To remain in charge of your business, you have to keep more equity. But that means fewer financial resources to fuel your venture. So, you must choose between money and power. Begin by articulating your primary motivation for starting a business. Then understand the trade-offs associated with that goal. And each choice comes with a trade-off. Startup founders who give up more equity to attract cofounders, key executives, and investors build more valuable companies than those who part with less equity.
And the founder ends up with a more valuable slice of the pie. On the other hand, to attract investors and executives, you have to cede control of most decision making. To retain control of your new business, you may need to bootstrap the venture—using your own capital instead of taking money from investors. Every would-be entrepreneur wants to be a Bill Gates, a Phil Knight, or an Anita Roddick, each of whom founded a large company and led it for many years. However, successful CEO-cum-founders are a very rare breed.
When I analyzed American start-ups that sprang up in the late s and early s, I discovered that most founders surrendered. Other researchers have subsequently found similar trends in various industries and in other time periods. The change in leadership can be particularly damaging when employees loyal to the founder oppose it. In fact, the manner in which founders tackle their first leadership transition often makes or breaks young enterprises. The transitions take place relatively smoothly if, at the outset, founders are honest about their motives for getting into business.
They do. However, a paper in the Journal of Political Economy and another two years later in the American Economic Review showed that entrepreneurs as a class make only as much money as they could have if they had been employees. In fact, entrepreneurs make less, if you account for the higher risk. As I studied the choices before entrepreneurs, I noticed that some options had the potential for generating higher financial gains but others, which founders often chose, conflicted with the desire for money. Few have been both.
The surprising thing is that trying to maximize one imperils achievement of the other. Entrepreneurs face a choice, at every step, between making money and managing their ventures. Founders are usually convinced that only they can lead their start-ups to success. At the start, the enterprise is only an idea in the mind of its founder, who possesses all the insights about the opportunity; about the innovative product, service, or business model that will capitalize on that opportunity; and about who the potential customers are. The founder hires people to build the business according to that vision and develops close relationships with those first employees.
The founder creates the organizational culture, which is an extension of his or her style, personality, and preferences. From the get-go, employees, customers, and business partners identify start-ups with their founders, who take great pride in their founder-cum-CEO status. Their attachment is evident in the relatively low salaries they pay themselves. That was so even after taking into account the value of the equity each person held. Many entrepreneurs are overconfident about their prospects and naive about the problems they will face. They invite family members and friends, angel investors, or venture capital firms to invest in their companies.
In doing so, they pay a heavy price: They often have to give up total control over the enterprise. Once the founder is no longer in control of the board, his or her job as CEO is at risk. But, paradoxically, the need for a change at the top becomes even greater when a founder has delivered results. Let me explain why. The first major task in any new venture is the development of its product or service. They think investors should have no cause for complaint and should continue to back their leadership. At that point, leaders face a different set of business challenges.
The founder has to build a company capable of marketing and selling large volumes of the product and of providing customers with after-sales service. The organization has to become more structured, and the CEO has to create formal processes, develop specialized roles, and, yes, institute a managerial hierarchy.
Executives at customer-centered companies engage these employees at every level of the organization, working directly with them in retail settings, taking calls, and getting out into the field. Some organizations create boards or panels of customers to provide a formal feedback mechanism. The key to satisfying customers is not just to measure what happens but also to use the data to drive action throughout the organization. The type of metric used is less important than the way it is applied. The ideal customer-experience measurement system puts journeys at the center and connects them to other critical elements such as business outcomes and operational improvements.
Leading practitioners start at the top, with a metric to measure the customer experience, and then cascade downward into key customer journeys and performance indicators, taking advantage of employee feedback to identify improvement opportunities Exhibit 4. Even for companies that collaborate smoothly, shifting to a customer-centric model that cuts across functions is not an easy task.
To move from knowledge to action, companies need proper governance and leadership. Best-in-class organizations have governance structures that include a sponsor—a chief customer officer—and an executive champion for each of their primary cross-functional customer journeys. They also have full-time teams carrying out their day-to-day work in the existing organization. To succeed, the transformation must take place within normal operations. To foster understanding and conviction, leaders at all levels must role-model the behavior they expect from these teams, constantly communicating the changes needed.
Formal reinforcement mechanisms and skill-building activities at multiple levels of the organization support the transformation, as well. Executives, citing the benefits of improved customer relations, launch bold initiatives to delight customers that end up having clear costs and unclear near-term results. The better way is to build an explicit link to value creation by defining the outcomes that really matter, analyzing historical performance of satisfied and dissatisfied customers, and focusing on customer satisfaction issues with the highest payouts.
This requires discipline and patience, but the result will be early wins that will build confidence within the organization and momentum to innovate further. Delighting customers by mastering the concept and execution of an exceptionally good customer experience is a challenge. But it is an essential requirement for leading in an environment where customers wield growing power.
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If You Want to Run the Company
McKinsey principal Ron Ritter explores the challenges and benefits that come when companies truly put customers first. Join me as I take you on a journey that starts with the Customer Interest, discovers your Knowledge Gaps, and develops limit and trade-off curves through testing. Bring your pens as we will be writing A3s, or as I call them, Knowledge Briefs.
Participation is expected in this fast paced two hours. My goal is to change the way you approach a project by focusing on the customer, the gaps and capturing visible knowledge in graphs. You may also want to bring a little dental floss back home. He holds a Master of Science degree in Electrical Engineering and multiple patents. Bob directs the engineering for six product lines in three locations, San Diego, Cape Cod, and Iceland. Bob considers himself a practical engineer, always looking for ways to improve himself and the company. The emotional matureness of a project team is decisive for the success of a project.
