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Founders are drawn to their profession of starting companies because they have a problem they want to solve and a vision for how to solve it. Oftentimes, though, the characteristics and skills that make people great at identifying that problem and seeing how they want to solve it are double-edged swords when it comes to actually running their companies. This is particularly true as a company reaches the transition point from proving product-market fit to scaling. A company and the marketplace it is in are in a constant state of flux and evolution; what got a founder and a company to where they are is therefore not necessarily what will get them to the next level of business success.
In my work with many founders and senior leaders, I have consistently observed three traits that have made them successful early on but, left unchecked, have also held back their companies from reaching their full potential as they grow. Below I’ve written a brief explanation of these three characteristics, and also included some very tactical actions that founders and companies can take to mitigate the downsides and ensure they continue to find success.
1. Having incredible long-term vision can mean that a founder isn’t as good at the day to day management of a company
Companies need to do two things really well in order to achieve lasting success: 1) they need to be going after high-opportunity problems, and 2) they need to be executing effectively on solving those problems. Many founders I’ve worked with are fantastic at identifying high-opportunity problems. They see the world differently than most people, and can therefore spot opportunities that others don’t see. But those same founders often see too many problems they want to work on, and they have a hard time prioritizing. The result is that their companies are working on the right problems, but working on too many of them, and therefore not executing effectively enough on any of them. I am a huge believer in the saying “if everything is a priority, then nothing is a priority”.
What to do: less
I read a lot about military history because I find the juxtaposition of sound military strategy and the tendencies that make us human beings to be absolutely fascinating. During World War II, one problem that consistently plagued Japanese military leaders, and contributed significantly to them losing the war, was a propensity to spread their forces too thin. At the Battle of Midway, the Japanese navy divided its aircraft carriers into groups, a larger one one whose objective was to attack and destroy the American carrier forces around the atoll of Midway, and a smaller one whose objective was to attack two small islands in Alaska nearly 2,000 miles away. The Japanese divided their forces in order to achieve multiple objectives, but this division of resources resulted in them failing to achieve their main one: the annihilation of the American carrier force. Instead, the battle resulted in the annihilation of the Japanese carrier force, and a decisive American victory. The carrier group that was sent to Alaska might very well have been the difference-maker for the Japanese at Midway. This lesson is repeated many times throughout military history and in numerous business cases: the more you try to do, the worse you will do it.
One easy way to notice if your organization is focused on too many priorities is if it is not consistently delivering on all of its commitments. I’ve seen many companies who have extensive roadmaps at the beginning of each quarter, but at the end there are invariably many items on those roadmaps that remain incomplete. Oftentimes even the items that are completed are done with suboptimal quality, such as hacks that work now but may not scale later. This can lead to more resources being required down the road to maintain the work done now, rather than being focused on growth-oriented activities.
It may seem a bit counter to the “hustle and grind” mentality common at many startups, but focusing your organization on just one or two key objectives at a time can yield powerful results:
Less context switching
Whenever someone has more than one focus, switching between those focuses takes time and energy. Whereas one focus might be able to take up 100% of someone’s brainspace and efforts, more than one focus will result in time being lost to context switching. Instead of giving 100% to one thing, suddenly an individual is giving maybe 45% to two things, or worse. This costs your organization valuable time and resources.
Greater collaboration and higher quality outputs
When teams with multiple priorities have to work with other teams who also have multiple priorities, there results an imperfect match of resources, and therefore lost productivity. One team might want to tackle one priority first, but they’re also needed by another team who is trying to tackle a different priority. Instead of one big team solving a problem, you have multiple smaller semi-autonomous groups, many of whom are imperfectly aligned and are wasting energy and resources trying to gain alignment and work around differing priorities.
2. The mindset that makes a founder believe that they see something that everyone else is missing could also result in them not having full faith or trust in those who work for them
A founder starts with a problem that no one else is seeing, or a solution that no one else is trying. They are starting a company because they want to solve that problem and implement that solution. Seeing that problem or solution and then deciding to work on it is essential to the very existence of a business. But a founder who believes that they see things differently than others do, and who wants to solve the problem they’re seeing, can also fall into the trap of needing control and not trusting others. This becomes more likely if their company has found initial success, because their vision and calling of all the shots have been key contributors to that early success.
As companies grow, inevitably layers must be created. Early on in a company’s lifecycle there might be 10 employees all reporting directly to the founder. A founder will probably know all of those individuals extremely well, they will know exactly what all of those people are working on, and most of those people will probably be generalists/hustlers taking frequent direction from the founder. But when a company grows to 100 people, there likely are (or should be) multiple layers of management, with only senior leaders reporting to that founder. Suddenly a founder does not have full context on what everyone is working on, and they have also probably hired leaders who are subject matter experts rather than generalists, so the founder is now significantly less knowledgeable about many areas of the business than their teams are.
