Getting Your Succession Planning Right & Learning From Nic Brisbourne and The VC Helping Founders Beat The Odds

Want to know the most significant obstacle facing scale-ups in the UK right now? It’s leadership. As businesses grow exponentially, they need talented leaders and managers. And all too often, they promote people internally who aren’t ready or hire from outside with an immense cultural cost.?

The answer? Leadership succession planning. We firmly believe the primary job of a leader is to make themselves redundant. Take this attitude to every leadership role, and you’ll build a culture that constantly develops and grows talent into future management roles.?

I remember working with a client, New Signature, and plotting their growth to ￡100 million.?With my help,?they realised they would need 70 new managers in three years. What a realisation. Where would these people come from? They needed to make a plan fast.

Succession planning is vital to scale your business whilst also retaining your culture. Growing your leaders will always be better than hiring from outside. What happened at Rackspace is a great lesson. In ‘The Rack We Built’ by Lorenzo Gomez, he describes how the culture was destroyed by bringing in leaders from outside the business. It’s painful to read.? ?

But when it comes to succession planning strategies, we’re not just looking at leaders and managers. We’re also thinking of sole contributors who might be vulnerable to a bus hit. Too often, scale-ups become reliant on one person who holds essential knowledge. Identifying these individuals and ensuring they’re included in succession management is vital.

So, how do you get succession planning right?

Identify and develop high-potential candidates.

Start with?talent assessment.?Sit down with the rest of your Executive team and group your staff according to their talents. Work out where they sit in the following matrix:

Remember, the definition of an A-Player is the top 10% of available talent for a given job title, location and salary. They consistently meet and beat goals. They’re a joy to work with and a great cultural fit. B-Players, on the other hand, have a habit of killing initiatives. They push back, make excuses and often have to be told what to do. C-Players are your dead wood – the lowest in terms of performance. They let work slip, rarely ask for help and try to coast unnoticed.?

Then, consider the stage your business is at on its growth journey. With 30 staff, you’ll need a leadership team. With 100, you’ll need to introduce a new management layer. Then you’ll need another layer at 300 and another at 1000. Look at your current A-Players and subdivide them further into A+ and A++. The A+ will be able to move up one layer and the A++ two. Start to earmark these people for development and create a framework to give them the skills before moving up a layer.

Remember, some of your A++ people will likely function better two layers above. When I think about my career in sales, I was happiest and most successful as a Director. Yes, I was an A-Player salesperson and manager, but I hated doing pipeline reviews. Only when I reached MD did my job put me in flow. Identify this type of high potential early, and it will help you retain and grow future talent.? ??

And while discussing potential and talent,?ditch the ‘9-Box Grid’.?I hate this tool! To be promoted, you need to be a star performer. End of. Don’t promote B-Players, as they won’t succeed and will block a seat where an A-Player could be sitting.

Provide growth opportunities and mentorship.

Put in place a development framework to advance skills in your business. If there are different layers of management and leadership, identify what’s needed at each stage to progress. Create pathways for talent to move through, establishing mentoring programmes and job rotation. Maybe there are courses they need to take,?tours of duty?in various parts of the business, secondments and opportunities to demonstrate management ability.?

Team leader roles can be helpful. However, be careful people don’t get stuck here. The purpose of a team leader role should always be to provide a stepping stone to management. No one should be a team leader if you don’t believe they have what it takes to step up into management.

If you’re future-proofing your business against reliance on sole contributors, look at job swap shadowing. Ensure that at least two people hold essential knowledge. Make sure person B can do the job of person A by freeing them up to shadow and document processes and ways of doing things.?

Review talent profiles regularly.

Make sure you go through the talent assessment process at least every quarter and review talent profiles. You’re always looking for the potential to move up two or even three layers in the business. Your most talented people will often need to improve at understanding that they could be promoted. It goes with the territory that the best people are often the most humble. So they might need to have opportunities pushed at them.? ?

Sometimes, you might have a manager who’s happy staying where they are but training other people. These people are so valuable, and it’s worth identifying them. One that springs to mind from my time as MD at Peer 1 was Mike. He ran the Data Centre and had 100% turnover in his team every 12 months. He’d hire new people into the organisation and screen for culture fit over three to four months. If they made it past probation, he would leverage skills into them. Before long, they’d get promoted to a new job elsewhere in the business. Mike was great at developing his people and got a real kick from seeing them succeed.

Prepare emergency succession plans.

Mitigate risk by having emergency succession plans in place. Be ready for sudden leadership transitions, with at least one backup successor for every key role. Keep these emergency plans current and known both by HR and the Board.?

I was chatting to a client recently who grew by 100% last year and was looking to do the same this year. Everything was going well, but they said, ‘OK, Dom – what are we NOT doing?’ I replied, ‘You don’t have an emergency plan. What if two or three of your top salespeople leave? Do you have a bench of salespeople waiting in the wings?’ From a recruitment perspective, this is important. Internally, who would you promote, and are they ready? What do you need to do to prepare them?

