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Increase the Odds of Your Start-Up’s Success

Geplaatst op dec 12, 2013 in News

While traveling between India and the U.S. these past few months, I spent some of the long hours in the air looking back at my professional life and the lessons I learned along the way.  Each phase of my career offered different challenges, successes, and lessons, but my most exhilarating moments were undoubtedly during the start-up phases.

As some of you will remember, I headed a start-up called HCL Comnet in 1993, which incubated the idea of remote infrastructure management services.  It’s a $1.4 billion business today, with 20,000 employees, and boasts some of the best people I’ve ever worked with.

People often ask me why HCL Comnet has been successful while so many new ventures are not, and what leaders can do to increase the probability of success in a start-up.  I don’t have all the answers, but there are five essentials to remember when leading a start-up:

Create a sense of purpose. More than an idea or a vision, a start-up must be driven by purpose.  People like working for start-ups not because of the salaries or designations they offer, but because of the excitement involved in pursuing a purpose — one that challenges the status quo and promises to change the world.  That often creates the feeling that a start-up will succeed irrespective of what it does; it will survive because of the way  it does things.

Put people first, always. Start-ups make for terrific training grounds because they provide the most important management lesson: People make companies, not the other way around, and only start-ups that realize that will be left standing.  That’s why implementation of ideas such as employee first, customer second increase the probability of success.

Jog fleetfootedly. The most important demand on the leaders of a start-up is flexibility — a flexible hierarchy, flexible markets, flexible solutions…  Many start-ups begin with one idea, shift to a second, and then, move to a third or fourth before they succeed.  For instance, PayPal started in encryption and Flickr in gaming.  HCL Comnet began with building communications networks but moved on to IT infrastructure management.  If it had been married to the idea of building networks, it might never have succeeded.

What’s important is the willingness to evolve by learning more about customers.  The evolution takes place in small steps, with the organization pivoting from one plan to another, leaving one foot firmly planted in what it knows.  If you’re climbing Mount Everest, which is pretty much what you’re doing when you launch a start-up, you won’t be able to see the peak from base camp.  You navigate your way one step at a time, focusing on how to climb the mountain facing you, thinking and rethinking your strategy at each cliff along the way.

Develop a sense of timing.  Waiting for the right moment to take a decision, and holding off until then, often makes the difference between success and failure.  A farmer knows when to sow and when to harvest.  When he plants rice, he doesn’t think about the price he may get, but when the crop is ripening, he will negotiate the price.

Be patient; try not to maximize your gains at every step.  The longer you wait, the higher the value you will create.  It can be frustrating but patience is sometimes your best friend; at other times, speed is important.  Knowing the difference is critical for success.

Create governance mechanisms. It isn’t necessary to define roles and responsibilities in a start-up; everyone must be prepared to do anything for success.  People usually get excited by that. It’s like the adrenalin that pumps when you go white river rafting; you don’t know what challenges you’re going to be hit with.  You certainly don’t know who would need to do what in advance.

To navigate through the turbulence, governance mechanisms are necessary.  They don’t create rigidity, but maintain financial discipline, with quarterly and monthly reporting.  It’s akin to laying down the railway tracks to channelize the momentum of speeding trains.  They may seem superfluous when revenues are hard to come by, but it’s imperative to have them in place in order to get funding and to stay capital efficient.

These five fundamentals can provide the fuel for any start-up, but I’d love to hear your ideas on what leaders can do to make start-ups succeed. Let me know.

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