It is at this stage where a founder can inadvertently fall into the trap of not transitioning from the role of “director” to “leader”. They might have a hard time delegating responsibility and decision-making to their senior leaders, or they might overly question or even countermand those leaders’ timelines and priorities. The result can be disengagement and decreased morale at best, or failure to deliver on key company priorities at worst.
What to do: listen
There’s an expression that goes something like “we have two ears and only one mouth for a reason”. In the early stages of a company’s growth, a founder has probably done a lot more talking than listening as they get their company off the ground. But to remain an effective leader, founders need to figure out how to do a lot more listening. One easy way to do more listening is to set up an anonymous engagement survey.
I’ve seen very few Series B or earlier companies that have any sort of structured, anonymous survey of their employees’s engagement. Without this mechanism, it can be really hard to know whether you as a founder are actually being an effective leader. Direct feedback from people reporting to you will only be as honest as they are comfortable with you as their manager, and therefore if you’re not a good leader in their eyes they might not be willing to tell you that. Feedback from lower down in the org, where the work is actually getting done, simply has a hard time making its way organically to the top. Weekly pulse surveys (“how did you feel at work this week on a scale of 1-10?”) and monthly or quarterly qualitative surveys are good ways to see disengagement or misalignment on company direction happening.
3. A dogmatic belief in the idea that made a founder start their company can also come with difficulty in adjusting business strategy based on new information the marketplace is offering
While difficulty listening to one’s leaders internally can be a pitfall for founders, it is just as easy to inadvertently ignore what the marketplace is saying. Before the season starts, sports teams have a plan that they think will win them the championship. But teams that don’t adjust their plans based on how the season is actually going are almost guaranteed to lose. Even D-Day in Normandy, perhaps the most carefully planned military operation and one of the largest invasions in history, was only successful due to the adjustments the planners made based on real-time information. The entire operation, in fact, was adjusted at the last minute to begin 24 hours later due to bad weather. The adjustment was so last minute, in fact, that the invasion force had already boarded ships in England and was literally en route to France when it was called off. But that adjustment, despite the tremendous momentum already going in the other direction, may have been the difference between success and failure. If D-Day needed adjustments in order to be successful, so does every company that’s ever been or going to be founded.
One problem that founders can run into is that they can be wedded to the solution they’ve built, and when this happens are often completely unaware of it. As such, when the need arises for changes in that solution, as will inevitably happen, it can be difficult to recognize. I once worked with a founder who was building an enterprise SaaS product. The product initially resulted in a number of large contracts. But for some customers, the results from actually using the product were below their expectations. It is natural human tendency to get defensive when given tough feedback, and it is also natural to suffer from sunk cost bias where it is preferable to stay the course because time and money have already been invested in it. This founder was human, and unfortunately had that reaction. They believed that the customers were to blame for using the product incorrectly and needed to behave differently, rather than seeing the need for an adjustment in the product. The result was both lost clients and an inefficient use of company resources trying to change user behavior instead of having the company focus on a different strategy based on the feedback it was getting from its users. If the company had been re-founded at that exact moment with all the information it had gotten from its users, it likely would have built something very different.
What to do: listen
I know I’m sounding like a broken record, but failure to listen to customers and teams has been the singular undoing of many, many founders who have been ousted from their companies or who simply have had their companies not achieve their full potential. The nice thing is, it’s pretty easy to do once you realize you need to. Some easy ways to listen to your customers:
Shadowing
Have you actually watched a customer get onboarded to your product and try to use it? Founders are usually much more savvy about their products than their customers are, and so it’s easy for them to make assumptions about how customers would use it or what they understand about it. In my experience I’ve always found at least some customers who have been more than willing to let me shadow them while they try to use the product. And I’ve always learned something about how they use (or don’t use) the product that has added valuable information to my knowledge about what the product needs.
Interview customers - those that are still using the product and those that have left
I was interviewing a former customer for a client recently, and the customer told me that they had moved over to a directly competing product. They had previously been using both products, but had gotten frustrated with the way something worked in my client’s product and the support team wasn’t being helpful in resolving it. Eventually they got annoyed enough that they just stopped using the product. I learned that this product issue, while quite frustrating to the customer, was actually quite an easy one to solve. It simply wasn’t a priority for the business. And it turned out that the company was losing a lot of customers to issues just like this one.
There is probably no direct substitute for talking to customers and understanding how they use the product, why they use the product, and what problems they’re having with it. Customers do not always have great ideas for how to solve those problems (that’s what your company is for), but the information you can glean from their experience simply cannot be directly replicated by you or the people in your company.
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