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| | Brought to you by Alex Panas, global leader of industries, & Becca Coggins, global leader of functional practices and growth platforms
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| | | | For company founders, reaching a $1 billion valuation is a major milestone. But sustaining growth at that stage can be a daunting task. McKinsey research shows that many founder-led companies lose momentum, with just 10 percent reaching a $10 billion valuation and 2 percent exceeding $50 billion. This week, we look at how founders can pair strategic choices with shifts in their leadership approach to position their companies for long-term success. | | | |
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| | | While every founder’s story is unique, the most successful ones share some common patterns in scaling their companies. McKinsey’s Alok Kshirsagar, Kurt Strovink, and Meagan Hill observe that scaling from $1 billion to $10 billion and beyond requires founders to transform the organization and evolve as leaders. Their research shows that successful founder-led companies typically navigate five key inflection points: | | | | | expanding beyond the core business | | | | | | | transforming the business model | | | | | | | building capabilities through partnerships | | | | | | | using capital to accelerate growth | | | | | | | building robust systems to manage increasing complexity | | | | | At the same time, founders need to make three shifts in how they operate to support their strategic choices. They should empower others to make key decisions and protect the culture, spend more time developing future leaders, and reimagine their own roles. “You must shift from being the ‘chief doer’ to . . . becoming the ‘chief architect,’ focusing on only the decisions you can make,” the authors say. | | |
| | | | That’s the number of winning behaviors shared by world-class athletes, teams, and coaches that business leaders and organizations can apply to improving their own performance, according to McKinsey’s Seth Goldstrom. These behaviors include “tattoo winning,” which means setting clear goals and pursuing them obsessively, evolving the roster to remain competitive, relentlessly reviewing data, and having a coach who provides candid feedback. | | |
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| | | “These founders know that you don’t succeed on your own but with the network of people you build around you, your immediate teams, as well as your stakeholders and partnerships.” | | | McKinsey’s Cheryl Lim, one of the authors of the new book Shapers and Founders: The Untold Stories of Asia’s Extraordinary Owner-CEOs, says top founders in the region share several consistent traits. They are relationship builders and continuous learners who derive substantial energy and joy from their work. They are also adept at balancing a big-picture perspective with a close view of day-to-day operations. “They make big bets and, because of their disciplined stress testing, they are able to take something that seems like a crazy bet and make it tangible and manageable,” Lim says.
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| What can start-up founders teach CEOs of large companies? Julia Stewart has experience in both worlds: She founded the health tech start-up Alurx after leading the restaurant operator Dine Brands Global for nearly two decades. Stewart says established companies typically do not demonstrate a learning mindset when innovating. “Large organizations often approach innovation like a budgeting exercise instead of a learning process,” she says in an interview with McKinsey’s Ann Carver. “In start-ups, you operate around hypotheses: test, learn, iterate, kill what doesn’t work, scale what does.” Stewart notes that big companies often rely too heavily on layers of governance and approvals while trying to innovate, but AI is now forcing companies to shrink their decision-making cycles.
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| Launching new ventures is a common strategy for companies seeking growth. Here, too, independent start-up founders can serve as models for corporate leaders—particularly when it comes to culture building. McKinsey’s Paul Jenkins, Maria Ocampo, and their coauthors find that roughly 26 percent of corporate venture failures are linked to cultural issues. “Corporate ventures can take inspiration from regular start-ups on how to build and maintain their company cultures while rapidly scaling,” the authors say. Based on their analysis of hundreds of start-ups, plus interviews with CEOs and founders of corporate ventures, they find the most important factor in developing a strong culture is having leaders who model desired behaviors through their actions, promotion decisions, and communications. “Leaders, managers, and employees are all on the same team, rowing in the same direction to establish and uphold the start-up’s culture—and everyone should be held accountable,” they note. | | | Lead by evolving your business for long-term growth. | | | | | —Edited by Eric Quiñones, senior editor, New Jersey
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