There are startup founders without the money to be the CEO of their venture. This is the case of this startup whose leader, without vision or values, led the entire organization to fail.
“There are no processes. Basically, we tell ourselves we’re building an AI robot, but no one at the company has done anything to research the relevant certifications and safety regulations that would allow it for personal use. Why would they do it? The CEO doesn’t see it as a priority. «
Zack, the CTO and project leader of this seemingly exciting tech startup (let’s call it ABC Inc.), shakes his head dejectedly.
Even on the grainy Zoom screen, I could see small lines furrowing deeper between his eyebrows as he frowns in genuine concern.
“I honestly don’t know how we’ve managed to raise $5.6 million so far.”
I wasn’t surprised. However, I was quite disappointed to hear the issues Zack was raising about this company, as I had high hopes for it.
Zack has been a close friend for a long time. I still vividly remember his enthusiasm during our conversation six months earlier, when I had just started this new role.
Fortunately, this was not a project that had been presented to me to raise capital. I had the unique opportunity to hear about the intricate inner workings of the company from Zack and a couple of other C-level executives on the leadership team.
As a startup that was established only 4 years ago, ABC Inc. is not a small company.
They have more than 40 employees to date: their C-level management team (CEO, CFO, CTO, COO), finance, human resources, and a large team of at least 25 technicians.
The good news is that they have managed to raise a relatively large amount of grant funding from the government and early investors, despite being a fairly early stage company with a lot of research and development.
However, the not-so-good news is much more significant. While their highly innovative concept may overcome the disadvantage that they have yet to generate revenue after almost 4 years of R&D, there is one fatal and inexcusable flaw in the company: Founding CEO John.
But first, let’s reflect on some of the glaring problems that have been identified.
When Zack started at the company, he quickly realized (to his horror) that there was absolutely no documentation, processes, or systematic approach of any kind.
In both the hardware prototype and software platform aspects, it is almost impossible to track the progress of what has been done, what has been modified or updated, and what the next steps are.
For example, any technical staff or even other employees could order the parts they deem necessary for the prototype, without adequate evaluation of the different types or costs. While John had insisted on a “flat hierarchy” in which all team members report directly to him, no one finds the need to discuss purchases with him.
For the finance team, it was a nightmare to track and justify the expenses to build this prototype.
For Zack as CTO, it was a whirlwind of random, untraceable actions that sprang from each team member, like mushrooms in a park after a rainy day.
Without structured processes, the business is likely to become a chaotic trail struggling to achieve any form of scalability.
As my greatest hero, Nelson Mandela, says,
«Action without vision is just passing time,
Vision without action is simply daydreaming,
But vision with action can change the world.”
This company did not have a clear vision.
Prototype designs would be modified over and over again, with no clear definition of what an MVP is and no deadline for when the MVP would be ready.
Part of Zack’s role is to implement processes and target dates so that milestones are met, however, it seems like every week something new comes up that would change his end goal.
I asked Zack: “What is the final commercial version of this robot supposed to be like?”
Zack’s response was what he experienced: John would have a changing vision of what the prototype should be from week to week. This caused a cascade of problems for the team.
Some technical staff would find out too late that they had been working on a version that has now been out of date for a week.
Nobody knows who has the most up-to-date version of the prototype.
To make matters worse, there was often a misaligned interpretation or understanding of certain milestones.
For example, half the team might have a different interpretation of an MVP, meaning that it is a prototype of their robot that can move on its own, and the other half of the team would think that an MVP means that it can understand and respond to humans. commands.
Beyond the MVP or the final version of what this product will look like, the company does not have a clear, well-defined long-term, “big picture” goal.
As my advisor often says: “If you don’t know where you’re going, how will you know when you’ve reached your destination?”
Without a well-defined mission and core values, one would struggle to build a successful and long-lasting organization.
These are the essential foundations that constitute the pillars of a successful company.
When I asked Zack and the other C-level executives what their core organizational values and mission are, they have no idea. It wasn’t because they hadn’t pursued it, but it was never mentioned or discussed at all at any point from their initial recruiting phase until they are now essential players of the central leadership team.
None of your coworkers and team members have a clear understanding of what the company’s values and mission are.
