The Startup Strategy Risk

Starting your own business is a fascinating notion, especially after years of working for giant corporations, with all the restraints and limitations that entails: the idea of being your own boss, of being able to determine what to do and how to do it, is quite enticing. This happy path in a founder’s life eventually leads to the necessity for the business to establish its strategy, and this is when the first disagreements may arise between the founders and other stakeholders (investors, advisors, and so on).

It is a luxury problem of small organizations that are successful and need to be supported in their natural growth, because no organization is self-sustaining: external parties, such as investors or suppliers, will begin to require a clear strategy, a clear vision, and a clear direction, forcing a joyful and immature organization to mature and become a serious one.

The Immaturity of Management

Management immaturity is a well-known problem in the startup industry, and it is a natural result of the founders being typically relatively young, with little or no experience managing a firm and with little or no experience managing people. This is a challenge that is typically remedied by recruiting experienced managers to assist the founders in maturing and managing the company, but this is not always the case, and the founders are occasionally left alone on this trip.

One issue that develops in this situation is that the founders are usually very passionate about their idea, and they are very focused on the product, the technology, and the solution that they are producing, rather than the financial side of the organization. This is a very typical problem, and it is usually managed by hiring a CEO to handle the company’s business while the founders focus on the product and technology.

Another situation that is completely unique to the previous one is when the founders are extremely passionate about the business side of the company but are uninterested in the product, technology, or solution that they are developing. This is a very common issue, and it is usually solved by hiring a CTO to oversee the product and technology while the founders concentrate on the business side of the company.

In any case, the pathological condition resulting from both situations is the general diversion of the company and its management from the original vision and strategy, causing general confusion and a general lack of direction, which is a dangerous situation for a startup because it can lead to a general lack of focus, and eventually to the company’s failure.

Growth Pain

In recent years, I’ve been involved in a couple of instances that exhibited the aforementioned patterns, and I’ve witnessed the implications of a lack of a clear strategy and vision for the company, or even a diverging view among the rest of the management.

Both organizations desired to establish more stable and planned growth in order to attract more investors and lay a more solid foundation for the company’s future, but they didn’t really know what this meant or how to achieve it: they were both in a situation of growth pain, where the company was growing but the management was unable to manage this growth, and the company was in a state of general confusion and lack of direction.

Sudden Change in Management and Strategy

In one of these experiences, I was hired to assist the company in establishing a more solid foundation for the Enterprise Architecture, its processes, functions, systems, and data, which also meant establishing a more structured and governed environment: something that contradicted the original vision of one of the founders, who had a poor understanding of the discipline, a generally negative attitude toward it, and a general lack of trust in the people involved in the initiative.

The rest of the founding members were skeptical of the practice, despite not being opposed to it, having worked in large organizations, albeit in roles that suffered the development and governance processes by nature: sitting on the riverbank, they were waiting to see some concrete results before committing to the initiative.

In this context and culture, I could see all of the negative and pathological manifestations of a Agile Manifesto utopia, with several teams working on concurrent matters, using different tools and processes, with little or no coordination between them, and with a general lack of direction and focus: despite the IT department’s moderate size (less than 100 people), and with no cases of acquisitions, the proliferation of systems, libraries, and solutions was immeasurable.

External factors influencing the company’s product performance prompted the board of directors to replace the CEO and several other members of the management team, some of whom were sponsoring the growth strategy and the consolidation of Enterprise Architecture: the new strategy was to shrink the organization’s investments and path to maturation, removing several of the System of Records and System of Engagement that were in place.

Eventually, the majority of the IT staff left, and the firm was compelled to rebrand itself in order to have a fresh start with the remaining personnel (albeit none of my former colleagues are now employed there).

Knowing What you Want / Need

Another example of such ambiguous strategy was presented to me when I was scouted by a promising startup, recommended by a good friend who turned down the offer first, to be their new CTO, to replace the one who abruptly decided to quit the position: they were a very young company, with management coming from mixed experiences and backgrounds, and facing the situation of investors requiring them to shape up their IT strategy, cost analysis, vision, and direction.

In fact, the qualifications for the new post they were searching for were mixed, because a lot of emphasis in their prospects was placed on strategic vision, analysis, and IT strategy (with a strong emphasis on knowledge of cloud technologies).

After a good interview with the HR (and co-founder), where we discussed the reason, vision, and personal experiences, I was invited to a second interview with the COO, where we discussed the technical aspects of the role, as well as the company’s expectations: the COO was very clear that the company was looking for a hands-on person, who could help them in the transformation of the company, and in the consolidation of the IT department, with a strong emphasis on cloud technologies.

As a last step of the process, I was scheduled an interview with the CEO of the startup: a surprisingly short one (less than 30 minutes), where the person clearly stated not being a technical expert, and that he didn’t know what the company needed in respect of the IT, but he wanted that the mobile application to be faster: learning of my limited front-end skills, the interview was more of less over, and we agreed I was not the person he was looking for, although I stated my recommendation to reconsider the requirements of the role, and to focus on the strategic vision and IT strategy aspects, rather than on the barely research of a front-end developer as a CTO.

In fact the above experience proves some of the issues in the management of a startup:

• Lack of communication between the founders on the vision for the company - while for two of them long-term vision was the focus, the third one was looking for a quick fix to an immediate issue.
• Lack of humility in the management, accepting there are areas of competence they might not be experts in - for example, in this case the likely causes for the slowness of the mobile application were issues in the back-end, rather than in the front-end: network misconfigurations in the load-balancer/gateway, database design issues, location of the infrastructure, etc.
• Poor knowledge of the real functions of roles and responsibilities in the IT department and of the real needs of the company_ - the company was not really looking for a strategist, but in reality they were looking for a front-end developer (glorifying the position as CTO) to fix an immediate issue

Follow-Up of a Failed Process

The week after the above mentioned final interview, it was announced by the company the person who was hired for the role: a young full-stack developer with little experience in cloud technologies, and with no experience in strategic vision and IT strategy, and 5 years in the industry: a profile fitting the immediate needs of the company, but not the long-term ones.

In fact after approximately four months from that announcement I was reached again from the HR (and co-founder), who initially interviewed me, to ask me if I was still interested in the role, since the person hired was not able to deliver the expected results, and they were looking for a replacement.

You can imagine my answer…

Heroes, Rockstars and Ninjas

The mythological figures of the heroes who jumpstart companies, despite the lack of security, and animated by the entrepreneurial spirit of the Western Explorers is fantastic, appealing, fascinating, but it is also a dangerous myth, since it is not realistic, and it is not sustainable in the long term.

When the initial spirit of adventure is turning into the need of a consistent and sustainable growth, the company needs to change its approach, and to start to think in a more structured and planned way, and to establish a more solid foundation for the future: the fun part of jumping without a net is over, and the company needs to start to think about the future, and to plan for it.

Sometimes I make the comparison between starting up an organization with starting a rock band: it is fun at the beginning, and mostly executed in the spare time, with other regular jobs sustaining the living of the members, but when the band starts to get some traction, and the members start to think about a career in music, they need to start to think about the future, and to plan for it. Only few bands ultimately succeed, cause the members, even not liking each other’s, are able to put aside their differences, and to focus on the common goal: the success of the band.

Some rockstars might even have success through a destructive path, with a sudden and unplanned success, but the majority of them will fail, and will be forgotten, and the same is true for the heroes of the startup world.