Common Scaleup Mistakes #3 - Seeing the Business Through Rose-Tinted Spectacles and Ignoring Reality

One of the most significant difficulties I have experienced when interacting with senior audiences is their remarkable denial of an impending collision course for their business.

There are two types of seniors:

1. Those who are too hands-off and leave nearly everything to their teams - arguing very likely that "those guys are accountable; they need to take the decisions and be held to account". This is often a navel-gazing "blue-sky" leader who has lost touch with reality, believing that his strategies are being impeccably implemented. But they are not. There is a chasm between blue-sky strategy and on-the-ground execution incompetence.
2. They are too hands-on and stifle their teams with micro-management. Often, the business suffers frequent staff churn and turnover - a wasted investment in its people.

Where scaleup is concerned, neither style nor type is a good fit.

A balance is required between being hands-on and hands-off. Knowing when to be hands-on and hands-off is based on the situation's demands and the capability development of the people being managed. This was the cornerstone of Ken Blanchard's work, Situational Leadership.

Some seniors need help with this paradigm. They revert to being one or the other when, in reality, they need to be both and switch between styles when required.

In my consulting life, I write to seniors and offer help. I research prospects before approaching them, and I only reach out when I think the prospect has underlying issues I can address.

When scaling up, it is essential to focus on the metrics. That is provided you have (a) set any metrics and (b) the metrics set are critical to success!

In corporate life, I was sent to turn around an ailing business in 18 countries, absorbing costs but failing to deliver sales targets in the prior three years. I could see that I had inherited a team of people with serious misalignment between the results they said they would deliver and what they did deliver.

Furthermore, when I discussed the business results with distributors through whom we were scaling up the business, none of them were willing to suggest that, in some part, they were to blame for the lack of results delivery.

No. They all told me that the company was to blame for the failure —the staff and the distributors all blamed the company. They stated we needed more reps and to spend more to drive the business. In short, they asked me to spend more on a business model that was not working—doing more of the same and expecting different results!

You see, distributors promise you the Earth but deliver nothing. As I have written in my book on distributor models, there are very good explainable reasons why delivery fails with such a model.

So often, scaleups fail due to a lack of metrics or the wrong metrics. If the reader is in charge of an international scaleup business, they are probably running it from an arm's length based in a different country or the company HQ. I argue that the person can be based elsewhere other than the country of scaleup, and I explain why in my book. I regard corporate affairs slogans such as "Being in Africa for Africa" as an excuse to relocate staff from Europe to Africa as utter trash and nonsense.

So long as some key non-negotiables are met in a candidate (that I explain in detail in my book), the person to lead the scaleup can be someone other than a local person or an ex-pat sent in to head up the scaleup and does not need to be based in the country. The person can be based anywhere in the world!

When I talked to my staff, they were wonderfully positive and committed to the business. However, international scale-up leaders must be cognizant of cultural awareness and differences.

Often, folk do not like to tell bad news that budgets will not be met. They are not lying. It is usually a cultural thing. Often, the folk do not want to tell bad news to the boss lest they be seen as failures.

Have you passed your instrument rating?

I often say that seniors need to remember that guiding and directing international business is like flying an aircraft at a height where you cannot see the ground below due to altitude and clouds. Pilots are trained to fly on what is termed "instrument rating" instead of flying by visual line of sight.

To pass the instrument rating, a trainee pilot goes into a flight simulator and has to wear a unique darkened visor. Everything in front of him (the view outside from the cockpit) is blacked out in the visor, and only the lower part is clear to enable visibility of the dials and instruments. The instructor takes off the aircraft on the simulator and hands control to the trainee. He cannot see the screen (the view from the cockpit). He confirms, "I have control".

After a short while gazing at the external view through the darkened visor, his mind starts playing tricks. He looks at the instruments. He is on a straight flight with a slight nose-up attitude on the correct heading. He checks the heading—230 degrees—spot-on as per the flight schedule.

But his mind tells him the plane has a downward attitude with a right-bank turn, which is not what his artificial horizon indicator shows. He taps the dials and instruments, thinking they must be incorrect and that something is wrong. He perceives his bearing as not 230 degrees.

He sees his instruments as different to reality.

NOTHING needs to be corrected! He is on level flight, on course, according to the navigation instructions received. However, his mind is playing tricks. He has become disoriented because he cannot see ahead or the horizon.

He can see the truth in the dials and instruments. He knows the truth - these instruments don't lie. There are backup systems that cut in in the event of a failure. But he thinks the instruments have failed. His mind is lying to him. His head believes the lies over and above the truth his instruments tell!

He overcorrects, sending the plane into a misdirected turn and crashes during the simulator exercise.

Why is this relevant?

