It’s that time of year when I run errands in the morning, eat dinner in my car, & spend more time at the University than I do at my house…that’s right…it’s the second half of Winter Semester at the University of Michigan (UofM). During this time, both partners at RPM Ventures teach classes at the UofM. Marc’s class, “Venture Business Development”, is taught through the Center for Entrepreneurship at the College of Engineering. It’s a two week intensive course where students work on teams to evaluate a real business idea – everything from developing an elevator pitch, to rapid prototyping, & talking with customers.
Tony’s class “Managing the Growth of New Ventures” is taught through the Ross School of Business to second year MBA students. This course takes place once per week for half a semester and is co-taught by Tom Porter. This year is my second year involved with this course & my role is basically the person who does whatever needs to get done to be helpful. I found articles for course readings, grade homework, track participation, take attendance, & brainstorm ways to improve the course for future sessions.
This week’s class included introductions and a roadmap for the course, as well as a discussion about the five stages of business growth.
- Take Off
The class focuses mostly on the first four stages, building a company from absolutely nothing to a company and navigating the stages of growth along the way. There is so much more than building product when building a company. Building team is equally if not more important. Team, culture, strategy, are the less glamorized aspects of starting a business, but so important. In this first class I pulled away a couple reflections:
Know Thyself & Discover Wealth
As a leader of a company, being able to be reflective & introspective about your role with the company is very important. In light of my recent unplugging & reflecting on so many things in my life, this is especially relevant. During quiet time to thing about life, interests, passions, I learned a lot. In an organization, for a CEO or leader, it’s important to take that time to pause & reflect on what you’re doing from a high level & ask yourself “am I the right person to be doing this or could someone else do it better?”, “would I be better suited somewhere else in the organization?” “would I add more value somewhere else in the organization?” because someone who may be great at creating and figuring out if something works may not be the same person who takes it from 10 employees to 50 or 50 to 100 and scale the business into the next stages of growth. Think of companies where the CEO/Founder has been the same throughout all stages…it’s very few…Mark Zuckerberg, Steve Jobs, Michael Dell. Being abel to figure that out as a leader is very important.
When thinking about a leadership role in a growing company, I think there are two aspects to consider:
- Role, in terms of what functions you are best at doing. Where do you add the most value? Where do you thrive? Is it the operational details, making sure money is the bank, paychecks are sent out, wheels are turning day to day. Or are you more strategic, thinking about where the company is, where it’s going. Are you great at graphic design? etc.
- Stage. What stage of growth is your paradise? What time during the company do you want to be there? When the company is 3 people with an idea & lots of ambiguity? or when the company has 100 people with more developed systems & lots of names & faces to remember? Holding your role constant, if you’re doing the same role in a 10 person company, it’s going to be different (even in that same role) than in a 100 person company.
I don’t think you need to figure out one before the other. For me, I’m still trying to figure out what the function is optimal for me & even more broadly, what industry, general space interests me most. What’s the space? What makes me tick? Now I have several interests in broad areas & am exploring them further to discover what really could be right for me.
In terms of stage, I like the early stuff…the ambiguity, figuring things out, the creation, having a blank canvas. I’m energized by a small team, setting the culture, & taking on the start of something with big plans. in a small team.
Another thing that came up when discussing the 5 stages of growth was this idea of transitioning from each stage, when you need to transition leadership. Let’s say a leader isn’t a right fit in a company that is going from Survival to Success & that leader could better be replaced by someone else to lead the company, & the original leader could be better off somewhere else in the company (with a different role perhaps). For the original leader it’s tough to make this transition…this is his/her baby, his/her creation. It’s very difficult. I’ve experienced this personally with Iorio’s. Just two weeks ago was the first time handing the reins over to someone else to run Iorio’s Gelateria in Ann Arbor. I think our delay in transitioning leadership has limited our growth because things are funneled to go through few people & there’s not breakup of decision making at a higher level. My biggest challenge & opportunity is preparing transitions so the company can successfully operate without the presence of the founders & early leaders. The first experiment for this went well. Transitioning leadership also illustrates the importance of hiring people & building a team of people you trust. It makes it a smoother transition if you trust the person you’re transitioning to.
I have also seen this play out in RPM Ventures‘ portfolio. In particular, there is a company where the CEO is doing a lot of operational/day to day things that maybe he doesn’t have to bother himself with. If he brings in someone else, he can step into a more strategic role, which is what he loves & is really good at. For instance, he could spend more time on things like product, vision, & leading the team in that direction.
Transitioning leadership is a common thing for companies. Though not just high tech, as Iorio’s is a great low tech example, it is prevalent in high tech as well.
What does this all mean?
When starting a company, think about how you are going to work yourself out of a job. How do you develop a company, build a culture, put systems in place, that will exist without you?
Sometimes the best thing you can do is pull yourself out of your company, or take yourself out of your current role, & do something else.
Have you ever transitioned leadership in your company? What did you learn? Do you think your company is ready for a transition? Is your current leadership team holding your company back? I’d really like to hear about your experiences!
MEL aka Venture Gal