Think through as many emergency scenarios as you can. Do you need to move faster on training and development? Any scale-up will be running hot. That’s the nature of exponential growth. Everyone’s busy. But this is when something goes wrong, and you’re up shit street because you didn’t plan.

Have regular conversations about these plans. Document processes. Even if you haven’t trained Fred on Bob’s process, have you got it in writing? Too often, there’s nothing. Maybe get Fred to document it for you. This is better than Bob writing it down himself, as he’s bound to forget something. He’ll know things and assume others have the same knowledge. But if Fred writes everything down, it’s more valuable. Fred will understand more quickly what needs to be done when Bob gets promoted.

Consider internal mobility and mapping career paths.

Lateral moves and job swaps are great for internal mobility. These need to be mapped and adequately considered. In the past, I’ve sent people overseas to do six months in a different location. This is great if you’re not ready to promote but want to retain an A-Player. It will keep this person happy whilst the business scales a little more, creating a role for them to move into.??

Provide these opportunities, but expect some ownership from your staff. You shouldn’t have to force-feed someone’s development – the best people should offer to take on new assignments or responsibilities without changing their pay grade. You need to see evidence of success before you promote. There should be an innate sense of curiosity and drive in your A-Players. These are your future leaders, and it should be evident to everyone that they have this potential.?

The VC Helping Founders Beat The Odds with Nic Brisbourne

This week on The Melting Pot, we delve into the world of venture capital, IPOs, and the limitations of traditional investment structures. We learned from Nic Brisbourne, a serial founder of VC firms and founding partner at Forward Partners, which has some rarity value. It’s one of only a handful of VC firms in the UK that has gone through an IPO. Every year, they get 4,000 pitch decks, from which they only interview 400. Ultimately, they only invest in 1% of the people they meet. That’s a very wide funnel at the top and incredibly narrow at the bottom.

In this episode, Nic dives into the complexities of recruitment and the importance of making the right hiring decisions. Along the way, he unveils his proprietary framework for assessing founders and shares valuable lessons on the IPO process and the structure of venture capital firms.?

Download and listen to learn more.

On today’s podcast:?

• Forward Partners investments
• The recruitment challenge
• Traditional vs Innovative VCs structure
• The CIDL proprietary framework to assess founders

Follow Nic Brisbourne:

Forward Partners website

LinkedIn

Twitter: @brisbourne

Nic is the founder and CEO of Forward Partners. He has worked in venture capital in London and Silicon Valley for over 20 years. Prior to founding Forward in 2013, he was a founding Partner at leading venture capital firm Molten Ventures (formerly Draper Espirit), which went on to admit to AIM in 2016. Before entering the venture capital industry, Nic worked as a strategy consultant for Gemini Consulting and at London-based startup Operis Group plc.

He has led over 100 investments and has overseen several successful exits, including, most recently, Wonderbly and Heights from the Forward portfolio. In 2021, Forward listed on the London Stock Exchange, raising ￡36.6m. He currently sits on the board of multiple fast-growth startups, including Robin, Makers and Koru Kids.

Outside of Forward, he’s a proud husband and father of two teenage kids and a long-time season ticket holder at Chelsea Football Club. He’s developed a keen interest in mindfulness and philosophy that’s proved to be a great asset at home, at work and as a club supporter.

Forward Partners?

Forward Partners, the VC company founded by Nic, invests in applied AI, web3 companies and marketplaces within applied AI. At the moment, all the excitement lies around Generative AI, ChatGPT and all the opportunities emerging from it. Throughout their ten years in operation, Forward Partners have tried to set themselves apart from other VCs with how much they help founders.?

One of how they help founders is through what they call the ‘studio team’, a small agency run on behalf of portfolio companies to help them succeed. They also took the slightly unusual decision to list themselves on the London stock market in 2021. So they’re a listed VC firm, which gives Forward Partners a platform to innovate more than in a traditional GPLP structure with the plus of giving them permanent capital.

For Nic, doing the IPO was one of the hardest things he’s ever done.

“When you start to think about IPOing your business, the first step you take is to meet with a bunch of potential brokers who might take you to market. And then, you select a broker, and the first thing they do is organise a test roadshow for you where you meet with five to ten potential IPO investors and have conversations with them. We’re thinking of listing in six months. If we do that, might you invest? That’s your market test. And if enough of them say, yes, we’ll put some money up, then you push ahead and do the whole thing. If not, you put it on pause and fix whatever you need to fix to get your business to the point where they will invest.”

With their IPO, Forward Partners were trying to bring an innovative approach to investment and innovation. Nic explains that the traditional structure of VCs – GPLP – doesn’t create the right environment for innovation.