One of the first things I did when I took over those 18 countries was to introduce a rigorous set of metrics in my 'dashboard' or my panel of instruments. They were the most important metrics I set up on the dashboard. Companies either have too many instruments and/or the wrong instruments! They become data rich, information poor.

This leads to paralysis by analysis and slow operational velocity, and the business moves further away from its goal until it is too late to correct it. Often, the focus is on the demand data—prescriptions written/dispensed—which is often inaccurate in emerging (distributor) markets. The more critical financial side of payments outstanding is rarely considered as much as it should be.

Why?

Because if you are to deliver a scaleup business, you can only scale if your customers can pay you! Remember that!

This is especially true for countries like Nigeria and Ghana in sub-Saharan Africa (SSA). They are facing immense inflationary pressure and massive currency devaluation, putting any company operating there at high risk of going bust through debts and inability to be paid by distributors.

In my book, I explain these factors and their impacts on business.

"Taking over as a new leader of a business that has a serial number of dead bodies attached to it is fraught with danger. The prior guy is probably no longer around because of the failure to deliver".

Where seniors make a big mistake is they listen to their teams and believe the (unintentional) lies. They usually know the business is going to miss the numbers. But they see a committed set of teams that is ever optimistic. But optimism alone is not a credible reason to deliver the numbers.

Seniors must believe their teams only when they present evidence of how things will change from the current trajectory of failure to success at hitting the numbers. It is how they manage those control systems that matter.

Too many seniors put their businesses at high risk of failure by leaving things to their staff instead of stepping in, taking control, and bringing in an expert to understand why the company will not deliver. They are often deluded - thinking their brilliant models and strategies are being impeccably implemented when, in reality, they are nothing of the sort!

An external expert can look objectively. He or she has no axe to grind, no agenda to protect jobs, and will present a clear set of findings—the truth—both positive and negative that need to be addressed if the business is to realise different results.

When I confronted my teams with the dashboard I had set up, they would cite many illogical reasons why things were off track and promise that things would be better down the line.

But I never backed down by believing that at face value.

I demanded to know both "why" and "how" things would change. I wanted to see a documented rigid set of actions and "by when" they would yield the results. I would then track the impact of those actions monthly to see their effect on the results.

That "dashboard" I set up was my set of instruments flying this business from afar.

It did not lie. It was the truth. The teams needed to be more truthful and overcome cultural tendencies to avoid being the bearers of bad news.

I am staggered at the number of seniors who wear rose-tinted spectacles and believe the lies.

They continually believe in and rely on the same teams that have not delivered and then expect them to miraculously deliver the results, with no logic or reason for why they will achieve a different set of results.

Taking over as a new leader of a business that has a serial number of dead bodies attached to it is fraught with danger. The prior guy is probably no longer around because of the failure to deliver.

What does the new incoming leader do? He asks for advice from the team left behind after the previous leader. But that team created disastrous results that led to the previous leader no longer being in the role!

So often, I can see a senior leader about to sail his ship onto an iceberg. But that senior is in denial and believes his staff can deliver the numbers when logic and history tell me they will not. And I have always been proven correct—they will not give the results promised.

I have correctly predicted who will succeed with scaleup and who will not.

Very few succeed; many fail.

Hard statistic? Maybe? But reality.

My message is that if you want to avoid this mistake of scaling up, remove the rose-tinted spectacles. Set up a dashboard comprising the essential metrics that matter. Track them meticulously and challenge them when the instruments tell you that you are adrift from where you need to be. A pilot uses these basic instruments. What are your basic instruments for flying the scaleup mission?

The instruments do not lie. People do!

Refrain from taking comfort from teams who say the next set of results will be better.

Ask and challenge why they will be different and what they will do to give different results. And LISTEN to what they say, don't interrupt and ask yourself:

"Are they telling me the truth, or are they just being nice, and is this all a pack of lies?"

Learn how to run a business on an instrument rating, as pilots learn to fly a plane when they cannot see the ground and their surroundings.

Don't get labelled on your exit as "the guy who knew and saw the truth but believed the lies!"

"At all times avoid paralysis by analysis; avoid slow operational velcoity and avoid becoming data-rich, information poor"

And if you want to know what is wrong, what needs to be fixed, and how, then bring in an outside expert who knows better than your team how to diagnose the disease and prescribe treatment. The expertise may save you from following your predecessor's fatal path.

About Samkoman Consulting Ltd:

I started SCL after a stellar career at AstraZeneca. I am focused on helping my clients succeed in scaling up in their home market and expanding into new markets, unblocking the factors stopping them from delivering scaleup after numerous attempts in existing markets, and advising senior Boardroom executives on international and domestic business commercial challenges.

If you want to chat about how I can help you, you can book a free, no-obligation Teams or Zoom call directly into my diary using the link below.

Book a free consultation with me: https://calendly.com/amitvaidya2021