Values are the beliefs of the organization and therefore create the principles and rules that underpin the philosophy and culture of the organization.
The mission defines the purpose of the organization’s existence: why it does what it does.
The organization’s values and mission are often an extension of the founder.
Even though John had initially given him a spiel about the importance of Zack’s role in “keep the technical team online”his subsequent actions, and the technical team’s responses are not aligned with this alleged statement.
The response from the technical team was rather unenthusiastic. None of them were interested in tracking their work, documenting their progress, or following the processes and timeline Zack had recommended.
Comments like “This is how things are done at ABC” either «If processes are so important to you, you should do it yourself»are often what Zack gets from the technical team.
Initially, Zack thought it might be due to the fact that he’s the new kid on the block. But you soon discover that others in leadership roles, such as the CFO and COO, would encounter similar reactions.
While some of these answers were delivered cheerfully and Zack maintains an excellent relationship with the team, the fundamental problem lies in his unwillingness to adapt to a more structured organizational system.
Zack soon realized that those comments were no different than what John would say.
“A fish rots from the head down.”
John’s general philosophy was: “Just do shit.”. He didn’t really care nor did he have time for hugs and cuddles for the team.
This philosophy permeates how you lead, what you say, how you talk to the team, how the entire company operates, and ultimately, the company’s culture and philosophy.
Zack’s team members trust him a lot, as he had established a relationship and trust with them.
As Zack spends a lot of time with his team members, it became clear to him over time that there was also a lot of dissatisfaction, as many of them put in long hours into the night to get their work done and often felt undervalued. .
However, from John’s perspective as a founder, this was expected.
After all, a startup is about being driven by passion, and working beyond regular hours was expected.
Instilling passion-driven inspiration in your team is certainly encouraging and highly effective. However, there is a method for its application.
As Zack began to describe these problems in the company, I came to understand that the lack of processes, the lack of an organizational vision, clear and well-defined values and mission, and the lack of a great team culture, were not the main problems. .
All of these problems are the collective consequences that arise as a result of a founder who is ineffective at leading his own organization.
As the saying goes, “There are no bad teams. Only bad leaders «.bNot all founders are cut out to be CEO.
Of course, in the beginning, as a solo preneur and startup founder, you may have to wear many hats and pull out all the stops until you can bring in great team members to delegate tasks to.
The roles of a founder and a CEO are substantially different.
Generally, founders are visionary, progressive, and often living in the future with their creative ideas and pioneering imaginations.
CEOs tend to be in the present: they excel at leading the team and managing the company’s progress by executing strategic and tactical steps.
John, the founder of ABC Inc., fits the description of a founder perfectly, but not a CEO.
In his previous career, he was a manager at a large global electronics corporation.
His attitude towards this startup he founded is:
They are an agile startup, unlike inflexible corporations
This is the “flat structure without hierarchies”, that is, everyone reports to you (including the technical team)
He believed that by giving the technical team the “freedom” to do whatever they wanted, their progress would not be stifled.
While there is a certain degree of truth in providing flexibility to team members to operate at their optimal capacity, the lack of foundation and structure in the organization ultimately led to the aforementioned problems.
These critical foundations must be established by the founder, as the leader of the organization.
The central problems of this startup can be compressed into these two points that I summarized for Zack:
Either John lacks clarity in his own personal values, mission and vision (hence the lack of clear and well-defined organizational values, mission and vision)
EITHER
He simply doesn’t care enough to deal with the glaringly obvious problems within the company, thinking that these are problems for the leadership team to deal with and not his own.
Maybe it’s both.
Either way, these two issues must be addressed immediately, or the organization will not prosper.
As the leader of the startup, John has responsibility for everything that happens.
To quote Jocko Willink and Leif Babin in their book Extreme Ownership: How US Navy Seals Lead and Win:
“There are only two types of leaders: effective and ineffective. Effective leaders who lead successful, high-performing teams exhibit extreme ownership. Anything else is simply ineffective. Anything else is bad leadership. The leader must own everything in his world. There is no one else to blame. The leader must recognize mistakes and admit failures, take ownership of them and develop a plan to win.”
