A Key Challenge in 2023 for Start & Scale-Ups

McKinsey shared a short outlook to 2022, highlighting pivotal moments of the year. According to McKinsey, these moments forge the path towards a resilient future. (2022 year in review images | McKinsey)

Out of 17 major trends, 8 of them are about people and leadership challenges around it, more than 50% !

It is about inclusivity, collaboration, respect, quite leaving, employee mental health and great attrition. Thus, building resilience within an organization and keeping it going, are becoming one of the biggest challenges of start & scale-ups.

Why is it more difficult for start & scale-ups than the others? It is because of their need on external financing for growth. They do not have best in class processes, products & services, and an established organizational architecture as matured organizations do have. Through many agile and growth methodologies, they need to run fast with focus on customers, churn rates, delivering products & services, and stay attractive for external financing. Finally, those activities deliver desired financial results but at the extent of what? People and future success.

I had opportunity to study two different approaches to strategy building; disruptive strategy model from Prof. Clayton Christensen and strategic leadership at Stanford GSB. Once both models identify sources of revenue and cost, final piece of the puzzle is the capabilities of an organisation to deliver what has been built. Capabilities will show if first two steps are just a theoretical exercise or the strategy has a chance to come to life.

Capabilities are people, routines ( which are defined by people), architecture (structure that shapes communication, behaviours, engagement of people) and culture (a guideline to all actions of people). Let us go back to McKinsey 2022 highlights which emphasise that more than 50% pivotal elements that will shape the future is about people. We can conclude that majority of organisations will face a major challenge in managing their organisational capabilities which is the essential piece of the puzzle to deliver their strategy

In their limited pool of leaders, start&scale-ups need to reassess their ability to see logical connection between revenue model, cost model and capabilities of an organisation. It is not anymore doing all the right things written by the book. It does not show you this logical connection. However, it is about doing the right thing for your business that can be visible if there is a clear understanding of your capabilities.