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The Founder's Dilemma. Business and management
"The Founder's Dilemma. With this term, Harvard Business School professor Noam Wasserman summed up the common problems faced by most entrepreneurs in creating and growing their companies. Wasserman analysed 212 US start-ups and identified the common challenges faced by the owner of a growing business in the role of CEO. "However, successful CEOs and founders are a very rare breed," Wasserman writes.
The choice between money and power? What becomes the measure of success? Which is better: to feed your ambitions, ruining your business, or to give up a high position, remaining a "loser" millionaire?
The lack of skills required for management, experience in scaling and a systematic approach very often becomes a reason for conflicts and a brake on the further development of the enterprise.
The choice between money and power? What becomes the measure of success? Which is better: to feed your ambitions, ruining your business, or to give up a high position, remaining a "loser" millionaire?
The lack of skills required for management, experience in scaling and a systematic approach very often becomes a reason for conflicts and a brake on the further development of the enterprise.
Control and ownership
Putting your brainchild into someone else's hands. This is difficult. Anyone who has set up a business and built a business from scratch, jealously watches everything that happens in their business. This becomes a problem and the first dilemma. As the company develops, the owner faces his first development dilemma. In whose interest is it to act? In his own interest or the interest of his company? Whether to attract investors who may have a different vision of the company. You have to find the strength and change your habits and stop controlling everything and everyone. Involve external investors and partners. A business development strategy depends on the motivation of the manager and the top managers. Therefore, when founding a startup, you need to be clear about what drives you.
When the web-based blogging service Blogger became successful, its founder Evan Williams was offered to sell the business. Williams didn't want to lose control of his product and limit the freedom of expression for its users, so he turned down the lucrative offer. Later, in 2003, Blogger was bought out by Google after all, and Evan Williams continued to work on developing his business in other projects, including Twitter.
Putting your brainchild into someone else's hands. This is difficult. Anyone who has set up a business and built a business from scratch, jealously watches everything that happens in their business. This becomes a problem and the first dilemma. As the company develops, the owner faces his first development dilemma. In whose interest is it to act? In his own interest or the interest of his company? Whether to attract investors who may have a different vision of the company. You have to find the strength and change your habits and stop controlling everything and everyone. Involve external investors and partners. A business development strategy depends on the motivation of the manager and the top managers. Therefore, when founding a startup, you need to be clear about what drives you.
When the web-based blogging service Blogger became successful, its founder Evan Williams was offered to sell the business. Williams didn't want to lose control of his product and limit the freedom of expression for its users, so he turned down the lucrative offer. Later, in 2003, Blogger was bought out by Google after all, and Evan Williams continued to work on developing his business in other projects, including Twitter.
The goals are short term and long term. Is there a balance?
Entrepreneurs often focus on short-term goals such as revenue growth and profitability. Businesses grow. As it scales, so do the goals. Should we try to balance old goals and new long-term objectives? How can we not slow down processes by changing the direction of the business? All these questions belong to the second "founder's dilemma". Although Apple was founded by friends Steve Jobs and Steve Wozniak, it became apparent after a while that they had different visions for the future of their business. For Jobs, the main priority was the value of the company, while Wozniak showed little interest in the financial aspects of the business.
Product or customer? Where is the middle ground?
Focusing on the product rather than on customer needs and changing market conditions can lead to failures and reduce a company's competitiveness. It is quite common for a company to invest in the development of its product and introduce it to the market without taking into account the needs and requirements of the target audience. The market is changing, competitors' offerings are updating, and customers' needs are also changing. An innovative product may be unnecessary, expensive or out of date. Or, conversely, it may already be obsolete.
Kodak was a market leader in films and cameras in the 1970s. Although Kodak developed the first digital camera in 1975, the company was unable to adapt to changing market conditions. Kodak owner George Eastman always believed that digital photography would not become the mainstream of the photography industry. Today we know that Kodak missed the opportunity to become the market leader in digital photography and lost its market position.
Entrepreneurs often focus on short-term goals such as revenue growth and profitability. Businesses grow. As it scales, so do the goals. Should we try to balance old goals and new long-term objectives? How can we not slow down processes by changing the direction of the business? All these questions belong to the second "founder's dilemma". Although Apple was founded by friends Steve Jobs and Steve Wozniak, it became apparent after a while that they had different visions for the future of their business. For Jobs, the main priority was the value of the company, while Wozniak showed little interest in the financial aspects of the business.
