Ninety-six percent of businesses fail before their tenth anniversary, according to Bill Carmody in his Inc.com article. Once an organization gets past the first few years, they have proven that the proverbial dog has eaten the dog food. So what is it that is causing so many companies to crumble before they reach the decade milestone?
It isn’t because the founders of these companies aren’t extraordinarily capable. Successful founders overcome overwhelming risks armed with healthy self-confidence all the time. But that confidence can backfire as their companies continue to grow. But there are steps you can take to move from great potential success, to actual success, moving your company to that 10-year mark and beyond. Here are nine ideas to enable you to beat the odds:
- The 80 percent Rule: Founders by definition are confident in their own abilities. When confidence translates into thinking that you are better at getting the job done than anyone else on your team, this is a problem. Even if you are, hire people who are 80 percent as good as you at doing a specific task, them let them do it.
- Provide a Clearing: Now that you’ve hired someone who is good but perhaps not up to your level at a particular task, get out of her way. If you continue to look over their shoulder or are a back seat driver, you will never scale your company at the rate you would like.
- Celebrate Mistakes/After Action Reviews: If you hire great people and let them do their job, good things will happen. But bad things will as well. When they do, don’t get angry. Instead, identify the mistake that was made with as much specificity as practical, celebrate the initiative that caused that mistake to occur with your team, determine its causation and determine not to make that same mistake again. We call that an “after action review” patterned after a similar process used by the Air Force. It will ensure that you don’t inhibit initiative.
- Honor Truth: In the early days of a startup, a loyal team is one of the most important characteristics of a winning team. However, when loyalty translates into trying to please the boss rather than delivering bad news or honest truth, the organization suffers. Remember the emperor with no clothes? Convincing your team that truth trumps loyalty is a critical ingredient in long-term success.
- Introduce Outside Perspective: Teams that have been together for a while tend to become insular. Not only do they exclude new ideas — “that’s not the way we do things” — but they spurn outsiders altogether. One of the most important things a leader can do is to continuously bring new perspectives into the group. Add new people from other industries, join a peer group of other executives to learn their ideas, read about other successful ventures, and keep a clear view about what is going on outside of your company. Competitors may come from anywhere even though they are not on your radar or in your industry today.
- Write it Down: Young teams tend to invent processes as they go. This may work great early on. Over time, as the team and your organization grows, you don’t want to waste cycles having new people reinvent the same methodologies that have already been invented. Document these processes for subsequent generations of managers. This doesn’t mean that these processes can’t or shouldn’t be changed, it just means that getting there will be much faster. We’ve coined the idea that if “it isn’t recorded it doesn’t exist.” Trying to get humans to remember is always a risky strategy.
- Ask for Help: When founders find early success they sometimes exchange their confidence for hubris. Thinking that you know all the answers is a lightning rod for future failure. The most powerful thing a leader can do is ask for help. While this might feel like revealing a weakness, it is just the opposite. Asking for help empowers you and compliments the person you ask. Besides you might even learn something new.
- Be Objective: When teams have been together through early battles they tend to become very close. And while this is often a good thing, it can fog the lens of objectivity. Companies grow at a different pace than team members. Like a snake that naturally sheds its skin in order to grow, it will be necessary to shed team members along your company’s growth path. This doesn’t mean someone has done a bad job. It just means that the new challenge in not in their wheelhouse. Remain objective about whether your team is up to the current task at hand. And if you can’t bear to part with an executive, find someone else who can do it for you.
- Take a Vacation: Many founders fall into the trap of always having to be present. This is both detrimental to the founder’s health and mental well-being as well as to the effectiveness of her team. Taking a vacation, preferably to a place with poor cell phone service, requires your team to step up and the founder to let go. While this might feel scary, you will be surprised at how well your team performs without you.
If you are honest with yourself, you will find that you are running afoul of at least some of these suggestions. Adjusting your game to adopt the behaviors of a few more, will give you a better shot at transforming your early magic into a lasting foundation that helps you beat the odds.
Les Trachtman is the CEO of The Trachtman Group – focused on helping companies grow and scale, as well as managing director (and majority investor) of Purview, an early stage company focused on disrupting the medical imaging business. Trachtman is also the author of the new book, Don’t F**k It Up: How Founders and Their Successors Can Avoid the Clichés That Inhibit Growth.