Successful start-ups bootstrap during the formative period, they rightfully focus on product viability. The lean operations and a focus on developing a scalable product help attract investment interest. However, as a company grows without increasing resources, purchasing and implementing automation tools, or addressing flaws and bottlenecks in back-office operations, it reaches a critical point – a reality check: the company must swiftly formalize and improve the efficiency of its operations or risk implosion. Many scramble to effect change, yet so many never realize it. Why is change so elusive? How can your start-up embrace change?
I believe there are 5 key reasons for why change eludes many start-ups:
1. Management had not embraced the idea of change. Change is hard, but it’s especially difficult to hear that the process you have built no longer works and must be replaced. Often, emotion prevails over rational thinking and management encourages change for appearance’s sake but does not support it with tangible actions. The status quo is comfortable, but a start-up is much like a beehive, everyone senses the leader’s unspoken reluctance towards an action and deprioritizes it. Management has to embrace and lead change, starting with explicitly communicating to all employees that process improvement is the key to future success and encouraging them to be part of the new solution.
2. No ownership and no authority. Start-ups prefer to employ young “go-getters” who work across departments, the organizational structures tends to be flat – everyone is his own manager, most report to the CEO directly. However, since each individual is stretched thin, each takes on only the quick success projects in additional to daily duties. Needless to say, there is also a lot of drama, cliques and competition for CEO’s approval. In order to successfully change operations of a company this fragmented, the CEO must (a) publicly appoint a project leader and (b) delegate the authority to lead this project to completion to this person. Change is serious business and it requires credibility and authority, without these components the project leader will not succeed.
3. “Wrong” project lead. The quarterback of change has to have empathy for the challenges faced by other departments, understanding of the company’s processes and the flow of business operations, a grasp of the limited resources of the company, and the ability to prioritize the company’s problems objectively. There are many ways to solve a problem, and not many can prioritize the needs of other departments for the “greater good” instead of championing the issues that they themselves experience. That level of detachment is difficult for most existing employees. The project lead should also have limited past friction with other stakeholders to foster trust and communication. Most companies find that newhires are more objective and aligned with big picture company goals.
4. Insufficient resources. No matter how great your project lead is, if she or other stakeholders have no time to focus on this project due to other responsibilities, the project will not get off the ground. There must be enough cash resources allocated to the project in order to hire temporary staff to help drive the change, or cover the daily duties of the project lead and stakeholders to provide them with the opportunity to focus on the project. There must also be enough cash resources allocated to effecting a viable solution, whether that means hiring more engineers/IT personnel to assist with automation, purchasing new software or replacing junior employees with more effective experienced hires. After all, you can’t make lemonade without a lemon.
5. Opinions are not facts. Start-ups often make decisions based on whims or the rule of “who complains the most”. To succeed, management must rely on data and use analytics to support decision making. The idea of change will cause friction among departments, some employees may feel singled out and see requests to change their process or staff as unfair ridicule and take it personally. Work is not personal, decisions should not be made based on tenure or friendships. Data analytics will not only help identify the right course of action, but also show the objective rationale to the rest of the company.
It’s a tough game of survival out there. Good luck to all!