On Scalable Leadership

On Scalable Leadership

November 15, 2022
An Overview:

When unlocking hypergrowth takes an inside job.

In the past week, there have been so many spectacular leadership failures (and a precious few bright lights) on full display. Over a hundred thousand technology workers have been laid off, with more announcements in the offing. The unraveling of crypto giant FTX has destroyed $1.8 billion in invested capital and over $30 billion in enterprise value, to say nothing of the $2 billion in customer funds that remain unaccounted for. In these moments, it becomes painfully clear that when you take a broken business model and scale it 100x, you destroy value and lives at a billion-dollar scale. The same goes for broken leadership.

In this blog post, I explore what scalable leadership means, what it looks like when leadership fails to scale, and what we can do about it. I’ve drawn inspiration for this piece from the courage and vulnerability of the founders I’ve coached in this year, as well as the brilliant teachings I’ve received from Narrative Enneagram, the work of Robert Kegan and Lisa Lahey on the immunity to change, and the work of Bob Anderson and The Leadership Circle — where I first encountered the words “scalable” and “leadership” in the same sentence. In addition to my coaching practice, this post also builds on the important work we’ve been doing at Avalanche VC to build a platform of support that helps our founders scale their leadership through individual coaching, group facilitation, 360 feedback assessments, and more.

"As the descriptions of non-scalable leadership make clear, those you work with will be the first to experience the impact of your leadership breaking down. As so many of us have experienced in our careers, it’s often no secret what a leader’s development gap is."

Leadership that doesn't break.

In the VC game, scalability is king. Startups have to be anointed “venture scalable” to receive investment, which boils down to the potential to grow over 100x and return an investor’s entire fund in under 10 years. Aspiring “rocket ships” must not only tackle a multi-billion dollar market with enough room to support that growth, and possess an unfair advantage that helps them outgrow everyone else — they must also attain escape velocity and bear the strain of exponential growth without breaking apart.

Savvy founders anticipate the many ways things break when gunning for exponential growth. Having internal processes strewn across Google Docs and Sheets works if you’re a team of 10, but breaks down when you need to grow to 100. Throwing bodies at a problem works if you have 10 customers, but breaks down when you’re trying to get 100. Reams of advice have already been dedicated to all the predictable ways a “rocket ship” can fail to hyperscale — but what of the pilot? For all the attention paid to how hyper scaling requires operating models to evolve, how can founders (and their investors) know if their leadership will scale?

Scalable leadership isn’t reducible to “human capital” or “founder market fit,” for which the venture ecosystem uses poor proxies like pedigree and professional experience. As complexity mounts and pressure grows, scalable leadership deploys our strengths in ways that amplify the capabilities of those we work with. In contrast, leadership that fails to scale defaults to using our strengths in ways that deplete organizational capacity and lead to diminishing returns on our time and energy. When business operations fail to scale, they break. When our leadership fails to scale, we break those around us — and the business along with it.

Leadership that works – until it doesn't.

Investors want to back founders who are confident, gritty, achievement-oriented, creative, empathetic, and so forth — but the question of scalable leadership isn’t whether a founder has these strengths, but how these strengths show up under the pressure of hypergrowth. The difference between leadership that scales and leadership that doesn’t isn’t that one works and one doesn’t. The difference is that non-scalable leadership involves the overuse of strengths in ways that feel compulsive and indiscriminate, and are often motivated by the leader’s own needs for security and safety. While it’s entirely possible to get results in this way, as stress and complexity mount, so too do the costs to the organization of persisting in these non-scalable strategies. Non-scalable leadership can still work — until it doesn’t.

To help make these distinctions more concrete, we can use as a staging ground psychologist Karen Horney’s description of the three basic strategies people deploy in relation to others: moving against, moving toward, and moving away. Of course, this is an oversimplification of the ways that leaders show up, but helps to illustrate how what initially look like leadership strengths can suddenly break apart under strain. Although as leaders we each have a tendency to prefer one of these styles, scalable leadership entails having conscious access to all three and the ability to deploy them according to the needs of different situations. In contrast, non-scalable leadership gets “stuck” in the overuse of one strategy even when it has become clearly dysfunctional and no longer works.

Leadership who move against others strike us bold, driven, and decisive.

At their best, these are the founders who magnetize investors, employers, and customers alike with a compelling vision for the future and a powerful story about why we should care. They take control, speak their mind, and push against what others consider limits. When moving against fails to scale, the same visionary storyteller is suddenly struck by willful and selective blindness when faced with conflicting evidence that threatens their beliefs. Decisiveness turns into a failure to listen, boldness turns into antagonism, and what started out as a powerfully galvanizing vision starts to feel to everyone else like a reality distortion field of the delusional sort. In its non-scalable forms, moving against becomes a leader’s strategy for managing anxiety and shoring up their own safety by over-demanding, criticizing, and silencing dissent. Under pressure, boldness calcifies and turns brittle.

