Saturday, September 10, 2011

Charles Doty of BlueShift talks about Entrepreneurs Transitioning

“Real artists ship.” That statement is attributed to Steve Jobs circa 1983. The message, whether Steve really said it or not, still resonates at Apple.

A successful entrepreneur is first of all a competent risk taker and a visionary; someone who sees an opportunity that few if any others can see, and is willing to take on the task of developing that product or service and targeting it so that the market will embrace it. For now I will refer to that generic successful entrepreneur as Bob.

Bob started his company with a team of dedicated developers who believed in the company and themselves equally. Whatever the obstacles, they were committed to confronting and overcoming them. Work eighty hours a week – no problem. Solve a problem that has never been solved – they will do it. Find a way to do it twice as fast at half the price – you got it. People like this are required if a start-up is to have a chance of getting off the ground.

You know about the runway analogy. The capital investment is the runway and the company is the plane. The idea is that the company must build up enough speed to take off before they run out of runway. Once in the air they have to keep the engine running to stay aloft. Getting off the runway typically means producing revenue, and that means “shipping” i.e. delivering product. Producing revenue means continuing operations which, when successful, requires a markedly different management approach than start-up development.

This is a difficult transition for Bob. He has been a founder-driver of the company since its inception. He has made quick decisions that cut across organizational lines, and he has been the final arbiter in internal disputes. Up until the transition, he has been the one person that accounted for the company’s value: the investors and employees alike trusted him to drive the company to success. The risk is that Bob is unable to envision how the company will succeed after the transition, or he may fear failure because he does not feel that the company is ready. He may see runway extension, that is additional investment, as a recurring goal – in fact it may become his only goal. At some point, however, runway construction (additional investment) stops.

When it is time for the commercialization transition, it is probably time for Bob to bring some new people into the company. These new people will not necessarily be people who would have been valuable in the early stages, but they are likely to make the difference between success and failure during and after the transition. They will facilitate a competent organization that works with processes that drive continuous improvement as a way of achieving excellence. Bob’s role in the company should now change dramatically. The organization will change, and the tendency for Bob to make snap decisions and cut through organization lines to steer the company directly will become detrimental to success.

If Bob does not allow and enable the transition, what is probably the greatest achievement of his life may well end up in the weeds, much like an airplane that goes off the end of the runway before it achieves liftoff speed.

Charles Doty, of BlueShift Consulting

No comments: