Platt Perspective on Business and Technology

Understanding and navigating burn rate: a startup primer – 5: navigating potential conflicts of priority and need

Posted in startups by Timothy Platt on September 28, 2011

This is my fifth installment in a series on building a startup within your resource means, and understanding and controlling the rate at which you expend from them (see Startups and Early Stage Businesses, postings 67-70.) And the topic area I will focus on here covers a set of potential pitfalls that have ended a great many startups before they can complete a successful launch.

• Setting aside franchise operations for the moment, when you build a startup you have to start from an organizational and operational blank slate with nothing in place and already working.
• And you have to develop and build an ongoing strategic foundation as you go along, preparing at each step of a complex building process, for steps ahead and taking into account your lessons encountered and learned up to now.
• And you have to do all of this within the limitations of your available resource base, liquid assets definitely included.
• And this means navigating a series of ongoing conflicts of interest and priority as everyone on your team seeks to flesh out their functional and operational part of this embryonic and rapidly growing enterprise.

I have already at least briefly outlined a set of issues related to identifying and prioritizing tasks and goals in Part 4: building for strength and business viability. But that leaves a significant gap – effectively working with the members of your team to develop buy-in and active support, so your founding team can actually work together as a team. So this is in large part a posting about negotiating while everyone involved is in the midst of steep learning curves. And I start this posting by noting a very important working principle in effective negotiations per se:

• Never assume that either you or anyone else in a negotiation process holds a monopoly on understanding or knowledge or that anyone, yourself included is completely right on all details as to what a best resolution should include. Assume that everyone involved has something of positive value to contribute – including those you start out most inclined to disagree with.

So determining and setting goals and priorities should not simply be a matter of any one voice, the CEO included, simply dictating and demanding that everyone else just follow orders. That is a route to winning skirmishes and battles but for loosing wars and certainly if it is the only approach to leadership taken.

I have seen startups fail and die because a headstrong CEO could not and would not listen to others, including the essential, core members of their own founders team. Those people with their essential skills and expertise became disenchanted and drifted away out of frustration. And avoidably bad decisions were made because the skills and experience they brought to the table were not being tapped into and used when they were most needed.

I admit I find myself thinking of a particular would-be CEO of a very specific failed startup as I write this. I became involved with this embryonic venture as a consultant, but add that I was sufficiently interested in the potential of this venture that I was actively considering acquiescing to founder requests and joining as a member of the founding team. But while everyone in the room got to speak, only one voice could actually be listened to. Consider this a sequel of sorts to one of my first postings in this blog: Maintaining a Vision while Loosening Our Grip. The startup I wrote of nearly two years now did hold real promise but it was unable to achieve it and it did fail. It was already in serious trouble when I wrote my October 10, 2009 posting and that very evident fact prompted me to write about it, as I thought through what needed to be done to turn things around.

This series is about burn rate and the careful use of resources, and that focus of orientation should be taken into account as a core set of working parameters in reviewing any proposed tasks or goals or when scheduling or prioritization decisions. But none of this can work without genuine buy-in and support from the people who would follow through on these tasks, goals and decisions and make them succeed.

So far I have discussed liquid resources as if a black box and without delving into the details of what they are or where they come from. I am going to look into this in my next series installment where I will turn to the issues of putting skin in the game and seeking outside investors.

You can find this and related postings at Startups and Early Stage Businesses.

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