Are Your Leaders Stunting Your Growth?

We all want our companies to grow. And there are many ingredients that go into how we grow successfully. Do we have scalable processes and systems that will enable our growth? Are our products/services unique and compelling to our customers? Is the market itself attractive? Do we have access to the capital we need to fund our growth.? Those are certainly important factors. But equally important is the ability of our leaders to enable our organization’s growth—to hire the right leaders and to develop talent that delivers the desired experience. The challenge with quality of leadership is that, unlike the other growth factors, we don’t have an objective assessment about whether our leaders are actually “scalable”.

How Unscalable Leaders Can Slow Your Growth... and What to Do About It.

Growth isn’t just a matter of opportunity; it’s survival. Companies that can’t scale—that are unable to move quickly, manage more customers and provide them with the desired experience, and develop fresh initiatives—risk falling behind competitors…or worse. Leadership that can’t scale stalls growth and drags the entire organization down with it.

Let’s dive into why leadership scalability is essential, how unscalable leaders inhibit growth, and what you can do to ensure your team is ready for every phase of your company’s growth journey.

The Problem with Unscalable Leadership

Scaling a business isn’t just about increasing resources; it’s about ensuring that every level of leadership can adapt and manage more complexity, ambiguity, and responsibility. Leaders who can’t grow with the company, anticipate, and adapt to changes, or think strategically across broader responsibilities create bottlenecks, slowing down the organization.

Dealing with unscalable leadership can, does, and has happened to some of the most successful and recognizable companies.

Many of us remember how distinctive Home Depot used to be. You went to Home Depot with a need to do a small home project and found a helpful associate who seemed to know everything about almost everything, and wanted to help you be successful. You left the store confident that you knew how to do the project - usually with a cartful of tools you didn’t know you needed to do the job right.

Like Starbucks, Home Depot began to grow faster than its’ industry peers and started hiring store managers who didn’t hire the right associates with the right backgrounds to continue creating the customer experience that had made them so distinctive. Store failures followed and Home Depot had to slow down and refocus on what made them successful in the first place. Home Depot had scaled everything except their leaders. This is unsustainable and stunts growth.

How Do We Spot an Unscalable Leader?

Some of the traits and behaviors that are common to leaders who are, or could become, unscalable:

Individual Expertise: In fast growing businesses, the tendency is to promote individual experts into leadership positions because they’re available. The expert focus leads to micro managers who don’t care about employee development or customer experience.

Overly Tactical: Leaders who excel in small teams or start-ups by “doing” rather than delegating may struggle in larger companies where strategic thinking is essential.

Lack Delegation Skills: Some leaders struggle to delegate and empower team members, feeling they need to control every aspect of their domain. This limits their effectiveness as the company grows.

Lack Communication Skills: Communication that works in small teams may fail in larger organizations where alignment and information flow are critical. Unclear or inconsistent communication can create confusion and limit growth.

Reluctant to Embrace Change: Companies that scale have to continuously evolve. Leaders resistant to new ideas or who cling to “what’s always worked” are often unfit for a fast-moving, innovative environment.

These traits create internal friction and team frustration, and waste resources, causing performance and growth to stagnate.

Warning Signs of an Unscalable Leader

Identifying unscalable leadership early on can prevent setbacks. Look for these warning signs:

Decision-Making Bottlenecks: Growth demands quick, decentralized decision-making. If decisions continuously stall at a particular leader, it could be due to reluctance or inability to trust others’ judgment or the intellectual horsepower to analyze complex situations and come up with solutions.

Low Team Engagement: Leaders who don’t empower or inspire their teams often see disengagement and high turnover, which can destabilize a company on the path to growth.

Failure to Embrace Technology and/or Process Improvements: As businesses scale, the ability to incorporate new systems and processes becomes crucial. Leaders who can’t see the value in this modernization limit the company’s efficiency and scalability.

Micromanagement: Micromanaging is not scalable. If leaders are constantly checking on minor details, it may be because they haven’t learned to build and trust a capable team.

How Do You Really Know if Your Team is Unscalable

Doing a deep dive on addressing issues of team scalability isn’t easy or simple. But we’ve developed a reliable, relatively quick, self-assessment that will give you a good indication of whether your leaders are scalable.

