In my experience, there is one action a founder can take that moves them from a first-time immature founder to a seasoned mature founder in a flash. This action is the life-cycle behavior modification.
Firms, like living creatures, have life cycles — they are born, grow, age, and die. A founder must adjust her behavior to reflect the lifecycle stage of the firm. Yet, the immature founder does not do so, and this failure to adjust their behavior causes the firm to underperform. Mature founders, on the other hand, modify their behavior based on the stage of the firm. And as a result, the firm flourishes.
It is not easy for a founder to adjust their behavior. Human beings resist change, and founders are no exception.
Let’s start with the first four life cycle stages of a boutique professional service firm and break them down:
In this stage, the firm is not yet born. The founder is only “flirting” with the idea. The key here is that the future founder must test out the idea to see if it will hold water or needs to go back to the drawing board.
Immature Founder Behavior: An immature founder in the flirting stage is unrealistic. He is focused on hitting it big and does not bother to test the value proposition. The risk is large, and the founder is only partially committed. Often, he loses control of the firm in this early stage by prematurely raising capital and diluting their ownership stake.
Mature Founder Behavior: A mature founder in the flirting stage is grounded in reality. He realizes that all he has are assumptions at this stage. He goes about testing each assumption. At this stage, their commitment is commensurate to the risk, often remaining employed full-time elsewhere. He also maintains 100% control of the firm and doesn’t let emotion fill his head with wild dreams.
In this stage, the idea is real, and the founder makes the leap and commits to the idea. The founder must be wholly committed to the concept of the firm for success to be possible.
Immature Founder Behavior: An immature founder in the conception stage starts making lots of promises to co-founders, the first group of employees and the early clients. She needs others to commit to her in order to get the firm launched. In her eagerness, she overpromises and over-commits.
Mature Founder Behavior: A mature founder in the conception stage does not make promises she cannot keep. Yes, she needs others to commit to the vision, but she is realistic with everyone. They would rather potential co-founders, employees and clients say no than sell them a grandiose vision that will never become real.
In this stage, the firm is launched. Founders are trying to build commitment. They need to recruit others, such as clients and employees, that will support the new idea. This is how many marginal employees and clients make it into the firm.
Immature Founder Behavior: An immature founder, flush with early funding, launches with far too many initiatives. This can mean pursuing big dreams and lots of ideas. Often the prospects do not become paying clients, or if they do, they are small and too few in quantity. This stage gets prolonged, funding runs out, the founder becomes exhausted, his commitment wavers, and he often quits.
Mature Founder Behavior: A mature founder in the birth stage focuses on sales, sales, and sales. He needs cash and generates it consistently, and he understands this is not the time for new ideas. Thinking gets replaced with doing. He needs paying clients. The relentless focus on generating paying clients and cash flow results in success. The success fills the founder with confidence and, as a consequence, intensifies his commitment. The founder becomes willing to die for the cause, so to speak.
In this stage, the firm is working and growing rapidly. Sales are up, and the firm achieves breakeven and starts to generate cash flow. The firm is not just surviving but flourishing.
Immature Founder Behavior: An immature founder in this stage gets arrogant. She starts to pursue too many opportunities, has a hard time prioritizing, and ends up simply reacting to the environment. The founder is basically the entire firm, up to this point. Eventually, they make a major mistake causing a big loss, client defection, and/or the loss of key employees. The root cause of this major mistake is usually premature delegation. The founder tries to build a team and delegate authority, but she picks the wrong team. The firm is not yet ready for this and starts to underperform. The arrogant founder believes she is the only person capable of making the firm successful and jumps back in to save the day. Yet, they do not realize that they just got trapped in a lifestyle business by building a firm dependent on the founder and cannot thrive without her.
Mature Founder Behavior: A mature founder stays humble. She understands that early success can be temporary and fickle, and she never forgets the struggle in the previous stages. Instead of reacting to the environment, the mature founder plans ahead for it. Rather than focusing on what else to do, she learns what not to do. The mature founder anticipates the future lifecycle stages and begins to build a team slowly. This begins with identifying high-potential employees and giving them incremental tasks to complete. She implements a succession planning process that prevents the firm from the whiplash caused by immature founders. The mature founder recognizes the firm is not mature enough to run without her yet. Rather than a dramatic exit from the day-to-day, she incrementally distances herself from the daily grind, allowing the team to slowly take control.
Thus far, I’ve primarily given you the description of the stages and the characteristics of a founder’s behavior in each stage. My hope in doing so is that you see yourself in these descriptions and adjust accordingly. If you see yourself in the birth stage, then you now know that you must focus on sales. The financial success during this stage is what will power your firm into the childhood stage, where you’ll be able to begin operating for short stints without the founder and continue cultivating skills.
Additionally, it is imperative that you don’t skip any stages. If you pass over the flirtation stage, you haven’t properly played with the idea enough, and the firm might tank before it gets to the birth stage. You’re back to the drawing board and disheartened.
If you don’t see yourself in these beginning stages, you might have an almost completely mature firm, but even those aren’t without their own stages and trials. In the next installment of The Maturing Founder, I will explore the later stages that focus on scaling your firm for the potential exit — what an immature founder will stumble over and what a mature founder will have the wisdom to avoid.
Note: blog part 1 of 2