Acting like an owner or some version of this ambition is a value that many founders try to instil in their teams.
And like most values, there is an assumption that team members (including co-founders) will automatically understand and embrace the ideal. While this rarely happens, I think there are three reasons why founders continue to commit to this assumption.
First, founders have been living their company values in their minds for a time. It is often months, if not years, from the time that founders start working on a business model to when they onboard their co-founders and first team members. During that time the values they want to have in their business are being subliminally formed and locked into place. The issue is that they are only intimately understood by the founder.
Second, founders believe (and hope) that they have hired outstanding people. As a result, there is an expectation that they will be quick studies about product, marketing and distribution, to name a few. While this might be the case, even the smartest people in the room will find it tough to understand the intricate details of each company value fully.
Third, the values are written on the wall (literally), on business cards and on email auto-signatures. Founders believe it will sink in eventually. Don’t laugh. Unfortunately, this is a thing.
It’s for these reasons that all team members should be invited to conversations to interpret and understand company values. And if there is one lesson from this post, making time for this conversation is non-negotiable. I write this knowing that I once thought ‘who has the time for this’.
Acting like an owner
I’m going to using ‘acting like an owner’ as a case in point. While it is a behaviour applicable to any team member in a new or growing venture, it is also, in my opinion, the one value that can deliver a force multiplier effect to founders and shareholders.
Acting like an owner means making decisions similar to those that a founder would make if they were in the room.
And ‘similar’ is the operative word.
When I explain the value of acting like an owner, I use a ‘de-risk, leverage and stabilise’ framework.
These three words are the themes that often underpin the work being done in pre-scale ventures. In other words, from the time a business model is conceived to the moment the team feels they are achieving product/market fit, startup teams should be focused on three types of work.
The subtlety that I also explain is that this framework is always front of mind for me. And it guides much of my decision-making.
This not only strengthens the relationship between my team and me, it also helps them understand how they can make decisions when leaders aren’t in the room.
De-risking involves eliminating uncertainty. This relates to how products are built and distributed, how supply chains (will) function, how the business will be financed, how the product’s core message(s) will be received and how regulation plays a role in getting to market.
The idea is that the more you can be sure that an input to the business is well-known and will remain predictable for a given period, the more ‘de-risked’ that input is.
Given the number of moving parts in a venture, I ask team-members to achieve relative certainty. This encourages the team, and particularly new hires, to strive for high-quality confidence without seeking perfection which can lead to an over-engineered outcome.
De-risking is often best put into action when prioritising tasks that exist on a spectrum between ‘interesting to know’ and ‘essential to grow’. Work that creates predictability and value for your customers de-risks a business model. Work that answers questions that are interesting to know is a hobby.
Leverage is the use of something to create the maximum advantage. Depending on the context of your venture, leverage could be a track record of customer growth or novel data from scientific studies, to name a few.
For those looking at a venture from the outside, they are looking for results that speak for themselves for two reasons. First, partners and customers will want to be confident that engaging with you is based on more than just intent. Second, hand waving and selling your religion will only go so far.
In fact, I think it’s never been easier to determine if a venture has any real substance behind it or not.
When it comes to acting like an owner, doing work to create leverage is essential. And because most team members in startups have a degree of creative licence in their roles, the question you want them to ask themselves (and their teammates) is, ‘will what we’re doing contribute to creating leverage with [insert customers, partners, investors or regulators]?’
It’s not enough to de-risk and create leverage. Because as soon as you do, a new expectation about growth will emerge.
At the very beginning of the journey, when you don’t have a product, isn’t the time focus on stabilisation. However, as soon as you have a minimum viable experience that people start to love, your team needs to start thinking about how they will stabilise the product and business model.
Let’s unpack this a little further.
You sell software as a service to other businesses.
A customer is inspired by your pitch and buys.
You know you’re not ready, but you find a way to deliver.
You were always pushed for time, but now instead of you hustling to close sales, you have a customer recommending your product.
The inevitable dilemma founders now face is to either stabilise their product so that a few customers derive even more value (and as a consequence sing your praises more widely) or use the leverage with the first customers and invest in selling the product that is held together with duct tape.
Some will argue that a tradeoff doesn’t exist and to do both.
But like most things in a startup, decisions like this are rarely that binary.
The fact is that a stable product enables scale.
And the question each team member should be continuously asking is, ‘if our customers or users doubled tomorrow, could our product handle that load?’
This question often changes how teams think about their company and how they build scalability into their products.
One last thing…
The safest assumption founders can make about how their team will embrace values is that they won’t. At least not in the way that the founder hopes.
Invest time in debating scenarios for each value so you can learn how different team members think about each value. This applies to co-founders and your board just as much as it does to junior hires.
I always start with is ‘acting like an owner’ because of its force multiplier effect. It also creates a framework within which team members can act and reflect.
Focusing on de-risking, leverage and stability also helps to focus the team’s intent and curiosity.
Chaotic environments demand high-quality decision making to stay in motion on the mission. I’ve found this framework useful to scale decision making across businesses, and I hope it helps you too.