Leadership Challenges and Opportunities for High Growth Companies: How to Identify and Replace Underperforming Leaders

As a leader of a high-growth company, the primary challenge and opportunity is to constantly strive for growth that matches the pace of the company. Tobi Lutke, the CEO of Shopify, has spoken about the importance of re-qualifying for his job every year. This mindset is crucial for success.

However, not all leaders are able to rise to this challenge. It is not uncommon for leadership team members to be replaced regularly. Sometimes, it is clear that a leader needs to be replaced, as they are unable to keep up with the company's growth. In other cases, the decision is less clear-cut, either because the facts are uncertain or because emotions cloud our judgment.

One of the toughest decisions a CEO may face is removing a leader who was once great but is no longer able to keep up with the company's growth. It can be difficult to let go of someone you have been through a lot with, trust, and have a personal connection to. However, deep down, you may know that they are no longer the right fit for the company at its current scale.

This decision can be even harder when it involves a co-founder who has not been able to keep up with the company's growth. The loyalty and personal connection can make it difficult to make the right decision for the company.

On a human level, this loyalty is admirable. However, it can get in the way of making the right decision for the company. If a leader is unable to keep up, other leaders, staff members, and the leader themselves will know it. By keeping someone who is good in a leadership role instead of striving for greatness, it sends the message that good is "good enough." This can lead to a decline in performance and motivation among staff members.

As a CEO, there are many stakeholders to consider and high expectations to meet. Compromising on leadership quality is not an option. If a leader is not able to become great within a timeframe that is relevant for the business, it is best for everyone, including that leader, to find a role that is a better fit.

Letting go of leaders who are unable to keep up can be difficult, but it is crucial for the success of the company. It is possible to do this in a humane way, and many leaders who have been replaced have gone on to excel in roles that were a better fit for them. They often remain friends with their former colleagues.

As a CEO, it is important to consider if there are any leaders in the company who are not operating at the right level. If so, it is crucial to ask yourself how long you have known or felt this, what has prevented you from acting on it, and what is holding you back. It is also important to communicate this with the leader in question and consider if they can become great within a relevant timeframe. If not, a plan must be put in place to remove the leader and find a great replacement. It is also important to take steps to ensure that this situation does not occur in the future.