“Be quick, but don’t hurry” is one of famed UCLA Coach John Wooden’s most famous quotes. By that, he meant learn to do the right things, but then do them quickly.
Too often founders make decisions before determining whether they are the right thing to do. These decisions often create chaos in their companies where people are having to jump from the last “great idea” to yet another unproven and about to be poorly executed one. When investors on the outside burned by the “dotcom” bubble of the late 1990s or the 2008 economic collapse get a whiff of this brilliant, but manic and highly unproductive activity, they smile politely (and often not so politely) behind the founder's back and then run for the hills.
To find out more about “haste makes waste… and then scares away investors” behaviors I turned to Jeff Weiner, a highly experienced M&A specialist in the Los Angeles office of international law firm Steptoe & Johnson and Mark Silverman, serial COO to early stage companies and entrepreneur in residence at Georgetown’s McDonough School of Business. Both Weiner and Silverman are frequently called in to advise and protect founders from themselves.
Here is a quick--but not hurried--list of 10 behaviors that founders would do well to avoid.
- Not thinking before you act: Weiner says, “It is very difficult to ‘unring a bell’ and in these skittish times acting impulsively and demonstrating poor judgment is likely to negatively impact your credibility both inside and outside your company.”
- Not listening before you act: Silverman says, “Founders would do well to become a ‘learn it all’ instead of a ‘know it all.’ When they don’t listen they not only miss out on their market’s true needs, but they miss out on the great input that their people have to give them about that market.” IDEO, one of the most celebrated design and innovation companies, sends people with wide ranging backgrounds and skill-sets out into the world to watch, listen, and notice what can be done better and then come back and share what they have discovered.
- Being sneaky: “Jack Welch devotes an entire chapter in Winning to candor, calling it ‘the biggest dirty little secret in business’--because there isn’t enough of it,’” said Weiner. He explained, “Honesty really is the best policy. And if you’re trying to raise money for your company, whether from family friends, angel investors, venture capital or private equity funds or a lender, honesty is the only policy. If you deceive or mislead an investor, you’re toast. Trust is an essential element.”
- Jumping to the next shiny thing: “GE’s CEO, Jeff Immelt says, if you want to get promoted or advance in your career, focus on doing what’s in front of you as if you will be doing it all of your life,” Silverman explained. “By that Immelt meant that doing that gives you the chance of being excellent and that really catches people’s attention rather than being scattered and too distracted. Keep practicing that and pretty soon you will be associated with having an excellent company.”
- Not sweating the small stuff: “In this day and age of extreme caution, people have a natural tendency to focus on anything, and I mean anything, that causes a hiccup," said Silverman. "They will take for granted and not even notice 95% of things that are right and make sense, and overreact to the 5% that feel a little off.”
- Rushing to hire the wrong people: “If you are building a business in industry A, you will not be engendering a lot of confidence in your judgment or ability if you have populated your senior team with individuals having experience in industry B, and none in industry A,” said Weiner, who added, “Remember, every company (‘C’), is equal to P + S, that is, ‘People’ plus ‘Stuff’ (real, personal, and intellectual property). Investors bet first on the people. In real estate, they say it’s all about three things: Location, Location, Location. In business, they say it’s also about three things: People, People and People.”
- Rushing to get investors: “The earlier you rush for investors, the easier it is for the competition to find out about your great idea and steal it, execute it better than you and leave you in the dust, making a success our of your creation,” warned Silverman. “Oh yeah, you can always use an NDA. Those often work as well as a restraining order on a psychopath...good luck.”
- Failing to consider the importance of social media: Weiner explains, “Check it. Your reputation could be killing you, or making you. As Fred Reichheld wrote in The Ultimate Question, "you need to know your Net Promoter Score. That is, you need to have an understanding of your customers’ loyalty, and whether you have enough affirmative promoters to make up for any detractors. The Internet makes it much easier to have both. Weiner noted that keeping abreast of people are saying online about you, your company, and your company’s “ecosystem” should be part of an overall corporate “situational awareness” program.
- Assembling, but then not listening to your board of advisors: Silverman said, “Don’t just assemble a wise and smart group to pad your PPM or IPO. You need to listen to them and ask them why they are suggesting what they are suggesting and then consider what they say, before you make the ultimate decision.”
- Overlooking “an ounce of prevention”: Weiner has preached this gospel for many years, with varying degrees of success, as not all founders or CEOs are willing to listen. If you have the right CPA, lawyer, or board of advisors, you might be able to get to where you want to go faster, cheaper, and with less aggravation.
Weiner explained: “I cannot tell you how many times I have had to bring in my litigation, intellectual property or other colleagues to clean up or defend a mess after the fact, at great expense and aggravation to a company, that could have been avoided, possibly altogether, had I only been consulted, even just briefly, before the company signed that “simple” or “straightforward” contract or took some other imprudent action.” Just as you see your primary care doctor for your annual physical or whenever you feel a pain or other symptoms needing medical attention, your company also needs to see a primary care professional, whether a good CPA or lawyer, to maintain sound financial and legal health. The right primary care professional can also give you invaluable objective advice, provide a safe sounding board for your ideas, goals, and dreams, and help you build the right board of advisors. “
The founders who most need to read this article didn’t. They were in too big of a rush.
--Mark Goulston is a doctor, best-selling author, and business advisor.
[Image: Flickr user Mcdarius]