How to lead a startup? Lessons from corporate world
Many books and articles have been written on what corporates can learn from startups. How to build an agile culture, foster creativity in the team and ship products quickly etc..
However, the opposite is also true in many cases — there are areas that a startup can learn from a “well run” corporate. Implementing these lessons early on will help a startup immensely along its journey to be a large well managed company.
When I moved from a corporate life to the world of startup, what took me by surprise are the similarities between the two irrespective of some fundamental differences. In the corporate world, I worked for a 150 year old multinational bank — at the deep end of one spectrum. Strong hierarchies, embedded processes and culture built over years of tradition, rewards, unwrittent corporate norms — the typical picture that comes to mind when one thinks of corporate life. The bank is a well known brand in many markets, the employees are highly regarded in the industry, a good career choice for man. And then I moved to the world of startups — companies having history of a few months to a maximum of few years, non existent brand recognition, struggling to survive another day and meet the payroll, practically nothing called hierarchy.
On paper, there was almost nothing similar between the two worlds. And I am often asked whether the transition was difficult?
From managing thousands of people to a few one can count on fingers..the answer is….as a leader, the challenges were not that different.
Following are lessons and tactics that can be implemented straight from a corporate world to a startup:
1. Team: There is this old saying that without followers, there is no leader. An important element of leadership is to be able to relate to the team. The challenges of managing a team between a corporate and a startup is not materially different. People, at the end of the day, are driven by same desires, ambitions and fears and being able to navigate through these emotions in a team environment is an important tool for a leader. There have been cases where senior leaders in my team fought tooth and nail to protect their territories and I have seen the same happening in a startup. I have seen how a breakdown of communication happens and the messages get misinterpreted in corporate as well as startups. Building and managing a strong team remains a core deliverables of a leader, irrespective of the organization.
There are significant amount of learnings in a corporate world on effectively managing a team and a good leader can migrate these learnings in a startup environment.
2. Performance: Performance spin the wheel, whether in a billion dollar organisation or a company with a few thousand dollars in revenue. Closing the sales, managing the lead, meeting customer demand, delivering a better experience — these are all part of an organization that continue to thrive and keep the lights on. The pressure for performance is bery real.
The discipline around a well run sales organisation is identical. The discipline around a well run product organisation is identical.
It is about identifying what to measure and have the process to measure those regularly. Startup founders who establish sales and performance discipline early on, borrowing the learning from a corporate world, significantly outperforms her peers
3. Financial discipline: This is critical for all types of companies. Many startup founders do not take time to establish financial discipline and end up paying a high cost for this mistake. A publicly traded large corporate needs to follow all regulatory requirements and have external bodies to ensure that this is happening. That rigor may be lacking in some startup. But in the long term, a startup with the right financial and accounting discipline, benefits whenever they are out there to raise investments or simply by avoiding surprises.
There are examples of startups that went bankrupt for no other reason but because the founders did not establish the basic accounting principles and suddenly realized they actually do not have the runway they thought they had.
As Tim O’Reilly of O’Reilly media said:
Money is like a gasoline during a roadtrip. You don’t want to run out of gas on your trip but you are not doing a tour of gas stations
Startups can borrow the learnings from the corporate and have the financial discipline in place.
4. Board governance: As startups continue to raise funds and have external investors, it needs to establish a proper governance around board. A good board can be a powerful ally to the founder. Board members can guide founders through difficult situations, make important introductions and help raise next level of funds. A properly run board meeting help the company to steer in the right direction. Board members usually are also in a unique position of observing different stages of different startups simultaneously and can step in when required. At the same time, a wrong choice in board member can have a long lasting negative impact on the company — oftentime making the board meetings pointless and confrontational.
Founders need to actively engage with the board members, establish a good operating rhythm to make the board effective.
There are many good lessons to incorporate from a corporate world in terms of board governance — from selecting a member to how a meeting should be conducted.
5. People discipline: A founder spends a good portion of her time to recruiting and managing the people in her company. As startup continues to accelerate, Human Resource becomes an important function for success of the company. Proper process around different aspects of Human Resources helps to avoid many complexities down the line. Many founders ignore some of the basic areas to build a free wheeling culture and I am not advocating a complex HR process that can stifle the ethos of the startup.
But at the same time, it is important to have a clear guideline on rewards and benefits, how the orgnaisation will build the structure and recruit new team members. At the end of the day, these practices are what eventually shapes the culture of the company.
6. Operations: One of the areas corporate do well are manage large scale operations. They have strong processes in place around the complexities of managing cross boarder, cross functional operations. Most of these processes are well documented and help avoid “rooky” mistakes. Startups can learn how to incorporate these processes in its DNA. When a startup achieves product/market fit and ready to scale, the biggest challenge is to manage the operational details in a larger landscape.
Things change very quickly and the old way of managing operations do not work anymore. Founders of startups can borrow the processes and operational learnings of the corporates as they embark to scale.
Going back to the story of the bank, during my career there, I have also seen the bank trying to reinvent itself to address the opportunities/risk coming up from a digital world and also meet the challenges from a changing regulatory landscape. This is true for a large number if corporates out there. As a startup continues to grow and turn into a large company, it will face the same challenges — new upcoming players and intense scrutiny from regulators. It will be well advised to be ready for the future.
If you like this blog, please hit 💚 button so that other people also get to know about it. Also, subscribe to me newsletter at www.sajidrahman.com