Since the publication of Les Propheties, Nostradamus has attracted loyal followers that, along with much of the press, give him credit for predicting major world events.
Had Nostradamus been into business prophecy, he would have predicted that Steve Jobs was a bad model for a startup business. I know, if you’re familiar with my CEO, I’m in danger just by writing that opening line. Nostradamus’ predictions have always been controversial, but I would like to share some points for you to think about.
The reason Nostradamus would have predicted that Jobs is a bad mentor is one word - control. I know, it worked for Jobs to have final say over all products. But it’s rare that I’ve seen this approach succeed when companies grow over 25 people. The odds are against you and, let’s face it; the odds are often against you in business. Why make it harder? The patterns I’ve seen and the experience I’ve gained while consulting with CEO teams is simple: you can control all decisions to a point – and after your business grows you’ll face issues that are better solved by someone other than a controlling owner, founder, or leader. This usually happens around 25 people.
It might go like this. You form your example company, Barry’s Business Solutions. At your startup basecamp you create great product and figure out your market. You continue to grow and - by innovating and adjusting your great product, you gain better market relevance and increased revenue. Then you reach 20-25 employees and the issues begin to arise.
As leader (or founder) you must now shift your mindset from growing great product or service to building great management and leadership. This is your new priority. When you begin your company, there is no management. This works really well. At under 20-25 employees the business was not really structured - everyone reported to Barry, the founder. It’s a flat organization.
This flat organization chart approach may serve you well up to 25 people, And it’s much of what Steve did even as Apple got larger. He gave you the assignment, sent you off to gather data and do testing, and then you came back to present it to Steve for him to make the final decision.
What seems counter intuitive to most entrepreneurs is this: when lack of business structure fails … it’s like an imploded building and fails all at once. What worked at 25 employees could become disastrous at 29 employees. This is why Steve is a bad model for most startups.
When you grow to 25 or more employees, create structure. Follow simple, proven patterns for management and alignment. Each team member should know who their manager is (only one) and every manager needs to know his or her direct reports. Move fast on two objectives to create clarity and simplicity:
- Clear reporting structure. Ensure that everyone knows what it is, and if there is an addition to the team, everyone knows how that happens.
- Mitigate common growth-company mistakes.
- Senior Executives. When your company is less than 25 employees the best pattern is to avoid paying for senior members. Besides the impact on your financial war chest, senior people are used to having support services and people to help them get the job done. At less than 25 people you only need team members that get stuff done. A willingness to work hard and aptitude matter most. This all changes when you have over 25 employees. Now you should consider hiring senior players in strategically key positions. Hire these people well (skills, core values, initiative, culture fit, etc.) and you’ll celebrate the results.
- Army of ONE. This is anyone in your startup who (with good intentions) leads by example. They work long, hard hours to set the example. Their workday grows from 10 hours to 12, and then to 14, etc. as the company begins to grow. You notice that they have a discomfort in delegating to others. They won’t stop and hire people and they won’t train the ones you have. The argument is that if I stop to train then we’ll fall behind. You must break this army of one into a team. It will be painful. You’ll have to determine that getting behind is OK because you must fill the gap, train the people, and then calculate how long it will last (based on growth rate) to plan your next round of hiring and/or training. This approach ensures that growth in this department is now sustainable.
- Delegation. Closely related to the above. Steve Jobs would send you off to investigate and return to present options and then he would make the decision. That’s why Nostradamus would have told you Steve Jobs is a Bad Model for Your Startup.
- Align. It’s pretty simple to communicate and align when your company has less than 25 team members. Over a quick delivery pizza in the break room you’re able to tell them how you think, why certain decisions are the right ones, and pass on some of your core values. Since this can’t be as easily (or often) done as you team grows, you should document how you do things and why you do them. At a minimum, a culture book helps you pass on the right stories, accurately, outlining how things have been done and why.
- Human Resources. You should ignore an official HR position in your startup but you’ll find it a mistake to ignore after 25 people. People are our most important asset may be a sound bite but hiring professional HR help is proof. Good HR will help you with clear structure in your organization (see #1 above), a path for careers, and performance feedback. Clear 13-week priorities and weekly adjustments allow for regular feedback. If a team member is failing, this should be a path to set them free for new opportunities and if succeeding well a path for career growth and/or increased compensation.
- Compensation. In the beginning, compensation is whatever each individual negotiates and is often all over the place. As you grow over 25 employees it can feel helplessly corporate and HR can help you set salary or compensation bands so individuals at each level are treated fairly. At some point your team will talk and if salaries are all over the place it can lead to team meltdown and disaster. Having the bands in place early helps entrepreneurs be fair and saves a lot of future negotiation.
Nostradamus’ predictions have always been controversial and I knew that they would be for you, here, in this article. Especially when many of you picture yourself the next Steve Jobs. Nostradamus predicted Steve Jobs as a bad model for your startup and I’ve shared a few proof points. For those with less than 20 employees, tuck this away for future reference, if you have 20-30 employees, move fast on the above list, and if you have more than 30 employees watch here for future predictions from Nostradamus.