Category Archives: Business Philosophy

Avoiding Death by A Thousand Cuts

Leave a reply

By:  Andrew Johnson, Ph.D.

Inside view of a watch

Since you can never create more time, be sure that you are not wasting it here.

Time.  You never seem to have enough of it and it is the great equalizer of companies of any size whether they realize it or not.  In a startup, you have a limited amount of time to get everything done so that you have a strong product launch before your funds run out and your investors are on to the next thing.  In a larger company, time is just as crucial but the consequences of wasting it are less apparent.  Without a sense of urgency, established companies can slowly sink into mediocrity after weak or failed product launches, poor BD and other important growth enhancing activities.

The biggest time waster of all at any size company is the useless meeting 
Startups will become established companies so establishing a sane and productive meeting policy at the beginning will save you from this death by a thousand cuts (meetings).

If you are looking to drive success at your company, here are some things you can do to assess the effectiveness of your current meetings:

  • Do the math:  How many people attended the meeting (N) x average hourly salary (S) x length of meeting in hours (H) = $ cost of the meeting (N x S x H).  For example:  A meeting of 5 people for one hour would cost you $500 if the average salary rate were $100 /Hr.   Was this meeting worth it?

Use this calculation to help eliminate useless meetings from your schedule and to negotiate yourself out of them with your supervisors if possible (sometimes this discussion can lead to the transformation of a useless meeting into a useful one).

  • Establish a policy of providing a meeting agenda with each invitation:  – This simple step helps to reinforce the policy of hosting only purposeful meetings.  This discipline also has the beneficial effect of reducing the number of meetings in total as well.  Having difficulty preparing an agenda for a meeting is the first sign that it might not be important enough to schedule.
  • Less is more: When conducting a meeting where decisions are needed – think, what are the fewest number of people we need to invite – then communicate to the rest of the team.  The more people that are in the room, the more opinions there will be and ultimately the more difficulty there will be to come to some consensus.  When key decisions are being made, feedback from a broader set of people and other important inputs should have been conducted earlier to provide the information that the final team needs to make a good and timely decision.
  • Watch behavior:   How many people are checking their cell phones, tablets or laptops during the meeting?   Did those people really need to be there?  A meeting that holds true value for the participants will also hold their attention.  If what you or others are doing on your computer during a meeting is more important than the meeting, perhaps you should have sent your regrets instead.  This behavior can also be a good indication that it is time to wrap things up (Not every meeting needs to occupy the entire time scheduled to it).
  • Watch your own behavior:  Finding yourself wanting to check your messages or put the final touches on your presentation might be signs that you are not spending your time appropriately.  You should be working on those things with all of your brain rather than attending this meeting.

Take home message
You can’t create time but you can prevent it from being wasted by establishing a meeting and communications policy that makes the most efficient use of everyone’s time.  If you are at an established company, use these tips to boost your own and your team’s productivity.  If you are at a startup, use these insights to make sure that you are getting every bit of value out of everyone’s time and effort as well as to establish the culture and habits that will keep your organization lean and mean as the company successfully grows.

Picture Credit:  JD Hancock via photopin cc

The Startup Founder Effect: The Genetics of Success

Leave a reply

By:  Andrew Johnson, Ph.D.

Black Antique Car

Founder Henry Ford’s leadership style affected his company both for good (ushering in the age of the automobile and for bad (decisions that put it into second place behind General Motors.

The ‘Founder Effect’ was discovered by Ernst Mayr in 1942 (Wikipedia) as part of his seminal work on population genetics.  It basically states that many of the traits that you might see in a given sub-population of individuals can be attributed to the genetics of the first individuals that inhabited the space (especially when the niche is isolated).  This can help explain the sometimes quirky existence of traits that may appear to have no real value for the survival of the species (e.g. higher rate of polydactyly (extra toes and fingers) in Amish communities than that observed in the general American population).

What has this got to do with my startup?
Well just like the isolated communities mentioned above, the ‘genetic imprint’ of the founder of any company has especially strong effects in the early days of the company which may persist far into the future even when the founder(s) are long gone.  The culture of the company, the personalities and formal structure of how things are accomplished come from the founder.  Some of these factors are beneficial and in fact can be traced to the very reason behind a company’s success while most others disappear into oblivion.  However, sometimes these quirks of the founder can largely lead to the eventual failure of the endeavor.

