you hire friends and family, you need to be OK with the day you may have to fire them. As companies grow, not everyone grows enough with it.

Require 90% A-Players. Only the most talented people can be in company roles, otherwise they'll slow you down. Emotions come into play with friends and family it can be challenging to give tough feedback, make tough decisions about them, put them on a performance improvement plan or tell them they need to move on. Do not hire any friends or family if you are unwilling to do that.

5. Leave the Numbers to Accountants

Although many great entrepreneurs know how to make profit, if they don’t have an accounting mind or are too busy with strategy, they may fully rely on accountants for the numbers, And while you do need to trust the people on your team, you also need to verify.

Must Trust & Verify. Business is a numbers game, and you need to be connected to the drivers of profit and cash flow, and to understand and verify the key aspects that relate to your performance. Blindly trusting people, in any part of your business, is not great management or leadership.

6. Start with a Low-Price Strategy

A few companies can thrive with a low-price strategy – like Walmart and dollar stores – but they are rare. These have a huge driver around logistics, efficiency and cost, and an ability to make or buy cheaper than anyone else on the planet. Typically, this very low-overhead model has a no-frills culture that’s spread throughout the entire company.

When people have a hard time selling in the market, they often default to a low-price strategy to get the business but may not have all the other pieces in place, to be successful.

This is usually a lack of strategic thinking or a way to sell your value in the market versus a true low-cost strategy across the enterprise.

Strategy = Higher Price or Margin. The best strategies allow you to command a higher price margin in the market for your specific customers. Make sure that you are clearly focused on a strategy to get you a higher price or premium with your customers. If you do have a low-price strategy, build your entire business model around being able to deliver and sell at a notably lower cost to get a strong profit.

7. Establish a Culture where People Self Manage

For a while, there was a trend in the tech world that people could run autonomously and fully manage themselves. While it’s a nice theory, many companies had a rude awakening.

Everyone Needs a Boss. That's why CEOs have boards: to help them to make better decisions, be more accountable and perform better. Without a clear manager - who has regular conversations about how to improve, and how goals are being met - people float, are not engaged and underperform in the medium term.

8. Think that Charisma and Confidence Matter

While charisma and confidence can be wonderful and helpful in many ways, without something solid behind them, they can lead to undesirable outcomes.

Humility & Drive Prevail. For long-term success, you need substance to back the style. Humility allows people to learn and grow and seek out the best answers, and drive to prevail and push through challenging situations, no matter what.

9. Save Time by Having Minimal Meetings

As a leader, you will spend most of your time in meetings. And while we can all agree that many are painful and a complete waste of time, that is not a reason to have less.

Meetings are leading. As a leader, meetings are your primary tool to create results in a business and critical to your success. It’s unfortunate that zero time is spent on this essential skill, in our formal education. You have to learn how to effectively run a meeting.

Powerful meetings create clarity and the right action to move people and the company ahead, supported by clear goals for team members and clear data to tell you how things are working.

The Challenge

Which of the nine items on this list do you think might be getting in the way for you, right now - and that might benefit you the most?
How can you take it up a notch?

Want to learn more? Listen or watch our Growth Whisperers episode about How Teams Fail When Scaling Up Their Business on one of the following channels:

About Kevin:

CEOs typically place their first call to Coach Kevin with a crisis to solve. They stay because of his business acumen and no-holds-barred, tell-it-like-it-is style.

Kevin’s career spans 20 years, over a dozen countries and four continents. He’s worked with hundreds of CEOs and executives, helping them to break through business challenges, grow their companies and find personal success along the way.

These experiences inspired Kevin’s book, Your Oxygen Mask First, in which he reveals the 17 habits every leader must know to transcend the perils of success, and achieve even more.

About Lawrence & Co:

Lawrence & Co’s work focuses on sustainable and enhanced growth for you and your business. Our diverse and experienced group of advisors can help your leaders and executive teams stay competitive through the use of various learning tools including workshops, webinars, executive retreats, or one-to-one coaching.

We help high-achieving leaders to have it all – a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.

by lawrenceandco

Are You Really Listening to What People are Saying?

It’s shocking how hard it is to listen to people, sometimes. I've often noticed that I fall into a trap that great football coach and mentor Lou Tice called “lock on, lock out”.

Early in my career, my manager gave me some Tice tapes to listen to (yes, cassette tapes because it was in the 90s) about “lock on, lock out”. They describe what happens when a thought is triggered in your brain by something someone says in a conversation. In the moment you get obsessed with that thought, you stop listening and try to inject your thought into the conversation.

Hearing: the process, function or power of perceiving a sound.

Listening: to hear something with thoughtful attention.

I’ve worked on this a lot was over the years. You'll often see me, in meetings, write things down on a piece of paper or type a note on a screen. This helps me quickly hold that thought and stay engaged in the importance of the conversation.

