Are you familiar with the phrase ‘Unicorn to Zombies’? It is the common term used for describing startups that experience a rapid shift from high valuation to closure. Based on research, around 42% of those closures were due to a lack of market fit. Cash flow challenges account for 29%. Team issues, such as management or personnel problems 23% and stiff competition, 19%, form the rest of the reasons for the fall.
When analysing the closers, analysts often focus on the big issues of market fit and cash flow challenges, neglecting team management problems, which account for almost a quarter of the cases. From various accounts, a highly motivated team combined with a great product concept and strong cash flow is central to achieving sustainable growth.
Not all growth pace is sustainable. Growth at every touchpoint in ways that feel more humane and sustainable requires strategic management of material and human resources. If growth isn’t well managed, it incurs costs that sometimes outweigh the advantages it brings. This accounts for the many “Unicorn to Zombies’ cases – instances where ambitions ignored market, material, governance and human fundamentals.
For years, the startup space prioritised acceleration to impress VCs who poured money into firms hitting top-line growth targets consistently. But the energy burst utilised in achieving that growth didn’t stay at the top. The unmanaged energy flow soon leaked into everything else.
Internal abuses, reactive leadership, and toxic practices became rife. Foxtrot shutdown, WeWork’s meteoric rise, followed by a spectacular fall, and Travis Kalanick scandal at Uber, reinforced the point that although capital might be in great supply, product could be appealing, growth planning must factor in team energy flow in a scaled operational push to ensure sustained momentum. This focus is key to sustainable growth.
Precisely, growth push loses momentum when it starts to overstretch the team and scar mental and physical health. Like a car on a long trip, it is crucial to understand where to go full throttle and where to relax to rejig. Consistent team member burnout isn’t a great mode for the long haul.
It is fine to grind. It is fine to push. It’s fine to put in the extra work to move forward, even faster. But burning team members out in the process reduces operational efficiency in the long run. The impact shows up in slips. It manifests in poor customer management, internal abuses and lack of goodwill.
The corporate world is getting the message, though. Lauren Kleinman, an entrepreneur, remarked, “For years, the message to founders was prioritise growth at all costs. That’s changed. In 2022, I remember when Sequoia Capital released a widely circulated memo stating that the era of growth at all costs was over and that efficiency, durability, and profitability were once again what markets rewarded. That marked a real turning point in how companies get evaluated.”
The message is clear. To prevent burning everyone out in the process of driving growth, here are four ways to manage your team’s energy flow:
- Give time off after a hard push that delivered the target – Giving a team member time off after a hard push that delivered the target doesn’t mean you are being soft. It means that you are being disciplined. It means you understood that you are playing a long-term game and a revenue target will fall in place if the team are regularly performing at their best. This focus will preserve your people, the culture, and the energy that make your business targets possible.
- Avoid the temptation to pile consistent pressure without stopping to show appreciation – Pause briefly at intervals to appreciate the progress made and the team behind the achievement. This is a psychological reprieve that rekindles the sparks within the team.
- Say ‘No’ to misaligned priorities – One of the practices that fuelled Apple’s growth when Steve Jobs was at the helm was saying ‘No’ to whatever wouldn’t serve the business priorities. If you say ‘Yes’ to every path, you are going to burn yourself and your team out soon. ‘Zombie brands’ push their team in every direction, leading to confusion and strain. Learn to say ‘No’ to paths that put you in perpetual urgency for the mere sake of survival. Such parts are not sustainable.
- Embrace calm leadership – In engaging with your team, avoid emotional spikes that leave your team members drained and mentally bruised. To avoid pivoting to such a tactic, it is important to hire people who have good judgment, can take ownership and find pride in their job.