OK then, So What
There are both positive and negative stories told about companies that continue to be run by their founders as well as those that have replaced this team.  Henry Ford and Ford Motor Company, Steve Jobs and Apple, Thomas Edison at what eventually became General Electric are just a few examples of founders that continued to lead their companies beyond what we would call an ‘exit event’.  Each person left their ‘genetic’ imprint (good and bad) on the culture and how that the company thrived.

We would general say that each of these men was extremely successful but what can be lost in the admiration of the companies that they each established is what were the lost opportunities, the alternatives not tried, the products that never saw the light of day.  Steve Jobs was famously known to have a tyrannical management style that equally pushed a slew of incredible technologies into the world and killed others, seemingly at a whim when they appeared to diverge from his own opinion of what was good or bad.  We will never know how many terrific and life changing things will never see the light of day when they were killed based on his opinion.  Edison was known to be equally intolerant to ideas that did not fit his vision for what he wanted (most famously he waged a marketing and commercial war to promote Direct Current (DC) over alternating current (AC) based on his own, it turns out flawed, view that DC was superior).  In fact this, in spite of all of the success with which Edison and his company is associated, character attribute or ‘Founder Effect’ drove one of his most brilliant scientists, Nicola Tesla, straight into the arms of his greatest competitor, Westinghouse.

As we can see, there are benefits and limitations to companies that are run by founders.

Some of the benefits are:

  • Passion and Vision :  This can be the very force that keeps the company both focused and on track in the face of outside forces that threaten to derail the company from its mission.  Raising money, building teams, facing skeptical customers etc. are a just a few of the things that put off lesser mortals.
  • ‘My Way or the Highway’:  Companies run by founders can introduce new innovations and develop whole new markets at a staggering pace.  A lot of this can be traced back to the single-minded drive of the founder.  He /she is not slowed down by gathering consensus at committee meetings as the company reaches important inflection points in its trajectory to success.  Having one ‘top-dog’ founder calling the shots can cut through a lot of the indecision and delay that can come from direction by committee.

Some limitations are:

  • ‘My Way or the Highway’:  The down-side of this style of leadership is that when the founder is wrong, there may be no recourse to alternatives.  Henry Ford was famous for stating “Our customers can have a car any color they like, as long as it is black”.  This shortsighted view of the relationship between a company and its customers (the ultimate bosses) soon left Ford trailing General Motors for virtually most of the early history of the automobile industry.
  • Making It Personal:  Edison had a personal feud with Westinghouse and this led him to the ‘take no prisoners’ focus on winning the electricity wars.  It can be argued that Edison and his company would have been far better off working together with Westinghouse than the time, money and effort that were wasted in trying to defeat the enemy.  It can be hard for some founders to separate their own egos from what might be best for the company as a whole.

What’s a Founder to do?
Should a founder fight to stay on with his company as it succeeds or make an exit and allow the company to grow under new management?  There is no right or wrong answer to this.  Obviously you want to maximize the positives and minimize the negatives of the founder’s influence.  If you are a founder, finding the time to take stock of your relationship to your company on a regular basis will allow you to achieve this.  The following tips are provided to help you with this critical assessment.

  • Has anyone told you ‘no’?  You may think that you have created a culture of openness but if you have not been told ‘no’ by your team, then you may have an issue here.  Remember, you can’t possibly be right about everything all the time and a good team should help you avoid mistakes.  If you are not hearing ‘no’ occasionally, then you need to work on helping your team feel comfortable doing so.
  • How are decisions made?  As you flesh out your team, make sure that you keep ‘delegation’ in mind.  This can be very difficult to do but you need to be thinking about brining on people that will take things ‘off your plate’ so that you can stay focused.   By keeping this concept in mind as you hire, you will make sure that the people who join you will be those that you can trust with the very life of the company.   If you already have your team, make sure that you are empowering them and that they are regularly making important decisions on their own for the company.
  • How are good ideas, not central to the company’s mission, disposed of?  One of the key attributes of a good Founder is to remain very focused on getting into the marketplace.  Good teams will have lots of good ideas (new product ideas, new markets to enter, new applications for R&D to develop etc.)  The key here is to be firm and respectful, but open-minded as well.  If you do this right you can keep the company focused while still encouraging new thinking.  Not an easy task.  If you do take the time to master this, these once rejected good ideas could one dayrepresent your next great product in the market.

