Monday, April 11, 2011

Lesson #15: Hands-On vs. Hands-Off Management of Startups

Startups have so much work to do, that it is typically much better to hire a smart management team, and let them do their jobs in a hands-off kind of way.  That does not means letting them run entirely unmanaged, as you should at least have weekly update meetings with your team, both individually and as a group.  But, it does mean letting loose the reins, once you are sure you and your team are sailing in the same direction.  A hands-off style allows the business to be more nimble, making quicker decisions, and also instills confidence in your team, that you trust them to do their jobs, and they will certainly appreciate not being micro-managed.

This is particularly true when dealing with start-ups, where you are in a race to win market share and client adoptance as quickly as possible.  I always tell my team, I would rather you get it right 90% of the time, and move at light speed on your own, than to get it right 100% of the time, and rely on me for input, which slows down my own work efforts.  Or, said another way, if you can deliver an A- result in one week of effort, that is much better than an A+ result in two weeks of effort, given the diminishing margin of return on that extra 50% of work time.

That said, there are a few times when a hand-on style is required.  The first time while you are still learning the business.  It is critical you have a deep understanding of all aspects of your business, to ensure that all input you are getting from your team makes sense and is justified by your own experiences.  For example, when I was a first-time CEO, I had no experience in running different areas of a business, like marketing, technology and operations.  So, I hired team members with deep experience in these areas, and relied on them to make key business decisions in those areas.  The problem was, their experience only revolved around big companies, not startups which required different skills.  We made a lot of mistakes in those early months, and we could have saved lots of money, had I been more hands-on right from the start, until I had a firm grasp of the key drivers of the business.  You never want to be in a position where you are getting advice from your team, and don't know whether or not what they are saying is the right advice, or at least credible based on your own personal experiences with the business or otherwise.

The second time a hands-on style is required is when things start going wrong, which will require you to come in like a "fireman" with water bucket in hand to put out the fire.  I typically use the three strike rule, before resorting to this hands-on involvement.  The first time the mistake is made, a simple communication and guidance should be sufficient to resolve the problem.  The second time the same mistake is made, a little firmer communication and a warning that the next time it happens, you will have no choice but to get more involved.  Then, after the third time the same mistake is made, you will need to jump in and try to resolve the problem directly.

But, overall, a hands-off management style typically rules the day, assuming you have hired the right team with the right skills to get the job done, and you are comfortable in your own core knowledge of the business requirements.

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