Category Archives: Leadership

Avoiding Death by A Thousand Cuts

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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

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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.

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Picture Credit:  Gemma Grace via photopin cc

The Successful Startup: Transforming Your Vision into Reality

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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

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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

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

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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.

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The Challenge of Ethics and Integrity in Business

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clip art ethical man

High standards of business and personal ethics and integrity are inevitably challenged, sooner or later, to handle difficult decisions prompted by a ‘survival-of-the-fittest’ doctrine.

By: Michael Kaiser

Do you remember the Enron Corporation and other similar energy scandals? And the financial ones that precipitated the 2008 “Great Recession”? And the automotive and the health care industries ones? In all cases, one factor stood out: the lack of intertwining ethics and personal integrity from senior executives, who either ended up in jail or were removed from their positions. Alas, for all the laudable concepts of business ethics, we can expect that established corporate codes of conduct will be violated sooner or later. Not surprisingly, many executives who rigorously adhere to the highest standards of ethics and integrity encounter the total opposite in many of their transactions.

And how can we not mention the famous 1970’s Watergate Scandal (even if you were not born then), one of the worst and most blatant ones in US political history. For the perpetrators, the words Ethics or Integrity had been erased from their lexicon.

How does an ethical business executive deal when confronted with quite the opposite?
Some years ago, during one of my visits to a client known to my former employer’s executives for his business ethics in a country where business and political corruption where one and the same, I asked him how he managed to confront and survive in such a difficult environment without becoming “one of the others”; he looked at me, somehow surprised at my question, and replied:
“Well, first of all, this is the reason why I choose to deal with your company and similar ones outside my country”, which he expanded with another reason: “Recently, when I complained to a local company executive about his commercial subterfuges, he replied that I should ‘not try to play being God in the Devil’s den’, and therefore I select foreign companies with an ethical reputation”. Some answer, rather shocking but one that described the rift that exists between rigorous ethical business codes and those operating under the more common or acceptable “survival-of-the fittest” rationale.

The challenge: Leadership and ethics
The above mentioned experience, and the retort my client received, merits revisiting James MacGregor Burns, who in his book “Leadership”, (1978), cites the sociologist Max Weber:

“In a famous distinction Max Weber contrasted the “ethic of responsibility” with the “ethic of ultimate ends”. The latter measured persons’ behavior by the extent of their adherence to good or high purposes; the former measured actions by persons’ capacity to take a calculating, prudential, rationalistic approach, making choices in terms of not one supreme value or value hierarchy alone but many values, attitudes, and interests, seeing the implication of choice for the means of attaining it … the relation of one goal to another, the direct and indirect effects of different goals for different persons and interests, all in a context of specificity and immediacy, and with an eye to actual consequences rather than lofty intent.”

Ethics, integrity or “survival-of-the fittest”?
The role of advanced IT communication, media reports or instrumentation and financial controls, forced (to some extent) a standard code of business conduct across the globe, reflected in the fact that no matter their geographic location, or their membership with EU, ASEAN or NAFTA, when a day does not go by without car manufacturers, pharmaceutical companies and food companies announcing a recall of one or more products; in some cases, a quality or contamination recall could actually usher the end of a company.

More often than not, the opposite takes place and reinforces consumer confidence. A couple of years ago a massive recall by an international car manufacturer led to a significant market share loss, but because the company executives freely admitted that manufacturing errors led to the crisis and were being corrected, the company has regained its sales leadership. Was that a case of corporate ethics in synch with executive integrity, or just a plain “survival-of-the-fittest” action?  When a pharmaceutical company is ordered by the FDA or EMEA to withdraw a medication with significant side-effects for the patient, is that to be perceived as a case of institutional ethics versus a “survival-of-the-fittest” strategy for the affected company?

Just implementing an ISO 9000 Quality Management control does not address the essence of human behavior on the issues of positive or negative tendencies.

Although ethics and integrity in business reflect a clear similarity as far as trust and truth are concerned, there are differences that rest on two Aristotelian demarcations, whereby Ethos reflects a community or national character that propel ethical standards on the individual, and Pathos reflects the passions or emotions of the individual, which builds integrity, or dismisses it. Therefore, in general, it can be argued that the CEO of a start-up company will be more prone to promote his personal integrity, whereas a counterpart in a large international corporation must promote both the corporate ethics as well as his personal integrity. In both cases, sooner or later they could confront the “survival-of-the fittest” dilemma, and then what would they do? The Case 1.2 on page 10 of “Defining Business Ethics” describes that quandary with a dramatic example.

Epilogue
The subject of this article is too complex for a minimalist description, and for the underlying interpretations we search. We may be tempted to choose this simple solution: that an organic business enterprise or a startup one are both correct, however one could, or can benefit if they adopt and display a code of ethics and that its top executive echelon stands out for their professional and personal integrity. But that is too easy a choice if a strategy to counteract the appeal emanating from a “survival-of-the-fittest” is not taken into consideration.