Growth Potential Score (“GPS”)

Making an initial assessment of your team is the first step. This assessment has five steps:

1. Review the 4 stages of scalable leadership
2. Select and assess a target group of leaders. This could be the senior leadership team, the top 100 leaders, a group of high potentials, leaders who are customer facing (think Starbucks baristas and Home Depot store managers) or any leadership team in the organization. Rate each leader based based on which column best describes that leader’s approach
3. Tally the number of leaders in each column and the percentage that number represents of the total
4. Review the implications of the assessments and determine next steps

Step 1: To assess the scalability of leaders and leadership teams we need to understand where they stand in four essential leadership stages. Review the descriptions in each column about different ways a leader could contribute to the business:

Growth Potential Score – GPS

	Stage 1 “Dependent”	Stage 2 “Expert”	Stage 3 “Integrator”	Stage 4 “Sponsor/Creator”
Summary Description	Require direction and have a narrow view of the world. Seen as dependent contributors.	View the world through the lens of their technical/functional expertise. Seen as expert contributors.	Look across multiple areas of expertise and synthesize solutions. Align to strategy and execution initiatives. Seen as idea leaders, and coaches.	Wide open “aperture” – they see how the organization fits into the world and develop strategies to win – they know how to pull the levers to achieve success.
How much direction do they need?	Extensive – they have limited technical skills.	Within their area of functional/technical expertise they are self-directed – beyond that, they require significant direction.	They coordinate and integrate across technical and functional areas.  They align to the enterprise strategy..	They set direction for the business. They solicit and synthesize input from others and make the final choices.
What is their role in developing strategy?	Lack perspective so tend to not be involved.	They contribute subject matter expertise and/or information to the strategy.	Set strategy for their team/function. They are brought into business and enterprise discussions to get their point of view.	Originators of business or enterprise strategic direction and plans. Big picture thinkers.
How do they view/interact with other leaders?	Look to others for ideas and direction.	Tend to lead others based on their technical/functional expertise. Competitive with others on their team. View themselves as “representing” their function or department.	Excellent coaches, idea leaders, mentors and advisors.	Ensure that systems and processes are in place to develop leaders who can execute their plans.
How broadly do they think about the organization?	Very narrow view.	View the organization through the lens of their technical/functional role/expertise.	See the organization holistically and want to influence direction.	Fully understand the organization and its strengths and weaknesses – see how the organization fits into the market context.
How well do they anticipate and prepare for changes in/conditions that impact the business?	Not relevant.	Understand the challenges faced by their technical/functional area of expertise.	Interested in what’s going on inside and outside the organization. Can identify challenges and opportunities that must be addressed.	Appear to be able to “see around corners” – always thinking about improving the performance of the current business while planning how the business will need to be different/better in the future.
How broad and deep is their connection to stakeholders?	Neither broad nor deep.	Deep connection to internal stakeholders- Team Members in same technical/functional area.	Have connections to internal stakeholders and often have a growing external network.	See their role as developing relationships and understanding motivations of all key stakeholders.
How do they get things done?	Do their best with limited expertise.	Focus on doing a good job in their expertise area.	Effectively use influence to achieve their goals.	Effectively use their power to achieve goals.
What’s their view of themselves in the organization?	Lack confidence beyond the scope of their direct responsibilities. In their 30’s and 40s often feel like imposters.	Experts who want to be respected.	See themselves as critical to the success of the business. Strong internal and external networks. Seen as leaders who develop their people and care about customers.	See themselves as accountable for the overall success of the business. They must create the conditions for current and future success.

Step 2: Select a group of leaders, and rate them 1-4 based on the descriptions above. Example:

Leader	Stage
Kirk	2
Katie	3
Norm	2
Tricia	3
Sanjiv	4
Donald	1
Julio	3
Veronica	2
Team Overall	3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Step 3: Tally the number of leaders in each column and the percentage that number represents of the total group. In this case: 1 in 1; 3 in 2; 4 in 3 and 1 in 4. So 1/8= 12%; 3/8=37%; 3/8=37% Overall # of leaders in each column and percentage of total.

Ratings	1	2	3	4
	12.5%	37.5%	37.5%	12.5%

 

 

 

 

Step 4: Implications of the assessment and next steps:

Overview: The Growth Potential Score (“GPS”) is adapted from Gene Dalton and Paul Thompson’s research published in the book, Novations: Strategies for Career Management.  Dalton and Thompson looked at thousands of knowledge workers to develop their Four Stages of Development.  As people move up the organization’s hierarchy, expectations for their contribution changes. An individual can be a high performer over their career in every stage except stage 1. Stage 1 “Dependents” must develop themselves into stage 2 “Experts” over a reasonable time frame or they lose respect for themselves and respect from those around them. Someone described in stage 1 at age 25 can be a high performer but if they are described in stage 1 at 35, something has gone wrong.

