Investors Like Ideas, But Measure You On Execution
After the idea, it’s all about execution. I often hear from investors that a great idea is necessary, but not sufficient. The most important thing is a proven team, meaning one who has built a startup before, and has experience with the execution process in this domain.
I’ve talked before about the best personality traits for a good entrepreneur, but I’ve never talked about the importance of process. Yes, even entrepreneurs need to follow a disciplined execution process if they want to maximize their probability for success.
Even though John Spence in Awesomely Simple, was talking about larger organizations, I think his concepts adapt equally well to a startup. Here is my adaptation of the key steps to ensure a winning execution in any business:
- Create a vision and instill values. The vision may be yours alone, but the communication has to include your team, potential investors, and customers. For most people the communication is the hard part – written, verbal, over and over again.
- Define a focused strategy. Limit the focus to a few critical areas that will yield the highest possible return. If your strategy has more than ten elements, it’s not focused. Not everything can be a priority. Do not spend any time on unimportant goals.
- Get stakeholder commitment. People who are not committed cannot be held accountable for delivering ambitious results. The guiding coalition must demonstrate 100 percent unity, or there will be a mutiny. The worst case is a silent mutiny.
- Align the objectives of principals. I have seen startups implode when principals were pitted against each other on mutually exclusive objectives, like adding more technology versus keeping costs down. Quantify time and cost goals early, get agreement from all, and measure results regularly to verify alignment.
- Every process needs a system. Define and use well-thought-out systems, manual or automated, to ensure repeatable success of every key process. The most basic element of every startup system is a written, agreed, and measurable business plan.
- Manage priorities. You must relentlessly communicate to all constituents the current priorities, and keep the total to a manageable number. One of the biggest mistakes I see in startups is a new and larger set of priorities every week, causing the team to lose momentum and lose commitment.
- Provide team support and training. People are your most valuable asset, so start with the right ones, and make sure they have the tools and training to deliver the results you are asking for. Don’t assume they know everything you know, or learn as fast as you do.
- Assign and orchestrate actions. Leaders must make sure all team members are taking the right actions (and behaviors) on a daily basis to deliver long-term performance. Even after all the previous steps, great leaders can’t afford to be merely observers. Lead by action.
- Measure, adapt and innovate. Things change in a startup, and things will go wrong. You won’t notice if you don’t measure. Measure four or five key drivers, not twenty or thirty things. Motivate everyone with an insatiable curiosity to make things one percent better every day (kaizen).
- Reward and punish. What gets measured and rewarded gets done. Be exceedingly generous with praise, celebration, recognition, small rewards, and sometimes money. Set high standards for performance and use the three T’s (train, transfer, or terminate) to deal with people unable to effectively execute the plan.
I’m not suggesting that your task execution will be perfect if you precisely follow these steps. There are far too many pitfalls and risks in a startup to imply they can all be avoided. But if you adopt this blueprint, it’s much less likely that when things get tough, your investors will be thinking of an alternate meaning for the term “execution.”
All opinions expressed are those of the author, and do not necessarily represent those of Gust.
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This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.