Solving The Biggest Startup Problems, Part 1

On February 1, 2017 we hosted our first impakt Labs Meetup: Startup Problems, Industry Leading Solutions, where we discussed some of the approaches large, industry leading businesses like Apple, GE, and FaceBook have taken to address common challenges that many startups face and how startups could adapt these methods without getting bogged down in process. We explored three important questions posed by attending Startup founders:

1. As a sole proprietor, how can I approach quality staff hiring without taking up too much of my own time with searching, training, etc?
2. How are business cultures evolving past pure profit-maximization? And is holistic value something I can sell my clients?
3. How can I scale quality without being involved in every decision?

Balancing Staff and Founder time Commitments

One important challenge facing entrepreneurs — particularly those who operate sole proprietorships and partnerships — is hiring high quality employees without losing a significant amount of their own time that would otherwise be spent running their businesses. Some solutions to consider:

1. Trial basis hiring — hiring employees temporarily for periods of 30–90 days with the potential for a permanent position is one way to minimize the risk of on-boarding sub-optimal performers. Setting expectations and milestones for each team member to achieve by the end of their trial period enables the manager/owner to have multiple team members at the same time while minimizing the downside risk beyond the short term. Another benefit of the trial basis is that it makes it much easier for founders to identify team members who are self-motivated as candidates to whom trials appeal tend to be confident in their abilities and more motivated than those just looking for any old job. One important prerequisite here is that the hirer must already be familiar with the work required, and successes must be defined, in the form of measurable objections, prior to on-boarding.
2. Hold Contests — inviting potential hires to compete against each other is another approach that can give insights into the skills of each candidate while also minimizing time spent on recruitment and training. The Silicon Valley Tech Startup Quixey, for example, held a competition in which software engineers were presented with a challenge: to identify a programming bug within 1 minute. Winners of the challenge were awarded $100 and the chance to interview for a position at the company. Six new hires were discovered as a result.
3. Delegate time-intensive work — in some cases, the hiring manager might be searching for staff to cover more time-consuming, yet less important (than core operations) tasks. It’s a challenge many founders are familiar with: when tedious back office to-dos consume large amounts of the owner’s time, stealing productivity and progress from core business. When this is the case, it might be time to bring on another team member who can tackle more straightforward, administrative tasks. Before doing so however, the hirer should not only be familiar with the processes that the new employee will be carrying out; they should also be aware of how much time was previously required and how much time saved by hiring will be considered a worthwhile success.

The Cultural Evolution of US Businesses

Also explored in the discussion was the difference in businesses across continents. While the US (along with Japan) is recognized as the most technologically advanced country in the world, its business cultures are purportedly evolving to reflect non-purely-profit-driven values, similar to those found in places like Australia and Europe, where comparatively more emphasis is placed on egalitarian leadership styles and providing benefits to the common good. Some examples of this evolution among US businesses include:

1. Balanced scorecard — adopted by over half of the large firms in the US, this strategic management framework emphasizes the importance of non-financial metrics to deliver positive, long-term financial results. These other factors — which include internal processes, customer satisfaction, and continuous learning and growth of knowledge workers — are considered leading indicators of success that drive the ultimate, traditionally-emphasized financial performance of a firm.
2. Benefit Corporations and B-Corporation Certification — Benefit Corporations are for-profit legal entities that have identical tax treatments as C-corps. Unlike C-corps, however, B-corporations differ in their (mandatory) purpose, that is, to make a positive impact on society, its workers, and the environment.
3. B-Corporation Certifications, on the other hand, are private certifications issued to for-profit companies by B-Lab, a non-profit organization that enforces similar standards as those required by Benefit Corporations but do so much more stringently, charging fees and administering assessments and scores.

Scaling while removing the “owner bottleneck”

The “owner bottleneck” refers to the limited decision making capacity of an organization’s leader and is often experienced by growing enterprises. In our discussion, we explored possible options for owners who wish to minimize or eliminate the obstruction that results when an organization has a very limited number of authorized decision makers.

1. Decision making expense caps — imposing a cap on the monetary value of a particular decision is one way to delegate decision-making while limiting the downside risk of doing so. One example is given by Tim Ferriss in The 4 Hour Work Week, who — in an effort to reduce time spent responding to customer emails — instructed members of his outsourced support team to “…decide anything under $100. Use your judgment and report the decisions.” In addition to saving time by doing this, outsourcing decisions to a maximum financial impact can also be a useful performance indicator and signal long-term potential of specific team members whose caps can be increased (or removed completely) over time.
2. Flat organizational structures — an organization with no or few levels of management creates a workplace of interdependent workers. Flat organizational structures can be found at several major corporations, including:

• Valve who eschews job titles and where employees can physically move their workspaces in order to assemble project teams to work on projects of their choosing.
• The Morning Star Company whose employees are individually empowered to decide on how best to apply their skills to benefit the company and are able to make big decisions by discussing potential moves with affected colleagues.
• W. L. Gore and Associates, a manufacturing company founded in 1958. Here, leaders emerge naturally among the collection of “associates”: the title given to every employee. In turn, fellow associates elect whether or not to follow a particular leader.

Meetup #2

This past event provided some good insight as to which subjects interest our attendees the most.

Our next meetup — to be held on March 1, 2017 — will include breakout sessions in order to facilitate workshopping the specific challenges of as many attendees as possible..

If you’re interested on getting in on the next conversation and workshopping your startup or small business’s challenges, sign up on our Meetup Page. Note that the $5 cover charge will be waived for members who join our Meetup Group and submit responses to the pre-assessment beforehand.

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