We developed the GPS to look only at leaders. Any leader of people should be in stages 3 or 4. That seems obvious but isn’t always the case. Take a look at the descriptors in each column to verify this. The GPS identifies the gap between the expectation for a role and the knowledge, skills and perspective of the leader in the role. Keep in mind that leaders aren’t necessarily limited to one discreet category but they do typically lean toward one category.

Most organizations, especially those growing quickly look for leaders to fill opportunities. It’s very common to choose the best technical contributor (column 2) and place them in a supervisory position (column 3). When this happens, it’s common to hear things like: “we lost a great sales guy and got a lousy supervisor.”

Implications for this team:

With this perspective, let’s look at the ratings of the example executive team which has similar results to almost all of the executive teams we have rated when they do this the first time. On this leadership team, Katie, Tricia, and Julio are in stage 3 and Sanjiv is in stage 4. So only half of the leaders on this executive team are creating the right conditions for the business to grow. Those who work with these leaders get work delegated to them and are free to make decisions. They feel developed and valued. The employee and customer engagement scores for these leaders is high.

However, this business won’t be able to scale because of the other half of the executive team. Kirk, Norm, and Veronica are rated as stage 2 experts. Donald is rated as stage 1 (someone lacking technical skills and needing direction).

Stage 2 leaders: Working for a stage 2 leader is frustrating and working for a stage 1 leader is impossible. When an expert is the leader of the team, they compete with others based on who is the most technically expert. There is very little development of the team because the leader is interested in doing the work, not developing the team. High-growth businesses are stalled by individual experts who are focused on ME not WE. Stage 2 experts who are leaders don’t have high employee engagement and are most often blind to the customer. Their interest is in the quality of the work they individually do. Often this is impressive which is how they got to this position.

Stage 1 leaders: Donald, the stage 1 leader on this executive team is a low performer, lacks confidence, and those who work for him are unhappy. Anyone who works for Donald will quit at the earliest opportunity. Since Donald is on the executive team he has likely been around for a while and somehow has been promoted to a level beyond his competence. Donald’s peers may like Donald and use that as the reason to keep him around. But the negative impact that Donald has on anyone who works for him or around him is what really matters.

Next Steps:

Good news: This leadership team can be improved quickly if the right actions are taken.

a) Create expectations for what it takes to be an effective people leader based on the 4 types of contributions. Communicate this to all leaders. Clarify that all leaders need to contribute as 3 or 4 players.

b) If you have a leadership competency model, stratify it so that there are clear behavioral descriptions consistent with leadership roles

c) Segment the stage 2 leaders into 3 buckets:

1) Those who have a high interest and want coaching and development to transition into stage 3

2) Those who have a moderate chance to develop into stage 3 with coaching and development

3) Those who are not interested in being a leader and unlikely to be able to contribute in stage 3

d) Focus on those in the first segment who have a high interest in developing themselves. For the others, look at redeploying them into a different, non-leadership role

e) Terminate any senior leader who is in stage 1. Donald must go. This is not about Donald – it’s about those who report to Donald who have no chance of development. If Donald’s team should have impact on customers, it’s not happening because Donald just doesn’t have the bandwidth to consider them. Stage 1 leaders who are terminated often feel relieved. Treat any exit with fairness. Don’t delay these tough decisions.

What Does a Scalable Leader Look Like?

To replace or develop scalable leaders, prioritize qualities that support sustainable growth and adaptation:

1. Visionary Thinking and Strategic Focus: Scalable leaders have to “open their apertures” to see the bigger picture, to focus on the future and be able to break down long-term goals into actionable steps that resonate with the team.
2. Emotional Intelligence and Empathy: People skills are even more important as teams and complexity grow. Leaders who are emotionally intelligent can understand and motivate their teams, ensuring engagement at all levels.
3. Strong Communication and Delegation Skills: Communication is essential for keeping large teams aligned. Leaders who are clear, consistent, and know when, and how, to delegate are more effective in growing organizations.
4. Adaptability and Innovation: Scalable leaders stay ahead of industry trends and understand that adaptability is necessary to stay competitive. They’re open to change, continually learn, and drive innovation within their teams. They understand and model behaviors that demonstrate their commitment to the organization to being better tomorrow than we are today.