Engineering is easy. People are hard.” This well-known line from Bill Coughran, a partner at Sequoia Capital who cut his teeth at Bell Labs and was later an executive at Google, recognized that most tech startup founders believe that three factors will make or break their success: technology, market fit, and sufficient capital. But this widely-held assumption ignores another key challenge. According to a piece of classic research from the Harvard Business School and McKinsey & Company, 65% of new ventures fail because of people issues — and specifically issues with senior executives. This and another recent study align with our experience: it’s not flawed technology, a misguided product, or a lack of cash that causes most failures among new ventures; it’s an inability to get the right team on board and collaborating effectively. In our work with more than 10,000 startup leaders across 70 countries (which is featured in our book, The Bonfire Moment, from which this article is adapted), we’ve found several common management myths that hinder new ventures. Many entrepreneurs show distaste if not disdain for the typical culture of big companies, which stereotypically includes bureaucracy, hierarchies, irrelevant policies, and unproductive meetings. This distaste is especially strong among founders who see themselves as maverick disruptors. If you believe that it’s possible to reinvent a product, service, or industry, it’s easy to extend that thinking to reinventing the way people work. But as frustrating as traditional management processes can be, they’ve endured in part because they make it possible to build large, successful organizations full of unpredictable individuals. While we are not apologists for old-school management, we caution leaders not to go too far in the other direction. It’s relatively easy to be a management maverick in the early days of a startup, when a handful of like-minded people share the same passion, goals, and energy. But a startup can only maintain a loosely managed, egalitarian culture for so long, before the likely outcome will be chronic dysfunction and deep internal conflicts. In particular, we’ve seen three common myths that would be wonderful if true, yet the evidence shows that they can lead to misaligned expectations and strained teams. The Myth of Scaling Without Hierarchy It’s no surprise that mavericks hate hierarchy. In large organizations, top leaders often lose touch with the realities of the work and the needs of users or customers. Decision-making slows down, and many teams get stuck in a loop of overexplaining their contributions to deflect blame or just to keep senior management apprised. There are other reasons why hierarchy has lost its appeal. It contradicts the egalitarian ideal that everyone is equal and implies that some people deserve more power and autonomy than others. It forces people to take narrower, more specialized roles, creating dissatisfaction among those who value variety in their work. It also forces managers to create reporting systems to coordinate a team’s efforts, but many employees experience these systems as red tape. And hierarchy forces managers to do intangible work that’s hard to measure, relative to the more quantifiable and easier to describe work of writing code, closing sales, or spearheading projects. For these reasons, Phanish Puranam of INSEAD rightly asserts that “hierarchy has its discontents, as it seems to violate basic human preferences for egalitarianism, autonomy, and task variety. For this reason, non-hierarchical forms of organization may sometimes enjoy a popularity that exceeds their direct economic significance.” In addition, people often conflate hierarchy with bureaucracy because they often expand in tandem. All else being equal, 50 people will always need more meetings, documentation, and approval processes than five. Nevertheless, it’s possible to reap the positive aspects of hierarchy in a growing startup without suffering from the downsides of too much bureaucracy. Maverick managers get into trouble when they ban hierarchy in the hopes of minimizing bureaucracy, but unleash chaos instead. For instance, as the late Harvard Business School professor David Garvin described, Google’s Larry Page and Sergey Brin experimented early on with a nearly flat organization, reassigning engineering managers and having a few hundred people report directly to a single VP of engineering. Their goal was to break down barriers to rapid idea generation and replicate the environment they’d enjoyed in grad school. But this experiment didn’t last long. Too many people were going directly to the founders with minutia, such as questions about expense reports. Projects that needed resources didn’t get them, while redundant work became an issue. Everyone soon realized that at least some hierarchy would be very useful. Similarly, in 2014 Zappos founder Tony Hsieh implemented a radically non-hierarchical self-management fad known as “holacracy.” But as the company continued to grow, its frustrated teams craved rules and guidance, especially for important functions such as budgeting. Self-managed teams also spent a lot of time haggling with each other, instead of having a manager make quick decisions so everyone could move forward. Within three years, Zappos was forced to abandon holacracy and restore some hierarchy. The evidence is clear that healthy hierarchy with