“I’m great at finding all the wrong people.” Founders confess this to me in a hundred different ways, and it’s a serious problem. After driving so hard to hit launch speed, founders often find that the only thing holding them back is the crew that is supposed to be getting them off the ground.
People need people, but anyone who’s ever tried to move a couch can tell you that adding more people doesn’t always make things better. Distracted or underqualified workers can make operations more difficult when there is little room for error and virtually no safety net.
Yet you have to bring people onboard. The Theory of Constraints, first proposed by Eliyahu M. Goldratt, is built on the premise that successful operations continuously add resources at the production bottleneck. For founders, that bottleneck is you.
Delegation of tasks unlocks time and capacity for growing the business UNLESS (and this is the problem) the task is done so poorly that it requires rework. That’s the point when founders have a strong desire to say, “I’ll just do it myself.” Those five words are a death knell.
Anyone creating something radically new -- and this point can be especially challenging for chronically underestimated founders -- must necessarily bring workers on board who are out of their comfort zone. Joining a startup is substantial risk to the worker’s professional life and it requires a facility for learning and unlearning at a breakneck speed.
I don’t blame anyone who refuses to work for a startup. I’ve made a different life choice for myself but I can understand why the odds against startup success and the mad turbulence of sporadic growth can be just too much for some to bear. The fact of the matter is, though, that Fortune 500 companies are really not any safer anymore. Disruptive tech is knocking down dinosaurs on every front and the average corporate lifespan has shrunk to less than 20 years. There are no secure paychecks or lifetime job offers in the future of work.
I’ve gathered together some of the toughest lessons learned from our own Headliners and data from founders everywhere who have found ways to assemble stellar teams on the fly.
This is one of those simple facts that seems intuitive but somehow rarely translates into real world hiring practices. It’s self-evident that echo chambers and homogeneous groups get blindsided because they share faulty assumptions.. As General Patton barked at his troops, “If everybody is thinking alike, somebody isn’t thinking.” *
Not only is diversity in hiring logical and the right thing to do, it improves financial performance, with a greater revenue impacts the more innovative the business model.
Boston Consulting Group’s study of 1700 companies across eight countries found that greater diversity in the workforce was directly correlated to higher innovation revenues for startups.
Despite every indication that companies gain an advantage from hiring diversity in terms gender, race, age and other factors, it’s still not very common. Traditions of erasure and oppression are strong and may take another generation to weaken. Even in progressive work environments like those of the 23 largest tech companies in the US, the percentages of people of color in the workforce remain in the single digits.
* Side note on Patton: He was certainly a deeply flawed person but he would have been just as effective as a management coach as he was on the battlefield. Another quote from deeper in his canon of strategic advice was, “Prepare for the unknown by studying how others in the past have coped with the unforeseeable and the unpredictable.” Another practical tip that is obvious in retrospect, yet rarely practiced. Following these practices will give underestimated founders the advantage in competing with entrenched, slow-moving enterprises.
Speed and cost containment take precedence for many startups. As a result, the founders and early hires tend to do whatever is necessary, often without regard to process adherence, scalability or the precepts of self-care. Eventually, that has to come to an end and process efficiency must become a strategic goal as you work to stabilize cash flows and ensure profitability.
One of the best ways to establish firm boundaries is to document the essential metrics used to evaluate the performance of each founder or department head. Compare your growth and current projections against the original forecast and the assumptions in your business case. Decide if there is a hole that needs to be filled and what skill set would be needed by the person filling that role. Don’t settle for the same vague guidelines and overlapping responsibilities that characterized the formation stage. Get serious and make your process repeatable.
Just as with the diversity discussion above, there is an ethical component to this discussion, but without getting into all that, it is simply financially beneficial to your business to put women in positions of power. This is not a matter opinion.
New studies indicate that female-led companies are better investments, earning more than double the revenue of male-led firms. The same research concluded that women tend to be more conservative in their financial projections and are more technically knowledgeable because they know they must withstand much tougher interrogations from potential investors than their male counterparts do.
I know this is true from my own experience. When I see a startup come to us looking for funding and they don’t have any women on their leadership team - that’s a red flag. That’s a company that is going to be operating at a disadvantage in the market from the very beginning. It’s a window into company culture, which forms early around founder decision-making processes. No women early on it likely to perpetuate as the company grows -- IF the company grows.
There’s another important factor at play, though. Women in power is in the zeitgeist. 2018 will be remembered as the year that “the first two Native American and Muslim congresswomen are headed to the U.S. House, and Massachusetts is getting its first black congresswoman, while Arizona and Tennessee are getting their first female senators.” Customer-orientation alone should be enough of an argument to bring more balance to the question of company leadership.
Lesson 4: Hire local if possible and build the community
There are always good reasons to hire remote teams for highly skilled work like software development and the creation of digital assets. The talent pool in your local area may not be broad enough to support someone with the necessary skills and tools at a price that a startup can afford. However, I have seen over and over that investing in local talent and partners can pay off in many ways as the young company gains traction.
For one thing, investment in local businesses is key to building up the local economy and supporting a culture of community. The network effects from establishing these bonds lead to better access to resources along unpredictably pathways. For example, if you need printing for business cards or other marketing collateral, you can order inexpensively online or pay a bit more to contract with a local printer. The owner of the local print shop may be married to someone in the chamber of commerce who can provide you with personal introductions to suppliers that can cut your operating costs.
Giving back to local businesses generates a host of economic benefits for the surrounding businesses. Members of local coops often find that local investments “pay off better annual returns (in discounts and patronage dividends) than Wall Street does.”
The same is also true for hiring local employees rather that outsourcing projects to more experienced talent online. Hiring locally gives you a greater personal stake in the success of the local community. It also opens the door to energetic workers who more than make up for their lack of experience with intense commitment to the mission of the company. Local employees are more likely to make their own contributions to the local economy and continue to support it. As your local ecosystem thrives, you gain a firmer foundation for growth and a more resource-rich network of partners.
The team is part of the deal. There are an infinite amount of great business models and disruptive concepts. What matters is how well your team can execute the idea and propel the company into sustained profitability. You can simplify that by hiring people more diverse minds and histories, defining specific goals for company leaders, bringing in talented women to serve in strategic roles, and investing in your local ecosystem. Before you run out of runway, assemble a team that will lift your both your spirits and your financial prospects.
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