It is important in these tough times to bring into your growth company people who have experience of business life at several times your size, or have experience in the market environment you are trying to evolve into. Do you need to change your managemen
By Tom McKaskill
Your business plan needs the right people behind it to see it through. And in straitened times, a management team with the right experience is gold.
In venture capital circles, they always say that they would rather back an A team with a B product than a B team with an A product.
If you think of the risks that the VC firms take on, and the levels of uncertainty they confront in emerging markets, it becomes very obvious why. They need a team that can cope with a rapidly changing competitive landscape.
Going into a deal, they can’t be sure how the market will emerge, what other firms will enter the market, and what the regulatory and economic situation will be several years hence. So they look for a management team that can cope with such an uncertain future.
In many ways, this is the lesson for high growth entrepreneurs as well. It is not sufficient to have a great product or, even, a significant competitive advantage. While good products are key to growth, they don’t solve all the problems of growth.
In the end, you really need to tap into a wide array of good quality management experience to build an evolving business. Sometimes, it is only by having the scars of prior campaigns that we know what is likely to happen and what we need to put in place to manage our future.
What is very clear from the research on theories of growth is that the growing firm will pass through a number of major and disruptive transitions. If you haven’t been there before, you will simply be on a journey of surprise and discovery, coping as you go; but mostly doing things too little and too late.
It is important, therefore, to bring into your management team people who have experience of business life at several times your size, or have experience in the market environment you are trying to evolve into.
They can then ensure that the foundations for that growth in terms of infrastructure, channels, networks and relationship are put in place early enough to be effective. If you can’t afford to have them as permanent members of your management team, then think about hiring them as part time consultants or put them on a board of advisers.
Take time out to create a model of what your business might look like at different stages of growth. Then identify the management roles that will be needed at that point and the experience, qualifications and contacts that the ideal candidate would have.
To what extent do you have those people now, and if you don’t, what does this mean for the current management team members? Some of your current management team may simply be not up to the task. How will you handle that problem? What impact will it have on your business if you are not able to fill an essential role?
You are only protecting your future by undertaking this type of analysis. There are long lead times for getting the right people on board, and so the planning should start as soon as possible. Don’t let hope be your growth strategy.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