Suggested Reading:

Picture Credit:  Gemma Grace via photopin cc

The Next Two People You Need to Start Up Your Startup

Leave a reply
Business leader and team

It’s a lot easier to figure out the startup puzzle when you have the right team!

By: Andrew Johnson, Ph.D.

It seems that every week there is an article or post that bemoans the shortage of innovation in America.  However, this is not due to a lack of great ideas and the pace of discovery in the labs across the nation.  The problem is getting the right team to lead and to grow these ideas into commercially successful endeavors.

Don’t go it alone
Having an exciting technology or scientific discovery on hand is not enough to form a successful company.  You need a team of talented people to help you realize your vision.  However, going from one person (you) with an idea and a passion to assembling an effective team and moving forward can seem daunting.  The answer to this is not complicated.  The first thing you need to do is assemble your first board members.

Who are they?  Early Advisors vs. Active Board
Whatever you want to call them, you need others to help you take your idea to the next step along the way to a successful company.  The best way to begin is to gather a small, but powerful group of people that you can rely on to help you develop a realistic strategy, identify productive tactics and complete the critical efforts needed to get this off the ground.  You will find that there are many that will be more than happy to become advisors but far fewer that will become valuable board members.  You need both but you need the active board member more, especially in the early days when this is still an idea.  Here are a few ways to distinguish the two types of people: Table of advisor traits

Your board may typically only have 2 or 3 other members in the beginning which is fine.  You will likely have significantly more advisors at the beginning but some of these may migrate over to the board member column as things progress.  Your advisors allow you to get a breadth of guidance and ideas and your board will provide the depth you need to sort through all of the ‘suggestions’ and actually help you with the heavy lifting of launching your new startup.  In addition to this, it is a lot easier to share the burden of this effort with a committed team than shouldering it all by yourself.

Next Steps:

      1. Identify 10 people who have the experience, resources, talents and connections you need and ask them to be on your board.
      2. Schedule a kick-off meeting to discuss your ideas with them and to identify what commitments you might need from them.
      3. Agree on a regular meeting schedule
      4. Parse this initial group, using the table above and your intuition, into Active Board Members and Advisors.
      5. Continue to recruit until you have at least 2 – 3 board members.

Picture Credit:  © Suravid | Stock Free Images & Dreamstime Stock Photos

The Successful Startup: Transforming Your Vision into Reality

Leave a reply
Night sky with dish

The successful launch and growth of your startup depends on the skillful integration of great vision and ideas with execution and commercial know-how. Finding your business or technical complement on day one will help to insure that this becomes reality.

By:  Andrew Johnson, Ph.D.

Gazing at the night sky can be an inspirational experience.  For some, there is more to this than just naming and tracking the celestial objects in the sky.  Some of the most interesting and bizarre objects in space are invisible to the naked eye (even to the naked eye aided with the most powerful telescope).  The discovery in the 1960’s of the existence of Neutron stars and Black Holes (not visible to the eye) were not only important discoveries in and of themselves but they allowed for some of the most powerful confirmation of Einstein’s General Theory of Relativity by allowing the actual measurement of things like the bending of light by gravity among other bizarre predictions from the theory.

What has this got to do with my startup?
The stories that are told about these discoveries take on an almost mythical narrative.  Think Einstein in his patent office in Berne, independently and brilliantly coming up with his radical new ideas about physics by himself in a sudden flash of insight (not entirely true).  The key here is that these ideas would remain obscure theoretical conjectures without the hard work and ingenuity of the experimental scientists that built the instruments and conducted the experiments that not only confirmed the validity of Einstein’s work but have even allowed them to be applied in ways that make our modern technologies work (GPS would not function properly without accounting for the dilation of time due to the stronger gravitational field at the earth’s surface relative to the global positioning satellites, as predicted by the General Theory of Relativity.  If this was not compensated for in your GPS, you would be off course by 10 meters in 1 minute).

