Scale-up strategies. Gordon Gecko – how things have changed -  the importance of leadership skills to create competitive advantage

Venture Capital (VC) firms have been very focused on the valuations and performance of their FinTech investments over the past two years. Much of that focus has been on the financial performance and risk of the companies they have invested in. While these are important KPIs in the near term, a myopic focus on these will leave many VC investors exposed to longer term leadership and managerial issues within their investment portfolio. We see this short term focus creeping in to other more traditional businesses too.

One of our associates who is a Chair, NED and Senior Advisor to a number of UK FinTech firms, has been highlighting to both investors and management teams the need to invest in sufficient training of managers in the skills and qualities of good leadership. This is of particular importance for those teams about to embark on scale-up strategies. Again this is a theme we are echoing more widely from the Pelicam stand-point.

Think about the challenges a management team faces as a firm grows 2, 3 or even 5 times over a short period. How do you control that? What changes do you need to make to your team structure, policies and procedures? How do you preserve and evolve your culture? Think of the same challenges in a more traditional company. New outsourcing providers, large transformation programmes, changing customer demands, difficulty finding and retaining the right people…

Just because a talented and innovative founding team or existing management team were able to come up with a great idea for a business that does not mean they will be properly equipped for the challenges of scale-up or significant change. Investing time to help management teams consider and prepare for the challenges of scale-up and change is just as, if not more, important as providing them with capital.

FinTech companies are often associated with “disrupting” incumbent business models and technology. Traditionally, there are 2 key elements associated with a successful disruptor – superior technology and operational agility. These are considered key to overcoming established incumbents.

At one FinTech we know, we have identified a third potential element – leadership. The incumbent who are being focused on for disruption has a tarnished reputation for leadership, quality and customer care. We believe a focus on change leadership skills will give us a third advantage over our competitor, not just in terms of commercial rewards, but also in terms of team culture, loyalty and morale.

Remember, scale-up is not just about increasing clients and capacity, it’s about encouraging and growing a team on a successful journey.

A timely investment in helping a management team acquire the necessary skills and mindset – whether through a training course or adding some Pelicam input and expertise to your Board – can make a big difference to the probability of a successful scale up and the return on shareholders’ investment.

For more information, talk to Mark Paton on +44(0)7909 906991 or email mark.paton@pelicam.com.

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