Establishing structures and processes
Flat hierarchies that can be found in start-ups are helpful to get a project off the ground. They also make it easier to prove a concept is scalable. But to scale a business idea/model to a more significant size, it is important to setup hierarchies and processes properly. Roles and responsibilities need to be defined. How do you make sure your young start-up organization is not overwhelmed by an exploding demand in the market? Established corporates might look very rigid but their processes are stress tested and can serve as a blueprint for start-ups. The challenge will be to take these established processes while ensuring that decision making time is not prolonged.
Develop management skills
The founder(s) and initial management team in a start-up are often not geared to lead a larger organization. They simply have a different skillset from what is needed to scale further and to manage large operations. They now need to define targets and KPIs for their direct reports. In-depth knowledge in strategic management is required that is specific to the different functions in a startup such as Marketing, Product Management, or IT. The horizon of a manager’s decision making power grows from a few months to several years to make the business sustainable. Many start-ups find themselves facing a need to transition from the initial management team to a more experienced and operations focused group of managers.
Successful large corporates invest a lot of time and budget to understand their employees and to ensure they provide not only a clear career path but also solutions to potential issues employees face within the hierarchy of an organization. In the initial launch phase of a startup very often there is no time for people and talent development. Good people become frustrated and leave. Not only is this a cost factor for a growing startup, it also harms the reputation of the business as an employer. Hence, hiring HR and people experts needs to become a priority for a founder. Looking at how established HR departments are organized can be very helpful.
Be on top of your budget
Startups and established companies have one thing in common: they all need to make money. It is essential for a startup to watch budget and have accurate accounting numbers. Established corporates have gone through various phases of economic performance and they have managed to develop a sustainable business model. They use their accounting, controlling and corporate finance teams to develop competitive advantages. Start-ups can learn from this by managing budgets smartly until the company approaches break-even. It still strikes me to see that for many start-ups “p&l”, “balance sheet” or “cash flow” are necessary evils rather than tools to steer their businesses!
A lot of start-up founders like their roles as being “hip” or “cool, even though their actual achievements in the marketplace are non-existent. As part of being cool they think it is okay to forget about business etiquette. Wearing too casual clothes, being late to meetings, or not showing up at all seems to be widely accepted. Bragging about starting work sometimes in the early afternoon and finishing close to or past midnight is part of the show-off jargon they use. Large corporates have been around long enough to understand how to tailor their communication style to the need of their business partners and their employees. But they will never compromise on professionalism!
Muhammad Chbib has been in the online sector in the MENA region since 2011. He is a McKinsey alumnus and currently leads Saudi travel giant Al Tayyar Group’s Online Businesses and is CEO of tajawal.com, which has emerged as the leading Online Travel Platform from the MENA region for the MENA region. For more information: www.tajawal.com
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