Why the ‘Odd Couple’ has a better chance of launching your next product
So as we can see from this example, the successful transformation of a great idea into a practical and valuable product (your GPS) requires the expertise of complimentary but different professionals.  Theorists and Experimentalists are as different from one another as scientific founders are from their business counterparts.  However, it takes the ingenuity, passion and drive of each to make the alchemy work of transmuting a great discovery and idea from the lab bench into a successful product on store shelves (or e-commerce sites).

Getting theory and practice together
It is the rare individual that has all of the qualities that are essential to making a technology based startup a success by themselves (I would posit that this person really does not exist).  It may seem very early to think about the commercial side of your business when you are still working on its technical feasibility.  However, if your vision and dream is to someday create a company to commercialize your discovery, you need to find your business or technical counterpart as soon as possible.

Most Life Science companies are founded by scientists with exciting discoveries from their lab.  These companies often languish for lack of adequate capital to take them to the next step.   A quick look at the companies that are successful in getting the money they need to make this work reveals that, more often than not, they have a strong ‘Odd Couple’ founding team.  Speak with any investor and they will tell you up front that they would much rather invest in an ‘A-Team’ with a ‘B-idea’ than the other way around.  What is an A-Team?  This is a powerful team composed of both technical and business excellence.  This type of founding team insures that the science is backed by a compelling business model (and plan).   Potential investors find these companies especially attractive since the science and business hypothesis are equally strong.  This also insures that the requisite expertise is in place to actually achieve the milestones that have been presented (thereby de-risking the investment some).

Take Home Points:

  • Look for your counterpart on Day 1:  The day you decide that you would like to start a company to commercialize some great new technology, start looking for your business or technical counterpart.  They should share your passion, be innovative and also compliment your own talents.  For example, if you are an introvert, consider finding an extrovert.  If you are a visionary thinker, team up with a detail oriented achiever.
  • Remember it’s the A-Team that gets the cash:  A well balanced technical and business team with great connections has the best chance of beating the odds in the rat-race to win the funding you need to get things off the ground.
  • Keep your eye on the prize:  The many challenges that startups face along with the issues that can arise when working with team members that differ from you can seem overwhelming.  Remembering that everyone on the team (make sure that they do) wants this to be a huge success can help you make the compromises, delegate authority and responsibility and cultivate the flexibility that are essential elements of a powerful A-Team member.

Further Reading:

Picture Credit:  “Satellite Dish Under Starry Night” by twobee, FreeDigitalPhotos.net

Testing, Testing: The Startup Executive And His Corporate Counterpart

Leave a reply
Fishbowl on briefcase

Selecting a ‘big fish’ CEO from a large company or an experienced one from the startup community. Matching the style of leadership with your needs is more important than where they have come from .

By:  Michael Kaiser

A startup company, in any business undertaking, is usually the creation of an entrepreneur or inventor, who is either unwilling to continue working for, or dissatisfied with the operational restrictions of established corporations. The move to create a startup company may also be the result of a corporation’s meltdown or downsizing, hence the opportunity “to do what I always wanted, my own business”. For those who left an established corporation, the transition may be as difficult as those who created a startup which then becomes the target of a corporate takeover that affects their hitherto control and independence. In both cases, four elements reign supreme: money, investment, innovation, leadership.

In general, early startups are more susceptible to failure than advanced or established corporations, either due to lack of funding or a specific organizational experience requirement. Obviously that is one area where a former corporation high-executive will have a better chance of success. But the entrepreneur, no matter if by previous corporate title or by sheer personal initiative also wields advantages such as initiative, the product or service it creates, and the independence to move forward without the rigid interference of executive echelons.

The Risk Takers
Entrepreneurial executives are usually recognized as “risk takers” but that is not to be taken as their defining attribute because, not surprisingly, they avoid unnecessary risks that may impact their agenda for success. In the current global economy, those entrepreneurs that will jump in the pool without checking if there is enough water to avoid injury will find the hard way that they are not ready  to swim.

