Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 19: exit strategies, entrance strategies and significant business transitions 9

Posted in startups, strategy and planning by Timothy Platt on April 8, 2016

This is my 19th posting to a series that addresses the issues of planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 499 and loosely following for Parts 1-18.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

I began discussing the issues and challenges of business systems friction in the context of this series in Part 18. And in the course of that, I briefly outlined something of my experience working with a specific startup where that became its single biggest challenge. To repeat a key detail from that example, the overall team that I was working with was small enough so as to be able to comfortably meet around the dining room table of this startup’s initial founder, and this group did meet that way once a week, as well as communicating by email and phone. But this group was challenged at seemingly every turn by failures in communications that stemmed from the way that its members, and particularly its initial founder withheld crucial information.

I stated at the end of Part 18 that I would follow it with a more systematic discussion of friction in the business transition context, with a goal of:

• Better planning for and anticipating it,
• Of clarifying its impact and
• For limiting its operational and strategic complications.

I have already been discussing friction in a variety of contexts in a range of postings and series in this blog, so I will focus here on startups and on more effectively building a new business that can begin to generate income and profits, and in spite of the disruptive potential that friction creates for that. And to be explicitly clear, for purposes of this discussion I refer here to two specific desired business transitions:

• Successfully moving from an initial pre-revenue startup phase, into an early stage where positive revenue flow has started to be generated, and
• Successfully taking that next basic transition in which that new business starts to generate profits and a positive overall cash flow, and reliably so.

I offered a link to one of my first postings to this blog in Part 18, for its relevance to this set of issues. I match that here with a link to a second early posting: Startups – dealing with unexpected agendas and staying on the same page.

• Unshared assumptions and unshared information that is essential for the new business’ success, and that others on the team have to have if they are to succeed in their work there, can kill a new venture and before it even has a real chance to get fully started.

Hidden agendas and the conflicts in goals and priorities that they engender – and the friction that they generate have probably killed off more startups than essentially any other cause, when these new ventures fail and early on.

I write here of leveraging the value of available information to carry out the right tasks more efficiently and with realistic priorities and according to realistic, overall coordinated time tables. But at least as importantly and certainly from a longer term perspective, I write here of developing a strong sense of buy-in and of ownership responsibility in everyone involved in creating and building this new venture – and that means their contributing to this effort and it means their knowing they are actively involved in the discussions that lead to strategy and the realized business plan. Members of a team who find that they have been working on and focusing on the wrong things because they were not given already available information that they directly and specifically needed, and in a timely manner, might not drop away from this effort the first time that this happens or even the second time – and certainly if those incidents are presented as learning curve exceptions to what is intended to be more open and effective communications. But if this becomes a pattern and comes to be seen as the norm for this business, these team members will quickly come to see themselves as wasting their time and energy and they will just as quickly come to see themselves as having been taken for granted and used.

Startups have no track record of prior functionality or performance to fall back upon here, and the earliest processes followed and the results achieved from them are going to build the foundation of trust that this business grows from. Or they will fail to do that, and that is where friction and the communications problems and information sharing gaps that create it, enter this narrative.

That is the basic fundamental problem. What at least in general actionable terms is the solution to it? I am going to at least start addressing that question in my next series installment. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too and at its Page 2 continuation.

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