Friday, September 29, 2017

Role Dilemmas and Recognizing Skills (600-4)

The best way to found a company is to start with a group of people who work in a shared decision model. Early emphasis on control & power is likely to choose the wrong leader and to disempower the other members of the team such that this becomes a weak company lacking in sufficient resources to grow.

From the outset, the founders must decide how to transition from a collaborative-decision company to a more hierarchical company. The collaborative decision model will eventually fall apart because of various power struggles if it is delayed for too long. Plus, it is unlikely that outside funding is going to be interested in a non-hierarchical organization. The reality is that there are not a lot of examples of successful companies that work in a collaborative-decision model. A while ago RIM (Blackberry) was the poster child of this kind of collaborative team; we all know how that ended up.

Set up a transition date and ensure there is a mechanism in place to transition from collaborative-decision to hierarchical structure. Make sure the initial collaborative team is in agreement that someone will be in charge of the CEO position. Other founders will have domains in which they can exercise control. However, their control will not be in the role of the decision-maker for the startup.

There is a good reason why folks emphasize sports teams. What better example is there of a team of individuals with different skills who work in a hierarchical structure to accomplish a goal?

Who should take on the various roles of this corporation? Don't assume that the "idea person" should be the CEO. The CEO must be a leader. The CEO must speak for and present the company to others. When the pitch is made, it won't be the CTO standing in front of the venture capitalists.

Similarly, match the other roles to the skills of the person.
  • The CTO is relatively obvious; does the person have the technical expertise to advance your technology?
  • The COO should be an organized person who gets things done on time and on budget. How are they with details?
  • If no founder is very good with money then perhaps you need to look outside for a CFO. 
  • Filling the CMO is tricky. You need to have a marketing plan and then find the person who can implement that plan. So perhaps you need a marketing advisor to help develop the plan. And that advisor is not necessarily going to be hired to lead the marketing effort. In the digital era, marketing is changing rapidly, don't get too focused on past success. Look for vision and passion in marketing products.
  • The sales lead. Find someone who loves to sell things. The first thing they should be able to sell is themselves. Let them sell you that they are the perfect person for the job. If their personal sales job is weak, keep looking.
  • The CIO role is crucial role in the age of cybersecurity and privacy. Solid system admin skills and awareness of the need for tight security and adherence to standards are essential. Here, a little paranoia isn't such a bad thing.
  • If you have a Chief Human Resources Officer or just the head of HR, this is a critical position and tricky to fill. You need experience, but you need someone who understands today's young workers. They enjoy the experience, they want to feel wanted, they want to be appreciated. Your company (and thus the person) must reflect a corporate culture that entices them to join you and convinces them they made the right decision.
Once you have a team in place, be flexible. Perhaps your technological needs change, and your CTO is no longer has the experience to handle the new requirements. Can you actually wait for that person take a course or slog through endless tutorials on Google? Some things can be taught, but most cannot be learned quickly. Make the change now before you embark on development that takes you the wrong direction. Who is going to do that? The CEO. That is why you chose a hierarchical model.

References:
  1. Wasserman Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton University Press. March 25, 2012, ch 5.
  2. Herrenkohl Eric. How to Hire A-Players: Finding the Top People for Your Team- Even If You Don’t Have a Recruiting Department. Vol 1 edition. Hoboken, N.J: Wiley. April 12, 2010, ch 6.
Photo Credit: Airman 1st Class Curt Beach 160414-F-IP109-036.JPG US Military.

6 comments:

  1. Great tips on what to look for when filling positions and having a hierarchy model. Just like you stated for sports - everyone has a position that they can fill or be trained to be the best at it but they have to want it. I think it is key for the CEO to know a enough about all areas so they know they get the right people in for the job.

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    1. ​Yes, it is disappointing that companies don't do well with co-leadership. In general, I believe in a model of shared responsibility and decision-making. But I think the requirement of a firm to have extreme focus is the issue. It's hard to stay true to a specific concentration with a shared decision-making model.

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  2. Great post Brad! I like how you use sports as a metaphor for a business structure. The tips for filling positions is helpful. You alluded to potential turnover towards the end of your post as it relates to filling positions. How much turnover is too much? When replacing multiple positions at once, how do you justify it to investors who may not agree?

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    1. I agree those are tough issues. Do you replace someone because they are "better"? What if all the staff love them and will do anything to please them? How do you explain to the investors that person A isn't the best person skill wise but the team is responding to his leadership? My impression is that investors have little understanding of such subtlety.

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  3. Hi Brad,
    You pointed out some valuable information regarding founder-CEO’s. Being proactive and asking for constant feedback from the Board of Directors is a smart way to ensure that you are being successful. It is hard, as you pointed out, to realize that as the business grows, you may need to hire a new CEO with the additional skills for the business. Although it may be hard for some, it may be easier to plan for the inevitable with an end goal in mind. That way, it can appear to be more of a celebration for a completed goal rather than a negative takeaway. At that point, you no longer need to consider whether control or wealth is more important because it is a part of your own plan. Successful founders will embrace the success and will want to be a part of the next phase of the company by helping to find a replacement with all the necessary skills for success of their “idea.”

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    1. Agreed. I think folks should write down at the outset what they hope to accomplish. Then when they get there they can see that perhaps it's okay to make a change. All too often inertia takes a hold of us. Until the inertia drives us into a wall.

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