ENTREPRENEUR SPECIAL...Five Mistakes in Business Execution

Five Mistakes in Business Execution

The Mughal dynasty would have been a forgotten footnote of history, if it was not for Jalal-Ud-Din Muhammad Akbar. His genius lay in recognising that it is easier to conquer lands than to hold onto them. Akbar had an important lesson for entrepreneurs; while unique ideas are important, executing on follow through is far more important to success. Most startups don’t reach their destiny despite the right vision, tight strategy and great idea. An idea doesn’t make a company and is just the start of a journey in creating a valuable company. With the benefit of hindsight, here are five execution mistakes commonly made by entrepreneurs:

CHOOSING THE FOUNDING TEAM
Building a company is like fighting a war made up of many skirmishes. Most great kings realised the value of a deep bench. An early test of an entrepreneur is the team; they usually find true believers in the mission with the faith to persevere through the agony and ecstasy of a startup. They choose co-founders who believe in the same destination and have similar value systems. It is great to find a co-founder or team that complements your skills but it is far more important to choose the co-founder on congruence of beliefs and values.

CHANGING SEATS TOO SOON
In the early stages, a CEO is the most important sales person – he has to sell his vision to investors, customers, and employees. Only passion and blind belief in the idea can sell it well. And you can almost never hire passion and belief. Besides, the person who thrives in an unstructured environment of a startup is very different from the person that thrives in a large company. It is best to defer adult supervision and bring in the professional CEO when a company has found a business model for predictable cash flows. Akbar ruled for 60 years; long enough to establish order, a system of controls and taxes, and a system to defend his borders.

LAUNCHING TOO LATE
Almost always, the Mughals were quicker, more nimble and had the element of surprise. As an entrepreneur, you have to be quick to the market so that you can accelerate your learning. Launch early instead of spending months creating and perfecting a product or adding bells and whistles that you believe your customer will want. Facebook was launched with the basic product – photo sharing, apps and timeline came much later. Launch as soon as the core product is ready. You can iterate after that.

SCALING TOO SOON
The most spectacular flameouts happen when a company that hasn’t figured out its revenue or business model starts to expand to different geographies and customer segments. Scale should come after the company knows which customer segment values the product, how to reach them, how much they are willing to pay and how to get them to buy. It is better to concentrate on a smaller geography or specific customer segment in the early days. Akbar’s legacy was finally destroyed by Aurangzeb’s obsession with the Deccan before he consolidated North India.

WRONG SPENDING PATTERN
Every startup must strike a careful balance between being spendthrift and frugal. Many expenses are investments; not all investments are physical assets. These expenses may be in understanding consumers, creating IP, business development, brand building, salaries of experienced people and much else. But there are many expenses that often don’t create value like huge founder salaries, founder perks and fancy offices. The spartan Mongols who were focussed only on conquest broke the backs of empires whose rulers were living the royal life.
Contrary to myth, execution is more important to early stage success than strategy or the idea. Both can be copied easily.

Bharati Jacob
Co-founder Seedfund Advisors

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