Making Transitions From Startup To Corporate | Design Cafe
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Startup To Corporate: Important People Transitions You Need To Manage Well

How to transition from startup to corporate

Effective organisation building is as important as the product or service a startup offers. I have witnessed these transitions in person or observed them up-close like a non-striking batsman. This article is a point of view on key decisions that a founder must make as the organisation makes its transition from one phase to another.

STAGE -1 to 0: GET THE RIGHT CO-FOUNDER(S)

As a founder, while it is important to understand what your strengths are it is as critical to understand what you don’t bring to the table. Getting a co-founder(s) who shares your zeal for the idea, is aligned with your values but has skills that complement yours is critical as you grow your company. This is always the most important hire any entrepreneur makes in their journey of building a company. Hiring a cofounder that is a misfit is a big reason why many startups fail.

This choice is comparable to a marriage. Two partners in any relationship need to gel well. If your co-founder is someone you already know and you believe has complementary skill sets, then go for it. If you need to find a good co-founder you need to search for one with a fine-toothed comb. Network extensively, get reference checks done, go on dates, understand the person and then decide. You must note that if this relationship fails it dramatically reduces the probability of success.

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STAGE 0-1: DEFINE THE VALUE SYSTEM, GET THE RIGHT LEADERS

So, you have got your product-market fit right and are showing promise of scale. This is when you are looking to become a team that is becoming larger than your fingers can count. How should you build this team? And what must you look for?

First and foremost be clear with yourself on the kind of organisation you want to build. The team members and leaders you hire at this stage go a long way in determining the core personality of your company. An easy way to define and implement a value system is to write them down. Now translate them to simple behaviours that people understand. It’s wise to test these values as you hire people. Make sure you get all relevant department heads and those in human resource to interview all key hires at this stage. And most importantly, never hire out of desperation. 

Founders often focus on getting the right leaders for core business functions and treat support functions such as HR and finance as a stepchild. If you truly believe in scaling your business you need a solid foundation. And this is only possible if you have strong support functions. From the perspective of HR, get a person who will drive not just talent acquisition and payroll, but someone who will help in organisational design, leadership hiring and establishing company culture.

STAGE 1 – 10: START GETTING OUT OF THE WAY, LAY DOWN STRONG GOVERNANCE

So, you have hired the leaders you need, defined the culture you want and your product/service is gaining wider acceptance. You seem unstoppable. Remember life has just started! Whatever you do, don’t get complacent. This is one of the toughest transitions for any startup. Processes and systems will be tested at this stage and oftentimes break. Communication and alignment start to become more complex. Star performers will move to managerial roles only to find that managing people versus executing tasks are opposing in nature and require different skill sets. 

At this stage it is important that founders start to let go. Empower your leaders to take charge. If I had to use the analogy of sports – move from being a captain to being the team coach. It is now your job to set direction, govern and get your leaders to work as a unit.  Your leadership team needs to feel like one unit that is steering the company forward with a unified mission and vision. 

A good rule of thumb to follow in order to know if your company is making this transition effectively is to see where founders are spending their time. If founders are not spending about 40-50% of their time on ‘tomorrow’ then the organization has the wrong leaders or are possibly getting micromanaged. 

Now, this is not to say that founders need to distance or isolate themselves from their own company. Nor does it mean you lose touch with your customers or employees. If you are a people dependent organisation bring in mechanisms to identify new managers and train existing ones. Don’t expect star individual contributors to be star managers. Spend time with them to help them succeed in this transition.

This is also a time when your company will start attracting the interest of high-quality talent from the market. However, don’t get tempted to hire just because you found a quality resource, hire only if you need him/ her and have a real role.

STAGE 10-100: WHO IS REALLY RIGHT FOR THE ORGANISATION

Your company has now reached a point where growth is dependent on the abilities of founders and leaders or lack of it. This is a hard transition for the leadership team as well. This is the time when some people who you would ideally want to retain aren’t scaling and costing the company dear. You may have to take tough decisions on restructuring teams/ departments with leaders and team members that can add value and those that need to take a step back or move on. Can you be fair to them in the process?

Another part of your role will be to integrate new seasoned executives along with your current leadership team. Ensure that factions or islands of power don’t form for that will be detrimental to your company’s growth. You and potentially the HR head need to be the glue that holds this team together as they warm up to each other in the early stages of working with each other.

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Also as a founder can you be honest to yourself about how relevant you still are? If you are not, do you have the humility to step out of an executive role, so that your company may continue to spread its wings and fly?

In conclusion, building an organisation can be messy. It can be messier still to build it fast. It is a bit like parenting where you need to adopt a different mindset and approach at every stage. If you don’t nurture in the beginning your company will not grow well. If you nurture it too much as it grows it may never reach its true potential. Being aware of all of the above while transitioning from one stage to the other is paramount. A good way of developing that awareness is to get a coach for yourself. A good coach who is operationally removed from the organisation can help you make these transitions. Do you have one?

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Rahul Jagannathan is Vice President Human Resources at Design Cafe

Rahul Jagannathan

Rahul is a generalist with a passion for people. He moved from business roles into HR to impact the process of organization building in startups. In the long run, he wishes to create an ecosystem level impact on sustainable organization building. While not working, he can be found dabbling with musical instruments or cracking jokes, some of which land well.