Product or customer? Where is the middle ground?
Focusing on the product rather than on customer needs and changing market conditions can lead to failures and reduce a company's competitiveness. It is quite common for a company to invest in the development of its product and introduce it to the market without taking into account the needs and requirements of the target audience. The market is changing, competitors' offerings are updating, and customers' needs are also changing. An innovative product may be unnecessary, expensive or out of date. Or, conversely, it may already be obsolete.
Kodak was a market leader in films and cameras in the 1970s. Although Kodak developed the first digital camera in 1975, the company was unable to adapt to changing market conditions. Kodak owner George Eastman always believed that digital photography would not become the mainstream of the photography industry. Today we know that Kodak missed the opportunity to become the market leader in digital photography and lost its market position.
Skills, attitude and values
As the business grows and the company scales, the need to hire new employees grows. You need to build a management team. Finding people who are competent in their business and who share the views and values of the company can sometimes be extremely difficult. At the start of a business, an entrepreneur has to manage a small team. New people are the new rules of management. They have to be created by analysing past mistakes. This is another challenge for the "founder" another "dilemma".
Founder and top management
Being the sole founder in a business is comfortable but difficult. Are you ready to delegate responsibilities and stop controlling part of your business? Very often business owners can't accept that someone will take over their business. Its present and future. These decisions may not be understood and some the owner may not agree with. Another dilemma is before us. The owner will have to come to terms with his or her new role, agree on profit sharing and learn to make joint decisions.
Uber's founders, Garrett Camp and Travis Kalanick, wanted to revolutionise the transport industry by creating an innovative taxi ordering platform. However, as the company grew, the owners and management had a disagreement about the company's strategy.
Camp and Kalanick wanted to continue investing heavily in the company's technological development and expansion, while Uber management wanted to improve profitability and cut costs. Conflicts between founders and management led to Camp's departure from the company in 2016, with Kalanick leaving a year later.
As the business grows and the company scales, the need to hire new employees grows. You need to build a management team. Finding people who are competent in their business and who share the views and values of the company can sometimes be extremely difficult. At the start of a business, an entrepreneur has to manage a small team. New people are the new rules of management. They have to be created by analysing past mistakes. This is another challenge for the "founder" another "dilemma".
Founder and top management
Being the sole founder in a business is comfortable but difficult. Are you ready to delegate responsibilities and stop controlling part of your business? Very often business owners can't accept that someone will take over their business. Its present and future. These decisions may not be understood and some the owner may not agree with. Another dilemma is before us. The owner will have to come to terms with his or her new role, agree on profit sharing and learn to make joint decisions.
Uber's founders, Garrett Camp and Travis Kalanick, wanted to revolutionise the transport industry by creating an innovative taxi ordering platform. However, as the company grew, the owners and management had a disagreement about the company's strategy.
Camp and Kalanick wanted to continue investing heavily in the company's technological development and expansion, while Uber management wanted to improve profitability and cut costs. Conflicts between founders and management led to Camp's departure from the company in 2016, with Kalanick leaving a year later.
Experience and consulting
"Founder's dilemmas are not a sentence. They can be managed. Don't be afraid to change, adapt to the situation, think strategically. Business creators, entrepreneurs, 'founding fathers' must be prepared to make difficult decisions, take risks, listen to the advice and ideas of others, including investors, employees and consultants.
In his book Wasserman stresses that there are many ways to solve the 'founder's dilemma'. You can use the experience and example of other companies, seek advice from experts and business consultants.
When advising entrepreneurs and top managers, PAnDiKubiz consulting company's specialists offer solutions to help them manage their businesses. We pay particular attention to modern staff motivation systems and the role of the CEO in the company.
"Founder's dilemmas are not a sentence. They can be managed. Don't be afraid to change, adapt to the situation, think strategically. Business creators, entrepreneurs, 'founding fathers' must be prepared to make difficult decisions, take risks, listen to the advice and ideas of others, including investors, employees and consultants.
In his book Wasserman stresses that there are many ways to solve the 'founder's dilemma'. You can use the experience and example of other companies, seek advice from experts and business consultants.
When advising entrepreneurs and top managers, PAnDiKubiz consulting company's specialists offer solutions to help them manage their businesses. We pay particular attention to modern staff motivation systems and the role of the CEO in the company.
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