How to Build a Functional Leadership Team

Why should a growing technology business establish a leadership team?

As consultants, this question often comes up.  I can tell you one thing for certain: Establishing a functional leadership team makes it easier to build a functioning business.

Becoming a micromanager, however. Not so much.

Many business owners are so passionate that they unknowingly go too far in the way they oversee the company—and passion becomes these owners’ biggest curse. This brings us to some key strategies for building a functional leadership team.

Buy Back Some of Your Time as an Owner

Don’t wait to delegate! Many owners brag about working 60 or even 80 hours a week—but why? They should enjoy their life, enjoy their time off, and engineer their workflow so that when they’re off, they’re truly off the clock.

It's simple: Being an owner shouldn’t dictate your life.

If you don’t start delegating today, you’ll face a bottleneck tomorrow. Begin to accept that you cannot grow and protect the stability of your business by doing everything. Many MSPs hit a bottleneck of $3 million or $4 million.

It may be exhilarating to land a new client, but what if two clients leave the next day?

This is where it is important to establish a leadership team responsible for operating the business, so that all facets of the organization continue to run smoothly. Without multiple allies, you will fall back on ‘time’ and ‘gut instinct’ that are not always the right paths to resolution. If you’ve ever caught yourself doing the old “do as I say, not as I do” routine, then you need to delegate!

New revenue won’t pay the bills—at least not by itself. And by buying back some of your time, you can ensure you’re looking after those long-term clients whose agreements you need to continue prioritizing.

Don’t have a passion for account management? That’s fine! Delegate that task and prioritize that new business. The message here is that you have to build a team to protect all sources of revenue.

Granted, sometimes those strategic hires aren’t as sexy. But operations and finance, or even account management, are still vital to your core business. So many CEOs spend dozens of hours a month invoicing, or working tickets, or in some rare cases, doing scheduling!

What they should do, though, is fire themselves from the roles that aren’t worth their time.

They should focus on the things they wake up for in the morning, and put a dollar amount on the value of their time. Most CEOs are valued in the $300-$500 /hour range, and if you’re the one scheduling tickets, think of how much profit is being lost each time you intervene.

So if you’re able to build out a leadership team that operates within your vision and expectations, you’ll be in an advantageous spot. Because now you have people dedicated to the operational excellence your clients have come to rely on.

Don’t Limit Your Leadership Team to Founders and Executives

There’s no binary way to build your leadership team—but there are several insights to keep in mind.

You can operate as a sole proprietor, but you will need some help to carry out your vision.

In some cases, your leadership team may consist of equity partners all pitching in to handle a needed function.

Or, it may consist of many people, without any founding partners involved in the company’s daily operations.

If you’re scaling your business and want to get to that $25 million or even $100 million level, you won’t always have equity to give.

That means people can make decisions without coming to you—and that also means you will have to be okay with people learning from their mistakes.

“Only those who dare to fail greatly can ever achieve greatly.” ― Robert F. Kennedy

Have a Clear Direction

Stating you want to be a $100 million MSP in three years, but hovering around the $3 million mark, isn’t a direction—it’s a pipe dream. You need to figure out how you’re going to get where you want to be, and that direction needs to be feasible.

In other words, having a clear direction will help drive the company in the right direction.

This means you’ll want to synthesize whatever goal you’re given and break it down. Where do you need to be a year from now to make your goal a reality?

The best businesses believe 25% growth year-over-year is fantastic. 300% year-over-year, meanwhile? That isn’t realistic.

You also have to consider, from a high-level vision, how you’ll need to build your staff, take on new hires, and increase your profitability.

Ultimately, if your team doesn’t have tangible goals, different leaders will create their own goals. And if different leaders create their own goals, those objectives might not be in alignment. The direction must be set. And this is why building a functional leadership team is so important.

This will be the number 1 source of frustration and an urge to take back the responsibility you delegated. Creating that shared vision will allow your leaders to create decisions that are in alignment with their expectations and accountability.

Hold Your Leaders Accountable

Last, we need to discuss that a leadership team is NOT protected from being accountable. Whether you are a shareholder or trusted ally, every seat in your organization has definitive expectations that need to be met.

A leadership scorecard will allow you to manage your leadership team objectively with simple ‘met’ or ‘unmet’ reports.

There does not need to be drama or consequences for unmet reports, but a strategic plan or discussion to meet their goals is the differentiator between good and bad in this situation. If they are striving to get their goals and expectations back on track, they are growing as a leader to meet your vision.

If they are not striving to meet targets, however, a conversation and agreement needs to be put in place to either get things back on track OR find someone passionate and driven to own this target.

This is where taking time to select your leaders AND what they are responsible for is so critical.

Do not get caught up in the trap of forcing people management to develop their soft-skills and problem resolution abilities. Personality tests like DISC, KOLBE, and Strength Finders are excellent for things like these, rather than simply promoting your smartest engineer.