We all know that we will have to deal with unruly stakeholders, problems with resources, too optimistic planning, rotating team members, and so on and so forth. Personal Coach of inventors, boardroom consulting. Suzanne: Suzanne van Egmond worked all her working life, more than 20 years, in product development roles in Philips.
: : National Telecom Corporation
In the last ten years, seven are spent on training, coaching and advising actors in product development area: project teams, project managers, development leaders, etcetera. In those years, Suzanne developed a sound capability in the area of lean product development. Suzanne is a board member of the Lean Product and Process Development Exchange and also she recently started Nabla lean product development, a Lean PD advisory company, as a side-job.
How can agile methods be used to speed up hardware development, especially in the early phase? Find out here! This session presents experiences in applying agile software methods in hardware development. What are the differences when applying agile in hardware, and how can you handle them? How can you reduce the project lead time? What examples and results do we have? What are the conclusions and next steps? These are the questions we will address. What are the key elements of successful teams in Product development? How does the team dynamic affect the success of the resulting product?
What is a team and how to you build it and create trust? What does a team need, in their day to day work and from their leadership? Based on my personal experience of working with agile teams, both in mechanical and software development, I will share with you my answers to these questions. I will share how it feels being a part of a successful team with strong leadership, as well as the challenges and pitfalls that I have faced as being part of building agile teams. Now over 5 years later, I want to share with you my further insights and learnings into teams, trust and leadership in relation to agile teams and successful product development.
Team Building Games, Training, Ideas and Tips
This includes the challenges and pitfalls I have faced and observed along the way. What I have learned is that in order to be agile we have to trust each other. Work-systems are great, and can also be very different depending on the teams. It is how the diverse individuals come together and build trust, resulting in a team, that then build great work-systems, to develop the latest and greatest products.
What trusting teams can do is amazing. But building trust can be hard and a bit fuzzy. I want to tell you my experience of feeling and building trust, the challenges and pitfalls, and my recommendations to you on assuring success in building your teams. Marel is the leading global provider of advanced processing systems and services to the Poultry, Meat and Fish industries. Do you often experience your creative people suddenly having personal blocks in their creative processes?
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Starting to doubt their potential or the project? Getting mad over small details? Will not finish a project, as it will never be good enough? And so on…. These normal types of behavior come up when your inner conflict is tricking a unconscious defense.
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This makes it difficult to reach the result in due time, at the right cost and without team conflicts. Whenever we want to create something new there are a lot of emotions in play — these emotions can become our friend or our enemy in the creative process. So, how can we learn to become friends with our emotional side?
How do we learn to set your emotional power free? In this session we will take a harder look at emotional power and look at how we can start blocking unintended defense that is holding you back and thereby reveal to you and your colleagues full potential in the creative processes. John teaches TWI hour courses and TWI hour courses and offers coaching services and teaching in organizational psychology. John's teaching method is about learning through mutual interaction. His way of teaching is very calm and appreciative, both in groups and in individual sessions.
He focuses on honest, kind and direct communication in the relationship between himself as a teacher and those who are taught. John started his career as a tool maker. This has given him a special insight into the processes that take place on the production floor and which cannot be taught in a classroom. Later, John served in the Danish defense as a Sergeant stationed in Kosovo.
John has also been a coach of the Danish rowing association, where he trained talented young rowers supported by Team Denmark. John lives in a terrace house in Kolding. He loves to cook good healthy food and devotes himself to a lot of physical and mental training. John BTP. Knowledge flow based on pull from knowledge reuse — how to do it, and why?
This session reveals insights from problems and trade-offs discovered during the journey of developing and implementing a knowledge management framework in Volvo Group Trucks.
Key takeaways from an 8 year long journey are presented alongside the details of the implemented KM framework itself. Knowledge flow chronologically always starts with knowledge creation followed by capture and hopefully reuse. Traditionally this has also been the sequence in which frameworks to manage knowledge with processes, methods and tools have been implemented. It has been a bumpy ride and several trade-offs have been discovered some of which go to the core of Lean Product Development fundamentals. The bumps and the trade-offs of this implementation journey will be in focus of this session alongside an in-depth description of the KM framework itself.
Since he has been working with implementing knowledge management in development functions of Volvo Group Trucks and continued to do research on topics of Lean Product Development with focus on data driven and knowledge based development as well as visual management. Here we are 15 years later and the philosophy continues to drive success.
In my keynote I will share with everyone how the system works. It starts with respect and a team working together. It includes making your work visible, problem solving through root cause analysis, and continuous improvement. It ends with leadership invoking the traits of a Chief Engineer. At this point of the exchange we have heard many speakers about even more interesting topics. Michael Kennedy, being a thought leader on lean product development will use this slot to reflect on what was presented.
Reading fiction can help you be more open-minded and creative
He will also include his ideas on why a significant portion of this type of tools end up stalling out before they achieve the high productivity levels. In this exciting half-day workshop we will discuss the management of projects. How can you approach product development projects, particularly in their early phases, using a lean approach? Project management is a topic on its own, and a lot of useful tools and techniques are offered by e.
The problem with these tools and techniques is that they take a one-size-fits-all approach that does not always match the situation. Project managers are trained to make plans project management plan, risk management plan, stakeholder management plan, communications plan, and many more and follow up on those. Suzanne van Egmond worked all her working life, more than 20 years, in product development roles in Philips.