By Todd Johnson | Principal at Strategic Talent Partners
One of the hardest parts of growth is recognizing when the leadership model that helped build the business needs to evolve.
That moment often comes before anything is obviously broken.
The company is still growing. The team is committed. Long-tenured leaders know the business inside and out.
But decisions start taking longer. A few key people carry more and more of the load. Strong individual contributors become managers without much preparation. The owner or CEO is still involved in decisions that probably should be happening elsewhere in the organization.
These are common signs that the business has reached a leadership inflection point.
In this three-part blog series, we’ll look at three distinct business scenarios adapted from a discussion exercise we use with leadership teams to explore the talent challenges that tend to surface across different stages of growth.
The Emerging-Stage Challenge
The first scenario focuses on a family-owned manufacturing business that falls within the Emerging stage of our Growth Leadership Model™.
The company has reached $35 million in revenue with 140 employees and plans to grow to $50–55 million over the next five years. The founder is still CEO after 28 years. The VP of Operations has been with the business for 20 years, the Controller for 15, and many supervisors have been promoted from the shop floor.
There is a lot of strength in that picture. But there is also a growing pressure.
The founder remains involved in most major decisions. Front-line supervisors lack leadership training. Increased demand is creating bottlenecks, while initiative and accountability are inconsistent.
The business has ambitious growth goals. The leadership structure now has to be ready to support them.
Moving From Leading Individuals to Leading Leaders
At the Emerging stage, one of the biggest shifts is moving from Leading Individuals to Leading Leaders.
Earlier in a company’s growth, a flat structure works. Leaders wear multiple hats. Decisions happen quickly. The founder stays close to the work.
But as the organization becomes more complex, that same approach gets harder to sustain.
The business now needs clearer functional accountability, a stronger middle-management layer, and leaders who can delegate, develop others, and work effectively across functions.
For this company, that evolution starts in a few key places.
Create Capacity Beyond the Founder
A founder being deeply involved in the business is not inherently a problem. In many family-owned companies, their involvement has been a major reason for the company’s success.
The challenge comes when too many decisions continue to depend on one person as the business grows.
At 140 employees, increased complexity creates more decisions, more cross-functional issues, and more demands on the leadership team. If most of those decisions still work their way back to the CEO, eventually the organization slows down.
This is where clarity around decision rights becomes important.
What genuinely requires the CEO? What should the VP of Operations own? Where should supervisors have the authority to act without waiting for approval?
Creating that clarity gives other leaders room to lead and begins reducing the company’s dependence on one person.
Strengthen the Layer Closest to the Work
The front-line supervisors may be one of the biggest opportunities in this scenario.
Promoting strong employees from the shop floor can be a great way to preserve knowledge and culture. But being excellent at the work does not automatically prepare someone to lead people.
As the company grows, supervisors need to be able to set expectations, delegate, coach, give feedback, manage conflict, and create accountability.
Without that development, issues continue moving upward. The VP of Operations stays too involved in day-to-day problems; supervisors struggle to take full ownership, and the founder remains closer to the operation than the future business may require.
Building stronger managers creates capacity at every level above them.
Long Tenure Creates Another Risk to Address
This company also has significant institutional knowledge concentrated among a few long-tenured leaders.
That can be a tremendous asset. But it also creates risk if the business has not thought about what happens when one of those leaders eventually steps away.
Formal succession planning becomes increasingly important as a company grows. For this business, the immediate need is simpler: identify where the organization is most dependent on one person and begin thinking about what those roles will require in the future.
The next VP of Operations will be leading a larger, more complex operation. The next CEO will inherit a different business than the founder built 28 years ago.
That means evaluating internal talent against future expectations, not just current performance. Some leaders may be ready. Some may need intentional development. And there may be gaps where outside experience makes the most sense.
The goal is to understand those risks before a transition becomes urgent.
Protect the Culture by Making It Scalable
For many family-owned companies, growth often comes with a very real concern: How do we grow without losing what made the business successful?
Long tenure, close relationships, and a strong connection to the founder can all be important parts of the culture. But as the company adds people and creates new layers of leadership, culture cannot depend entirely on proximity to the founder.
Leaders throughout the organization need to understand what the company values, what those values look like in practice, and how they should show up in hiring, communication, decision-making, and accountability.
That is how culture begins to scale.
It also allows the founder to gradually shift from personally reinforcing the culture every day to building a leadership team capable of carrying it forward.
Building Leadership Capacity for What’s Next
For a company in this position, the priorities become fairly clear:
- Clarify where leadership accountability needs to move as the organization grows.
- Develop supervisors and middle managers into stronger people leaders.
- Identify key-person and future leadership risks around critical, long-tenured roles.
- Evaluate where internal talent can grow and where outside experience may be needed.
Taken together, these moves help the business become less dependent on a handful of experienced leaders and build the leadership capacity needed for its next stage of growth – without losing the culture that made it successful in the first place.
The next blog in this series will look at a Scaling-stage ESOP facing a different set of leadership challenges, including an aging executive team, a stagnant leadership bench, concentrated client relationships, and an unclear path to the next CEO.
In the meantime, explore our Growth Leadership Model™ to better understand your organization’s current stage and the leadership priorities that come with it.
