Getting Businesses Over the “Hero Hump”

There is a phenomenon I have been observing lately that I’m calling the “Hero Hump”.  It concerns the ability of an enterprise to grow beyond its founder, and it’s a question I need to consider in my own business.

The most obvious place I observe it is in small design (and web design) agencies.  The process goes like this:

• A talented founder sets up as a freelancer
• The founder does great work and builds a great reputation, so wins more business than they can handle
• They hire others to do the work they can’t do themselves
• The staff are less motivated and often less able than the founder, so the quality of the work falls
  • Frequently the founder does not have the skills to hire or manage good staff
  • The reputation of the enterprise is eroded, and it fails or contracts

The founder is the “Hero” and the “Hump” is the barrier to building an enterprise that has more capacity than the founder alone can provide.

So what is needed to successfully overcome the “Hero Hump”?

• The Hero must become a leader and a manager as well as an implementer
• The Hero must be able to attract and motivate a team of top quality people

All too often the hero fails to recognise that their role must change, and fails to recognise just how hard (and expensive) it can be to hire really good people.

I have experienced this phenomenon as a customer on a number of occasions, where I’ve had great service and work from someone, but when I’ve gone back a couple of years later it has been a much less positive experience.  I shall name no names

It can’t be impossible however – I know a plenty of larger agencies which seem to do perfectly well.  They have the critical mass to attract good people, and sufficient resources to allow for professional management.

I feel like this problem is commonplace, but is it structural?  Are there some types of business which work either as one-man-bands or with 10+ people, but where growing is extremely difficult?  Perhaps it is the opportunistic approach to growth that is the problem?  Maybe the agencies that achieved scale set out to do that from the start rather than simply trying to exploit opportunity presented by demand?

Although some of these issues are specific to services businesses,  the same basic problem can apply to technology startups.  A brilliant founder needs to put a team together around them to build a business, but all too often they lack the experience to do so.    Often a part of the work that I do with a young company is helping the founding team to understand the need to develop their skills as leaders, managers and recruiters.

Getting Salient Point over the hump?

Ironically, while I may be trying to help others with this problem, I also face it in my own business.  I don’t apply the “Hero” moniker to myself, but I have a small services business based largely on my own work.  I have some intellectual assets, I have built a little bit of brand, and I already work with others on an associate basis from time to time.  Sometimes I have leads for business that we have no capacity to operate, which seems like a waste.   The associate model may have a little more mileage in it, but it is tempting to think that I could exploit the intellectual assets, brand and leads in my business to create more value.

In theory I should have the skills to overcome the hump, but I’ve worked in large consultancies before and I know how their cost base compares to mine.  I have ideas about how to build a larger business and I do come back to the this thought from time to time.  The question is, should I try to scale?  There are some compelling reasons to give it a go…

• Currently I’m limited by the number of hours in the day.  The only way to make significantly more from my business is to scale.
• My business currently has no real value.  Scaling could turn my business into an asset.
• I’m passionate about helping startups, and scaling would give me an (indirect) opportunity to help more companies.

It would undoubtedly involve a number of compromises too:

• I would have to spend more time managing my business and less doing the work I love in startups.
• I expect at some point I will want to join the team of one of the companies I work with.   Scaling my own business would make that a less straightforward choice.
• Startups tend have limited funds, so price is important.  Anything that builds my cost base will tend to push me away from working with startups.

The way I see the balance varies, but mostly I’m leaning towards the status quo.  Watch this space to see if I change my mind at some point…

In the meantime, I’ll be helping others in the startup community to grow their businesses.