Evolution of a Startup

Have you ever wondered what it's like to be at a startup? Maybe wondered why you hate the red tape so much? Or heard the phrase "take business to the next level"? 

I'm here to share the details behind what business levels exist and questions to ask when looking for a new job.

Here's the nitty gritty: 

Corporations have patterns and many can be boiled down to lifecycles where there are things that the company is focused on. Ichak Adizes articulates this in his book " Corporate Lifecycles: How and Why Corporations Grow and Die and What to Do About It".

Knowing these patterns and what the company is focused on will help you ask questions during the interview and ensure what is important to you, or your innate tendencies will thrive. I will go over the first 5 stages and questions you should be asking in your interviews. 

1. Courtship: This stage is called courtship because the founder flirts with the idea of starting a business but hasn't taken any concrete steps. To get to the next stage, a founder needs the courage to take a risk and commitment to follow up on that idea. 

• Questions to ask:

  • What actions have you taken to put this idea into action? 

  • What is the timeline to secure funding for my position for X period of time? 

  • Who else knows of this idea?

  • What business plan have you created? 

• Biggest Danger is an Affiar:  A business can die before it's even born if the founder doesn't commit and abandons the idea.

• Who does well in this type of company?

  • Individuals willing to take a risk to join something that is only beginning. Thrill seekers, those that have ideas and want to take charge. 

2. Infancy: This stage is called infancy because the founder doesn't have time for personal life because the business that needs constant attention is like an infant. Decisions are crisis-driven. There are new problems every day so rules and best practices are created along the way. Energy is high, consistency is low. To secure positive cash flow, long-term planning takes a back seat. Everyone is busy trying to keep the business afloat. Firefighting is the way of life. Each day brings unique situations that require creativity and the ability to make decisions quickly.

• Questions to ask:

  • What kind of sales have you had in the last 6 months? 

  • What are your cash flow projects for this year? 

  • Who is the founder and how much time are they dedicating to this?

  • How long have you been "fighting fires"? 

• Biggest Danger is Infant Mortality:  There's a great possibility the business will die due to a lack of sales or commitment from the founder, negative cash-flow, or if the company stays in infancy too long (at which point people will give up due to continuous pressure and no compensation).

• Who does well in this type of company?

  • Individuals who are willing to live in a fast-paced environment working on crisis after crisis each day. 

3. GoGo: This stage is called GoGo because the business tries to chase every opportunity it gets and has trouble staying focused. People are spread thin due to all the work. New people are introduced but there aren't enough processes to coordinate everyone. Work gets sloppy and quality suffers. Founders organize the company around people rather than functions but keep interfering in everyday work. They keep trying to run everything but they keep dropping the ball. They need to hire their first managers and offload control and decision-making.

• Questions to ask:

  • What kind of managers do you have in place? 

  • How involved is the founder in everyday business? 

  • Do you have a RACI?

  • What is your target audience for sales? 

• Biggest Danger is the Founder’s Trap:  If the founder doesn’t delegate control, the company's growth becomes limited by how many people they can personally manage. The founder ends up a bottleneck. They have to decentralize decision-making so people can pursue initiatives without having to ask permission for each and everything.

• Who does well in this type of company?

  • Individuals that thrive in a selling environment. Those looking to step into management and be quickly promoted within. 

4. Adolescence: This stage is called adolescence because the company is in constant conflict and confusion, like a teenager. During adolescence, the company suffers a temporary loss of vision due to conflicting attitudes. Too many projects are started in the Go-Go but few are followed through. So the new management’s first job is to consolidate existing projects and reorganize. They also need consistency and a way to measure progress. So, they introduce processes. New leaders put in place usually can't agree on a direction and what risks to take initially. But once they resolve their conflicts, the company reaches its prime.

• Questions to ask:

  • What are the priority programs/projects for the year? 

  • How are leaders aligning on programs each year? 

  • How do you manage risk as a business?

  • What is the founders 5 year plan for the company? 

• Biggest Danger is Divorce:  If management can't resolve their conflicts, one of the two things happens:

  • Unfulfilled Entrepreneur: Professional managers leave the company and the company stops growing, thus failing to reach its full potential.

  • Premature Aging: The founders decide to retire or sell the business. Administratively-oriented technocratic managers take over and cut costs, which briefly improves profit. But then they run out of ideas. Without a creative energy and founder's vision, the company stops growing and stagnates

• Who does well in this type of company?

  • Individuals that don't need clarity to get the work done. Realize this is just a phase and those willing to align on a vision with the founder and management to get the work done to get to the next phase. 

5. Prime: This stage is called prime because everything comes together. When the management and the founders settled on a clear vision, magic happens. Efforts are disciplined yet innovative. The company is agile and produces results consistently thanks to strong processes. It has the same energy and aggressiveness as in the days of Go-Go, only it's much more predictable. Due to having more people, it can accomplish more, do it better, and make gains in efficiency due to the constant improvement of processes. The management has a strategy for improving services/products and employee satisfaction. Companies in their prime have trouble finding talent because their standards are high and they need a lot of people. At this point, they start developing talent in-house instead of relying on the outside.

• Questions to ask:

  • What is the vision of the company (make sure to ask each person you interview)? 

  • How are you documenting processes to ensure alignment between work done with employees? 

  • Where is most of your talent sourced?

  • What is your strategy to improve services and products? 

• Biggest Danger is complacency:  A business without innovation will eventually die.

• Who does well in this type of company?
  

  • Individuals who like the processes and procedures to do great work and like the buzz of the GoGo phase. Most processes will be defined, yet still room for improvement as the company grows. 

Look for the next article in this series. We'll talk about the next 5 stages and questions to be aware of!