Date: Thursday, 9 May 2024
Location: London, UK
Experts: Dan Hyde, CEO at Erevena; Maddy Cross, Partner at Erevena; Dean Forbes, CEO at Forterro; Céline Daley, former VP Customer and Head of Revenue at DeepL.
Category of Advice: Leadership Hiring, Scaling Software, Organisational Excellence, Data-Driven Insights, Culture and Values, Team Dynamics.
Introduction: Cultivating Leadership for Growth
What does it take to build a leadership team that can drive a company from seed to series A and beyond? How do successful companies navigate the complexities of hiring the right leaders at the right time? And what role does diversity, culture, and strategic decision-making play in scaling a business?
These are the critical questions that we addressed at our recent Boardwave Breakfast. Sponsored by Erevena, this event brought together a powerhouse panel: Dan Hyde, CEO at Erevena; Maddy Cross, Partner at Erevena; Dean Forbes, CEO at Forterro; and Céline Daley, former VP Customer and Head of Revenue at DeepL.
The conversation was rich with practical advice and real-world examples, offering attendees mini roadmaps to navigate the challenges of building and maintaining a stellar leadership team. From the nuances of hiring at different growth stages to the critical role of diverse perspectives and the necessity of making tough performance decisions, the insights shared were both profound and actionable.
Whether you're an early-stage start-up founder or a seasoned executive, this article distils the key takeaways from the event, providing you with the knowledge and strategies to build a leadership team that can propel your company to new heights. Read on to discover how to leverage data-driven insights, foster a diverse and dynamic team, and ensure your leadership evolves in line with your company's growth objectives.
1. Learning From Unicorns: Embracing Data-Driven Leadership Hiring
Maddy Cross, Partner at Erevena and author of the report "From the Beginning to a Billion: How Unicorns Built Their Leadership Teams," emphasised the importance of data in guiding leadership hiring decisions.
"Unicorns typically hire 16 senior leaders in their first five years, compared to only 5-6 in companies that are successful but do not reach unicorn status," she explained. "Between the two groups, there's no financial difference, both groups raise the same amount in seed rounds. But at the same time, those numbers are so wild and different I think we can assume that there is a connection between companies that go on to do really well and hiring more people into their C Suite."
Key Takeaway: Use data-driven insights to guide your leadership hiring strategy. Regularly evaluate and refresh your leadership team to ensure it remains aligned with the company’s growth objectives. Ensure a mix of leaders who are experienced in scaling and those who provide stability.
2. The Critical Role of Diverse Perspectives
Diversity in leadership teams extends well beyond gender and ethnicity to include diverse educational backgrounds, experiences, and perspectives. “When we think about diversity, we often think about ethnic backgrounds, gender, religion, and LGBTQ plus. But we should also consider things like access to education and years of experience.”
Cross’s research once again showed that having a diverse leadership team is crucial. "One of the key lessons is that diversity can show up in many different ways. For instance, about 80% of unicorns have someone in the leadership team who did not graduate from university and someone else who graduated from a top 5 university globally. This diversity in experience and opportunity is crucial."
“And then similarly in, in unicorns, the average unicorn has someone with 25 years experience behind them, and also someone with only five years behind them. So you've got a difference there of 20 years of experience in leadership teams of unicorn companies and in the companies that don't do so well, that gap is more like 12 years. So you have this diversity of experience and opportunity. And I think that's something that's really worth bearing in mind - that diversity can show up in lots of different ways. And cognitive diversity is a really important thing to get right as you build your company.”
Dan Hyde shared, "It's not just about diversity in terms of demographics, but also diversity in thought and experience. This variety can challenge the status quo and lead to better decision-making."
Dean Forbes added, "Always make sure that you make room for brilliant. A team is a tapestry. One of my measures for my team is how effectively and passionately it can disagree and recover quickly. When that's happening then I know I’ve got it, I’ve cracked it."
Key Takeaway: Cultivate a leadership team with diverse experiences and backgrounds to foster innovation and resilience. Embrace cognitive diversity to ensure a broad spectrum of ideas and solutions.
3. Navigating Cultural Transitions
Cultural transitions are inevitable as companies grow. Forbes shared his experience with managing cultural shifts, emphasising the importance of deep listening and understanding the existing culture before making changes. "My framework would be deep listening and understanding – and I mean highly visible, deep listening and understanding," he explained. "Then, talk about the company in generations – so 2.0 and 3.0, allows you to talk about things that were needed in 2.0 but are no longer needed in 3.0."
Céline Daley agreed, "I do the same, I call it a listening tour. And then you can do public readouts of what you’re finding and seeing – for example, ‘I’ve had 23 conversations and this is what I’ve found.’ You have the data then to support what you’re saying."
Key Takeaway: Approach cultural transitions with empathy and clarity. Frame changes as part of the company’s evolution to help team members understand and embrace the new direction. Engage in deep listening to build trust and ensure a smooth transition.
4. Performance Management and Making Tough Decisions
Performance management is crucial, especially when team members are not meeting evolving company needs. Forbes discussed the challenges of transitioning team members who may no longer be the right fit for the company's growth stage. "If you’re unsure after six weeks, you're likely going to be unsure after two years. Addressing these issues early can prevent prolonged periods of underperformance and misalignment," he advised.
Forbes shared a specific instance, "I had to transition a long-time colleague out of the organisation when it became clear that the company’s future growth required different skills and approaches. It was one of the hardest decisions I’ve had to make, but it was necessary for the company’s growth."
