By Tony Mulkern
Ever wonder why some entrepreneurial companies take off like rockets, while others struggle to gain at best modest “altitude,” while still others fizzle out or never get more than a few feet of the launch pad? When it comes to actual rockets that hurl satellites in orbit, travel to the moon, or send missions to the other planets, they require multiple, high thrust, first stage engines to get off the ground and gain the ascent velocity necessary for gravity not to pull them crashing back into the earth.
In my experience of working with multiple entrepreneurial companies, I have come to see that they are much like rocket ships. The “payload” is the achievement of the enterprise value—or beyond—which the founder is aiming to reach. Underneath the payload is the third stage, the founder’s idea and vision. The second stage is the capital necessary for launch. All of these depend upon the massive thrust of the first stage engines required to go from zero to high velocity and without which the second and first stages will not be effective. “Engine failure” or the absence of one or more of these engines from the beginning explains why only 17% to 20% of privately held companies put on the market each year actually sell.
So what are these six engines without which the entrepreneurial enterprise will fail to deliver the payload? They are 1) Total Trust; 2) Hiring Right; 3) Renewal of mission, vision, and values; 4) Unleashing inspiration; 5) Sustaining a sense of urgency; and 6) Team accountability. Taking the first letter of each term, the six engines can be summed up as THRUST. A brief discussion of each and its importance follows.
Trust—It is impossible to succeed in business if others do not believe that you mean what you say and you say what you mean and that you will keep your promises. Research by Jim Kouzes and Barry Posner, as documented in The Leadership Challenge , shows that trust in their leaders is the single most important factor in employees’ satisfaction with an organization. Without it, people spend their energy maneuvering, playing politics, and playing it safe. Why total trust? I have seen leaders who fool themselves into believing that their closest associates will trust them even if they stick it to vendors, suppliers, banks, or former employees. I have also seen that it does not happen.
Hiring Right—Once an enterprise has grown large enough to require the hiring of expensive executive talent, many candidates will apply who are well coached in how to land a job but less so in how to succeed in the job. Those with extensive, large corporation experience often have romantic notions of the fast-moving entrepreneurial firm and seem to be the perfect fit. They may quickly sour once they realize the perks, large budgets, formal systems, and lavish support they grew used to in large companies are not available in the scrappy start-up. Correcting such hiring mistakes is time- and capital-consuming and often a cause of litigation and damage to reputation. One of the first executives to hire—or contract with—should be someone who can help you learn how to hire well.
Renewal of Mission and Vision—It is a mistake to be so in love with your mission and vision that you do not allow the expert team you assemble to have any say in its revision. Their commitment and dedication will be in proportion to the extent that they make that mission and vision their own. Apple is no longer just a computer company; Amazon does not sell just books; and Google is involved in some many ventures it is hard to keep up. Let the brilliant team that you assemble critique and re-create on a regular basis the underlying concepts that drive your company.
Unleashing Inspiration—SpaceX has been described as the “special forces” of the corporate world, with the expectations placed upon all employees to meet impossibly demanding deadlines and standards. How can the company continue to attract and retain brilliant engineers, scientists and other specialists? The answer is that everyone who works with Elon Musk is deeply aware of his mission and vision, to make space exploration economical and humans a multi-planet species. His faith in the possibility and importance of his goals is infectious, and that combination unleashes the spirit of inspiration that most of us crave in our lives. He knows, speaks, and lives his dreams, and others want to be a part of it. Can you say the same for yourself and your team?
Sustaining a Sense of Urgency—A sense of urgency is natural in the early days of an enterprise. Once the initial success is achieved, however, it contains the seeds of its own destruction—complacency, the attitude that we finally have it made. It is like the gravity that always exerts a downward pull on the ascending rocket. A Sense of Urgency by John Cotter of Harvard Business School provides exceptional insight on this subject, which I recommend to every entrepreneur. Beyond Cotter’s very sound advice, however, we also need to see that sometimes success is based partly on luck and good breaks, and eventually the luck runs out and the breaks will go to the competition. Nothing humans create lasts forever, as Lincoln deeply felt when he stated that the democracy he was fighting for was an “experiment,” not a guaranteed reality. Additionally, envy and the desire for mischief cannot be underestimated as dark motives of the human heart, as many computer viruses and cyber attacks have shown. Finally, our technological and scientific developments make the world ever more unpredictable. Andrew Grove, a co-founder and CEO of Intel, summed up with a touch of irony the message in his book entitled, “Only the Paranoid Survive.”
Team Formation—Whole libraries have been written about teamwork. Suffice it to say here that teamwork requires all of the “engines” described above and without it not much “altitude” will be gained in entrepreneurial success. The right people have to be on board, they have to communicate with trust, be inspired by a common mission and vision, know their roles in the process, and hold one another accountable to work with urgency and commitment to the flourishing of the common enterprise. It is almost a cliché to say that teams win or lose as a unit, but what is often underemphasized is that this should mean significant rewards for all when there are wins. Make it clear how the rewards of success will be shared or some of your engines will lose power.
A natural question at this point would be, “why six engines of ascent and why not seven or eight or more?” The novelist and pilot Antoine de Saint-Exupéry once said that perfection is achieved not when there is nothing more to add, but when there is nothing left to take away. Granted, each of the six engines has a multiplicity of parts, and you may need additional sources of “lift” in your unique circumstances, but I submit that if you aim high you will not succeed with any one of these engines missing, and you may not even get off the ground.
Is there an engine that needs to be added to your enterprise, or does one of them need a tune-up in order to fire at full power? Your answer may determine whether you are able to sell your business when the time comes.
According to the International Business Brokers Association, no more than 20% of businesses listed for sale in the U.S. every year actually ever sell. Other sources put the number lower. Our CEO Roundtable on Exit and Succession Planning is designed to help you as a business owner to be among the fortunate 20% who have a successful sale by helping you to do the necessary preparation one to five years ahead. If interested in getting more information with no obligation, please give us a call or drop an email at ajmulkern@cs.com.