How to tackle the biggest challenge for hyper-growth tech startups today

hyper-growth startup

It’s safe to say that whatever qualms Southeast Asia had towards digital transformation, COVID-19 has effectively squashed them. With various iterations of lockdown restrictions across the region, either business go digital or they go dark.

For the foreseeable future, the region is now governed by an explicit digital mandate. As a result of government restrictions to curb the spread of the virus, Southeast Asia saw an accelerated adoption of digital services in e-commerce, food delivery and online payment methods.

According to a Facebook and Bain & Company report, an estimated 70 million more people have shopped online in six Southeast Asian countries since the pandemic began.

With Southeast Asia’s foot still firmly on the digitalisation gas pedal, this has paved the way for “upstart” companies experiencing massive change and growth. There is a significant pool of emerging Series A, B and C companies thriving in the region.

This has become more prevalent, particularly in fintech and e-commerce companies, growing exponentially from 200 people to over 2000 people.

Although tech companies have fallen on the “right” side of the pandemic, this hyper-growth phase presents new challenges. As these scale-ups evolve, there are growing pains to undergo.

There is a massive leap between a scrappy startup of 10 people and an organisation of 50 or 250 working towards their next round of VC fundraising.

Also Read: SEA tech founders playbook: A to Z of becoming a fundraising legend (Part 1)

The truth is that a lot of these challenges stem from the people within the organisation that have the heart and drive but need a leap in skill and mindset.

Startups need to build a culture of growth and maturity. They need good executors and entrepreneurs and strong leadership and middle management to translate this growth mindset to their junior teammates.

Here are three business challenges that we have observed hyper-growth companies in the region are tackling and our recommendations on what is needed to overcome them.

The gap in leadership skills for new managers

As startups go into hyper-growth, this leads to exponential employee growth and individual contributors are pushed into people management responsibilities. What is unique about these scale-ups as they evolve into full-fledged organisations is that they tend to identify and promote internal talent with leadership potential rather than importing experienced hires.

This is critical to mention because the average age and experience of a manager have gone down – the average age of a manager working in a startup in Asia is someone in their mid-twenties or early thirties. In some industries, such as e-commerce, this could be lower.

Unfortunately, more businesses do not have the capacity, talent and resources to provide impactful training to these new managers.

Formal training tends to be designed for senior leaders with an average age of 40, so there is a gap in training available for such emerging managers.

Hence, you could have a whole decade of the “blind leading the blind”, potentially leading to toxic work culture and employee attrition rates rising over time, much of which might have been avoided with more accessible leadership training earlier on.

As such, businesses need to proactively think about developing their new managers in a standardised and effective way so that they can set them, and ultimately the company, for success.

Also Read: Workers are switching jobs now more than ever. Why upskilling matters most post-pandemic

After all, research by Boston Consulting Group and the World Federation of People Management Associations in 2020 has indicated that middle managers are, in fact, more critical than company leadership in driving employee performance.

Fortunately, we have seen more companies aware of this leadership training gap in their new managers and have taken action. For instance, the Head of People for MyRepublic, one of the fastest-growing telecommunications companies, quickly connected senior leadership training to traditional MBAs but had realised that training for new managers was a gap that could not be ignored much longer.

As such, MyRepublic engaged NewCampus to upskill their middle managers to create the right kind of organisational change as they enter the next growth stage for their business.

Learning and development as a necessary perk

Gone are the days where a cushy paycheck and office perks such as pool tables, gym memberships and stocked kitchens were enough to effectively retain talent. Back in 2018, a Work Institute report had already predicted that providing career development would be an essential tool for employee retention.

In an analysis of over 234,000 exit interviews, nearly one-third of the turnover was attributed to unsupportive management and a lack of development opportunities.

In a survey featuring NewCampus’ latest programme cohort, all 12 managers from scale-ups in the APAC region highlighted career development as the most important factor in staying with their reactive employers, and 30 per cent are in the process of transitioning companies for the lack thereof.

This ties back with retention research which indicates that individuals tend to stay longer when experiencing personal and professional growth.

But at the same time, it’s not sufficient to promote employees without consideration. On the one hand, you have employees who express interest in becoming a people manager but have no training to succeed. A recurring theme we have observed is that businesses lose their top-performing employees by promoting them without training.

Also Read: Workers are switching jobs now more than ever. Why upskilling matters most post-pandemic

On the other hand, you have individual contributors who are great at their job but do not want to lead a team. Promoting them to become people managers is not aligned with their own goals.

Hence, we agree with the recommendations made by EngageRocket’s HR 2022 report. Indeed, the usual approach to manager evaluation and promotion needs to change. Instead of selecting task orchestrators for managerial roles, companies should be promoting those with leadership and coaching or mentoring skillsets.

For those identified as potential leaders, businesses need to actively equip these new managers with all the ingredients necessary for them to be effective people managers. A majority of managers struggle to build relationships, develop and bring the best out of their team.

