EP29 Who should be on your leadership team?

In this episode, Mike discusses who should be on a leadership team. He emphasises the importance of a strong and disciplined meeting rhythm, including annual planning, quarterly planning, weekly leadership team meetings, and daily huddles.
He breaks down the primary functions of a business into operations, sales and marketing, and finance, and explains that the heads of these functions should be part of the leadership team. Mike also advises framing the invitation to join the leadership team as an experiment to allow for flexibility and evaluation.

Takeaways
A strong and disciplined meeting rhythm is crucial for a leadership team.
The heads of the primary functions of a business should be part of the leadership team.
Inviting team members to join the leadership team as an experiment allows for flexibility and evaluation.
Investing in developing leaders within the organization is essential for scaling and reducing reliance on the founder.

Chapters

00:00 Introduction

02:05 Identifying the Primary Functions of the Business

04:03 Determining Who Should Be on the Leadership Team

05:48 Bringing Team Members into the Leadership Team

08:41 Inviting Team Members as an Experiment

09:39 Investing in Developing Leaders

Find out more about working with me. mike@smbmastery.com.au or https://www.linkedin.com/in/mikeadamscott/

Transcript

Mike Scott (00:01.294)
Hey, everybody. Good to be back. Nice to have a bit of a cadence going again. So today's episode will probably be a bit quicker than normal. In the last few weeks, I've had a number of people either reach out or some of my clients that I've just started working with ask me a question that broadly translates to who should be on my leadership team. Right. And it's a good question. So my firm belief is that the sort of cascading, I guess, let's say like prioritization set starts with vision. Then it moves to strategy and it moved to tactics. That's all brought to life through a number of things, but

primarily through a very strong and disciplined and structured meeting rhythm. The meeting rhythm is including annual planning, quarterly planning, weekly leadership team meeting, and a daily huddle. In the weekly leadership team meeting and the quarterly offsites, that's what we're talking about. Who should be in these daily huddles at a leadership team level? Who should be in the weekly leadership team? Who should be attending the quarterly offsite planning sessions where we set the OKRs? Who should attend the annual reset? There is no straight answer to this.

But the way that I like to think about this is quite simple. It's when you're looking at your organization and you're designing your organization from a structure perspective, generally, we're going to have the founder at the top. The title might be CEO, might be MD, might be GM, whatever you want to call that role. The person who's kind of the person or the duo that is ultimately responsible for the strategy, execution of the strategy, the culture.

Mike Scott (02:05.134)
the profit and loss, big projects, that sort of stuff, sitting at the top. Those people are then responsible for making sure that the primary functions of the business run well, but also that they run well together and in harmony. So what are those primary functions of the business? Every single business in the world can be broken down simply into three areas. We've got operations, sales and marketing, and finance, right? That's its simplest structure. Most of our businesses,

we will extrapolate one of those three boxes or more than one of those three boxes out into multiple areas. So finance, depending on your type of business, you may have finance and at the same level, you might have HR or administration or legal, right? At the same level. Other businesses, all of HR, legal, finance, admin, all might sit under finance. Similarly in sales and marketing, some businesses may split out sales and marketing at a core function level, right? It depends.

on the state of your business, the phase of your business, the maturity, the age of your business, the size of your business, all of those things. In operations, similarly, you may call it operations, you may spin that out into multiple things. At Nona, for example, we didn't have operations at that top level. We had design, development, project management, right? It's at that level that you're sort of talking about the heads of, right? There might not be their title on their business card, but the function that they are serving in the business.

will be the head of the financial function, the head of the sales and slash all marketing function, the head of the operations function. Or if you've broken those down, the heads of that function, they are ultimately accountable for that function in the business. Once you've sort of laid out that structure, and I'm going really, really quickly here because that is a whole episode, multiple episodes in and of itself is what that structure should be. The answer then becomes quite clear who should be.

in these senior leadership team meetings. It's basically the heads of those functions, whatever their titles are, together with the person or the duo that is running the business. So you've generally got the founder, the entrepreneur, right? Sometimes they have been hired in a GM type role or a COO type role or an MD type role. You've got them, they're in there. Then you've got probably...

Mike Scott (04:31.182)
the equivalent of the head of the financial, administrative, legal, and HR function, the head of the sales and marketing function, and the head of the operations function. If those are split out, you've got the heads of all of those respective functions that are split out at that top level. When you go down a level, those people generally, it's not appropriate for them to be in the leadership team. So that's a sort of rule of thumb. Forget about titles, but look at your business.

understand the various functions within your business, look in your business and say who is ultimately accountable for these functions? The answer to that question is the answer to who your leadership team should probably begin with. Almost certainly it will change and evolve, but that is a really good starting point. Now, something that's important to sort of understand or take note of here is that...

