How to Survive the ‘Valley of Death’

What happens when you realise you need to make changes to your leadership team if you want to continue to grow? Maybe even let some of your leadership team go?

If you’re part of a business that has experienced strong growth, you may have noticed that the people you had when you started your business are not the people that you need through your next growth phase.?

This can be a really difficult realisation for business owners and leaders because it means you need to make some tough decisions. But if you don’t make these critical decisions, your company can enter what’s been called the Valley of Death.?

‘if you don’t make these critical decisions, your company can enter what’s been called the Valley of Death’

What is the Valley of Death?

Sounds great, doesn’t it? Verne Harnish discusses the Valley of Death in his book Scaling Up .

Plateaus

Verne discusses a study of 28 million firms in the US which found that companies often start with some hard-won growth, and it’s really hard to get up that first mountain, but then you hit a plateau. All of a sudden you start sliding down into the Valley of Death. At this point you need to find a way to grow again, and then you’ll inevitably hit another plateau. (You can use a search engine to find an image that shows this trajectory.)

Those plateau points are at around US$1 million of revenue and then US$10 million and then US$50 million. The idea is that the processes and systems and people that got you to US$1 million aren’t necessarily the same processes and systems and people that will get you over US$1 million in revenue.

Decision Time

That’s the Valley of Death. This is where we start to feel the pain and where you need to make those tough decisions to get out of the Valley – and not everyone does. Within those 28 million firms studied, 96% of businesses will stay at under US$1 million. About 4% get over US$1 million, 0.4% get over US$10 million, and just 17,000 over US$50 million.?

Recognising the Valley of Death

I was thinking about this recently because a number of my clients have found themselves in the Valley. As an example, let’s say I’m working with a senior leadership team of six people, but really, only four of those six roles are required for the future plans of the company. The other two roles might be an operations role and a delivery role. It doesn’t make a lot of sense to keep them for the next phase of growth. We just don’t need them anymore. We really need to combine those operational roles together into a more strategic role. It is very difficult to manage this change.?

‘We really need to combine those operational roles together into a more strategic role. It is very difficult to manage this change.’

Preparing for the Valley of Death

However, you can get a jump on this process to make it much less painful. It’s important to start thinking about ways you can move people into different roles in the business in advance. Done well, you can be strategic and proactive about this to recognise the warning signs.

Planning Ahead

This comes back to planning for the growth of your business. If you use the ‘Valley of Death’ as a litmus test, you can consider questions like:

• Where are we sitting in terms of revenue and growth??
• Where are we sitting in the trajectory of the Valley of Death??
• Are we way down the bottom in the worst part??
• Are we starting to slowly slide down?
• Or are we actually on the curve up??

People First

If you’re in a situation where you have roles that you don’t need, or that need to transform, you also need to be thinking about the people involved, asking questions like:

• How do we give those people the opportunity to apply for a new role??
• Do they have the skills, experience and knowledge required??

Notwithstanding the legislative requirements around redundancy, we should be thinking in advance about the best ways to keep good people on board.?

Navigating the Valley of Death

If your people are right for your business behaviourally, if they align with your values and believe in your purpose, you can prepare them for the transition in advance. You need to think about how you can give people the best chance to apply for the new roles. What can you do to support them to be successful??

Communication

Imagine I have someone who’s in an operational role, and they’re doing a fairly good job, but I have realised that if I want to get out of the Valley of Death, I need a much more strategic operations role.?

I might just assume that my operational person can’t fill the strategic role, but how do I know for sure? How do I open a conversation with them about the organisation’s new strategic direction and different objectives, and the skills they would need to develop for the new requirements??

One question might be – have you done that kind of work before? Sometimes people have been in a role for a while, and they don’t know what they don’t know. They might not be keen to step into a role that’s unfamiliar to them.?

You need to be open and honest with people and explain that over the next two to three years, you’re going to need a lot more strategy in their role. Explain the skills they will need to start developing now, and ask them what they think.?

Adjusting the Narrative

This approach has another advantage: it can help to set the narrative up front. It can prompt a person to start developing the skills they need, but it also can prompt them to their own realisation. If they’re just not the right person, they’re likely to work this out for themselves.?

‘This approach has another advantage: it can help to set the narrative up front.’

This helps to set the narrative with the rest of the business as well. When people leave, it doesn’t just impact the person leaving, but the rest of the organisation as well. They’re all watching how you handle the exit.?

If you don’t manage it in a way that’s aligned with your values and your purpose, and is respectful to the person leaving as a human being, your actions will impact on everybody in the business, and not just the person leaving.?

Changing Needs

I’m not saying that you’re always going to have to remove people who have been with your business from the start. But the reality is that as your business grows, the things that you require from those roles are going to change, particularly those senior roles.?

I’ve heard people say that the first COO you hire is never the COO that you need. It’s actually the second or the third COO who will work better for the business. Sometimes it’s the business owner who won’t let go – I’ve certainly seen that happen. But sometimes it’s also because the business is growing fast and the role of COO becomes very different to what you needed 12 months or two years ago.

Intentionality and Structure

How do we become more intentional about this process? Go back to your business planning. Have a look at the things you need to achieve over the next 12 months. To reach these goals, ask yourself:

• What will you need from your business culture to meet your goals??
• Is it fine the way it is or do you need to change it??
• What will you need to develop?
• What skills and experience do you need, particularly in the leadership team, to get you there??
• Do you currently have those skills represented or not??

Start to have those open development conversations with your senior managers, because without having that leadership team really solid, it’s going to be really difficult to keep growing. And that can be disastrous for business owners – they become stressed out and overworked, unable to switch off.

Instead, try to be intentional and structured about business growth. And once you get to the next plateau, it’s time to start thinking about whether you want to keep growing. Are you happy here? Is this your spot? Is this where you want to stay? Or are you going to take a deep breath and get ready to go back into the next Valley of Death until you get to that next plateau point??

All these things require really deep thinking, because they go to the purpose of your organisation and what you’re trying to achieve in the medium to long term.

Have your say

Have you been in the Valley of Death? We’d love your feedback on this series, just head on over to Amplify HR or connect with Karen on LinkedIn .