effective managers can reduce operational ambiguity. It can help align the team around shared goals, resolve conflicts, speed up progress, and ensure that people’s development and well-being are looked after. Adam Galinsky and Maurice Schweitzer of Columbia and Wharton Business Schools showed in several studies that if you need a collaborative team to solve complex problems, you’re better off with a boss in the mix instead of a group of equals. Further, Wharton professor Saerom Lee studied this tradeoff via a large sample of video game studios. His research found that every additional layer of management correlated to a decrease of about one percent in the average customer ratings of a studio’s games, attributed to less cross-pollination of ideas when managers divide large groups into small teams. On the other hand, adding one extra layer of management correlated with a 14% increase in sales, attributed to a reduction in aimless exploration and dysfunctional conflicts. If your company is in a growth phase that demands focused teams working diligently toward critical product deadlines and commercial goals, this study reinforces the value of putting a few skilled managers in place and overcoming your initial fear of hierarchy. The Myth of Structural Harmony Maverick leaders, who see themselves as architects of a coveted team culture designed to attract top talent, often gauge their success by the level of conflict within their expanding teams. Workplace conflict is often assumed to be a result of personal conflict, in which colleagues clash over values, personality traits, communication styles, or bad behavior. Addressing personal conflict might require clearing up misunderstandings, fostering more empathy, or removing one of the parties. But there’s also another type of conflict that’s far less understood and harder to resolve. As any team grows and people take on more specialized roles, there’s an inevitable rise in structural conflict. These disputes emerge naturally from the roles people play, especially amid competition for limited resources, the desire to steer the team’s strategy in one direction or another, and as a built-in check-and-balance between departments. Here are some common examples of structural conflict: CEOs and CTOs clash over timelines. CEOs frequently get impatient for product launches, because they’ve already made big promises to investors and customers. But CTOs feel pressure to make every product as good as possible before it launches, without accruing excessive technical debt. Product managers and engineers clash over speed and quality tradeoffs. Product teams typically want to launch new features quickly to keep competition at bay, while engineering teams first want to fix as many bugs as possible. Finance almost always tries to restrict spending by marketing, human resources, and other functions, who in turn almost always feel their budgets are too low. Sales VPs often push to give discounts to new customers to increase revenue, while CFOs hate discounts that hurt profitability. Often those involved don’t recognize that these tensions stem from the natural checks and balances inherent in their roles. And in their frustration, they may not see the genuine value of structural conflicts that prevent the company from going too far, too fast in any given direction. Maverick managers get in trouble when they try to solve structural conflicts as quickly and decisively as personal conflicts, usually by blaming one of the individuals involved. They seldom consider that if, for example, the CFO and the sales VP traded jobs, they would probably still argue about discounts from the opposite perspectives. The biggest mistake many leaders make is to marginalize and disempower one function over another in an effort to resolve the conflict. Instead, we urge leaders to address structural conflicts by acknowledging them, asking those involved to clarify their priorities, and accept that some tensions between functional roles can never be fully resolved. This means that it’s sometimes okay to let the product team turn up the heat on sales, and vice versa. Allow finance to have an honest debate with marketing about their budget. But remind everyone that, in the end, the overall organization’s goals have to take priority over any department’s goals. The Myth of Sustained Heroics Maverick founders love heroics — the long hours and dramatic efforts that are often required in the early months of a startup when the cofounders and early hires face do-or-die pressure. We tend to celebrate such heroics because they reinforce cultural norms such as hard work, ingenuity, and resilience in the face of obstacles. Years or even decades later, some founders still brag about the time they worked 20-hour days for a month to hit a product deadline, perhaps while sleeping on the office floor and eating nothing but cold pizza. It feels great to the hero. The adrenaline that comes with intense focus and unlocking an epic win can be addictive, as are the accolades of colleagues and friends after a period of heroics. So, it’s not surprising that some leaders try to sustain that intensity. But trying to perform heroics consistently, month after month, is extremely dangerous, for at least three reasons. First, heroics create a single-point dependency that is guaranteed to break down, probably sooner rather than later. When a hero repeatedly swoops in