The Pitfalls of Locking Out

By the look in your eyes, and the words shaping on your lips, the other person knows you’re not really listening. They feel locked out as we lock on to our triggered thought, and demoralized because they are not being heard.

Things gets worse when we then start an argument to defend our thought and dispute what they are saying.

I recently had a conversation with an amazing group of inspiring, passionate, driven, smart and caring leaders. The issue was they had become four-year olds in a trigger festival – each defending their corner of the sandbox. Instead of looking for common ground and higher purpose, they all locked on and locked out. This turned into a set of defensive arguments that really damaged their relationships. It took individual conversations and group facilitation to help them realize that they were, once they started listening to each other, actually, in agreement.

It’s a common problem, no matter your emotional age.

In my experience, most people don’t listen – they are just waiting for their turn to talk.

We all want to be heard and respected.

The Challenge

In what situations do you find yourself most likely to “lock on and lock out? Think of these in all facets - Work, Self and Life.
When you have a different thought, what mechanisms can you use to stay present and fully listen? Consider writing it down, or letting it go.

We help high-achieving leaders to have it all – a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.

by lawrenceandco

Hi Travel! Remember Me?

Last week was officially one year since my last major trip. I have fond memories of a conference keynote in Las Vegas followed by a workshop in St. Louis.

I've been inspired by how companies have pivoted their strategies. Even more impressive is how humans have adapted to find new ways to thrive without being close to each other.

And I realized how much I miss travel. As I was driving by the Vancouver airport recently, I had the need to go to The Fairmont Hotel. I just wanted to sit in the lounge, have a meal, and look at the airplanes.

No doubt that I love airports. And I love travel - experiencing new environments and new people, new beliefs and new challenges.

So, when people ask me if I'm glad I don't have to travel anymore, I answer with hesitation. While I did travel most weeks in the year - and my body has thanked me for not being jet lagged so much - I know that my mind and spirit really enjoyed the adventures. And, time in an airport and on a plane is time to myself: time to think, to focus and be highly productive. It’s where I do some of my best strategic thinking and planning, writing and reflecting.

They were part of my resilience rituals which I’ve had to rebuild in different ways.

I miss you, travel. And, in the future, I likely won't travel as much as I did before and suspect - based on how well we’ve learned to run virtual meetings - that half to three quarters of the meetings, we used to do in person, will probably stay that way. They're incredibly productive and save notable amounts of time and money.

And when we do meet face-to-face, those experiences will be richer than before - wonderful for deepening relationships, for camaraderie and the excitement of celebrating victories together. Popping a bottle of champagne by yourself is just not as much fun!

Oh travel, I miss you!

The Challenge

When the world opens up, again, how do you envision it looking for you and your company?
Is there anything, out of this last year’s experience, that you would change or take with you?

We help high-achieving leaders to have it all – a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.

by lawrenceandco

Perfect Performance Requires Perfect Practice

I was talking to a coach of a very technical sport who told me about their 50X rule where young, elite athletes-in-training have to be able to do a routine perfectly, 50 times in a row.

Only then do they not only have the technique in their muscle memory but the confidence to perform under pressure, with precision, during competition.

This rule reminds me of my experience racing cars and go karts. In that world, we call it ‘seat time’ - that you need to do lots and lots of laps, ideally on the same corners, trying different things until you can consistently make the right moves on every corner, every time.

The same thing applies in business. Inspired by the 50X rule, it takes a while for someone to truly master anything. You can only learn and get better by doing something again and again and again and again and again and again and again.

This leads back to the 14X advisors in Your Oxygen Mask First (Chapter 11, Quadruple Your IQ). If you want help, you need someone who's been there and done that 14 times. Of course, 50 times would be outstanding, although in the world of business that’s next to impossible!

Perfect Practice

So, are you and your teams getting enough practice every week to perfect your skills?

A sales team to master role-playing, prospecting or key parts of the sales process
An operations team to master switchovers or safety drills
A finance team to master developing and communicating insights from the data.

The highest performance requires perfect practice to make skills automatic. F1 race teams, for example, are able to do pit stops that include changing all four tires in seconds. In fact, the fastest Formula One pit stop is a stunning 1.82 seconds, achieved by Red Bull Racing (Austria) during the 2019 Brazilian Grand Prix. Guaranteed, they have followed the 50X rule.

The Challenge

Where can you and your team benefit from applying the 50X rule? If you're not sure, just look at the things that you or your team consistently complain about - or that your customers might want you to perfect.

We help high-achieving leaders to have it all – a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.

by lawrenceandco

How to Make People Decisions

Jim Collins just did an amazing event talking about some of the principles from his most recent book BE 2.0 (Beyond Entrepreneurship 2.0): Turning Your Business into an Enduring Great Company, co-authored with Bill Lazier.

