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Saturday, April 19th, 2014

Why Startup Skills Often Become Counter-Productive for Scaling

There’s a plethora of success stories of mega corporations, on their genetic code and on how they operate. There’s also a lot of glamorous coverage on start-ups & start-up leaders. We hear of the best practices and management learning from successful large Enterprises, and we also have a plenty of advice for the Start-up leaders.

However, the fact remains that only a miniscule number of all promising start-ups actually break-through to the big league. And for those who do, the script of their painful & paradoxical journey is often oversimplified or just plain uncovered. And one of the most important aspects of such successful transformations – from a successful start-up to a mega-business – lies in whether entrepreneurs are able to successfully transform the genetic code of the organization.

Entrepreneurs & Start-up leaders that are successful in the Jump-start phase are so because of certain effective habits that they either have or have developed during the initial phase. However, the same habits, if carried forward too long become counter-productive to scale for their business. The main reason being that once the business is off the ground, it’s not about the entrepreneur any more, but about the engine that propels the business. Also, entrepreneurs may find it harder to adapt because of the early successes. It’s tempting to think that the same characteristics that brought them a string of successes can continue to play their part as the business grows. And unfortunately, they cannot just bring in a new leadership to take over and do this for them. They have to start with themselves – precisely for the tremendous zeal with which they brought the organization to where it is – and, then infuse new leadership accordingly if needed.

Let’s look at some of such habits, why they are great for start-up and how they become counter-productive for scaling.

1. The Jugaad Syndrome

Entrepreneurs are adept at figuring complex situations out, and to find simplistic “anything that works” solutions to keep going through the grind of early stages. That is one trait that’s critical early on when one has to contend with perennial set of challenges with minimal resources. However, this tendency, over time has to give way to intellectual freedom for others in the organization and also a more systematic set of problem solving techniques for the organization to scale. Consistency and Repeatability are important for scaling organizations.

The ability to simplify the complex situations is a great trait in general.However, as the growth requirements demands scaling up, business faces more complex problems posed by variety of employees & customers across the spectrum. A process and systems driven approach is called for, and while that doesn’t have to yield to a more cumbersome and rigid process driven organization, still a more structured approach to handling the commonly confronted situations is required so that people at various tiers can operate on their own at operational level. Hence, the “Jugaad” tendencies have to give way to more structured operations.

2. Dynamic, or too dynamic for own good

Successful entrepreneurs are masters at adapting on the fly. Early on, this is important because most times the foundations of the business are not validated with the real markets and real customers. Ability to change the direction as required by the market is important in the early stages, even at strategic level. This “Pivoting” is becoming even more critical in the fast paced technology environment, especially in the consumer markets where one cannot always be sure of the right combination of the product, pricing, positioning and promotional approaches.

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