Blog: Managers Match
There’s a general feeling that all the presentations I sit through with entrepreneurs raising money, it’s implied the founder entrepreneur is going to take the company to a point that is successful, success being when everyone is getting a payback for their investment, in dollars and time. I can say that in my experience of startup CEOs, the majority were not there when the company was a success, as they had been replaced especially, when success requires tens of millions of dollars of revenue.
With the majority of successes taking five to ten years, a person changes quite a bit.
There are many styles of management in running a company, and in many cases a different style of management and personality over time are required to drive a successful company.
Referring to startups, the original entrepreneur in most cases has a new experience and needs to reach a different mentality, then their previous experiences. A startup CEO must be conditioned for: robust growth, staying in of the market and each day running the biggest company that ran in their career.
There’s a significant different phase after the validation and money raising.
CEO has to run a total company although it’s a small business at first, and therefore has to concentrate on cash availability from the revenue stream.
It is important that the investors and most likely the Board of Directors have to be very aware of what is needed during a certain period of growth, and whether or not the original CEO/entrepreneur is capable of continuing to drive the company.
In my long experience I’ve encountered situations where the CEO was required to react to unexpected changes, not only growth was needed.
To keep the company going on and on trying to attain some significant goals related to growth, there may be periods where a different style management is required to keep the company going. It is very unusual when a manager can be effective in all of the stages listed.
There are many styles of management with the best chance of success, a CEO is matched to a company’s needs. Following is a list of companies in various stages.
It is very unusual when a manager can be effective in all the following stages listed:
- Start-Up – An entrepreneur mentality is needed related to management and therefore it is important to get coaches and mentors on the team as soon as possible.
- Robust Growth – The CEO will constantly be under extreme pressure.
- Small company – The CEO needs a businessman mentality and cash availability is important.
- Big company – CEO becomes Budget Manager, and needs establish numbers and making them to happen.
- New Division of a company – CEO needs to be a seasoned manager to control acquisitions and mergers, if needed.
- Flat Revenue period – CEO needed to be a caretaker.
- Turnaround situation – CEO has to be a specialist and use to the word “no.”
- Self-style – CEO has to do a lot on their own.
A manager great at caretaking is unlikely to succeed as an entrepreneur because they’re not willing to risk their own personal fortune and/or work 70-hour weeks.
A manager great at robust growth with vision would get bored with caretaking or turnaround.
A manager great at turnarounds, who can live by saying no to excessive requests might fail at high-risk situation.
A manager successful in a self-style business, with personal financial goals and family as a priority, could stumble when situations require customers’ and employees’ needs to come first.
General managers who are successful in a large company by working to budgets may fail in running small company where cash is king.
The key is recognizing when changes are needed, and it is important to make the change before it’s too late.