Platt Perspective on Business and Technology

Re-Visioning leadership 4 – business stage-specific skills and experience requirements for startups

Posted in startups, strategy and planning by Timothy Platt on January 20, 2013

This is my fourth posting to a series in which I discuss leadership styles, and the issues involved in meshing the right leader to the right organization, and for their style and approach and their hands-on skills and experience, and for the organization’s current and emerging needs (see Business Strategy and Operations – 2, postings 345 and scattered following for Parts 1-3.) I looked into some of the issues that arise when a business seeks new leadership from within their own industry or from outside of it, in Part 2: staying in-industry or bringing in new, outside experience and skills 1 and its continuation as series Part 3. And here I turn to consider the developmental stage of a business as that determines most important skills and experience for a new leader. And I begin at the beginning for this, with a simple if rarely asked question:

• What is the most important skill, experience or quality that a startup founder and leader can bring to the table, of particular importance for that stage in a business’ development?

Stepping back from that question for a moment, it is clear that much of what goes into being an effective leader would apply to any business or business situation. Effective organizational and communications skills immediately come to mind as core elements of effective leadership in general. And I have been writing about leadership on an ongoing basis for several years now in this blog, and there primarily writing about generally applicable and necessary skills sets. But what skills and experience and what credentials would be most important to meet specific organizational needs? With that, I turn to consider the above bullet pointed question.

A startup needs to have a great idea that holds potential for being turned into a market-making commoditizable product or service if it is to succeed. But any and every business needs to have something to offer that can be converted into a product or service that the market will want and be willing to pay for. When you ask a venture capitalist: a professional investor who makes a living out of successfully identifying and backing the right young businesses that will take off and succeed, the single most important qualification they look for is experience working with and leading other startups. A previously successful startup founder and successful serial entrepreneur is virtually always considered a best bet to invest in. An entrepreneur who has tried before and who has clearly learned a lot from a previous attempt is considered a next best investment and even if their first startup venture did not succeed as planned. Note that this is not about the great idea that would-be entrepreneurs approach venture capitalists with, when seeking funding support from them. Venture capitalists get to see and hear pitches for great ideas all the time. This is all about backing the right people who happen to have product or service ideas they wish to develop into businesses, out of the crowd seeking their attention.

What is it that a successful startup founder learns? What is it that a less than successful startup founder learns too, that would favorably impress a potential backer for its learning curve value? That is in fact the specific subject of this posting.

• Startups begin without system or structure in place. Most managers, and certainly in established businesses, function and lead from within established organization and with the structure and order and the established best practices and fiscally supported momentum that entails. A startup founder has to build without that support and build everything from scratch when organizing and launching their new business. They have to in effect walk the tightrope without a net.
• This means a tremendous focus on identifying and pursuing the right priorities and in the right order.
• That means being comfortable with uncertainty and with the sure to emerge changes and challenges that founders face.
• This means a willingness and ability to wear multiple hats and to carry through on a seemingly endless list of tasks and responsibilities.
• And this means believing in the promise and potential of their unique value proposition idea and their being able to set aside, or at least defer any return on this investment to themselves as they pour effort and money into it – their own savings, funds from family and friends and others who they can convince to invest into their dream. And with that, I add in a willingness to “put their own skin in the game” – their willingness to invest themselves and their reputations in this venture. I have never heard of a professional startup or early stage investor, willing to invest a dime of their money in a proposed new business when its own founder has not already proven their faith and commitment to this venture by investing in it themselves, of their own money and name and effort.
• As an aside here, I made a commitment to follow through on this blog with daily postings when I started it and I did so intentionally, explicitly thinking like a startup founder when beginning this endeavor. Successful entrepreneurs have to be actively committed to what they start, and they need to be willing to take the ongoing steps needed to succeed and as an open-ended commitment.

Who am I explicitly writing this posting for? Who is my intended audience? One obvious group would be entrepreneurs who are considering becoming startup investors, there primarily thinking of angel investors and crowd funding investors who are just starting out in this. I also write this in terms of founding teams – people who come together with a shared idea and a shared dream that they would build into a new business together. There, my goal is in helping them decide who would be best to put in the position of chief executive officer from among their group. And my third target audience for this, which I freely state to be the most important to my thinking, is the entrepreneurs who would seek to build and lead a first startup. And for them I explicitly add that the skills and qualities that I write of above in my longer bullet pointed list are all qualifications that an entrepreneur can cultivate in themselves and learn.

Some of the qualities of effective and even great leadership are easier or more difficult to pick up and learn, and internalize as naturally expressed capabilities. And the points that are more difficult for some can be easier for others depending on their basic temperament and approach. Extroverts can start out a lot more comfortably when mastering the open, outreaching communications skills that go into effective leadership for example. But introverts can master this too, capitalizing on their starting point as good listeners. Extroverts sometimes talk more readily than listen and both halves of a conversation have to be mastered when improving communications skills. Learning curve needs and capabilities enter into more stage-specific qualities and requirements that go into being an effective or even a great startup founder and entrepreneur too. This can all be learned. The key here is in knowing what to work on and learn. And that was the goal of this posting – to help point a direction for further thought and study and work.

I am going to turn next in this series to consider leadership skills and experience as they would be called upon when a business explicitly seeks to scale up. I have been writing and posting a series on Moving Past Early Stage and the Challenge of Scalability in this blog (see Startups and Early Stage Businesses, postings 96 and scattered following) and the next installment in this series is where it and that series intersect. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.)

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