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It was only after a long career running big businesses that I finally became an entrepreneur, heading up Ellevest, the digital investment platform for women that my team and I are working to launch. I knew well before then that management and leadership are learned skills, so I’ve been an avid student of both for a while.
But as an entrepreneur, I’ve learned a great deal more, and very quickly. Starting a business from scratch and having little money in the bank focuses your mind in a way that running a multibillion-dollar business never does. It brings the key drivers of performance into sharp relief. I promise.
If I could jump into a time machine, here are seven pieces of advice I’d go back and give my big-company self based on what I know now.
A dysfunctional team means a dysfunctional–and likely doomed–company.
Researchers at Google have found that the most important driver of their teams’ success is psychological safety. That sounds right to me: Can you be yourself at work? Can you take risks at work? Can you ask the “dumb question” at work? Can you fail? Can you trust others to deliver what they say they will?
So what should big companies do? Throw out the forced stack rankings. Throw out the anonymous 360-degree reviews. Those winner-take-more systems are absolute poison to a well-functioning team. Instead, they encourage infighting, as employees vie to improve their relative positions on the team. Psychological safety? Quite the opposite.
It wasn’t until I started Ellevest that I learned how much more intensively I needed to understand my business’s customer. What life stage is she in? What is her family situation? What does she read? What does she read but not really want to admit she reads? (I’m looking at you, People magazine.) What does she do outside of work? Who influences her? What are her pain points? What information does she need to engage with your product?
At the big companies where I’ve worked, there was surprisingly little of this. Clients were pretty much tiered in terms of wealth. If you had more than $250,000 in investable assets at one division, they wanted you as a client; if you were a company with more than $1 million in revenue, you should be a client of this other division.
Why these broad-strokes strategies? Well, the reasoning went that we were big, so we needed a lot of clients in order to get bigger. Microtargeting felt too small, and so hard, to make a dent. And so those companies lost share to more nimble competitors all day long.
If you don’t share information among your startup’s team, then it’ll be just about a coincidence if product, marketing, and engineering are ever aligned. Those odds are too low to succeed.
By contrast, many large companies were built in the days when information was scarce and expensive to gather; you gained power by hoarding it. This enabled the rise of “command and control” management systems, in which power was disproportionately held at the top.
And, boy, power is a tough thing to give up. You’ve heard it: “We can’t share it, because what if our competitors get hold of the information?” “What if it were to leak to the press?”
Today, information is less expensive to come by but no less valuable. To some degree, this gets back to the question of psychological safety at work: Can you share power (in this case information) with others and trust that it doesn’t leave you disempowered?
At Ellevest, I’ve learned to break big projects into small pieces. After we choose delivery dates, it takes almost an act of Congress to move them–features can be postponed, and sometimes bugs even remain–but the date is close to sacrosanct. What’s more, they come often: Our product is user-tested at every step along the way, and it’s normal to make adjustments to it based on the feedback that generates.
This isn’t how it works at big corporations, which almost never make their tech deadlines. In my experience, this was often because the team would consistently underestimate how much work had to be done as well as its complexity, or else a project would suffer feature creep. All of which led to a late, over-budget, over-engineered rollout that in many cases didn’t resemble what the team had set out to build in the first place. Or the world had simply moved on.
As an entrepreneur, I’ve learned how crucial it is to be able to call a spade a spade and avoid falling in love with a particular strategy or product. Instead, you need to let the customer tell you what she needs–and to change her as she changes.
In asset and wealth management today, you see pitched battles about the future of the industry: Will clients want a real, human financial adviser or an online experience? Some in the industry are staunchly in the “financial adviser only and forever” camp–and okay, great, but what does the client want? (In my view, anyway, that answer is shifting–in some cases pretty rapidly–and it will continue to do so. Those who completely shun technology in this space are probably doomed, eventually.)
You can’t afford to let any one strategy become dogma for everyone or forever.
You’ve got your values written down; they’re even hanging on your break-room wall. So of course they matter, right?
We all like to say we’re values-driven businesses, but at a startup, where you’re making many important decisions for the first time, values can be a prism for the toughest of them. They provide the very guide-rails by which to act.
Wait, you may say, we’ve got value statements. But are you really living by them? In my experience, many Wall Street firms’ value statements include “putting clients at the center of everything we do” and “respecting our people.” But were all of them really living by those adages over the past few years? And wouldn’t they–and the economy–have been better off if they had been?
I’ve found that when someone says, “If they could just do a better job of telling the story,” then it’s time to dig deeper.
I stopped advising one startup when its CEO told the board that the product (which was his idea) was great, but that it was the head of marketing’s fault that it wasn’t taking off–and then that it was the next head of marketing’s fault after the first one was replaced, and then that B2B customers were too set in their ways to understand . . . you get the idea.
At a startup, you don’t have the luxury of time—or the cash—to blame the other guys. You need to be honest with yourself.
Because, believe me–at a big company, you may say you spend money like it’s your own. But you don’t. Not until it’s really your own and there’s less of it. It’s only then that the things that really drive your performance come abruptly to the fore.