Ed-tech Growth Milestones: Maintenance Due
Every 30,000 miles, our cars give us a reminder for what’s called “scheduled maintenance.” It’s that little tune-up specifically designed for major milestones on the odometer. Wouldn’t it be great if high-growth ed-tech companies had a “scheduled maintenance due” light on the dashboard when they reached a certain mileage?
Unfortunately, ed-tech companies don’t come with dashboard warning indicators (or owner’s manuals, for that matter). However, as ed-tech companies grow, there are certain milestones that can prompt investors and C-level Executives to step back and examine certain aspects of the business that might need a tune-up. Here are several indicators that the organization has outgrown the start-up structure and needs to level-up:
The company doesn’t fit in the same room anymore
Although this analogy isn’t quite as relevant in hybrid-work models, the concept and importance remain valid. During their early stages of growth, companies benefit from being able to have weekly or monthly “all-hands meetings,” where the entire company gathers together to share important information (e.g., business priorities, customer wins, product launches, policy updates and new hires). Message consistency is fairly easy to maintain, and the small-group nature of the meetings allows for a good amount of two-way communication.
As companies grow, company-wide communication becomes much more difficult. “All-hands meetings” become less effective at accomplishing the objectives that were possible as a 25-person company. Although the CEO should still remain visible and vocal regarding mission, values and priorities, once your company size reaches 50 to 60 people, communication needs to become more distributed. At this stage, employees will get most of their communication about goals and priorities from the C-suite, Department Heads and middle managers, rather than directly from the CEO. The more that essential communication occurs at the department or team level, the greater chance that departmental silos may emerge or company culture may become more fragmented.
If your “company size” light is flashing, it’s time to check the following items:
- Are your company priorities and values understood and consistently communicated by your C-suite and middle managers?
- How strong are your middle managers’ communication skills (listening, writing, speaking)?
- Have you created authentic opportunities to build company culture and team bonding?
CEO’s direct reports: A half-dozen is too many
A bogged-down executive team is a recipe for stagnant company growth. A good general rule of thumb is that having more than six direct reports becomes difficult for most managers to effectively lead and support their teams. Once managers are spread too thin, they risk not having the time to support their team members with problem-solving and heavy lifting, and often end up becoming a bottleneck for important decisions. If your CEO has six direct reports, it may be time to restructure the leadership team, so that the CEO can focus on strategic leadership, and your Department Heads can move the business forward more swiftly.
While having a smaller number of direct reports is a best practice, it also requires organizations to embrace a more distributed form of leadership and decision-making. (But if your CEO still insists on being the conduit for decisions across multiple levels of the organization, you may find yourself in a more challenging position than before.) In order for distributed decision-making to be effective, leadership teams should focus on strong alignment on strategic priorities and company values, otherwise teams are likely to see departmental silos and conflicting priorities begin to emerge.
If your “CEO bogged down” light is flashing, it’s time to check the following items:
- How can you streamline reporting lines for the CEO and executive team?
- Are your middle managers empowered to make operational decisions with executive approval?
- Do your middle managers have the necessary skills to manage up, down and across the organization?
The organization now has a “managers of managers” layer
As the company grows, it’s common to see more layers of middle management emerge as the CEO narrows her or his reporting lines, and functional roles within various departments become more specialized. At this point, the majority of employees are managed by someone who is not the CEO or a direct report of the CEO. As decision-making becomes further decentralized and a “managers of managers” layer develops in the organization, strong company-wide alignment on priorities and values is critically important.
Bear in mind that the majority of middle managers in ed-tech companies are in the biggest job of their life. They face the complex tasks of identifying and analyzing problems, managing conflicting sets of priorities, and communicating effectively up, down, and across the organization. They must do this without the direct support from the CEO and likely with limited support from their direct manager. When middle managers struggle with this set of responsibilities, it can create significant obstacles to company growth.
If your “managers of managers” light is flashing, it’s time to check the following items:
- Are company priorities, mission and values clear and frequently communicated?
- Do your middle managers have sufficient problem-solving skills?
- Are you providing your middle managers with the mentoring and support they need?
Not enough founder/CEO pixie dust to go around
Early on, the founders and CEO are often the reason that a start-up succeeds. They know the customer and the value proposition incredibly well, they can tell a compelling story about the business, and their passion for the mission makes believers out of all of us. Their knowledge, hustle and charisma are that proverbial “magical pixie dust” that fuels their company’s early growth. However, as the business scales, the job of selling shifts from the CEO to the sales and marketing team, and many companies find that there’s not enough pixie dust to go around.
Once the selling process moves out of the hands of the CEO, companies begin to truly see how strong their product and go-to-market systems are. The sales message is no longer a personal story from the founder, and the sales reps’ interactions with the customer may not have the same level of gravitas as the CEO’s. The fundamentals of positioning, messaging, lead generation, sales enablement and selling capabilities are fully exposed. Companies are often surprised when their sales process suddenly stalls; conversion rates drop, they’re getting fewer opportunities, and they’re winning fewer deals. This can be even more challenging to diagnose if the company lacks the systems to effectively track sales and marketing performance.
If your “low pixie dust” light is flashing, it’s time to check the following items:
- Are your buyer personas and product positioning clearly defined and embraced?
- Is marketing articulating the value proposition and targeting the right buyers?
- Do your reps have domain knowledge, product expertise, and a solid selling methodology?
By being aware of these critical milestones and watching for these warning signs, CEOs, leadership teams and investors can avoid having a “roadside breakdown” that will stifle company growth. High-growth ed-tech companies should work proactively to put in place the processes and support systems to help their organization continue to accelerate during this important stage of growth.
Collin Earnst is founder and managing partner of the Ed-tech Leadership Collective, an organization focused on helping high-potential employees achieve the professional breakthroughs necessary for businesses to succeed. The Collective provides executive coaching as well as professional peer groups designed specifically for high-potential ed-tech employees at key points in their career.