ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at [email protected] and [email protected].

—Alex and Axel

In business, hypergrowth typically means maintaining a rapid rate of growth over time. Start-ups often have the agility to do this, but they may become more stratified as they grow larger—often because their hiring practices may not have kept pace with the scaling needs of the business. For their part, established businesses may not have the flexibility to push growth to the levels they need. This week, we look at how both start-ups and incumbent companies can deploy talent to position their organizations for consistent and rapid expansion.

AN IDEA

Find talent that helps your organization scale

Start-ups generally pay close attention to hiring the best talent to ensure the new company’s success. But as the business expands, the recruiting process can become more challenging, say McKinsey’s Claudy Jules, Shahar Markovitch, and Charlotte Seiler in a new article. “Talent needs inevitably change, skill gaps become more apparent, and it becomes increasingly difficult for founders and leaders to stay as personally involved in the hiring process,” they say. One possible solution is to conduct a formal assessment of the organization’s plans to scale and compare the current talent mix against those plans to identify any gaps. It may also help to hire talent in “functional areas that make the most sense strategically,” suggest the authors. “For instance, bringing new talent into sales, legal, and compliance teams may help scaling technology start-ups identify and lock in new accounts more quickly.”

A BIG NUMBER

4

That’s the number of critical questions company founders should ask when they seek to bring new leaders into the ranks, according to McKinsey senior partners Alok Kshirsagar and Arne Gast and colleagues. One core question to consider as the company grows is: Who leads? “While leaders may wear multiple hats in the early stages, organizational growth will likely call for more structure and clearer roles,” observe the McKinsey experts. “Moreover, the small circle of early leaders must acknowledge that the expanding enterprise will demand leadership and people skills that may be outside of their current knowledge and experience.”

A QUOTE

“To create a fast-moving, effective hiring engine, companies are creating talent win rooms.”

That’s McKinsey senior partner Vincent Bérubé and colleagues on creating an integrated talent approach to power growth. Designing a talent win room involves pulling together leaders from across different functions and HR to develop a holistic view of the candidate experience. This could include revising job descriptions, looking at candidates with nontraditional backgrounds and experiences, and using generative AI and other analytics tools to match candidates with skills pools. For example, a software and services company redesigned its jobs architecture and review process to offer career paths usually available only at technology companies—and experienced not only a swift increase in the number of employees hired but also a reduction in the time spent from application to hiring.

A SPOTLIGHT INTERVIEW

There’s no unique magic that makes start-up employees different from those in a traditional corporate setting, says venture capitalist Florian Heinemann in a discussion with McKinsey partner Philipp Hillenbrand on how incumbent companies can incorporate a start-up-like approach to hypergrowth. What’s most important, he says, is for large companies to offer employees the incentives and flexibility that entrepreneurial ventures tend to nurture. “What you need is a structure parallel to the current business, plus some kind of independent, small, multidisciplinary group that mimics the start-up setting,” he suggests. Small cross-functional teams are also essential to ensure effective marketing and sales: “Very few people can create a superior product/market fit,” says Heinemann. “But if you get these people together in a small, fully or partially cross-functional team, that really gets things going. That’s why I like this kind of team so much, because the intensity with which you can iterate and experiment really creates energy.”

— Edited by Rama Ramaswami, senior editor, New York

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