"Only three things happen naturally in organizations: friction, confusion and underperformance. Everything else requires leadership."
Where does all this come from?
So far nobody seemed to bother much about failing startups. The woeful statistics of 9 out of 10 failures seem to be accepted like a law of nature. Strange enough.
Having been inside a number of startups, and even more innovative ventures inside larger companies, I developed however a strong feeling that there must be a better way. I also strongly believe that any solid idea, any team of smart and engaged people, and any investment taken deserve to be run in the most proficient way possible. So what could that be like?
The approach suggested here - unbiased feedback, a dashboard for visualizing issues and their severity, and a "North Star" concept giving guidance - is innovative. Like every other innovation it is a result of melting existing ideas, adding some fresh ingredients, and creating an new perspective out of all this. So here’s the background.
There is a huge market for all kinds of methods and blueprints. They are typically sold as books, trainings, certifications and consulting services. Examples include Scrum, Management 3.0, Lean Startup and Design Thinking. They all bring valuable ideas and concepts, that can be very useful.
There are, however, two problems with such ready-made solutions:
a) They only look at a part of the picture, e.g. product development or the development process. A productive organization however is about consistency and performance across many different fields and aspects.
The solution to this however can not be a Great Unified Method ("GUM"?) covering life, the universe and the rest. The reason is that
b) Methods and processes make people stop asking the right questions. They create a perception of being able to offload the difficult task of building a productive company to some external blueprint. With all good ideas these concepts may contain, this thinking they trigger is flawed and dangerous. A venture is as unique as its product and the people involved, the amount of repetitive routine is naturally very small. There is no way to escape the hard work and get out of the comfort zone.
To build a company you need to start with the desired outcomes, and work your way backwards using effective feedback loops. Not the other way around.
OWN RESEARCH and book
The then ongoing discussions in the software engineering domain about what might be the right method (waterfall, RUP, or agile) led me at some point to co-author a book ("Software entwickeln mit Verstand"), together with two colleagues. We tried to look inside innovative projects and understand what was really going on there, with a focus on how problem solving works and how people creatively work together. The goal was to create a solid ground for managing this. There are solid principles how people communicate and learn most productively. In terms of finding the best overall process it depend on the available knowledge in a given situation - the knowns, the known unknowns, and the unknown unknowns. There are different ways to manage these cases effectively, and knowing when and how to use them increases productivity dramatically.
The key for dealing with unknowns (no matter if it is related to the product or the organization) is to ensure fast and effective feedback. These insights are obviously very relevant also for running startups.
20+ YEARS EXPERIENCE
Apart from some conceptual thinking the other, probably most important ingredient is the personal background. My own story as a consultant, project manager as well as executive created a wealth of experiences, ranging from small startups to very big players, and covering very diverse situations and missions.
I was privileged to work with a lot of not only very nice, but also extremely smart and knowledgable people. Together we made a lot of good things happen, and also learned a lot.
One insight coming with experience is that a venture is not one "thing" that either fails or goes well. A company itself is a complex system, and while there are maybe unhealthy things happening, at the same time there are others that may go extremely well. Good leadership is about a) shaping the good things, and b) about recognizing issues, judging their severity and knowing how to fix them before things tip over.
Any venture is always also about people. How do they organize so that they productively work together, live up to their individual potentials and become more than the sum of their parts?
Shaping this together in a project with the typical roles or specializations is one thing. When it comes to building a startup however, things get significantly more complicated, and more risky. The reason is that there are more topics that need to be covered, requiring people to step out of their comfort zone and cover new grounds. This is not always happening.
It is a tough question: People working in innovation and startups are generally extremely smart and well educated. The question is, why is that not enough to make more than 1 in 10 startups a success?
There are a number of reasons, all coming back to the human factor :
- Most people are subject matter experts. Building a productive business however is about connecting different disciplines. There is generally no education on how to do this. The universities create great experts, but connecting the dots across domains is a skill taught nowhere. With leadership being basically a social science, it is also quite alien thinking for STEM alumni. If you now think of the MBA education, then this also doesn’t cover what we need here. The A stands for Administration, which is ok to maintain and optimize a status quo, but is clearly not enough for building something new in the midst of uncertainty and complexity. And so far, there is no MBL yet (L for leadership), that would fill this gap.
- People are humans, and humans are subject to their biases. This is simply a reality that whatever system for leading innovation needs to consider. People tend to do what they think is the right thing - and the right thing is what they want to do. This unfortunately isn’t always what would be needed.
- There are few things that humans generally don't like much, and thus avoid. These are:
- Digging into topics they are not familiar with (for a STEM guy this could be Marketing for example). People rather delegate these things to experts and trust it will be good. The experts are again only trained for their silo, so the overarching link will be weak.
- The human brain is not good at dealing with complexity. The natural response is to ignore it, or to fall back to simplified solutions (see methods and blueprints above).
- Another trait is a typical lack of persistence (or even ankle-biting) when it comes to following through in delivery management. Repeatedly asking things like „What exactly will be the outcome?“, „When will it be finished?“, „Will it really be finished by Friday?“, „What is left after this that we need to do?“ is hardly anyone’s cup of tea - which is why hardly anyone does it. And yet, this is exactly what’s needed.
THE NEW PERSPECTIVE
Recapping all this leads to some requirements for a system that helps increasing the odds of a startup:
We need to
- allow to use practices invented elsewhere that can help to solve parts of the problem (such as Design Thinking)
- have a concept with guiding principles that provide an overall direction how things depend on each other in a productive organization
- generate effective feedback on a variety of topics, crossing the gaps between expert silos
- present the feedback in an actionable, easy to understand format
- overcome human biases when it comes to really taking action on the feedback
The solution providing ventures with relevant feedback, and enabling them to act properly on it, is therefore 3-fold:
- You need feedback by an unbiased expert, who has the necessary experience to see where things can break. Somebody knowing the ins and outs of building and running innovative organizations, and who can see things nobody else involved in daily business will likely see.
- You need a tool to put things on the table, and making sure they stay there. A report or recommendation will soon be forgotten when the next fire needs to be extinguished. But if you establish a proper governance and a way to visualize the issues, you have a much better chance of not getting away without solving them.
- In order to assess the situation, you need a „north star“, a concept that defines the direction things should go and that is able to tell whether something is good or maybe less so.
The „North Star“ concept is explained in our Whitepaper. Get it here
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