Surviving a Start-Up’s Transition from Projects to Processes

Surviving a Start-Up’s Transition from Projects to Processes

by Derek Lidow  |   11:00 AM March 12, 2014

“Why change my leadership style? It got us to this point, where we’ve established a real beachhead in our market.”

These are the famous last words of many an entrepreneur. Failing to realize that critical transition points in the growth of an enterprise require leaders to shift emphasis, they blindly stick with what has been working up to that point. The company stalls. Confusion grows among key team members, investors, customers and suppliers.  And, ultimately, the failure to understand the demands of the transition lead to the failure of the company itself.

One such abrupt transition — from project to process mode — occurs once a company launches its initial sales efforts and begins to service its first customers. A project is a one-at-a-time exercise performed by a team assembled specifically for that task. It is the ad hoc nature of the project that enables the flexibility and agility required to capture the first real customer.  If the entrepreneur has recruited the type of people usually attracted to startups — people who like fast-paced projects — then they will likely find working as a team in the project mode extremely satisfying.

Most entrepreneurs understand that they need to be flexible and agile in order to figure out how and what potential customers will buy from them. But flexibility and agility must begin to make way for reliability and efficiency if the company is to deliver the kind of consistent product or service required to maintain happy customers and win new ones. Reliability and efficiency require that work be performed in a process mode, where tasks are accomplished repetitively in a prescribed fashion, resulting in minimal variation and cost.

But most entrepreneurs instinctively resist switching from the project to the process mode. I hear entrepreneurs use excuses like, “there are a few more things we can do to make our product even better,” or the classic, “we are working well as a team, why change how we work?” The teams that have been recruited to successfully create a new company, product or service also resist this change.  They ask why they need to change from the ‘fun’ mode into a mode most project-loving people despairingly and naively call ‘bureaucratic.’

The dangers of staying in a pure project mode too long are many. Projects, no matter how well led, produce inconsistent results. Entrepreneurs cannot afford disappointed customers, and most won’t forgive poor products or services just because they were experiments.

Staying in project mode too long also opens up opportunities for competitors. How many entrepreneurs have seen their great ideas copied by a more cost-effective competitor destroying all the value they had created to that point — irrespective of patents?

Staying in the project mode too long also makes the enterprise too reliant on the founder. No enterprise can become self-sustaining if the skills of its founder have not been replicated in an effective process.  And staying in project mode too long frustrates the employees the entrepreneur will need to rely upon to manage effective processes. People who enjoy making something better and better make good process managers, and these people typically like organization and feel uncomfortable with the change and disorganization that often accompany project mode.

A strong and savvy leader with a sense of the needs of the enterprise will understand that this transition needs to take place to create a more competitive and self-sustaining company. Savvy leadership is also required to know how to lead both the experimental, creative, project-loving people recruited to help capture the first customer and the organized process-loving people required to implement efficient and reliable processes. Also, a strong and savvy leader will want to develop processes that do not require her unique talents.

The first step toward successfully making the transition is to explain why the shift from projects to processes is critical to the well-being of the enterprise. A compelling explanation gets the team comfortable with the need to design and develop reliable and efficient processes — and it pre-empts cries of ‘bureaucracy.’

Although work in a maturing enterprise is progressively dominated by processes, projects never go away entirely.  After all, you need a project to create or even improve a process. Leaders who understand the differences between projects and processes will keep the good project-loving people, who found and captured the first customers, assigned to project work while process-loving people focus on helping the enterprise become increasingly efficient and reliable.

The transitions required in a rapidly growing and maturing startup are unforgiving, and for many entrepreneurs the project-to-process change is particularly tricky. It’s one of the reasons entrepreneurs have such a high rate of failure and why those who understand it greatly increase their odds of survival.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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