Entrepreneur, Author, Professor, Global CEO

April 7, 2015

Staying a Step Ahead Without Leaving Your People Behind

Ask an entrepreneur about the company’s strategy and you are likely to hear a lot about a revolutionary idea, a disruptive innovation, or maybe an ingenious business model. All of those things are worthy pursuits, but entrepreneurial strategy, in its essence, is profoundly simple. The overriding goal is to get the fledging enterprise to the next stage of maturity. Any activity that isn’t focused on getting to the next stage is a waste of effort, time, and money.

In the first stage – customer validation – you must take a product or service you are thinking about and turn it into something actual customers are willing to pay for. In stage two – operational validation – you must be able to reliably deliver the product to customers, keep them satisfied, and confirm that you know how to find new customers. In stage three – financial validation – you must be able to make sure the company can produce value under changing market and competitive conditions. And in stage four – self-sustainability – you must create a process for innovation to prevent the company from stagnating and eventually dying.

The leader must simultaneously shepherd the company through each stage of maturity and prepare to make the often sweeping changes required by the next stage. Meanwhile, employees immersed in their responsibilities in the current stage are often shocked and sometimes dismayed when the next stage commences.

In the first stage, for example, the effort is project-focused, often with a founder and small team working together passionately to develop a product that customers will buy. In the second stage, however, the focus shifts to developing processes that can reliably deliver the product or service to customers. To some extent, work becomes routine and some specialization in jobs begins to occur. The innovators who love open-ended challenges and developed the original product may feel devalued, seeing themselves as displaced by people they regard as bureaucrats.

Those pioneer employees may find themselves even more put off in the third stage. That’s when the company needs bona fide specialists, people who know how to implement and refine robust and sophisticated processes that make the company highly profitable, scalable, and competitive. With specialists getting much of the executive attention many of the people recruited in the earlier stages of development can feel alienated, and some may leave.

The entrepreneurial leader cannot afford this alienation and flight. Those initial innovators will be needed more than ever in stage four to work with specialists to develop new products, technologies, business models – or whatever it takes to win new customers and capture new markets to make the company self-sustainable. But if the pioneers and the specialists have become polarized during the first three stages, the sustainability of the company can be at serious risk.

The challenge for the entrepreneurial leader is to stay a step ahead in strategy – pushing relentlessly toward the next stage of enterprise maturity – while making sure that valuable employees aren’t left behind. To ensure that employees remain engaged through all stages of enterprise maturity the leader must first understand motivation – what impels people to perform at their best. Generally, people perform innovatively and productively over long periods of time when they feel autonomous, masterful, and purposeful. Entrepreneurial leaders should therefore create an environment and objectives that enable employees to:

    ·Feel in control of their environments and their destiny

    ·Feel as if they are performing to the best of their abilities

    ·Feel they are doing something that is meaningful to them

But the leader must also understand that what generates feelings of control, mastery, and meaning will differ for different people, sometimes starkly for the pioneer employees versus the specialists who join the enterprise in later stages. That should go without saying, but some leaders unreflectively assume that everyone’s motivations are fulfilled in the same way. They aren’t. What inspires jack-of-all trades innovators may not necessarily drive highly talented and experienced manufacturing or marketing executives.

Startup Leadership deals in detail with the nuances of motivating employees who come on board at different stages of enterprise maturity – and keeping them all engaged throughout the journey. But these simple principles can take you, as an entrepreneurial leader, a long way:

·In the move from stage one to stage two, when project-loving and adventurous people must be fit into more defined process roles, continually make it clear to them that bigger and even more adventurous projects lie ahead. At the same time, recognize and reward new hires for their mastery at improving things.

·In the move from stage two to stage three, focused intensely on improving and scaling existing processes and creating new ones, fight polarization and bureaucratic creep by deliberately working through teams.

·In stage four, requiring a balance between innovation and efficiency, support both equally and establish career tracks to people who want to change everything and for the enormously productive people who want to improve how they do what they already do.

Getting to stage four can be difficult, but it can resolve many of the inherent tensions in developing the enterprise. Why? Because it offers the widest variety of ways for people to fulfill their deep need for control, mastery, and meaning.

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