Just as every puzzle piece has a precise location in the big picture, each person in a startup has a very specific position in the overall picture of the new company. Sometimes it takes a little turning to get the exact fit for each person, and the picture is ever changing. In Noam Wasserman’s book, The Founder’s Dilemma, he talks about the dilemma of assigning roles to founding members and beyond. To begin with, a founder must decide who gets a title and why? If one is given a title (or assumes one), what is their role in the company at startup? Does it overlap with other roles? How does their role change with the company?
Wasserman believes that overlapping roles at startup, “when there are too many things to do and not enough people and time to do them, when the startup is cash-poor, and when the strategy and business model may have to turn on a dime, having an organization with flexible and overlapping roles-changeable as needed-can be a big advantage” (Wasserman, 124). However, as the company grows, the roles may need to be more specific (as each person begins to fit precisely into the big picture) to decrease redundancy of tasks, and increase founder differentiation. As the team becomes more distinct in their roles and responsibilities, the division of labor that occurs can be a difficult transition from previous overlapping roles and responsibilities. Collaboration may be more difficult, and the growth and evolution of the company may become fractured as the team becomes more autonomous in their roles.
If autonomy is considered an advantage and a sign of a maturing company, how does a startup decide who is in charge of final decisions? Decisions must be made, but the group has a choice of making those conclusions as a team or allowing a single person to be responsible for the final determination. Wasserman refers to this choice as egalitarian or hierarchical (129). Research by Professor Kathleen Eisenhardt “found that consensus-based teams make decisions too slowly for startups operating in ‘high-velocity’ environments” (Wasserman, 133).
Therefore, it is concluded that in the beginning, it may be beneficial to make decisions slowly and with group consensus, but as the startup becomes more mature, it behooves the group to allow for a single, decisive voice in the leadership team.
One of the significant differences already discussed in founding teams is the motivation of wealth versus control. Money and power come in to play again when assigning roles to a founding team. If we stick to the idea of games, this is a game of paper, rock, scissors. Money and power motivations equal themselves out in most circumstances. Money motivations in both (or all) founders will generally succeed. But when two cofounders are both motivated by power, there is likely going to be some struggle ahead. In Wasserman’s words, “potential cofounders should assess each other’s motivations to understand potential sources of role conflict,” and do so before founding to avoid those conflicts (144). It’s kind of like making sure the puzzle pieces in the box match the picture on the front.
4 thoughts on “Role Dilemmas When Founding a Startup”
Your analogy of rock paper scissors is an interesting one. I’ve been reading the plans of other folks in the class. I think many would identify the third item to add to that list that includes power and money. That item might be positive social impact. My opinion and hope is the corporations will move beyond a sole emphasis on the creation of capital and recognize that to achieve that goal they have to be socially responsible and add value to the entire community. In a world of social networks, a company can no longer dump its pollution on the world at large in exchange for higher profits. I’m not quite sure if social responsibility is at the level of-of wealth and power but hopefully, it will get there.
a good analogy of the people matching and being a piece of the puzzle and matching what they are trying to accomplish like on the front of a puzzle box. Another thing that a start-up might do instead of rock, paper, scissors are drawing straws to see who wins the CEO position. No matter how they determine who the CEO is they need to have it written down in the agreement terms of the partnership.
I agree with your quote referencing Professor Kathleen Eisenhardt about roles being identified over time. It’s a hard decision for co-founders to agree on a CEO at startup, and often times more progress can be made when the startup team is focused on their passion to launch rather than who is in control. However, over time, someone needs to take the reins! Jill
I also found your analogies to be very ‘fitting’. Founding teams are like puzzle pieces – you keeping turning the pieces until they fit, or keep trying to find the place where they fit. Power can readily come into play on a team, especially if founding team members don’t have a plan in place to address the power dilemma as the organization comes together/grows and the pieces find their places. It’s unusual for a player to fit into multiple roles. And titles can really mean a lot to some, especially if these folks feel the need to demonstrate their power or roles in the organization through titles. I really do feel that having an agreed-upon plan in place to address growing pains can help team members develop into their roles more readily. Will the plan morph over time? It’s very likely, but at least a strategy will be in place that can help carve an amicable path.
You also pointed out another very important point – founding team members must know one another, which includes each other’s motivations for being part of the start-up. I keep harping on ‘the plan’, but knowing each other is another way for founding members to peek into their futures. Who has what desires and motivations? One member might be happy taking charge during the start-up phase because of the newness. This person may need regular, fresh and new challenges, and may serve best as the business developer. A CEO might need to be the more stable one who wants to see the vision through the long haul. This person may be in the start-up background but move to the forefront (CEO role) once the start-up has begun to move ahead. If there there are overlaps in motivation and aspiration, the founding team must identify these early to (hopefully) mitigate future conflicts.