Blog: Accountability – From the Beginning
Many startups are highly dependent of the development of the product. With limited cash up front and credibility at risk, it is highly important that schedules be met. Revenue commitments can only be if there a service or product to sell. Time to market can be very important and the lost opportunity by late deliveries can limit the growth or even kill a company. For robust growth assets and skills are often needed to be put in place, without customer’s commitments, by the company assuming a financial risk. If new ideas, a disruptive technology and an emerging market, are available, equity investment may be possible for the funding the company growth.
The bigger and more robust the growth the higher the risk becomes by putting capital in jeopardy. Planning and priorities become more a part of the culture and the proper perspective and perception on the company team are a necessity. As the company requires investments in facilities and products be put in place for future growth needs the performance to programs by all staff is required.
- What appears to be a modest slip in commitments at the beginning of a program can have a devastating effect on its long-term outcome. Windows of opportunity are often fragile, so a manager must be sensitive to their importance, catch them when they're open, and address them with the high priority and commitment level they require. How often I have heard, "We'll only be a month late with the product!" Unfortunately, that one month often has a tremendous impact on the big picture.
- In my experience, reasons for company failures has missed commitments and performance is in the top five.
- The result can be and the message is loud and clear:
- Revenue Down: This kills any growth plans for the year.
- Gross Margin Down: This falls so low that it will force a staff reduction.
- Profit Down: Kiss your equity goodbye has to tell the board.
- Increased Manufacturing and Engineering Expenses: Expenses will exceed budget and require actions that may end up hurting the program even more.
- Development: New program development will be delayed, hurting future company performance and pushing out the IPO they had hoped to do in eighteen months.
- Negative Cash: Cash will fall far short of plan, and that may force a private equity offering at giveaway prices, diluting the value of the stock for the present stockholders.
- Growth requires intensity and commitment to meeting goals, impossible though they may seem. Certainly management cannot permit casual schedule changes.
Although initial staff is working numerous hours and is very loyal to the CEO, they must be held accountable to their commitments. I like to and& in working with any staff, "say what you will do, do what you say, and if you have problems let me know in time to help your commitment."
It is important to recognize that in a robust growth situation people can run out of gas. There's a big difference in operating a company, than there was in validating and raising capital.
Goals must be set from the very beginning for each staff member and must be monitored on a regular basis. I know my 00 MT laws number three is often challenged but, I believe his staff that stays together will not grow together.