Startups are labour of love. An enterprenure has an idea, a vision, and they toil hard to make that vision into a reality. Generally, the startup growth is depicted in a four-step journey.

 

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It is estimated that around 70-85% startups fail at the growth stage.

 

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Source: https://www.cbinsights.com/blog/startup-failure-reasons-top/

Out of these top 20 reasons, there two reasons corresponding to teams. The third top reason “Not the right team” and the 12th one, “Disharmony on Team/Investors” constitute almost 36% of the total population. Let’s try to understand why this happens and what you as an entrepreneur can do to make sure it does not affect your dream.

Team Augmentation

The first change that happens is that you might be bringing in talent required for growth from outside. So far, the leadership team including you and your co-founders were sharing most of the workload amongst you. With the growth, you will need to re-think how much and what each of you can do to handle & propel the growth that you are envisaging. At some point you might want to share some of the leadership responsibilities with someone you bring from outside. While this is necessary, you will have to be very cautious as you and your co-founders hand-over some of the responsibilities to the new leader.

Your Cultural Foundation

When you grow from the idea to the growth stage, you build certain culture. You have some values you define for your startup. This culture & values represent the fundamental strengths of your organization & team. Your cultural foundation is the biggest growth enabler for your startup. While the new leaders bring in experience & diverse knowledge, it is very essential that their viewpoints merge organically with the prevailing culture. The way your organization works will definitely have to change, but it’s still important that those changes do not harm the foundations of your organization, on which the success has been built.

The Need for Succession Management

From the above perspective, you need to manage the transition very carefully. Abrupt shift in the organizational outlook, some of which may not be in tune with the foundational culture and values which are your strong points on which you have based your success so far, may shake the very organization and hamper the growth with possible catastrophic results. You and your co-founders should be working with these new leaders to make sure they understand the cultural foundation of your startup and can identify with those values in organic manner. In that sense, the succession management in startups is as important as it is in larger organizations.

Formalization, Process Orientation & Organizational Design

When you are in initial stages, your organizational design will be very free-form. The communication will be more horizontal with bare minimum processes. The team will be mostly comprising of generalists, who can perform different functions as the need arises. As the work starts increasing, you will need to look at division of work and having specialized functions. The overall organization structure will become more formal, the communication will be vertical and there would be stricter and structured processes.

Increased Communication is the key

These changes may make some of the old team members a bit uneasy. First, they will have to manage the change coming from top. On top of that, there would be changes happening at their level too. They will have to change their working habits, will need to get accustomed to communication boundaries & processes. As a founder, you need to make sure you keep all your communications open & continuous with the team. They need to feel secure with the new changes, they need to feel that they are still valued. You would want the new leader to take most of the responsibilities in the way organization would function henceforth. But that does not mean you need to discontinue engaging with them. Remember, more than anything else they put trust into you, your vision. They stuck with you when the organization you started was taking it’s baby steps. It’s your responsibility to make sure they are still aligned to the vision.  Making sure that organizational aspirations are in sync with personal aspirations is best motivator for startup team.

All said, it will be an exciting phase in the life of a startup. This is when you will start reaping the fruits of your labour. If this phase is handled effectively, you are truly on the path of success. We wish you all the best!!