Top 5 operational mistakes early startups make
Getting that idea off the ground is an exciting, adrenaline-pumping time. You have support from your friends and family, you have a few keen people on your team, and you are getting great signals from the market.
Suddenly you are at a dozen people or more. There are too many things to manage by yourself, and a team to encourage, supervise and grow, all the while holding onto the sales reins. It's an intense time: things have evolved without much thought as to scalability, or whether you should be doing it this way. Everyone is expected to just do all the things.
Personally, I love those times. The camaraderie is right there, and it’s always clear that you are adding value. But working this intensely and being reactive can also burn people out, and make it much harder to adapt to your future state. So, here are my Top 5 Operational Mistakes that I see happening frequently, and how you might avoid them.
1. It’s a start up so it's supposed to be chaos, right?
It doesn’t help that in this industry, it is often spoken about as a badge of honour; how random and wild the startup scene is. People are hacking code, sleeping under desks, building things and breaking them quickly, to learn, pivoting, ideating, reacting quickly. Isn’t that the only way to innovate? In those early days, it's the extremely focused effort you put in that makes you the one out of ten startups that will go the distance, right?
Most failed startups tend to have several things in common (source: https://www.failory.com/):
First, insufficient competence can result in emotional pricing and a lack of planning.
Second, inexperienced founders often buy the wrong inventory or make bad decisions.
Third, poor advice from friends and family, in addition to family commitments, piles on the considerable pressure of running your own company and impacts what percentage of business startups fail.
It’s important to remember that you can stop and regroup at any time. The wheel can stop spinning for a few days, and no one will lose an eye. In fact, one of the most important things you can do once you recognise a problem anywhere in your business, is stop as soon as possible, to inspect and adapt. Anyone in an organisation should feel confident to raise their hand and say ‘Let's take a breath and look at whether we are still on the right path’, whether it be for 5 minutes, 5 hours or 5 days. Your only upper hand as a startup is your ability to reset goals, processes, metrics and priorities quickly. You can and should do this constantly. In startup operations, what makes an organisation resilient to the road ahead is reviewing what is working, what isn’t anymore, or what is missing. What’s stopping you from changing the things that aren’t working, other than taking the time to do so? Nothing. Take the time. You’ll be surprised how easy it is to feel in control again.
2. Startups forget to manage people’s growth and performance
Often, startups employ junior or inexperienced people as they are cheap. They feel happy that you’ve given them the chance, and you can have them do anything you need, as they have no understanding of how it usually works elsewhere.
People in startups are human beings, with life goals, dreams and aspirations. They are not your slaves; they are worthy of having their leaders care for their professional growth. It is a privilege to have people you are responsible for, and you should help them as much as possible to be the best they can, no matter how long they are with you, or their level of experience. Sometimes you are their first boss, and they will compare every other boss to you in future. If their first work experience is someone just driving them to work hard, with false promises of reward in the future, then they are likely to expect the same from future managers. You can cause a lot of damage. Take it seriously: create a professional development plan with them, and follow up with them every month to make sure they are learning and driving to their future goals. They will feel valued as people, and give you their best work, not just their “most work”. Create a skills matrix (there are heaps online for you to start with), and give people a way to can see how they can grow in your organisation, even if you don't know whether it will make it past year 3. Treat the organisation like it will last for 30 years, and it just might.
3. The false belief that any process is too heavy and will hold you back
I’ve worked with people who have baulked at the mention of a framework, no matter how lightweight. They think it cramps their style, which is typically gut feel: this is common in people who run on instinct, who just want to get it done, rather than talk about it. To be honest, I was like that once: I was proud that I was intuitive and could act quickly. I was known for it, and I thought it was my superpower. Many years later, I now believe it was a key weakness, something that only goes so far.
No matter whether you are introverted or extroverted, whether you are analytical or you shoot from the hip, we all need some structure in our lives. It creates boundaries to safely work within, or press against. It prevents wasted time, wasted effort on things not valuable, and helps everyone get on the same field, even if they are playing different positions.
Frameworks can be so variable in depth and effort, and for every reason under the sun. They may be a lightweight framing of how to think through a problem in 5 minutes, all the way to scientific methods of testing hypotheses that can take years. When people run away from the idea of frameworks or process systems, they are often thinking of the latter. One thing you should understand is there are frameworks that will suit what you are doing in your business, whether for product strategy, delivery structure, decision making and priority, or how you set goals as individuals or teams. Some of my favourite examples are the Six Thinking Hats for challenging yourself to think around an idea or issue from different perspectives, and Design thinking for quickly working through an idea to gain user feedback in 5 stages. I particularly love canvases, and there's one for everything these days: Lean Canvas, Business Model Canvas, or Project Planning Canvas, to name a few. I use these constantly. Agile and Lean practices are all based on quick, iterative ways to learn what should happen next. As someone who has practiced these for 15 years, they have given me ways to assess situations quickly and reliably, and don’t often fail me.
Processes will be as heavyweight as you let them become. Focus on what people need to do their best work, and what tools/frameworks will enable them to do this optimally. Avoiding them only will slow you down in the long run, or won’t let you repeat things that do work as you will have no idea how it happened. Regularly review as well, as these do not remain static. As you grow you will need different tools and processes. There are predictable patterns and you can prepare early for those moments if you understand the signs that change is needed.
4. You think there will be time later to fix things, once you’ve made it off the runway
This one is easy: there will never be a time to do this, so you might as well do it now. In fact, sometimes it will be too late, as the refactoring needed will be expensive and painful, especially when you are scaling. Sometimes this means the death of a startup, as it becomes too much to maintain, or you have to throw things out and start again. Waste can be avoided: make a map of where the next year or two will take you, and chip operational things off in order of priority. With a good HR strategy, tools and management, when you need to hire quickly, you can do so without the pain. Map your data strategy and the insights you hope to gain, so you can add these as they become real, rather than having a pile of data but no understanding of what's valuable within it. Make time in your organisation's week to deal with business as usual, tidy things up, evolve processes and remove redundancies. If you do this early and continuously, you will avoid many of the pitfalls that might otherwise burn you later.
5. Senior people are too expensive so you’ll have to wait until you can afford them
There is truth in this: hiring senior managers too soon can kill a startup. Timing is everything, and you will often want to acutely feel the pain of that person’s absence before you hire.
However, that doesn’t mean you can’t have senior-level support and advice. People like myself and other consultants are creating a world where you can affordably get this experience into your organisation earlier. The potential of virtual-Cx0 roles is huge; they can have so much impact on how well your business model works. Gather advisors, consultants, experts and part-timers along the way, who will give you more in an hour than what you’d get in a week with someone less experienced. We want to help. We want you to avoid things that happen often and are avoidable. The more startups that make it, the better we will all be. My own goal is to get that 1-in-10 success story to be more like 3-in-10, if I can help it, or even higher. As a founder, never think you have to do it alone, or that every decision is on your head. Share the load, understand you have weaknesses and get support for those weaknesses from others who have those strengths. Ask for what you need and you’ll likely get it sooner that you think.
Operational excellence doesn't need to be left until later, or heavy handed. Simple, scalable models and plans will mean you as a founder can control your organisation, and let you focus on your core priorities. There is already enough that could go wrong in startup land, so let's avoid these traps once and for all.