Hence, companies should help them acquire knowledge and skills such as identifying their leadership style and how it impacts them, learning delegation techniques to boost team output, and learning to diagnose and unblock productivity challenges.

Adapting to a remote and globally distributed workforce

The pandemic has accelerated remote work and proven its feasibility for the future of work. Businesses, particularly hyper-growth startups, have increasingly expanded regionally and distributed their workforce the same way.

We have increasingly seen business leaders having to manage geographies, cultures and timezones. It’s not uncommon for a product leader based in Singapore to manage and lead teams in Vietnam and Manila, for instance.

However, this has proven to be a new hurdle for businesses to overcome. In our recent fireside series, I interviewed over 30 senior leaders from fast-growing companies in APAC.

Also Read: Voice of Employees: How the pandemic accelerated focus on employee welfare

A common pain point that emerged from our discussion was the difficulty in managing across cultures and doing so in a remote environment. After all, a standard model by startups here is to have headquarters in Singapore with small offices scattered across the region.

Much like what I mentioned earlier, companies need to help set their employees up for success, and they need to tailor their strategies accordingly to make this shift work for them and not against them.

This is critical as a survey by Slack of 9,000 knowledge workers last year showed that middle managers felt the most stress with remote working compared to senior management and individual contributors. They also had the lowest scores in productivity and overall satisfaction.

One way is to up-skill their people managers with remote team management, cross-cultural communication and empathetic leadership to lead in this new world.

Another way is for senior leaders to continuously check in on these managers and gather feedback on what they need to adjust better. Managers unable to handle the transition well could impact their team, so this needs to be addressed.

Conclusion

The pandemic has undeniably accelerated a new world of work. Companies that are prepared will thrive, and those that do not will stagnate.

Ultimately, businesses investing in their people leaders are an important part of de-risking this transition. Leadership skills are no longer a soft skill but a fundamental and necessary skill to have in the future of work.

Companies need to realise that career development and succession planning go hand-in-hand. When employees’ personal goals are aligned with the organisation’s current and future needs, it creates a mutually beneficial environment.

The synergy between career development and a company’s succession planning creates happier and more productive employees, which allow a company to avoid the constant burn-and-churn in Southeast Asia.

Moreover, this allows the firm to experience a positive bottom-line impact while preparing for its future business needs.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: freedomtumz

The post How to tackle the biggest challenge for hyper-growth tech startups today appeared first on e27.

,
hyper-growth startup

It’s safe to say that whatever qualms Southeast Asia had towards digital transformation, COVID-19 has effectively squashed them. With various iterations of lockdown restrictions across the region, either business go digital or they go dark.

For the foreseeable future, the region is now governed by an explicit digital mandate. As a result of government restrictions to curb the spread of the virus, Southeast Asia saw an accelerated adoption of digital services in e-commerce, food delivery and online payment methods.

According to a Facebook and Bain & Company report, an estimated 70 million more people have shopped online in six Southeast Asian countries since the pandemic began.

With Southeast Asia’s foot still firmly on the digitalisation gas pedal, this has paved the way for “upstart” companies experiencing massive change and growth. There is a significant pool of emerging Series A, B and C companies thriving in the region.

This has become more prevalent, particularly in fintech and e-commerce companies, growing exponentially from 200 people to over 2000 people.

Although tech companies have fallen on the “right” side of the pandemic, this hyper-growth phase presents new challenges. As these scale-ups evolve, there are growing pains to undergo.

There is a massive leap between a scrappy startup of 10 people and an organisation of 50 or 250 working towards their next round of VC fundraising.

Also Read: SEA tech founders playbook: A to Z of becoming a fundraising legend (Part 1)

The truth is that a lot of these challenges stem from the people within the organisation that have the heart and drive but need a leap in skill and mindset.

Startups need to build a culture of growth and maturity. They need good executors and entrepreneurs and strong leadership and middle management to translate this growth mindset to their junior teammates.

Here are three business challenges that we have observed hyper-growth companies in the region are tackling and our recommendations on what is needed to overcome them.

The gap in leadership skills for new managers

As startups go into hyper-growth, this leads to exponential employee growth and individual contributors are pushed into people management responsibilities. What is unique about these scale-ups as they evolve into full-fledged organisations is that they tend to identify and promote internal talent with leadership potential rather than importing experienced hires.

This is critical to mention because the average age and experience of a manager have gone down – the average age of a manager working in a startup in Asia is someone in their mid-twenties or early thirties. In some industries, such as e-commerce, this could be lower.

Unfortunately, more businesses do not have the capacity, talent and resources to provide impactful training to these new managers.

Formal training tends to be designed for senior leaders with an average age of 40, so there is a gap in training available for such emerging managers.

Hence, you could have a whole decade of the “blind leading the blind”, potentially leading to toxic work culture and employee attrition rates rising over time, much of which might have been avoided with more accessible leadership training earlier on.

