Startups and startup executives all over Silicon Valley intensely debate around how, when and how much governance startups should apply to their operations when considering the challenges facing them at the moment and the challenges that lie ahead. These sometimes grueling discussions take place at executive meetings, board meetings and manager meetings when a startup moves form one phase of growth to another. The inflection points between each phase of growth manifest challenges and hurdles that begin to frustrate managers as they operate. It is important to note that these challenges and frustrations are supremely important and management’s actions around them are critical, as the decisions made will either suffocate or propel the business. I refer to the proper management of these growing pains as progressive governance.
As with anything else, a company is a progressively evolving entity that passes through different phases in the course of its evolution. However in a startup everything is and must be accelerated in order to gain the critical mass and stability necessary for sustained growth and development.
Imagine the difference between the way a jet’s mechanics are situated during its take off and climb versus once its reaches cruising altitude. You cannot govern the jet or the business with methods that belong to a different phase of its evolution, else neither the jet nor the business will take flight.
Too often startups make the mistake of applying too much brakes and governance to alleviate the growing pains and challenges they face. Managers instill too many protocols, policies, procedures that weigh down a business during a time where speed and agility are everything. It is supremely important for managers to detect the problems and apply the exact amount of governance necessary without comprising the climb of the business.
Managers with little experience with startups, and boards with traditional seat holders tend to want to drive a business to have the same governance they have experienced at companies at much further positions in the course of maturation. Too often startups fail because they have busied themselves in making everything run smoothly during a phase where growth and product development are everything. What is often overlooked is the fact that there is no point in having a smoothly operating operation that has no revenues or growth trajectory.
Clearly there is a certain amount of governance that needs to be put in place before a business steps on the accelerator, but the growing pains made present as a company moves from one phase of development to another must be met with a progressive governance application that takes into account what is most important and maintain intense focus on the ball.
Managers in startups have to learn to walk the line of too much and too little governance to keep the business moving forward while mitigating the occurrences of inefficiencies and incidents but to a degree where the business still maintains climb.
Best,
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Founder
DotNext Inc.
February 12th, 2009 at 12:31 pm
Well written. In my past experiences of business ownership and growth these were some of the issues that took us to a low profitability position. This was due to not letting the growth happen in a more “organic” way.
Instead we were taking the “corporate” view of business growth and structure and we were trying to apply it to our small startup. Unfortunately at the time corporate experience was all we had to work with which eventually led to shuttering the company.
This is a well served post out there for the startups that are trying to control every aspect of growth and using too much governance.
Also this is a perfect article for those who have done the corporate career and are now getting a venture started - pay attention to this article. Better yet print it out and put it up on the wall at your new startup offices.
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February 12th, 2009 at 8:41 pm
Too often startups make this mistake. But you certainly have to strike a balance between too little and too much as well.
Ben
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March 19th, 2009 at 5:42 pm
This is an interesting article and every details is true. Every business owners must realize that owning a business have its up and down and through each process, good leaders arise. Challenges do come and its the function of business heads to keep business in good shape.
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