That is not to say that risk is an entry/exit barrier; rather it is the concept that the risk taken fills a need. Recent examples in business history are Steve Jobs and Microsoft’s Bill Gates. It was their determination (Jobs worked until the last two or one day before his death), vision and leadership that brought about the global impact of their innovations. (The 10 greatest entrepreneurs – Investopedia).

Organic Growth
The entrepreneur’s personality does not suffer fools, but also requires that he/she should select and be surrounded by capable partners that will support the vision of their leader but also be able to challenge it when necessary. One reason for that is that a startup’s solution to generate income and grow their products or services as soon as possible requires an “organic growth” strategy.

The Established Corporation (EC)
In contrast to a startup, an established corporation (herein EC) has the resources, organizational plans and established business recognition that allows it to expand globally as well as the domestic market. Procter and Gamble, General Electric, Pfizer, Novartis, and Toyota are just a few examples that come to mind. The EC is usually, if not always, listed on a financial exchange such as the New York and London Exchanges, the Asian ones and the NASDAQ. That apparent advantage over the startups came crashing down in 2008 with the economy’s “Great Recession”, which to the present day has not fully recovered.

The Crisis
The economic crisis forced many EC’s to cut the number of employees or facilities, and seek mergers with other EC’s. More surprisingly, even dramatically so, many large corporations had to reverse their established organizational standards to operational policies somewhere between their previous ways and the more dynamic and fast moving startup; imagine the difference between an EC as a tractor trailer and the startup as a sports car. In many cases, top executives that held their jobs for many years were summarily removed or forced to resign.

One particular reason why those EC’s that were able to survive the 2008 economic crisis had to change their entrenched policies as soon as possible was their investment presence in the global marketplace. Even those EC’s long established in the major exchanges mentioned above had to face not only the headquarter loss but those of their subsidiaries in Europe, Asia and Latin America as well.

Experience
The CEO’s of established corporations do not differ too much from that of their startup counterparts, but at the same time their experience with entrenched organizational policies and negotiating skills with clients or competitors, as well as the need to report corporate directions to the board of directors, with the support of teams reporting to them, represent a clear advantage in facilitating the conduct of the their business. In contrast to startups, the EC’s can operate and expand their business growth by adopting either an organic or inorganic growth strategy.

There is one specific and important requirement shared by both startups and established corporations in their quest for success: Leadership.

The Twain Can Meet
The old saying that “never the twain shall meet” meant that two things or people are very different and cannot exist together. The British novelist Rudyard Kipling chose a more geographic description: “Oh, East is East and West is West, and never the twain shall meet”.

Well, that is not always the case in the business world, because there is one exception that allows an easier executive transition and it is the established corporation’s CEO moving to a startup. Although entrepreneurial executives like Steve Jobs, Bill Gates or Larry Page and Sergey Brin (Google) were able to wear the corporate mantle as their companies grew to a global level, those are exceptions more than the norm.

The Entrepreneurial CEO
A highly energetic and innovative startup CEO feels the need to wear multiple hats in order to implement his/her vision without interruptions or critique from employees or company directors. Those executives like to put their seal on the company as soon as possible, without interference and distractions. That is particularly evident in software/hardware, life sciences and engineering nascent companies. But once their companies have grown to the level of a large corporation, or are acquired by one, they require financial expertise, resources and organizational rules that are just some of the advantages expected and available in a large, successful corporation. And that is when many entrepreneurs, accustomed to ‘my way or no way’ leave or are eased out their startup after a reasonable time, or are induced to accept executive roles such as Chief Scientific Officer, VP Engineering Division, etc.

The Corporate CEO
By contrast with the above, a corporate CEO executive is often called in by investors/venture capitalists to save a startup that finds itself in rough waters, because its CEO is unable to navigate the storm or his/her ego is such that he/she cannot accept help from experts; the startup in question has a very marketable product or service, but the leader is floundering. Thus, a new, very experienced corporate CEO is called in to take control, even if it is not Jack Welch or A.G. Lafley.

