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Why Startups Fail at Scaling Too Soon · The Science of Leading

• 0:00
  Welcome to the show, everyone!
• 0:01
  I'm Claire Monroe, and I'm sitting here with Edwin Carrington.
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  And Edwin, I want to start with a number that genuinely stopped me in my tracks this
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  morning: 74 percent.
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  According to a massive study by Startup Genome, seventy-four percent of high-growth
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  startups fail because of premature scaling.
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  They basically grow themselves to death.
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  Why is that?
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  Seventy-four percent.
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  It is a staggering number, Claire, but it doesn't surprise me.
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  In my decades of advising, I've seen it time and again.
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  Leaders mistake growing for scaling.
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  They scale their inputs--meaning they raise capital, they double their headcount,
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  they ramp up marketing spend--before they have actually proved their outputs.
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  They throw resources at a system that doesn't actually work yet.
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  Wait, explain that distinction.
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  What do you mean by scaling inputs before outputs?
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  Well, think of it this way.
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  If you have a leaky bucket, pouring more water into it doesn't fix the leak.
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  It just wastes water.
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  In business, the water is your capital and your new hires.
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  The bucket is your operating system.
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  If you haven't built a repeatable, predictable machine that can handle volume,
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  adding fifty new people just creates mass confusion.
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  You're scaling complexity, not capability.
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  Ah, so you're hiring to solve a process problem instead of fixing the process first.
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  But how does a leader actually know if their "bucket" isn't leaking?
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  How do you prove the outputs are ready?
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  You look at behavioral customer retention, not just revenue or what I call "polite
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  feedback."
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  Customers will tell you they love your product because they want to be nice.
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  But do they actually use it?
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  Do they keep paying for it month after month without you having to constantly
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  re-sell them?
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  If your retention is a leaky bucket, you are not ready to scale.
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  Period.
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  Right, because if you're spending three dollars to acquire a customer who only
• 1:51
  brings in two dollars of lifetime value, you're just accelerating your own demise.
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  You're paying for the illusion of growth.
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  Exactly.
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  You're subsidizing your customers' existence.
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  True scaling is about absorbing complexity without breaking the team or the customer
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  experience.
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  So, if we accept that we can't just throw bodies at the problem,
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  how do we actually operationalize this?
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  I know one tool you talk about a lot is a One-Page Strategic Plan.
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  But honestly, Edwin, when I hear "strategic plan," I picture a fifty-page binder
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  that sits on a shelf gathering dust.
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  How does one page change that?
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  Because one page acts as a constraint system.
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  It forces radical clarity.
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  If you only have one page, you can't write down twenty different priorities.
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  You have to choose the critical three.
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  It has to be written in plain English, not corporate jargon,
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  so that a frontline supervisor and the CEO both read it and understand the exact
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  same thing.
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  It keeps everyone pulling in the same direction when the storm of scaling hits.
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  That makes sense.
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  But even with a perfect one-page plan, you still need the right people to execute
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  it.
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  And as organizations scale, the roles themselves change.
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  The person who was a fantastic, scrappy generalist at employee number ten might
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  struggle when you need them to be a process-driven manager at employee number fifty.
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  This is the core of the people challenge, Claire.
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  And it's where we look at what we call the OAD angle--using deep behavioral data and
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  people analytics to audit hiring and ensure role-fit.
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  When you scale, you can't rely on gut feel anymore.
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  You need objective data to see if a person's natural behavioral style actually
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  matches the cognitive and emotional demands of the new role.
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  So you're saying we should look at behavioral data to diagnose flight risks and
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  role-mismatches before the team actually breaks.
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  Precisely.
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  If you put a highly creative, autonomous person into a highly structured,
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  repetitive execution role because "they've been here since the beginning,"
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  you're going to break that person.
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  And when key people break, the scale-up stalls.
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  You have to design the team by data, not by default.
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  It really comes down to having the right people in the right seats as the vehicle
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  speeds up.
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  If you want to see if your team is truly aligned and in the right roles to handle
• 4:07
  your next stage of growth, you should check out the behavioral assessment platform
• 4:10
  we've been talking about.
• 4:12
  Go to O-A-D dot A-I to sign up for a free trial.
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  It's a game-changer for understanding your people.
• 4:18
  It truly is.
• 4:19
  Don't leave your talent strategy to chance.
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  O-A-D dot A-I is the place to start.
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  Thanks for listening, everyone.
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  We'll see you next time.
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  Take care.