Startup Governance

The recent debacle involving LaunchVic and 500 Startups comes at a time when startups and entrepreneurs are facing increased public scrutiny over their ethical behaviour. Having a great idea, building an innovative or disruptive business, and attracting investors is not carte blanche to disregard corporate governance and social responsibility obligations. So how do we instil a better “moral compass” among startups and their founders?

The TV sitcom, “Silicon Valley”, is drawn from experience of the software industry, but it also reveals much that ails the startup economy. As funny as it is, the series also highlights some painful truths. Scenes where founders “trade” equity in their non-existent companies are just one aspect of how startups can develop an over-inflated sense of their own worth. These interactions also reveal how startups can reward inappropriate behaviour – if sweat equity is the only way founders can “pay” their team, it can lead to distorted thinking and impaired judgement, because the incentive to go along with poor decision-making is greater than the threat of any immediate sanction.

A key challenge for any startup is knowing when to seek external advice – not just legal, tax or accounting services, but an independent viewpoint. Many startups don’t bother (or need) to establish a board of directors – and if they do, they normally consist of only the founders and key shareholders. The role of independent, non-executive directors is probably under-valued by startups. But even an advisory board (including mentors who may already be guiding the business) would allow for some more formal and impartial debate.

Another challenge for startups is that in needing to attract funding, they can find themselves swimming with the sharks, so doing due diligence on potential investors is a critical task in building a sustainable cap table that will benefit the longer term aims of the business.

Equally, if startup founders are motivated to “do their own thing”, because they are driven by purpose or a higher cause, or they simply want to make a difference, they can risk having to compromise their values in order to engage with bigger, more-established companies. So they may end up emulating the very behaviours they sought to change or challenge. Neither startups nor big corporations have a monopoly on unethical behaviour, but if founders stray from their original founding principles, they will soon alienate their stakeholders.

Finally, nurturing the “conscience” of a startup is not something that should be left to the founder(s) alone. The vision has to be shared with, and owned by everyone involved, especially as the business scales. Everything should be measured or tested against this criteria – “does it stay true to or enhance our reason for being here?” Without a clear sense of what is important to a startup, it will also struggle to convey its core value proposition.

Next week: Digital Richmond

 

More on Purpose

Regular readers may be familiar with the name Carolyn Tate from my previous blogs on purpose, and the Slow School of Business. Last week, Carolyn launched her latest book, The Purpose Project, a distillation of the past seven years of her work, and quite possibly a road map for anyone wanting to take control of their own destiny at work.

I would describe The Purpose Project as a cross between a first aid kit for a disillusioned workforce and a survival guide for the modern workplace. But as with defining your own “purpose”, the value is in the mind of the reader, rather than in any prescriptive solution or outcome.

Having spent the past few years working with Carolyn at Slow School, I know that her views on this topic have subtly changed. Slow School itself initially appealed to, and was designed for, independent consultants (“solopreneurs”) and aspiring consultants (“corporate escapees”). But as the concept of finding purpose in our work has started to take hold, Carolyn now encourages her readers to find their own purpose where they are, rather than rushing headlong into a new job, a new company, a new career or even into entrepreneurship (which as we know, isn’t for everyone).

I first connected with Carolyn at the Slow School, when I was exploring my own purpose as an independent consultant (and sometime corporate escapee….). Slow School provides a community of like-minded souls with a “safe” space to test new ideas, a playground to kick around new concepts, and an environment to challenge our own assumptions. Unsurprisingly, a key part of The Purpose Project is a list of 50 questions designed to help readers dig deeper into their own purpose, modeled on the Japanese concept of ikigai”. There are also some tools and practices to bring purpose to life in our current work.

In my own case, I still think my purpose is a work in progress, and is never settled – much of my career has been driven by a need for new ideas and experiences, work that is intellectually stimulating, and a willingness to engage in continuous learning (while feeding an enduring curiosity and maintaining a healthy dose of skepticism). These factors, even more than formal qualifications or faddish management theories, have helped me to build resilience and navigate a rapidly changing work environment.

One point where I may disagree with Carolyn is this notion about finding purpose through staying in your current role or workplace – that it’s not necessary to leave. While I agree that it may be possible to reshape your current job to suit your personal needs and preferences, staying in an unrewarding job or remaining with an organisation that does not value you is like persevering with an unhealthy relationship.