The Lafley case is particularly interesting: as the former Chairman and CEO of Procter and Gamble, he was called in by investors and the Board of Directors to retake the leadership of P&G, a household name that found itself facing losses under the executive that followed Lafley once he left P&G after his successful tenure. The reason for recalling Lafley was obvious: leadership and vast managerial experience with a large global corporation; he accepted the “May Day” call from his former employer (What A.G. Lafley’s Return Means for P&G – Harvard Business Review). The point being made here is that an experienced and recognized corporation executive can, although not always, save a promising startup company from sinking in a storm and lead it to success. There is little chance that a creative, dynamic, innovative startup leader would be called to save a large, global corporation. Yes, the twain can meet, but more often than not, only in one direction.

Epilogue
The subject of this article covers just a few of the multiple scenarios that deal with different examples, outcomes and opinions, as mentioned at the beginning of this article. To afford the reader further information I enclose a list of helpful sources (see below) divided in three sections: 1) Entrepreneurs; 2) Organic and Inorganic Growth; 3) Management.

Recommended Information  

1) Entrepreneurs

2) Organic and Inorganic Growth

3) Management

  • Our History In Depth – Google How a startup became a global power.
  • Google – Wikipedia The startup that became a mega-corporation.
  • Jack Welch Quotes – Brainyquote Worth reading because they reflect his driven CEO personality.
  • Jack Welch – Wikipedia A very successful executive at GE, who also generated deserved criticism.
  • Bill Gates – Wikipedia Notice the similarity of his management style with that of Steve Jobs.
  • Steve Jobs – Wikipedia Without doubt one of the most complex, creative and charismatic entrepreneurial and corporate figures in American history. His abrupt managerial style was widely criticized.
  • What A.G. Lafley’s Return Means for P&G – Harvard Business Review The action an established corporation had to take to regain its market share and why.
  • Leadership Styles – Wall Street Journal Six Different Leadership Styles

Picture   Credit:  Lindsay Caro via photopincc

What You Can Learn from an Orchard about Growing your Business

Leave a reply
Apples

Approach building your company like planting an orchard. Be sure that you know what your customers want today but also a few years down the road as well.

By:  Andrew Johnson, Ph.D.

What does growing apples have to do with building a life science company?  It turns out that there are a lot of similarities if you look closely.  A successful orchard requires a huge investment in planning (what variety of trees, how much of each, etc.), effort (a lot of work before the first harvest), finances (cost of land, labor, farm equipment etc.) and time (trees need a number of years to mature before your first harvest) to become successful.  The successful orchard keeper needs to have a good assessment of what types of fruit his customers will want in a few years and also how he can differentiate his own business from other orchards in the area to compete successfully.  The leadership of a strong life science business needs to think in the same terms.  What need will your offering(s) fulfill in the future and why will customers come to you rather than to your competitors?  With an orchard, once you plant the trees, you are now committed to your view of the future market for your products and now everything is about nurturing your trees until you have your first harvest.  With a startup, once you have selected a product and/or service, all of your efforts will be to get it successfully to market.  The orchard keeper cannot rip up trees next year if he thinks that the market for his fruit has changed.  Likewise, most startups do not have the funds (or time) to scrap a product offering once they are working to get it to market.  The lesson here is, make sure to spend enough time to understand your market, your customers and how you will successfully sell and then commit to a laser-like focus for getting that offering to market as soon as possible.

Tips for Building a Strong Startup:

