I often deal with early-stage and startup technology companies. It never ceases to surprise me when after initial success (typically on the back of a development milestone or financing), many founders/CEOs opt to expand their board and engage consultants. They begin to seek opinions on just about every decision, big or small. It’s almost a common reaction after early success — despite the many pitfalls of having too many cooks in the kitchen…
So why does it happen?
I think committees makes many CEOs feel safer or insulated from blame if something were to go wrong. You see, as a startup’s profile rises after experiencing early success, new eyeballs begin to watch its every move (larger investors, media, etc.).
This heightened attention makes many new CEOs cautious and risk-averse. They don’t want to make a blunder with the spotlight on them. That mindset is utterly counterproductive to their overall mission. Mistakes are all but guaranteed in the research and development process, and being afraid of making one will stunt or eliminate the growth of a startup.
Founders can also develop imposter syndrome as their profile rises. And they hope the expanded board and new consultants will relieve them from some of that pressure. Either that or founders think it validates them as a leader by having a big committee behind them.
Of course, there is a time and place for a committee and a think tank of experts (after revenue has been achieved), but it’s not in the startup stage. Committees work well when you have to figure out ways to cut costs by a percent here or there, comply with a complex regulatory landscape, and so forth — efficiency checkers if you will. However, the bigger the committee, the slower an organization moves.
Time is the greatest enemy of new innovation. The only staff additions to a technology startup should be practical, skill-related folks: i.e., engineers, designers, marketers.
War Council
Technology startups are pre-revenue and have to move quickly to capture a piece of market share, yet CEOs often choose to bring on a committee — a sort of ‘war council’ — in the early days. This war council is intended to deliberate on ‘next steps’ when determining a course of action. However, before the startup’s initial success (and what made it an early winner), decisions were made by the commanding officer… the founder. He could act on his instincts and take a swing at an idea at the drop of a hat. Changing that during the startup stage puts everything at risk.
Always Remember How Innovations Happen
Creating a great innovation requires four key elements from the inventor(s): Independence, timing, gut instinct, and intelligence. You need all four to turn a cool idea into something people want. Furthermore, winning innovations require a creative and obsessive process with intense focus and minimal distractions.
Committees make founders/inventors second guess, slow down, and deliberate — sucking precious time away from the project or research and development. Committees, in short, kill an innovator’s mojo.
Strict Structure is Dangerous for Technology Startups
Innovations require a messy process and rarely reach commercialization in a structured environment. The very act of innovating is more of an artistic process than it is a formal business one. To that point, we would never tell a painter to reconsider her color choice, or where she should brush a tree into her painting, would we? Nor would she seek the advice of numerous colleagues before painting a tree into her scene. She’s inspired, and needs to be left to her own devices. It almost seems sacrilegious to tell an artist how to paint a picture…
However, for reasons previously mentioned, so many innovative founders seek that committee after early success. I’m here to remind the entrepreneur to avoid the committee at all costs in the startup days.
If you get those early days right, especially after an initial financing or significant development milestone, you’ve got a shot at enormous returns for your investors. Novel products come with the most significant margins. On the contrary, saturated markets have thin margins and a lot of committees.
Stay hungry,
Aaron
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