He emphasised, "My baseline has always been, here is the strategy, here is the plan that we’ve underwritten. Do I have the mix of talent around the table that I can say with certainty, this will go well? Or if it doesn’t go well, I’m prepared to be accountable for the lack of performance because I’ve got the right team. So, I never compromise on having the right team."
Daley added, "You have to look at the team, think about who could scale and then realistically get people in externally to help professionalise the rest. But managing the culture shift is always harder than you think it's going to be."
Hyde also noted, "Dean would describe a process when he joined a company of basically swimming from the bottom of the ocean up. In other words, find out actually where the business is rather than where the investors were told it is.”
Key Takeaway: Be proactive in performance management. Address underperformance early and ensure that your team evolves in line with the company’s strategic goals. Don’t shy away from making tough decisions for the long-term benefit of the organisation.
5. Strategic Leadership Appointments
Hiring the right leaders at the right time is essential for scaling. Hyde led a discussion on the importance of strategic leadership appointments, focusing on the hiring patterns of Europe’s most successful B2B software companies. "Different growth stages require different leadership skills and experiences," he pointed out. "A seed-stage company needs leaders who are versatile and can wear multiple hats, whereas a series A company might need more specialised skills."
Hyde emphasised, "One of the mistakes we often see is hiring too senior too soon or too junior too late. It’s about finding the right balance. For example, in a seed stage, you might need a jack-of-all-trades COO who can handle everything from operations to HR. By series A, you might need a seasoned CFO to manage finances as you prepare for rapid growth and possibly fundraising."
Forbes highlighted the importance of bringing in experienced leaders who can provide valuable insights and avoid past mistakes. "One of the most important is having enough people around the table who have seen the desired things. Because in my experience, you short circuit decision making when you've got people who can say ‘don't do that’, ‘don't try that’ or ‘I did that before. It didn't work, it never works’."
Key Takeaway: Align leadership hiring with your company’s growth stage. Different stages of growth require different leadership skills, so ensure your hiring strategy is adaptable and forward-thinking. Avoid the pitfalls of hiring too senior too soon or too junior too late.
6. Defining and Living by Core Values
Hyde discussed the importance of defining and living by core values. "The mistake is to project your aspiration as your core values. Don't be aspirational. Try to tell it like it is. Let's say one of your values is being tenacious. It’s really important to ask candidates about this in the interview – say it would be great to talk about how you show up as a tenacious person, give me some examples."
Forbes continued, "I think especially if you're working in a company that's international, as ours is, then you might not be speaking in the same native language as somebody after you're interviewing. And I think it's really critical to not overlook the fact that stuff can get lost in translation but you can ask again to make sure. And maybe you ask the person and they don't give you the answer that you're looking for and that's fine too. But at least then you can say with confidence ‘I don't think our values are aligned’."
Hyde highlighted another example when values helped shape the interview process. "One of our values is people having a positive relationship with feedback. And we were talking to a potential new employee. And I was talking to her about this and I said, you know, it's really important for us that people are positive about feedback and she said. ‘My mother was my ballet teacher.’ And it turned out that she was basically given a lot of feedback in front of all of her friends for 10 years of her life."
Hyde added, "Get it right and culture and values are self-policing, the team owns it and calls out when someone doesn’t fit and changes can be made quickly."
Key Takeaway: Clearly define your company’s core values and ensure they are reflected in the hiring process. Encourage open and positive feedback to maintain these values and foster a strong, self-policing culture.
7. The Art of Interviewing: Spending Quality Time
Spending substantial time with potential hires to ensure a good fit is vital. "If I'm hiring, let's say, a CFO, then I know that everyone I see can add up - like I know that the basics are covered. So, I spend most of my time on: How does this person think? How do they behave? How are they going to behave under pressure? What does that cultural fit look like?"
Forbes elaborated on his interview process, "I challenge and probe them, and tell them that I don't think that they're right about something or I tell them that something in their CV doesn't look right to me, or I find a person who's got something negative to say about this reference. Because I want to see how you behave. I spend evenings with them, I drink with them. I want to see how you behave, how do we get on? Nothing makes me feel better in the interview process when I challenge the incoming exec and they say, yeah, it's a really good point, I just don't see it that way or I would never do it like that. Then I think, right - now this person and I can work together."
He added, "In micro-environments, let them go spend time with the team and have the team do the same and then tell both parties that, you know, this has to work for us to take the new person on because that's my environment. My environment is that we challenge stuff and we're passionate. That’s how this place operates. You have to come in ready to be excited and motivated by being part of that culture. On average I’ve dedicated probably 20 plus hours to the interview process."
Key Takeaway: Spend significant time with potential hires to assess cultural fit and behaviour under pressure. Challenge them during the interview process to see how they respond and ensure they align with your company’s culture and values.
Conclusion: The Path to Effective Leadership Hiring
The insights above underscore the complexity and importance of strategic leadership hiring. From leveraging data-driven insights from unicorns and embracing diversity to managing cultural transitions and making tough performance decisions, building a stellar leadership team requires thoughtful planning and execution.
As Hyde concluded, "I think clarity on where you're trying to get to and how you all objectively know if you're on that trajectory is vital. When we have this clarity, it becomes easier to navigate the challenges and steer a company towards sustained growth."
Thank you to our partner, Erevena, and to Dan Hyde, Maddy Cross, Dean Forbes, and Céline Daley for sharing their time and expertise.
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