Updated: Dec 20, 2021
In this episode, we take a look at the different phases and crisis points that every start-up encounters on their growth journey. We will follow a fictional account of a start-up experiencing these challenges. Meet Chen and Olga: two founders who have an amazing idea for their first foray into the start-up world.
I have seen every start-up I’ve worked with experience the same organisational life-cycle and patterns as they scale. The challenges faced may vary in flavour but at their core are fundamentally similar.
The Greiner Curve captures this life-cycle in 6 growth phases. Each phase starts with stable and continuous growth known as the evolutionary stage and ends with a crisis point, where the business needs to make a step change and transition into the next phase. This triggers the revolutionary stage, where businesses tend to experience substantial turmoil and changes in the organisation, such as process transformation, leadership change and structural overhaul.
The Greiner Curve: Organisational life-cycle and growth journey
The speed each business moves through this life-cycle is shaped by variables, such as its age and size, stages of evolution and revolution and most significantly, the growth rate of its industry.
Let’s see if the fictional story below rings a bell.
Once upon a time, in the land of start-up...
Our story begins with two friends who have a ground-breaking idea to level the tea-making world for all-handed people. Their concept is simple: they were going to take the left-handed world by storm with bespoke left-handed mugs.
Let’s say hello to our Co-Founders of Mugs ‘L’ Us.
CHEN: CEO & Co-founder
He's just finished a Bachelor in Entrepreneurial Studies.
Ready to make his debut in start-up world.
He's visionary for Mugs 'L' Us.
First time founder, first time jobber.
OLGA: COO & Co-founder
She was previously the Operations Manager in a Series A start-up and a core member of the team who held the place together.
That start-up hadn't worked out, but what she learned about operations had been invaluable.
📈 PHASE 1: Growth through creativity
Chen’s parents loaned him a cool £100,000 as seed capital which gave them a 6 to 9 month runway to get a prototype in front of their first potential backers. Chen and Olga needed some extra helping hands to get the business off the ground, so their first hires were three trusted friends in Finance, Business Development and Product & Tech.
Typically, no one really stuck to their own role. Chen would just as soon be on the phone taking customer service calls as he would be preparing investor pitches or ideating the newest product design. Olga handled everything else, from all things people (hiring and happiness) to workspace lease negotiations to sourcing the manufacturing and production of their bespoke mugs. It didn’t really matter to them what responsibilities they had to pick up, as long as shit got done.
The one thing they all came to expect were the hours - morning or night, you’d find these five in their tiny coworking space in Shoreditch, London. Excitement to conquer the market and glorious amounts of coffee fuelled their days. Of course, £100,000 only goes so far; but the promise of having a slice in the Mugs ‘L’ Us pie from the outset made up for the modest salaries and long hours.
The great thing about having the Co-Founders so close to the end-users was the “ear to the ground” reactivity - they were able to speak to customers and pivot in real time based on their feedback. The best part: these decisions were made quickly - all it took was a chair swivel to talk to the group, maybe a short whiteboarding session, and the pivot would be planned, communicated and actioned. This responsiveness won them favour among the long-neglected left-handed community.
Before long, they were receiving more orders than they knew what to do with: their cobbled-together Excel tracker was overwhelmed. They needed a larger space to host new hires, tools to support their growth and, most of all, someone experienced who was able to manage their growing manufacturing needs.
On top of that, Chen secured their Series A funding! They were fast-approaching Phase 2 of Greiner’s Curve.
💥 END OF PHASE 1: Leadership crisis
The main condition of the funding was to grow the team and customer base, and make profit.
Their first port of call was to transform manufacturing practices. One of Olga’s many hats up until now had been to oversee this supply chain and for someone who had never done it before, she’d done an amazing job.
To take their next step in left-handed market domination however, they needed to hire an experienced person who had done this before and would take the job off Olga’s plate. Chen was thrilled when Matt joined as the Head of Manufacturing. He came with a stellar track record, some brilliant names on his CV and was a culture add to boot.
Matt joined as Head of Manufacturing
Unfortunately, they had a bit of a rocky start. Olga was a bit too… helpful. As much as she was behind the idea of having an experienced person, Olga had a bit of difficulty handing the reins over. She dipped in and out of team meetings to drop her two cents in, hovered around Matt’s reports and gave them so much advice it was bordering on directive.
After a couple of awkward run-ins, Matt had a chat with the founders. Olga admitted to feeling less valuable to the company - she had gone from being an integral piece in their production puzzle, to having most of those responsibilities taken over by Matt. Chen needed to remind Olga that her role was growing, not being taken away or becoming any less. With Matt joining, Olga was able to focus on the bigger picture: the company’s growth and success! Finally, with support from Chen, Olga started to work with Matt to empower him and enable him to succeed in his role.
How to overcome Leadership Crisis?
“The situation that Olga faces is very common for Founders. The framework I often find helpful is to reflect on how much of your time is spent Doing vs. Managing vs. Leading, and whether that’s the right balance for the stage of the company. The next question that often comes up, particularly for those with limited previous leadership experience, is what does it actually mean to a manager, or to be a leader; and crucially, what style of manager or leader do I want to be?
In this situation Olga is learning how to become a manager. Typically, someone in this position will initially struggle to let go of control and that tends to be driven by a fear that something will go wrong. As Olga steps into this managerial role for the first time I’d encourage her to consider the responsibilities that she can delegate to Matt, what metrics she can use to track progress, what types of decisions she’s happy for Matt to make by himself and how often they’ll have a check in.
In addition to becoming a manager, the addition of new team members puts more pressure on Olga’s leadership responsibilities. She’ll need to be able to find time with her co-founder to step back from the day-to-day tasks to think strategically and set the direction for the company. The quality of this strategy will be crucial to raising further investment, hiring team members and ultimately ensuring the company’s success.”
Becca Sweetman, Coach & advisor for founders & executives in impact driven start-ups
In the next episode...
So, we’ve followed our founders Chen and Olga as they established their foothold in the left-handed market and experienced their first crisis point (Leadership Crisis) at the end of Phase 1 in Greiner’s Curve. What challenges await them in Phase 2, 3 and 4 of their journey? Stay tuned to find out!