By Bob and Gregg Vanourek, co-authors of Triple Crown Leadership: Building Excellent, Ethical and Enduring Organizations
Entrepreneurs face three unique and pressing challenges in leading startups. The first is extreme uncertainty. Though they lack vital information and clarity, they must act anyway, sometimes placing make-or-break bets with their limited resources.
The second is extreme time pressure. Startups race to launch before their window of opportunity closes and before their cash runs out. They must somehow defy the odds and discover a viable business model even while the clock is ticking.
The third is extreme resource constraints. Early on, startups lack key people, money, hardware, software, systems, infrastructure and more. The game is bootstrapping—scavenging, negotiating, persuading—whatever it takes.
Each constraint on its own is daunting. The full trio can push entrepreneurs into compromising quality, abandoning ethics and adopting an extreme short-term focus.
How can entrepreneurial leaders build ventures that are excellent, ethical and enduring (what we call the three Es of the “triple crown”)? How can founders achieve exceptional results with integrity with ventures that are built to last and not to flip?
Entrepreneurs are wise to reflect inward before building outward: What are your values and vision? What are your key goals? What is your tolerance for risk? What kind of culture do you want to establish?
When recruiting the venture team, too many founders make the same mistake and focus on an overly narrow set of factors. They should evaluate not just the “head” issues of knowledge, skills and experience, but also the “heart” issues of character, emotional intelligence and fit with the desired venture culture. Entrepreneurs should also recruit people whose skills augment their own. Technical founders who are weak in finance or sales should not just hire other techies. It helps to have a detail-oriented person on the team— a point overlooked in many new ventures blinded by starry visions.
Bad hires are costly, draining energy, momentum and money. Some walk away with valuable intellectual property or trade secrets. If there is no alternative position in the venture for a mistaken hire, the entrepreneur must face up to it quickly and part company. They must make faster cuts to be able to survive.
Entrepreneurs should also probe potential business partners, investors, board members and even key vendors carefully for fit with the purpose, values and vision of the venture. Smart vetting takes a little extra time, but saves much more time (and money) down the road.
In the swirl of a startup, with all its frenetic activity and “hair on fire” pressure, entrepreneurs shape the culture either purposefully or by default. In the throng of daily decisions, patterns emerge that form the venture in the future. How do the leaders make tradeoffs between the interests of employees, customers, owners and others? Do they align those interests creatively? Do they build and invest in a culture of character? Do they keep their commitments? Do they develop their people even as they race ahead? Do they build a foundation for long-term success even as they meet their short-term obligations? Investments in people, culture and leadership require discipline and foresight, but pay big dividends.
Most startups do not survive the gauntlet of extreme uncertainty, time pressure and resource constraints. Some that do survive compromise their integrity and long-term vision along the way.
To avoid that fate, commit to build a triple crown venture that is built to last, not to flip. Purposefully shape a culture of character. Recruit for complementary skills and cultural fit. Vet your partners, employees, board members, customers and vendors in advance. Face up to it when you make bad hires. Make quick pivots to find a business model that works.
With that kind of leadership, your venture will attract great people and committed partners, building a foundation for enduring and ethical excellence.
For more on this and other advanced leadership practices, check out Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations. Follow Bob and Gregg on Twitter: @TripleCrownLead.