Transitioning from a founder to a CXO is a pivotal evolution in a startup’s lifecycle. While the founder’s passion and vision ignite the venture, scaling requires a shift in leadership style and skills. Often, founders find themselves at this juncture with little preparation.
This was the case with a former client, Alex, the Founder and CTO of a fintech startup. Initially, he thrived on solving technical problems and building the product. However, as the company grew, he became overwhelmed by managing the expanding team and making strategic business decisions. He struggled with delegating tasks, managing the pressure of decisions, and navigating the complex dynamics of a larger organization. His challenges not only affected him but also rippled through the company. Team members felt confused about their roles, his co-founders began to walk on eggshells, and critical decisions were delayed. The strain on Alex’s relationships with his co-founders and employees highlighted the need for a more structured leadership approach.
Alex’s experience is similar to that of many founders who lack the skills required for their expanding roles as the startup quickly scales. Below are five steps to help founders confidently transition into the role of CXO of a scale-up.
Embrace delegation
Transitioning to a CXO role requires shifting from doing to leading. This means trusting your team to handle operational tasks and non-strategic decisions. Founders who effectively delegate can focus on strategic growth. A Gallup study showed that only 25% of entrepreneurs are highly adept at delegation, yet those who see their companies generate 33% more revenue. Delegating not only boosts employee morale, making them feel empowered, but also enhances productivity, creativity, and effectiveness.
Set clear strategic goals
Effective CXOs set clear visions and measurable goals, balancing short-term objectives with long-term aspirations. “Companies fail or fall short of their potential not because of bad strategies, but because of failure to implement good ones,” according to a report by the Project Management Institute.
Founders often face significant time constraints, leading them to react rather than proactively strategize. Prioritizing strategic planning enhances decision-making capabilities, reduces reactionary responses, improves risk management, aligns organizational efforts, and minimizes missed opportunities.
Foster a strong company culture
Company culture is often an afterthought in startups until it’s apparent that it has deteriorated. A common mistake during rapid scaling is hiring solely based on skills and qualifications, neglecting cultural fit. This can lead to onboarding individuals who do not align with the company’s values, resulting in discord and reduced team cohesion.
Culture starts at the top, and CXOs must define, document, share, and champion it. Fostering a strong company culture has numerous benefits. Research commissioned by Amazon Web Services found that it plays a critical role in securing investment. After all, who will invest in a captain with an unruly crew? A positive culture attracts investors and enhances employee retention and satisfaction. Conversely, poor culture can lead to high turnover, resulting in knowledge drain, low productivity, and high recruitment costs. A strong culture cultivates loyalty and engagement, driving the company toward its long-term goals.
Manage stakeholder relationships
Many founders are surprised by the increasing complexity of stakeholder relationships as they scale. Initially, managing a small team and a handful of investors is manageable. As the company grows, expectations and pressures from stakeholders intensify.
CXOs learn to handle this complexity by skillfully influencing relationships with authenticity, transparency, and a grounded approach. Effective influence goes beyond communication; it involves aligning stakeholders’ expectations with the company’s vision and goals. Open communication builds trust, crucial for garnering support during crises. By being authentic and transparent, CXOs cultivate a loyal network that stands by the company through tough periods. Trust, forged through honest interactions and realistic expectations, enhances the CXO’s ability to influence stakeholder support, ensuring greater stability and resilience in adversity.
Adapt and evolve as the business changes
Every founder will face business challenges that demand skills they may not yet possess. As the company evolves, adapting and acquiring new competencies is crucial. The transition from startup founder to scale-up CXO often triggers a natural fight-or-flight response, as outlined in the Conscious Competence Learning Model. This model shows how individuals move from unconscious incompetence—where they are unaware of their lack of skills—to conscious competence, where they actively work to develop new abilities.
Many founders are highly adept individuals, and it can unsettle their egos when they realize they lack the skills to drive the company forward through the next phase. However, through this discomfort, founders gain the expertise needed for their expanded roles. Resilience, paired with a continuous learning mindset, helps founders manage the complexities of their evolving roles and guides their organization toward long-term success.
To sum up
Smooth sailing does not develop a seasoned captain. Like many founders, my client Alex initially struggled to recognize his limitations. Through self-awareness and targeted learning, he gradually developed the necessary skills and foresight to lead effectively. Alex’s journey is common in the startup world. Founders with the right mindset and commitment to learning can successfully transition into impactful CXOs, guiding their companies to long-term success.