We describe leaders who move towards others as empathetic, responsible, and networked.

At their best, these are founders who inspire immense loyalty and trust among their supporters through deep listening, collaboration, and consensus-building. They are gifted at building up, empowering, and partnering selflessly with others. When moving towards fails to scale, the thoughtful founder who so quickly found product market fit through empathy with customers’ needs suddenly finds themselves paralyzed by tough decisions that will require disappointing someone’s expectations. Consensus-building turns into death by committee, the impulse to listen becomes a tailspin into indecision, and what used to feel like servant leadership starts to look more like poor boundaries and overextension. In its non-scalable forms, strategies for moving towards get pressed into the service of maintaining likability and avoiding conflict. Empathy and understanding for others become a solvent in which one’s own agenda disappears.

Leaders who move away from others appear to us as calm, objective, independent thinkers.

At their best, they are sharp, brilliant problem solvers who synthesize multiple points of view and bring to bear immense knowledge and expertise to chart a path through complexity. They bring the gifts of visionary intellection, originality of thought, and keen observation. When stress mounts and moving away fails to scale, the calm and brilliant founder who until recently seemed to have an answer for every question finds themselves retreating so far away from the day-to-day in order to maintain perspective that they fail to actually lead. Intellection turns towards the endless gathering of data, the impulse towards objectivity becomes paralysis by analysis, and what used to seem like calm objectivity begins to look to others like an aloof and absent detachment. In its non-scalable forms, strategies for move away become fixated on maintaining distance as a way to contain anxiety and escape difficulty. One retreats so far that one disappears entirely.

Coachability as promise, not criterion.

If you’re a founder, the not-so-good news is that it’s not always clear from the outset whether your leadership will scale. It’ll work, until it doesn’t. The good news is that with some self-awareness, you’ll know when your leadership is about to break. You’ll recognize it in the growing tension between what you intend to do what you actually do. You’ll start your day wanting to trust your team with the details and to turn your attention to the big picture, but end your day realizing you’ve spent all your time in the weeds. You’ll walk into meetings resolving to give others the tough feedback you’ve been sitting on for weeks, but walk out having pushed it off once again. You’ll imagine yourself tackling your to-do list with gusto each morning, but come to your senses hours later realizing you’ve frittered the day away chasing shiny new ideas.

Founders, trust that you’ll know when it’s time to get help scaling your leadership. It’ll feel like what’s blocking you is sitting right behind your eyes, predetermining how you see the world and compelling you to walk down the same garden paths. That’s your sign that what you need is not new knowledge, new tactics, or new hacks, but an update to your entire “leadership operating system.” And if you’re not sure it’s time, you need only ask those around you. As the descriptions of  non-scalable leadership make clear, those you work with will be the first to experience the impact of your leadership breaking down. As so many of us have experienced in our careers, it’s often no secret what a leader’s development gap is. Practices that encourage feedback, vulnerability, and courageous truth-telling help turn what’s already an open secret into fuel for the change that needs to happen. You could do worse than start with a Leadership Circle profile.

There's bad and good news for investors, too.

VCs hoping to check off a list of traits they’d like to see in a founding team may well find themselves completely blindsided six months later when those same strengths become exactly what limit the business from further growth. The good news is that just like systems and processes, leaders can change and scale — when given the right support. Somewhat ironically, one of the traits commonly found on investors’ diligence checklists is “coachability.” Interest in founder coachability has grown astronomically since Thomas Hellman christened venture capitalists the “Coaches of Silicon Valley” in 2000. Unfortunately, scratch beneath the surface and it turns out that “coachability” in this context usually means nothing more than a vague sense of open-mindedness, and willingness to take feedback.

What if we reframed “coachability” as a promise we make to founders, instead of a criterion for investment diligence? The team at Avalanche VC has been working on exactly this reframe for our second fund, and here’s what it means to us:

  • It would mean providing, either personally or via expert partners, the coaching that helps founders do the inner work and deep self-inquiry required to hyperscale their leadership.
  • It would mean making facilitation services and 360 feedback assessment tools just as much a part of our platform as introductions to other investors and credits for cloud computing services.
  • It would mean building deep, authentic relationships with founders where their leadership behaviors and team dynamics are just as much on the table for discussion as their product development roadmap and financial model.

This is only the beginning, and we have our work cut out for us. Founders — if you find yourself at the very edge of your growth and are looking for help tackling the inner work required to hyperscale as a leader, I’d love to chat. Until then, I hope the words help you find your way.

Schedule a free 45 minute introductory session.