Scaling Challenge #1: Passing the Hat
AS a start-up, executives need to be prepared to wear more than one functional hat to be successful. As you scale, however, you must carefully oversee the process of passing those hats to new executives and managers that join the team. This looks easy on paper (just draw up the new org chart), but it can prove extremely challenging in practice. While it is easy to pass the hat in form, it may not be easy to pass the hat in substance when the on-boarding of the new hat owner is arduous, i.e., big learning curve, lots of important internal relationships, and so forth.
As long as the old hat-owner offers greater knowledge and effectiveness in the relevant functional area, everyone in the organization will gravitate to her for decisions and support, regardless of what the new org chart says. The problem can be further exacerbated if the old hat owner isn’t all that willing to pass the hat in the first place or if the old hat owner is too willing and runs away from the responsibility faster than the new executive can get up to speed. Poor hat passing can result in confusion, frustration, conflict, executive turnover and ultimately poor business performance.
Hat passing is tricky business that requires the buy-in all of all those affected, a solid foundation of respect between the two hat-passers, and a thoughtful approach to managing the transition. Without these fundamentals in place as you are scaling, you may find that you are dropping more hats than you are passing.

Scaling Challenge #2: The Solution of an Unknown Function
A corollary to the challenge of passing the hat is the introduction of a new business function whose role is unknown to those who must work with it. For example, most B2B SaaS firms begin with a CEO and a bunch of engineers, then they add sales and marketing to take the product to market, then technical