This can be quite a difficult thing to undo. In other words, if you currently don't actually have a sort of formal leadership team and you don't have a formal leadership team meeting rhythm, you're probably having some pretty big challenges in your business and you probably wanna have a look at doing that. But if you haven't yet done it, I've helped you now to sort of maybe articulate who should be in that meeting.

Mike Scott (05:48.43)
But the way in which you bring them in is quite important. So like with a lot of things that I do, I like to sort of lead with a strong opinions, loosely held leadership style. What does that mean practically? It means that often we're going to get things wrong. It means that we need to know that often we're going to get things wrong. It means that we need to communicate in a way that conveys conviction with what we currently know and the circumstances in front of us.

but also the humility to be able to change that without people losing faith in us as a leader, without people think that we're just flip -flopping. So the narrative generally goes something like this. Hey guys and girls, I have strong conviction in this direction right now based on the information that I have at my disposal. So this is where we're going right now. If the information or the environment changes, we will pivot, we will change, and I will have conviction in that direction.

That is a very different narrative to like, hey guys, we're doing this. No, actually wait, we're doing this. No, actually wait, we're doing that. Very different approach, same outcome. So when you're bringing people into this leadership team function, my advice would be to frame it as a bit of an experiment, right? So right now it's just you, you're the founder, you've grown your business to one, two, three, $5 million. You've got a bunch of stuff, not really a leadership team. It's kind of just you, you're kind of just holding everything together.

and you wanna start to formulate this leadership team. You're looking at your business based on the structure that I spoke about and loosely you're going, okay, cool, yeah, I think this person sort of broadly takes care of the finance function. This person, yep, broadly takes care of the operations function. This person, yep, broadly takes care of the sales and marketing function. I'm sort of one of the leadership duos and I've just hired a GM, cool, I get that. Okay, so broadly I've got the structure that makes sense. I wouldn't run out to them now and just say, hey guys, you're all on the leadership team, let's go.

The way that I would do it is I would say, hey, look, we're formulating this leadership team. We're going to be running through these processes. We're going to be doing all of this stuff that I'm learning. I want to run an experiment to have you join the leadership team for three months. After three months, we'll talk, we'll evaluate, we'll see if it's working from the business side, we'll see if it's working from your side, and then we'll decide what we're going to do. This is a very, very different approach to saying you're on the leadership team.

Mike Scott (08:11.854)
Because in three months time, if it's not working, if you've done it, if you've just said you're on the leadership team, it's quite hard to undo that. You're probably going to really deflate that person. They could actually be amazing in the business, but not a good fit for the leadership team. And now you've got to undo something that is just not cool for them. They're going to feel like they've been let down and potentially they're not good enough. If you run it as an experiment, it's still not going to feel great. It's just going to be a lot better because they are expecting a review process in three months.

They are expecting, they're acknowledging that this is an experiment. We're literally going in to test how this works. So if it's not working, it's a hell of a lot easier to undo that experiment, right? This I think is critical. So just to recap, really the answer to who should be on the leadership team comes down to what is the optimal structure you want in your business to get the business to the next level. What are those primary functions?

who is ultimately accountable for those primary functions, those people should be in the leadership team. Don't just tell them they're on the leadership team, invite them in on an experiment basis and honor that experiment. Evaluate it as much as you can, put a line in the sand when it's done. I would suggest three months, have a conversation after three months, see if it makes sense to continue with that. I really hope this was helpful. This is critical, right? This is critical.

If you're feeling like you're just scaling chaos, if you're feeling like you're growing your business, but you're just getting completely overwhelmed that you as the founder is just getting stretched thinner and thinner and thinner and thinner and thinner, this is something that you really need to invest in. You need to invest in putting in the structures, processes, tools, frameworks, meeting rhythms, all of these things, common language, so that you are developing leaders in your business so that there isn't such a...

a enormous reliance on you. There isn't such a key dependency on you. There isn't just this bottleneck on you as the founder who can do everything because it's going to stop you scaling. It's also going to stop you sleeping and it's probably going to lead to intense burnout. We need to invest in people. We need to take staff or managers, whatever you want to call them, and turn them into leaders. And we can do that using the mechanisms that I speak about here quite a lot. So I hope this was helpful. As always,

Mike Scott (10:35.278)
This stuff can be done internally. You don't need a facilitator or a coach to do this stuff. It's just so much easier when you do for a simple reason that when you are facilitating and participating, it's really difficult. When you have a facilitator who knows what they're doing, you are able to fully participate, which is a much higher use of your time. Hope this was helpful. See you again soon.