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For Companies to Scale, so must Leaders; Get Ready for the Golden Age; Are you a BRAVE Leader; What’s your Salary Cap?

For companies to scale, so must leaders – It’s no secret that scaling for success is not easy – and many companies that grow quickly can fail just as fast.

According to a study by the Kauffman Foundation into the 5,000 fastest growing U.S. companies, two-thirds (or about 67 percent) either shrank in size, went out of business or were disadvantageously sold five to eight years later.

At the heart of each failure? The leader. To scale a company to its next level, a leader must have the right mindset, thinking capacities and capabilities. Consider these three reasons why leaders fail.

  • Leaders were hired based on past performance, not future capacity – in a fast-moving world, leadership success factors change as fast as we can respond to new challenges.
  • Not all leaders are “wired” to grow a company – cognitive capacities such as conceptual thinking, goal orientation, big picture and future thinking are critical requirements in a leader.
  • Leaders’ thought processes are often blinded by cognitive biases – past success can be a leader’s greatest enemy, causing him or her to become over-confident, take high risks and/or become complacent.

Leadership and organisational development expert, Dr Carl Harshman has developed a process of motivation profiling using leadership MAPs – motivation and attitudinal patterns. This article explores the range of MAPs that leaders need for ongoing success.

Are you wired for success? Do you have the right leaders on your team? Can you see the next crop coming through with the right MAP?

Read the full article here.

Get ready for the Golden Age – According to economic historian, Carlota Perez, we are on the verge of another ‘Golden Age’ – a time where humanity will pass through a period of upheaval and economic malaise and emerge victorious into a time of broad economic growth.

In her influential book ‘Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages’ (2002), Perez proposed that we are in the midst of the fifth great ‘surge’ of technological and economic change since the Industrial Revolution. The current surge began around 1970 – the age of the computer and the Internet.

Perez’s observations are fascinating and useful in considering where our businesses might fit into the big picture. She says that a few pioneering leaders could begin creating conditions for a new golden age.

“Leaders would have to understand their role in this crucial moment, move to open a consensus-building process, and be determined to take bold measures. Their efforts, hopefully supported by business and society, could be the basis for the global golden age of the information economy.”

What could you be doing to build competencies towards the next ‘golden age’?

For those, like my clients, who study important trends, it’s worth taking the time to digest the full article here.

Are you a BRAVE leader? – Celebrating the milestone of 500 articles for Forbes in this article, George Bradt took a retrospective look at recurring themes. He discovered that BRAVE leadership was a key discussion; an approach based on focusing on others, inspiring and enabling the talents of those around you.

Bradt has created a leadership framework based on the word BRAVE – Behaviours, Relationships, Attitudes, Values, and Environment. He has these five questions for leaders.

Behaviours: What impact? Leaders are defined by their followers. The only way to achieve your vision, in line with your values, in the context you choose, is through the attitude, relationships, and behaviours you model and engender in your followers. It’s not about you. It’s about your cause.

Relationships: How to connect? If you want people to contribute, you’ll need to direct communication and guidelines. And if you want people to commit to the cause, you must connect with them emotionally and give them the freedom to co-create your future in line with your guiding principles.

Attitude: How to win? Strategy is about choices. You must decide how you are going to win, where you are going to focus your efforts, and where you are not going to focus. Start with your overarching strategic posture then agree sub-strategies so people know where to invest to be best-in-class, world class, strong or just good enough.

Values: What matters and why? It is imperative for you as a leader to define the value you will create and the principles you will follow to get there. A critical piece of this is moving from theoretically elegant values that no one really believes to guiding principles actually guiding what people do.

Environment: Where to play? As a leader, you must understand the context in which you’re operating and interpret and create context for others. Start with your organization’s history including the founders’ intent. Then understand your current situation and recent results.

How could you bring more BRAVE behaviour into your own approach to leadership?

Read the full article here

What’s your salary cap? – I’ve spoken with a couple of clients recently about how to better manage their overheads as they grow their businesses. An idea I’ve shared is the salary cap. Whilst we’re probably all familiar with the salary cap that gets applied to our professional sports teams, my friend Greg Crabtree, author of Simple Numbers, Straight Talk, Big Profits, challenges us to take the same approach with our businesses. The goal is to get the most productivity per dollar of salary spend.

It’s a really simple calculation, for example:

Revenue $50m
Profit target (say 15%) $7.5m
COGS/non-salary costs $20m
Salary cap $22.5m

  1. What to do:
    Calculate your own salary cap, including salaries and hourly wages (and an appropriate remuneration for the founder/owner if they’re active in the business) plus all overtime, superannuation and bonuses
  2. Calculate current salaries
  3. To support growth phases, determine a salary cap range based on minimum and maximum profit targets.

Do your actual salaries exceed the cap? If so, what actions are required to bring things back into line (sales boost, cost reduction, change of team)? What is the cap range that will best support your growth ambitions? And, perhaps most importantly, are you fielding the best possible team within the salary cap you have?

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