As such, businesses need to proactively think about developing their new managers in a standardised and effective way so that they can set them, and ultimately the company, for success.

Also Read: Workers are switching jobs now more than ever. Why upskilling matters most post-pandemic

After all, research by Boston Consulting Group and the World Federation of People Management Associations in 2020 has indicated that middle managers are, in fact, more critical than company leadership in driving employee performance.

Fortunately, we have seen more companies aware of this leadership training gap in their new managers and have taken action. For instance, the Head of People for MyRepublic, one of the fastest-growing telecommunications companies, quickly connected senior leadership training to traditional MBAs but had realised that training for new managers was a gap that could not be ignored much longer.

As such, MyRepublic engaged NewCampus to upskill their middle managers to create the right kind of organisational change as they enter the next growth stage for their business.

Learning and development as a necessary perk

Gone are the days where a cushy paycheck and office perks such as pool tables, gym memberships and stocked kitchens were enough to effectively retain talent. Back in 2018, a Work Institute report had already predicted that providing career development would be an essential tool for employee retention.

In an analysis of over 234,000 exit interviews, nearly one-third of the turnover was attributed to unsupportive management and a lack of development opportunities.

In a survey featuring NewCampus’ latest programme cohort, all 12 managers from scale-ups in the APAC region highlighted career development as the most important factor in staying with their reactive employers, and 30 per cent are in the process of transitioning companies for the lack thereof.

This ties back with retention research which indicates that individuals tend to stay longer when experiencing personal and professional growth.

But at the same time, it’s not sufficient to promote employees without consideration. On the one hand, you have employees who express interest in becoming a people manager but have no training to succeed. A recurring theme we have observed is that businesses lose their top-performing employees by promoting them without training.

Also Read: Workers are switching jobs now more than ever. Why upskilling matters most post-pandemic

On the other hand, you have individual contributors who are great at their job but do not want to lead a team. Promoting them to become people managers is not aligned with their own goals.

Hence, we agree with the recommendations made by EngageRocket’s HR 2022 report. Indeed, the usual approach to manager evaluation and promotion needs to change. Instead of selecting task orchestrators for managerial roles, companies should be promoting those with leadership and coaching or mentoring skillsets.

For those identified as potential leaders, businesses need to actively equip these new managers with all the ingredients necessary for them to be effective people managers. A majority of managers struggle to build relationships, develop and bring the best out of their team.

Hence, companies should help them acquire knowledge and skills such as identifying their leadership style and how it impacts them, learning delegation techniques to boost team output, and learning to diagnose and unblock productivity challenges.

Adapting to a remote and globally distributed workforce

The pandemic has accelerated remote work and proven its feasibility for the future of work. Businesses, particularly hyper-growth startups, have increasingly expanded regionally and distributed their workforce the same way.

We have increasingly seen business leaders having to manage geographies, cultures and timezones. It’s not uncommon for a product leader based in Singapore to manage and lead teams in Vietnam and Manila, for instance.

However, this has proven to be a new hurdle for businesses to overcome. In our recent fireside series, I interviewed over 30 senior leaders from fast-growing companies in APAC.

Also Read: Voice of Employees: How the pandemic accelerated focus on employee welfare

A common pain point that emerged from our discussion was the difficulty in managing across cultures and doing so in a remote environment. After all, a standard model by startups here is to have headquarters in Singapore with small offices scattered across the region.

Much like what I mentioned earlier, companies need to help set their employees up for success, and they need to tailor their strategies accordingly to make this shift work for them and not against them.

This is critical as a survey by Slack of 9,000 knowledge workers last year showed that middle managers felt the most stress with remote working compared to senior management and individual contributors. They also had the lowest scores in productivity and overall satisfaction.

One way is to up-skill their people managers with remote team management, cross-cultural communication and empathetic leadership to lead in this new world.

Another way is for senior leaders to continuously check in on these managers and gather feedback on what they need to adjust better. Managers unable to handle the transition well could impact their team, so this needs to be addressed.

Conclusion

The pandemic has undeniably accelerated a new world of work. Companies that are prepared will thrive, and those that do not will stagnate.

Ultimately, businesses investing in their people leaders are an important part of de-risking this transition. Leadership skills are no longer a soft skill but a fundamental and necessary skill to have in the future of work.

Companies need to realise that career development and succession planning go hand-in-hand. When employees’ personal goals are aligned with the organisation’s current and future needs, it creates a mutually beneficial environment.

The synergy between career development and a company’s succession planning creates happier and more productive employees, which allow a company to avoid the constant burn-and-churn in Southeast Asia.

Moreover, this allows the firm to experience a positive bottom-line impact while preparing for its future business needs.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: freedomtumz

The post How to tackle the biggest challenge for hyper-growth tech startups today appeared first on e27.

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