Having done a number of events with Jim – big, small and intimate, and in this format - I was very impressed with this exceptional virtual session. The format was outstanding, and we didn’t feel the need to be there, in the same room, with him. We also had break-out groups so that participants could meet and interact with each other.

While he talked about many things, one of the attending CEOs said that most impactful were Jim’s simple and powerful questions used to decide whether to develop or replace someone on your team:

Jim Collins’ 7 Questions for People Decisions

Are you beginning to lose other people by keeping this person in the seat?
Do you have a values problem, a will problem or a skills problem?
What’s the person’s relationship to the window and the mirrors? The right people look out the window when things go right, giving credit to others. The wrong people look in the mirror assigning credit to themselves.
Does the person see work as a job or a responsibility?
Has your confidence in the person gone up or down in the past year?
Do you have a bus problem or a seat problem?
How would you feel if the person quit?

We’ve used these questions hundreds of times, with different teams, since I learned them a few years ago. We’ve even built them into quarterly and semi-annual reviews of people in the most important roles in a company, to guide our decision-making and to give feedback to individuals.

When and How to Make People Decisions

Interestingly, most of the time, we end up using the questions to see what we can do to develop and grow the person further – not to decide to replace them on the spot. The answers can give you insights about the specific things that are working and not working - and the teams often team get epiphanies they need to do something differently that gives the person a better chance of success.

I call this ‘eliminating the management variable’. We, as managers, might not be giving people the right feedback, direction or clarity about what great looks like in their role and specifically what behaviour or performance currently isn’t that great; and directing them towards positive change.

Once we’ve made sure we are not in the way or failing to give them what they need, we will see, over a subsequent quarter or two, either notable improvement or growth, or if we need to make a different decision.

Final note: If your answer to #7 is “relieved, excited, overjoyed, thankful” or you want to offer some gesture of appreciation or celebration, it means you are not doing your job. You are waiting for your employee to make a tough call when, really, it’s yours to make.

In the worst-case scenario, when someone does need to move on from your organization, remember to treat them with dignity and respect (unless they have done something horrible to deserve otherwise. Even then, hold yourself to the highest standard of your values and professionalism.)

Remember, you or someone in your company made the hiring choice or gave them that promotion or added responsibility or has tolerated that behaviour or lack of performance for a long time. They are not the guilty party, so allow them to hold their head high, whenever possible.

The Challenge

If you have challenges with someone on your team use these questions as a guide to develop or replace them.

PS - Our team has masterful tools, so please contact us if you need help:

With challenging people decisions
To decide how to strengthen the individuals on your team or to improve your team as a whole
To clarify and master some of the principles Jim Collins talks about.

Listen to this episode of The Growth Whisperers podcast for more about this.

We help high-achieving leaders to have it all – a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.

by lawrenceandco

Taking a Mental Health Break

Back in the early 1900s, the term ‘nervous breakdown’ described the condition when someone was prevented from carrying on with the demands of daily life. The nervous breakdown was considered a temporary, sociological condition. It wasn't a character flaw or a mental issue - and the cure was a restorative power break. Declaring you were having a nervous breakdown gave you a socially acceptable license to step off the treadmill to recover and rejuvenate.

This great article in the Atlantic talks about how many successful people - including JD Rockefeller who went to the south of France for six months - took sabbatical breaks.

The French describe it as reculer pour mieux sauter - to withdraw in order to make a better jump.

While this does tie into the importance of having resilience rituals (Chapter 3, Your Oxygen Mask First, Double Your Resilience), there’s a point when you just can’t get stronger and need to not just rest but rejuvenate.

A few CEOs we know have taken months-long sabbaticals away from their businesses to recover and reset.

One CEO sold his business and took three years to sail around the world. Another rode her motorcycle around America, and yet another took his family on an expedition around the world.

Give Yourself Permission For a Mental Health Break

The point is to give yourself permission to have a recovery period when you know you need it. And while not everyone has the luxury of taking six months out, everyone can do something towards sustainable resilience. Take a couple of extra days, every month, for long weekend recoveries; or reduce your personal or volunteer commitments or commit to taking a full hour for lunch every day.

When I get frayed and burnt out, I deliberately make space in my schedule for recovery. Thankfully, I’ve learned to catch it earlier in the process so that I don’t need an extreme remedy. This year, I’m focused on getting back to a rhythm of one week a month with no meetings. My goal is to create time for personal pursuits or writing or strategic things for my business.

The Challenge

What’s your plan for a mental health break or recovery period so that you can get back to - and sustain - the best version of yourself?

We help high-achieving leaders to have it all - a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.

by lawrenceandco