“When you have that structure, because there’s differential ownership between the two, then that makes innovation very difficult because if the manager, the VCs, are innovating down in the general partnership, it’s not clear that the benefit accrues to the general partner, not to the limited partners, increased limited partners, the extent of flow through to investments.”

When you change to a company, he adds, all stakeholders and shareholders in a single vehicle; if you want to innovate, you take it to the board. The governance as to whether the innovations are working comes through the board.?

“We wanted to unlock that. Specifically, we wanted to do it because we had begun launching an additional business alongside our venture capital equity investment business, which was a revenue-based finance business. So, we provided a novel form of debt to early-stage e-commerce SaaS businesses, and doing that inside the traditional structure was impossible. To scale that, we needed to get to a single company, and the IPO allowed us to do that.”

The recruitment challenge

Startups face many challenges, but the biggest one is finding talent. At the early stages, where he invests, the recruitment services market is very inefficient in its provision for small businesses. These are difficult for recruitment firms to work with, says Nic. Startups are not prepared to pay the fees of the biggest and best recruitment firms, so the CEOs are left working with recruitment firms that send CVs indiscriminately and that don’t treat candidates well.

“All the surveys show that the two biggest challenges for startups across stages are getting the right people and getting the right money into their businesses. And so A, there’s a problem and B, as a VC, what’s nice is that when we call candidates, they take our call. If there’s a VC firm calling, I will speak to them. If they get a call from a startup they haven’t heard of before, they’re much less likely to do that. And similarly, if they get a call from a recruitment firm, most good candidates are not taking those calls either these days.”

Recruitment is not only a challenge for startups but for larger firms as well. For many companies, hiring a new executive is one of the most critical decisions in their business, yet no one in the executive team has done any training on hiring. For Nic, it’s challenging to find and screen good candidates to speak with. And it’s also tough to convince them to join.?

A common mistake during recruitment is hiring someone for the wrong job at the wrong time. Dominic gives the example of startups, which usually don’t have processes in place. These not only need someone who can sell but who can also create some order out of the chaos and build a process. So often, people have been successful in a big company, but they didn’t design the process; they executed it. They might be a great salesperson, but they may not be the right fit for the stage at which the startup is at.

“Another common mistake is arriving from a company having a successful sales track record and [thinking] I’m just going to implement the same process that worked for me before. You need to think, what product are we selling here? Right? Is the selling price the kind of average selling price the same? Is the sales cycle the same?”?

The CIDL proprietary framework for founders

For a startup, growth is key, says Nic. And, for many companies, the CEO or the founder is the Chief salesperson until they get up to ten million in turnover. So, they might be hiring salespeople to give them leverage, but it’s the founder who is driving the revenue. In those cases where the CEO is not the chief revenue officer, Nic assesses the go-to-market by of the product.?

“We invest when companies typically got between maybe 2 and 15 people. And so half of them are pre-revenue, and the other half have got some early revenues. But how do sales scale? How do revenues scale is a key question. Is this team going to be able to do it?”

And to find out, Forward Partners has developed a proprietary framework to assess founders. The CIDL framework focuses on the four drivers for success: Competence, Insight, Drive and Leadership. They evaluate the new investments based on those four components and compare them with their existing portfolio companies. This has enabled Nic and his team to have much richer conversations about founders than ever before.?

“So you’re going to give them a five for Insight? Maybe. So let’s look at the other fives in our portfolio for Insight and say, are they as good as this person? So you can make that conversation real. […] And then when we look across the portfolio and see, well, is there any pattern to which founders are successful?”

Nic says one of the successful patterns is scoring five for Insight, which shows a deep understanding of the problem and the customer. Within Leadership would fall the charisma and sales ability. If founders can run a good process, that would go into the Competence bucket.?

“Typically, if you’ve got deep Insight, they may not be a great salesperson, but customers love to speak with them because they are the expert on the subject, right? So if you can get in front of, you know, if you can get into the deep conversation, then customers end up buying.”

Looking for founders that stand out

“One of the amazing things about investing in early-stage startups is how much founders grow and develop as the business does. And one of the most profound learning experiences I think anybody can go on is setting up their own company. And you’re looking for someone who is going to be able to embrace that and really grow and learn.”

The experience is different when the company you’re investing in is a few years old. In these cases, he relies on the founder’s trajectory rather than assessing whether they’re going to be able to ‘get on this curve or not’. If founders have started a company before, that process is straightforward. But if not, Nic looks for what he calls master events. Have they stepped out and done something difficult, given the context? For example, if they went to a public school and then became a football team captain at Cambridge.

“That’s nice, but it’s nothing like the same as if you came from a much more difficult background and making this up. And we haven’t got one of these examples, but came from a difficult background and ended up partnering a major law firm at the age of 29, you’re going, okay, that’s much more real.”

Book recommendations?

The Great CEO Within

Breath

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