Tag Archives: bottleneck

I’m published by Harvard Business! “Are you the bottleneck in your organization?”

Hi all!  It took a while but (a small sliver) of my Fulbright research on entrepreneurial decision will see the light of day courtesy of Harvard Business Online.  Here’s a snipCelebration baby!pet:

“You may be the reason your company isn’t growing. You are micromanaging — and it’s stifling the organization you are trying to build.  Our research tells us that the very management style that enables a founder to get a company off the ground — a zealous focus on tactical execution — often derails growth down the line. Lost in the heat of battle, many entrepreneurs fail to adapt their management style to the evolving needs of their growing organizations…”

Check out the article over at HBR to see what the 100+ seasoned venture capitalists and serial entrepreneurs we interviewed said about how to balance growth and control.  Or check it out because you want to know what the heck I was doing in Italy for nearly a year!  Either way, let me know what you think and thanks for clicking!

Be well!

Brett

PS.  If anyone is interested in seeing the rest of my research, I would be happy to send it to them!

The CEO Question: Interview with Aris Constantinides of NBGI Ventures

Yesterday, I sat down with Aris Constantinides , founder and Investment Director of NBGI Ventures- a leading U.K. venture firm focused on investing in medical technologies. I wanted to get his thoughts on whether or not founders become bottlenecks in their own organizations. His response:

“Do founders often become bottlenecks? Actually, it’s the norm. The question is why.

Find below Aris’s thoughts on why so many founders get in the way of their own success, including seven questions VCs and entrepreneurs can ask themselves to avoid sinking their own ship. Thanks Aris!

The primary reason founders become bottlenecks is personality. Many founders just can’t let go.

In the beginning, founders run all aspects of the company. What makes the good ones good is their ability to let their organization grow on its own. The founder himself is no longer the center of everything, but plays the functional role to which he or she is most suited. For example, a scientific founder may turn into a chief scientific officer or chief evangelist. More often than not, this is what occurs. It’s not that founders outlive their usefulness; it’s just that the role for which they are best suited often changes. Our founders are incredibly passionate about the technology and are usually the best people to have in the market. We absolutely don’t want to lose them.

We call this issue the “CEO question.” Can the founder of a startup become the CEO of a rapidly growing company? Do they have the skills? Are they capable of becoming an expert manager? Asking these questions is the duty of Board of Directors. The board has the necessary bird’s eye view. They should see where the bottlenecks are and take action. Here are seven questions we ask when evaluating a founder’s ability to grow with his company:

1. Are common tasks unduly delayed? It’s always troublesome to see a founder get derailed by minor details. As the company grows, it’s easy for a founder to get pulled in 1000 directions if he or she lacks focus or the ability to execute.

2. Does the founder have a clear vision for long term growth and a tactical plan to get there? Founders need to see past the initial product. The ability to leverage early wins into future victories is what makes a long term CEO.

3. Is the founder hiring to complement his or her weaknesses? We expect our technical founders to make strong technical decisions but we are have real confidence when they make strong hires in commercial, sales, and marketing.

4. How many direct reports does the founder have? Anything above five or six reports is suspect. What do you need more than commercial, finance, manufacturing, R&D, clinical, regulatory, HR?

5. Where is the founder spending his or her time: managing/delegating or inventing/marketing? Investors sleep better at night if we know that our founders are also worrying about hiring and building out the organization. Many founders are already off thinking about their next business before the first one has been executed!

6. Is the founder consistently hitting internal targets and milestones? If a founder can’t stick to his schedule in the early days, delays are only going to get worse as complexity increases. Has the company planned accurately and executed without significant delay?

7. What operations are outsourced? Outsourcing is a great way to grow the organization. Entrepreneurs need to do a serious self-assessment and ask themselves, ‘What do I do well?’ Everything else should be outsourced or hired into the company. If you want to meet targets, you need to focus your efforts on what you do best.

Are you a bottleneck?

The more decisions that must go through the entrepreneur, the more of a bottleneck he becomes.

Just because you are capable of wearing many hats, doesn’t mean you always should. While self-sufficiency enables is critical to getting started, entrepreneurs incapable of delegating tasks inevitably become bottlenecks in their firms’ growth. Routing all info and decisions through one person is expensive- decisions and the information necessary to make them should be pushed down the ranks whenever possible.

I know of two partners at a shipping company that could not figure out how to break through double digit millions in revenue. Despite working harder than ever, the needle refused to budge. A quick look at the firm’s organizational structure revealed the problem instantly. Even with 70 employees working on 8-10 separated projects, every single “scoping” decision ran through the two founders. Without the courage to delegate “core” functions, the founders had inadvertently become the bottlenecks in their own firm’s growth! For a firm to grow, entrepreneurs must hand off their existing responsibilities in order to focus on newer, more value add activities.

Questions:

How many tasks pending do you have?

What percentage of your to-do list gets completed every week?

What is your average time to respond to internal requests? External ones?

How many direct reports do you have?

What would happen if you fired yourself?