Monday, September 25, 2017

Maintaining Control Versus Maximizing Wealth (600-1)

It's your idea and your company, right? You instinctively hold onto your creation. Like a little kid holding onto a toy, you won't let anyone play with it. Unfortunately, stubbornness and entitlement is not exactly a recipe for entrepreneurial success.

You have a lot of competition, and they have teams of smart, dedicated people working in tandem toward a common goal. By the time you let someone else play with your toy, the market may have moved on to something else. As you probably learned a long time ago, you are going to have to share. And sharing means sharing ownership of your idea.

"Fine" you might say, "but I'm in charge." Does that mean you are in charge of the development process, the employees, the marketing plan, the sales effort and the oversight of the finances? Leaving aside the issue of who would want to work with someone who is such a control freak, do you really think that your skills in all these domains are better than every other person out there?

You are going to have to give up some control as well. The individuals who work for you will need to feel like they have some control. More importantly, your company cannot grow if every single component requires your input, vision, and guidance.  The question then becomes how much power to give up.

Let's say you are a person with excellent leadership skills and the CEO task is what you are best suited for. Perhaps you have a technical background, but others have more technical expertise than you have. You hire a CTO.

You don't have to give complete control over the technology to the future CTO. Maybe the CTO is a "pie in the sky" early adopter of the latest technology. They might choose the most expensive, cutting-edge technology, with the most exciting and trendy features. Is that the best way to deliver a viable product that meets customer needs on time and on a budget?

Probably not. So you still need to have some control over technical development and set the overall goal and limiting parameters. But recognize that there is an end to your power. Eventually, you have to let your CTO make some specific decisions based on their expertise. And some decisions may be a mistake. That's the risk you take. But the danger of disempowering people is higher. You don't want to be the only one who cares about your toy and kid that no one plays with.

Reference:

Wasserman Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton University Press. March 25, 2012, p. 12.

Photo courtesy of Donnie Ray Jones on Flickr. Creative Commons 2.0 Generic (CC BY 2.0)

6 comments:

  1. How much do you share? Yes, it is good to turn over the reins of some of the companies responsibility and to have people in those positions that know their craft. But if you are developing new technology how much do you share with others. It would be crazy to go work for someone and have to daily sign confidentiality letters at each phase of the product. But there could be stipulations that disclose no cell phones or cameras on company grounds. It makes me think about Willy Wonka and the Chocolate Factory. Unfortunately, we cannot hire and keep employees at our disposal 24-7 like in the movie. But it is a struggle to want to share and build ideas in today's world because someone can come by and steal it right from under your nose. I guess a positive note to this would be that we are innovative and the best is yet to come.

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    1. I've always felt that ideas are cheap. Implementation is hard. The value is the process. Besides most people want to build their own dream house. Stealing someone elses plan is not as likely to be a motivating. That said, larger companies might love to steal your ideas, but they would probably prefer to buy them from you.

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  2. Great post Brad! I like how you relate the topics of "Rich" and "King" to kids. When explained in that way, it makes more sense to most people because most people emphasize sharing to kids. Although the dynamics to "sharing" as a founder are difficult they are inevitable in most cases. Now that we know we almost have to share, the question now becomes, how much do we share?

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    1. The other half if how much do the other people want. The book doesn't really cover this, but a "greedy" officer who values money/control is equally deadly. Both sides need to see value in sharing.

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  3. Great analogies. I really enjoy your writing and ideas. You couldn't be more right, stubbornness has been the cause of so many missed opportunities AND complete failures for entrepreneurs. It just does not work well with success. Control has to be relinquished in some quality for a company to really take advantage of the highly rewarding opportunities.

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    1. It amazes me that we forget the lessons we teach our children. How many people would tell their young driver, "oh you can rush through that stop sign, cut off that guy, honk at the bicyclist, and chat on your phone. You'll be fine."

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