  • Plant Trees:  Build your company for strong and steady future business.  Whether you are offering a platform, service or a one-time sale of a large instrument, referrals are the key to efficiently growing profitably.  Winning new customers is costly so getting referrals from happy customers is like harvesting apples in the fall.  The time, effort and investment you put into winning strong early customers will pay off as they share their experience with your future customers.  Building a scalable infrastructure that consistently and efficiently delivers the goods that delight your customers will insure success in the long run.
  • Build a Barrier to Entry:  It takes a while to plant and nurture an orchard.  However, once your trees have matured, you will have happy customers coming on a regular basis.  Building strong relationships with key opinion leaders, establishing preferred vendor status with organizations and establishing your company as a market leader in the technology is a lot like planting new trees.  There is a lot of prep work up front and the rewards are not immediate but once you have done this, this makes it very difficult for competitors to come into the market later.
  • Plant some Pumpkins Too:  As a startup, you need to start generating revenues as soon as possible to prove out your business.  Your team will need to put a lot of focus on getting your first sales and creating happy customers.  Many startups make the mistake of neglecting to build in some time for creating a scalable and profitable business.  You will be planting and harvesting an annual crop like pumpkins to do this. Developing a product road map that contains both near term (pumpkins) and long term (apples) offerings will allow you to get to market faster and get the insights you need to insure a better outcome with your later prospects. However, the key here is using what you have learned about your customers, their wants and needs and enthusiasm for your offering to build an infrastructure that will allow you to maintain the high level of customer satisfaction that will lead to referrals from your customers (See first point – Plant Trees).

Take Home Points:

  • Start building relationships with key opinion leaders and strategic partners early (even before the launch of your first product or service).
  • Use the insights you gain of your customers’ wants and needs from early sales to guide your efforts as you scale the business.  (e.g. if you will start selling using distributors, make sure that you build in an infrastructure (tech support, technical inside sales, social media outreach, etc.) to maintain the level of support and service that your customers valued in the early days).
  • Everything you do and every interaction you have with the public will shape your brand.  A strong positive brand can be a powerful barrier to block your competitors.  Clearly identify the brand identity you would like to have and make sure that you and everyone in the company reinforce this in everything they do and with every interaction with the public.

Picture Credit:  © Sofiaworld | Dreamstime Stock Photos & Stock Free Images

Don’t Miss the ‘Good to Great’ Way to Startup Success

Leave a reply

By Andrew Johnson, Ph.D.

Rocket blast off

Achieving breakout success for your startup is all dependent on what you do before anyone has even heard of you. Do this right and there is no stopping the heights you will attain and the success you will enjoy.

There are no shortages of stories of great ideas and entrepreneurs that, for one reason or another, failed to achieve commercial success.  Is there some secret to getting this right that is being tightly held by the winners in this Darwinian race to startup glory?

Jim Collins investigated this phenomenon in his book, ‘Good to Great:  Why Some Companies Make the Leap and Other’s Don’t’ more than a decade ago.  He selected 11 publicly traded US companies from the ‘Fortune 500’ that consistently out-performed the market by 30% for at least 15 years after an initially lackluster performance of 15 years.  He compared these ‘breakout’ companies to their industry matched (same size, market, revenues in the previous 15 year period) counterparts to see what was behind these company’s’ incredible success.   Mr. Collins and his team used publically traded US companies since there was a wealth of publically available data for him and his team to use to figure this puzzle out.

A look at the stock market valuations of the ‘breakout’ companies compared to their market average counterparts shows that any two comparison companies tracked one another for at least 15 years and then the graph of the returns for the breakout company would just skyrocket up consistently for at least 15 years (some showed even more dramatic growth both in size and duration).  This is the type of financial performance and success that every startup team dreams of achieving as well.  However, this study was originally done with well-established companies whose revenues were high enough to rank them as the top earners in the US.  What, if any, of the findings here could be relevant to a startup?

The Secret Sauce
The answer:  Many of the ‘Good to Great’ findings are a perfect fit for startups as well.  Many of the principles that drove the success of the ‘breakout’ companies in Jim Collins’ study are applicable to startups today.  The following insights are inspired by the findings of the ‘Good to Great’ team but have been adapted for startup stage companies.

