01 Jun 2022
From Founders to Leaders: In the midst of every crisis, lies great opportunity
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Oliver Sherwood expands on how tech scale-ups that weathered the pandemic now face a new challenge and shares more about Odgers Berndtson's Scale-up Collective.
Dot-com bubbles. Economic downturns. Digital disruption. Brexit. Virus outbreaks. The Great Resignation. Global conflict. Dot-com bub…
Leaders of organizations the world over have had a tumultuous time of late. Crises of every nature have brought disruption to organizations, toppled leaders and upended entire industries. Only those leaders willing and able to react, adapt and evolve, survived.
The global pandemic is a very recent and obvious crisis that afflicted industries and tested the resolve of business leaders worldwide. It didn’t look promising for companies and their leaders as we headed into confinement: just 10 days before the first UK lockdown, research from Odgers Berndtson had uncovered a crisis of leadership, with only 24% of executives expressing confidence in their leaders. Gulp.
But two years on, after navigating a crisis the likes of which have not been experienced in recent history, the picture is very different. Our latest Leadership Confidence Index, published last month, found that 42% of executives have confidence in their leaders. Admittedly that is still less than half, but it is very significant progress given the extent of the pandemic.
However, the most innovative and exciting technology scale-ups in the UK and Europe – many of which are not headed by seasoned corporate leaders – didn’t suffer the same fate as other industries. In fact, most of them boomed.
Of course, they had to deal with disruption, but tech companies were largely darlings of the pandemic, the must-have investment, who experienced unprecedented demand for their products and services and had almost unlimited access to cheap money – all of which fuelled rapid growth and boosted valuations.
Yet it is the founders of these businesses who today find themselves facing a very different context, as a post-pandemic storm that has battered technology companies on one side of the Atlantic is now reverberating loudly through Europe.
I wouldn’t dare go as far as calling the current situation Dot-com Bubble 2.0 – there are others who are far more qualified (or courageous, at least) to opine on that – and even to describe it as a crisis might be stretching the term too far,
but it is very clear a new era has dawned.
Interest rates are rising. Economic growth is slowing. Costs and cash are coming back into focus. Jobs are being cut. Sentiment is shifting.
This creates a much more challenging operating environment to what this generation of scale-up founders have become accustomed to. And it will undoubtedly result in greater scrutiny – from investors, employees and customers – of not just products and strategy, but of leadership.
However, with everything else going on in their rapidly growing businesses, founders can often find themselves with only very limited time available to develop and enhance the leadership competencies needed to successfully take their business forward to the next phase and inspire confidence. Ben Horowitz, of leading VC firm Andreessen Horowitz, argues in his book The Hard Thing About Hard Things, that effective CEOs must both know what to do and be able to get their companies to do those things. But Horowitz suggests that founding CEOs are generally much better at the first part than the second and, as a result, often struggle as their organisations grow more complex.
How we help:
That’s why we established the Scale-up Collective, an expert team from Odgers Berndtson’s Technology, Gaming, Media and Life Sciences Practices who possess intimate knowledge of the steps-to-scale, and the critical leadership competencies required to successfully steer a business from one stage of development to the next. Working together with our specialist Leadership Practice, we help founders identify areas of potential development and co-create a development plan to help them achieve the strategic agenda of the next few years.
The frameworks we’ve developed to assess and profile founders’ capabilities and potential, reflect the stage of current and targeted maturation of the business.
It remains to be seen how wide and deep the impact of the current situation will be on tech scale-ups and how founders will fare. But what we’ve witnessed in recent weeks serves as a stark reminder that being a founder is rarely a comfortable ride. To borrow a quote from Albert Einstein, “in the midst of every crisis, lies great opportunity”. The opportunity for founders to become leaders is nigh.
If you'd like to find out more about the Scale-up Collective, contact Oliver Sherwood