Recommended links and reading resources

Picture Credit:  Business metaphor of a question mark in front of a man’s head, Microsoft Word 2010, Clip Art

The Mind of the Startup CEO: Why a Little Crazy is Good

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Person thinking

The successful startup CEO has a particular mindset that tends to favor the chaos and excitement that are typical in the early days.

By:  Andrew Johnson, Ph.D.

We have all heard stories about the ousting of the Founder and his team once their business has proven itself to be a winner.  Steve Jobs was kicked out of Apple (though famously brought back for a second act), Ben Cohen and Jerry Greenfield (The Ben & Jerry of premium ice cream fame) were ultimately replaced when the company was sold to Unilever.  This phenomenon can be scary to many new entrepreneurs.  However, a closer look at the differences between what makes a successful entrepreneur different from a successful manager not only shows why this is a logical progression but also something that should not be feared.

It is extremely rare to find a person that has the mental makeup and desire to be both an entrepreneur and a manager.  The following points show why this is.

The Mind of a Startup CEO

  • Deals with chaos with calmness:  The startup CEO not only has the resilience to withstand the unpredictability and risk associated with a new company but actually thrives in this environment.  Here are a few examples of the things that can keep you up at night with a startup; making payroll, cash flow, technical setbacks, opportunity costs, launching into an unknown market, threats from competitors, dysfunctional boards etc.  The startup CEO actually thrives with these challenges by finding creative ways to resolve these issues while sleeping soundly at night.
  • Doesn’t shy from risk:  The stakes are often very high.  You only have so much time to prove that you have a viable business before either you lose the support of your investors and/or miss your moment to enter the market.  Being comfortable with taking prudent risks allows the startup CEO to move faster towards success or failure.
  • Is creative, resilient and realistic: The startup CEO can maintain a certain amount of detachment from the pressures that are part of launching a successful startup (resilience).  They will look for non-traditional ways of solving problems (creativity). However, they are also realistic.  This crucial balance between Cassandra and Pollyanna (too pessimistic or optimistic) can be the key leadership difference between a commercial success and failure.

The Mind of an Established Company CEO

  • Skilled at maintaining and growing existing business with the least amount of risk:  The market and business of an established company are well known.  Success here is about strong and steady growth that is scalable.  The successful CEO of an established company knows how to execute on the business plan and provides the calm and methodical leadership it takes to keep everyone on track.  There is much less unpredictability here and this type of leader will look to avoid risks when possible and maintain a strong and steady growth trajectory.
  • Generally most effective when things are good – fails terribly when things go bad:  The CEO’s of established companies are excellent managers.  When things are good, they shine at steadily improving the performance of the company using tried and true procedures and policies that can be easily scaled to grow the company.  When things start to go wrong, (e.g. technical problems, labor issues, and/or entry of a powerful competitor into the market) executing on existing plans only makes things worse.  This is a time for innovation and risk-taking, this is a situation where the startup CEO thrives (turn-around experts are often former startup CEO’s).
  • More risk averse, steady hand on the tiller:  Decisions are made after careful and thorough analysis.  If there is not enough data to guide a decision, these CEO’s will defer making a decision and look to gather more information.  This is often the right thing to do in a successful established company where there are fewer unknowns.

Why you want to be replaced
Once a company has seen some success it needs to focus on execution and getting every last drop of profit from its established products.  This is where the mentality of an Established Company CEO is needed.  The startup CEO can find this environment to be stifling and may feel constrained.  The ‘seat-of-the –pants’ style of leadership that worked in the early days must give way to new processes and procedures.  This allows the business to scale up quickly and efficiently with a much larger team.  At this stage, even new product launches will feel different than your earlier efforts.  Phased gate reviews, shareholder communications management etc. will need to be part of the process now.

Know thyself and gun for your exit
The chaotic realm of the life science startup is a fast moving, passionate ride with thrilling highs (achieved profitability) and crushing lows (great tech but no market for it).  This is where the ‘Fail Fast” moniker is celebrated.  If you thrive in the worlds of chaos and speed, you will find the life of a manager to be slow and plodding.  You will no longer be as free to innovate as you were before.  If you know this about yourself, you can start to build in how and when you will exit the company.  Keeping this in mind can even be helpful with investors as they look for entrepreneurs with the foresight to put the well-being of the company above their own ambitions.  Stay as long as it is a fit and plan to leave when it is your time.  With a little planning, you can still participate in the success of the company with good exit terms (seat on the board, profit sharing, valuable equity holdings).  By planning for your exit you will now have even more resources to ease the burdens of starting your next company.

Suggested Reading:

A First-Rate Madness: Uncovering the Links between Leadership and Mental Illness by Nassir Ghaemi, Penguin Books Ltd, 2012. | A New York Times Bestseller.

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