  • Selecting your leadership:  The ‘breakout companies’ were all lead by top performing CEO’s that many had not heard of before.  This is because they were not celebrity CEO’s that were interested in driving their own ego’s and compensation, but passionate ‘get-it-done’ leaders.  Startup CEO’s rarely have this issue.  The reason is that entrepreneurial leaders are passionate for transforming their startup into a successful company.  The only ‘watch-out’ here is that sometimes investors will insist on the placement of an experienced executive (well-known outsider) at the helm based on the misconception that this will boost the chances for success.  When this occurs, it is important to make sure that this leader shares the passion for driving the company’s success (rather than their own) first.  In other words, a leader that has an enviable track record of creating long-lasting successful companies rather than just a big name in the industry.
  • Building your team:  The ‘Good to Great’ findings showed that all breakout companies spent some time making sure that they had the right team in place before they worried about their strategy for transformation.  The startup is spared the need of ridding the team of ‘dead wood’ if it focuses on only hiring the very best from day one.  The reason that this effort precedes developing your strategy is that you need the input of a top performing team to come up with the best strategy here.  Another benefit of hiring the very best even before you fully know exactly what all of your needs are is that they will require much less care and handling and help to create a culture of excellence from day one.
  • Facing the music:  All great ‘breakout companies’ had some moments of truth were they discovered that they were in the wrong business or that the market had changed in such a way that they could no longer count on being number 1 or even 2.  Once the truth has been faced, the team can then rally to develop a strategy to redirect the company into a more successful and profitable direction.  Startups with a good leader and a solid team can face the realization that they might have a great technology that has no compelling market early on.  This team , working from these facts, is now in the best position to make the necessary pivots in the early days (before too much cash and time) is wasted to direct the company in a new and more promising direction.
  • Refining and sticking to your focus:  Jim Collins called this the ‘Hedgehog Concept’ (The Fox knows many things but it is the Hedgehog that knows the one most important thing).  This is all about focus and not being distracted by outside interests that do not serve your central strategy to succeed.  The ‘Good to Great’ team found that this central guiding concept (The Hedgehog Concept) was composed of 3 things that are roughly 1) identifying what you are best in the world at, 2) what you are most passionate about and 3)what business model will best transform this passion and world-class talent into financial success.  The startup concern will need to do the same reckoning and this is not always an easy thing to do.  Insight will come from both an honest assessment of the capabilities and talents of the team as well as a reasonably good estimate of how you can successfully commercialize this.  Focus is usually not an issue in the early days for the startup.  This becomes more of an issue after the company has enjoyed some commercial success.  The key here is to stick to this central focus of the company (The strategy for taking you to number 1 in the market) when exploring opportunities for growth from everything from product line expansions to strategic partnerships and acquisitions.  Anything that does not contribute to your core strategy should be ignored.
  • Nurturing a culture of discipline:  Remember that we recommended hiring only the best people for your team.  If you have done this well, you will already have built a culture of discipline.  Many of us have seen the gimmicks and marketing efforts that companies use to ‘motivate’ their employees to do more for the company.  If you have the right people in the company in the first place you won’t waste one minute or one dollar on this since everyone is already aligned with your goals for the company.  Essentially with a culture of discipline, you will not need to find ways to get your employees to get the job done as they will likely already be well on their way to completing this.  Make sure that you continue to follow the high standards you used in the early days as you continue to grow the team.  ‘Quality People’ over finding the cheapest person to do the job will always be more valuable in the end.
  • Turning the ‘Flywheel of Success’:  Success does not come overnight.  The ‘Good to Great’ team found that there was never one event or decision that lead to the company’s success.  It turns out that it was the accumulation of a thousand little things being done right that lead to breakout.  For a startup, this is about meeting challenges every day and working together to achieve that one central goal of first getting the company to market and then building its fortunes after a successful launch.  This last point is kind of a recap of all the others in that with the right leadership, the right team will be hired and with the right team and leadership the right path to success will be found and then the team will work hard together to achieve this goal step by step every day.  Judicious and frequent use of refining and following your central strategy will easily allow the team to determine if a given action or decision will be a push that increases the momentum of the ‘flywheel’ or not.

Putting it all together
It can often look like ‘breakout companies’ just popped up out of nowhere.  Whether they are the next Apple Computer or Genzyme, startup or well-established, this comes about more from the way that the popular press covers these companies than reality.  Jim Collins and his team found this to be true in his study and it is true for the budding startup as well.  The ultimate factors that best predicted for success turn out to be with those companies that are fortunate to have a passionate and capable leader, strong ‘results focused’ team and a single minded discipline and focus to do what is most important for the growth of the company.  The road to success may be long but following these great insights will insure that you stay on track.

Suggested Reading:

Picture Credit:  jurvetson via photopin cc