In short, I’m quite pessimistic about the ability for large corporations and large institutions (as they are currently framed and constituted) to help us connect with our individual purpose, or even to provide the space to do so. And of course, rapid changes in the very nature of work, the way we work, the economic structures and business models that have traditionally underpinned employment and the value exchange of labour require us to take more control over where, how and with whom we choose to spend our working time.

Next week: Agtech Pitch Night at SproutX

 

 

Tribute

It’s two months since my father passed away, and nearly a year to the day since he went into hospital for scheduled heart surgery. Sadly, although the operation itself appears to have been a success, the ordeal seemed to trigger a whole series of complications and underlying conditions: within 6 months he was admitted to a dementia ward, and by late last year, he was in a nursing home undergoing palliative care. Less than three months later, he passed away, the shadow of his former self.

I was able to spend several weeks back in the UK over Christmas and New Year, visiting him up to three times a day. Most of the time, he was living in his own little world, and I would simply sit with him and listen to some of his favourite music, mainly baroque and opera. But in his lucid moments there were flashbacks to the distant past, and some recollections of more recent memories. On one occasion, even though he had lost most of his capacity for speech, he did manage a sage piece of advice: “Don’t play with fire”.

More recently, I was in the UK again to scatter his ashes and help sort out his study and his workshop. Memories of impromptu DIY lessons came flooding back. There were also several quirks and surprises in his personal archive: photos of him at management conferences in the 1970s and 1980s, a scrapbook of his time in Germany in the late 1950s during National Service (including some chilling images of Belsen), and a spreadsheet showing his annual income and income tax right up to his retirement.

Although he was fortunate in being able to take early retirement in his late 50s, he spent the next 25 years volunteering, building a portfolio of interests and serving on multiple committees for the arts, small business, veteran affairs, U3A and other community projects. My mother likes to joke that he’d rather chair a committee than mow the lawn. He also continued to learn, and I found recent certificates of proficiency for speaking German, and for formatting Word documents (very handy for writing up agendas and minutes).

He was the product of a classic liberal education, not a polymath, but possessing a solid knowledge about lots of different things: the arts, politics, language and history as well as science and technology. All the things you need to solve The Times crossword.

There are probably three key things that my father taught me:

  • Think for yourself
  • Don’t follow the herd
  • And of course, being an engineer, don’t take something apart unless you know how to put it back together again.

The latter is particularly useful when working with clients on their business reviews!

Next week: Music Streaming Comes of Age

“I’m reframing, the situation….”

As a break from my consulting and business development work, I have been taking lessons on picture framing. My significant other is an artist, and she has commissioned me to mount and frame a number of her works for a forthcoming exhibition. Things got off to an interesting start, when I inadvertently framed the first print the “wrong” way round (see the image below). Because there wasn’t an obvious top or bottom, I didn’t realise that I hadn’t placed the image in the way she intended. But, luckily, this “error” created a fresh perspective, and I realised that I was simply doing what I do all with the time with my clients when I reframe the information, problems or situations they present.

"Eclipse" (© Margaret Manchee)

“Eclipse” (© Margaret Manchee)

Some recent examples of where I have helped my various clients to reframe a situation and make a breakthrough when they have become stuck or blocked in their own thinking include:

  • shifting from a “retail” sales model to a “wholesale” strategy that focuses on aggregators and distributors;
  • treating an employer as just one part of a mixed portfolio of clients, rather than thinking that the regular job was a barrier to acquiring more direct clients;
  • refining the sales process to avoid giving away too much proprietary information during the RFP process, but still demonstrating value by delivering the best solution in terms of quality and technical capabilities;
  • repositioning the business to leverage proprietary data and analytics to build long-term revenue streams via commercial relationships and partnerships, rather than competing for increasingly price-sensitive, commoditized and transactional work;
  • adopting a more client-centred approach when designing a new on-line product that hitherto had been viewed internally as simply a technology-driven service extension;
  • using a service-design model for developing and delivering a communication strategy that needs to engage multiple stakeholders who simply want to know “what’s in it for me?”

Another useful insight that my picture framing has given me is the use of complementary and contrasting mount boards and mouldings to emphasise certain colours, to bring out highlights, to add depth and perspective, or to the give the illusion of infinite space and/or possibilities. Again, all things which I bring to the discussions I have with my clients.

Next week: FinTech Melbourne’s latest pitch event