Entrepreneurial Governance: the Key to Startup Success?
Governance is about more than just management, and in today’s fast-moving world of digital tech and innovative business models, it has never been more important.
The way a founder chooses to act within their business is a very personal and subjective thing. Take the example of former Google director and now Twitter and Dropbox advisor, Kim Smith. It’s 2000, she was the founder and CEO of Juice Software, and she had one thing to do: price her product. She had blocked off her whole morning to make this decision.
The moment she stepped into the office, co-workers confronted her. One wanted to discuss a health concern, another about his kid excelling at school, another about a disintegrating marriage. She listened to each one in turn and, you guessed it, never priced the product. “For a minute I thought, this is where the assholes really have the advantage,” said Scott. “But that’s not right either. Good managers give a damn.”
This example illustrates the dilemma of governing a small or medium-sized enterprise (SME) perfectly. How should founders position themselves within a business? How should they adapt as the business grows? Today’s founders are expected to be friends, co-workers, managers, shareholders and directors all at the same time. This is the challenge of entrepreneurial governance.
Nowadays entrepreneurs must perform several roles within their startup:
1) You work in your business
You have day-to-day tasks like any other team member, and as a manager must be ready to roll up your sleeves to ensure results are achieved.
2) You work at your business
You're responsible for the business' longevity: you deal with various stakeholders in and around your business and must look ahead as you try to improve it.
3) You are a stakeholder
As an owner you seek short- and long-term value through financial results because, after all, you’re investing your own time and money in the business.
4) You are a director
You must distance yourself from the business in order to monitor it according to your goals, and make objective decisions, but also act as a sparring partner – someone who co-workers can bounce ideas off in an informal way.
In the corporate world, these responsibilities are divided between various roles. Meanwhile, entrepreneurs have to switch between them on a daily basis. As a modern entrepreneur it’s no longer enough to work in your business as a manger. Governance is more than management. It involves maintaining an overview of your business with regards to team members, investors, competitors and market trends. Governance helps to realise the creation of short- and long-term value, is a balancing act between change and stability. It’s also no longer optional.
The essence of entrepreneurship in the twenty-first century is responsiveness: to people, market trends, competition, developments in technology and the global economy. All successful start-ups are dynamic, but creating this dynamism doesn’t happen overnight, and can be hard to maintain as the business grows and processes are set. It takes time to put the right structures in place, and develop a culture that balances innovation with stability.
According to business author James C. Collins, “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.”
Governance can lay the foundation for smart entrepreneurship. Today all major corporations are built on strong corporate governance. But how do we account for governance in SMEs where roles can shift and business models can change rapidly?
Symbid has teamed up with Dutch Entrepreneurial Commissioner Karin Kleingeld (de Ondernemende Commissaris) to delve deeper into entrepreneurial governance over the next few weeks.
We’ll look into common issues facing entrepreneurs, including:
- How to create the right startup culture?
- How to adapt your management style as you grow?
- How to manage the various stakeholders?
- Finally, how good management can make the difference when it comes to getting funded.
We’re also looking for your opinions.
Tell us what you think and know about entrepreneurial governance with our short questionnaire for investors and entrepreneurs (note: both in Dutch). This will help us to answer the right questions over the next few weeks.
Interested in learning more about this emerging topic?