to save the day, colleagues feel less incentive to build their own skills and take ownership. One person’s heroics today nudge others toward learned helplessness, which sets up future problems. Over time, prolonged patterns of heroics, or “overfunctioning” behavior, trigger “underfunctioning” in response: colleagues become passive, resist taking on more responsibilities, and increasingly depend on the hero. This response then frustrates the overfunctioning hero, who often ends up burned out. The result can be inefficiency, mutual resentment, underskilled teams, and unreliable systems. Alex Komoroske, a successful product leader at several Silicon Valley companies, shared how his impulse toward heroics hurt his workplace relationships: “I thought…the others weren’t as strong or capable as me,” he writes. “I came to resent the people who weren’t also constantly heroically sprinting, who it seemed to me were just being whiny or lazy. Over time I found myself pointing fingers, or pushing those people away, closing myself off to their perspective or insights.” Komoroske eventually realized that these opinions were distorted and unfair, and ultimately the reason why fires kept needing to be put out in the first place. After a stretch of overfunctioning and distorted opinions of the team, some heroes start thinking, “I do much more than my peers, so I deserve more.” For instance, Daniel and Kyle (pseudonyms) cofounded a European fintech company with distinctly different management styles. Daniel, the CEO for the startup’s first 10 years, focused on assembling strong teams and wrestling with the most important problems, while delegating day-to-day decisions. He wasn’t easy to work for, often calling people out publicly for poor judgment, but he would always give them a chance to come back with better ideas. Kyle, after holding several executive roles, eventually succeeded Daniel as CEO. He was much more prone to heroics because he had a rare gift for mastering new disciplines quickly — he was a coder, a data scientist, a strong operating executive, and a corporate finance whiz who orchestrated their IPO. Because people loved working with Kyle, and he loved getting into the weeds on all kinds of details, he soon became the chief problem solver for relatively minor issues that Daniel would have delegated. In a conversation with us shortly after he stepped down as CEO, following a long and successful run, Kyle reflected on his journey. “I always felt Daniel didn’t work as hard as I did to build this company. But he was the face of the company, and the public loved him. I only realized lately that I constantly overworked myself, because I was trying to prove to people that I deserved to be recognized just as much. Things would have probably been better for me if I realized that sooner.” Creating a hero culture is not the way to build an enduring business. Instead, think of heroics as a “break the glass in case of emergency” option — and think hard before breaking that glass. This advice is not meant to diminish the value of deep commitment or hard work; just be mindful that disruptively solving problems that others were hired to address will have unintended consequences and can undermine your goals. Instead, invest your time and energy into building a stronger team and effective systems, which will help your people solve most of their own challenges without needing you to save the day. . . . Not all maverick ideas about running an organization are doomed to result in negative unintended consequences. We are always excited to see companies find success via unconventional management methods. But if you’re tempted to try the specific maverick practices described above, proceed with caution. Instead, redirect your instincts toward the rigorous use of evidence as you experiment with new ways of working.

Entrepreneurial management

3 Management Myths That Derail Startups   -  Sun and Planets Spirituality AYINRIN 

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Summary.   

In their work with more than 10,000 startup leaders across 70 countries, the authors identify three common management myths among startup leaders looking to grow their companies: the myth of scaling without hierarchy, the myth of structural harmony, and the myth of sustained heroics. By understanding why entrepreneurs fall for these myths, founders can better calibrate their own maverick impulses and instead rely on rigorous evidence about what actually leads to success.

Engineering is easy. People are hard.” This well-known line from Bill Coughran, a partner at Sequoia Capital who cut his teeth at Bell Labs and was later an executive at Google, recognized that most tech startup founders believe that three factors will make or break their success: technology, market fit, and sufficient capital. But this widely-held assumption ignores another key challenge. According to a piece of classic research from the Harvard Business School and McKinsey & Company, 65% of new ventures fail because of people issues — and specifically issues with senior executives. This and another recent study align with our experience: it’s not flawed technology, a misguided product, or a lack of cash that causes most failures among new ventures; it’s an inability to get the right team on board and collaborating effectively.

In our work with more than 10,000 startup leaders across 70 countries (which is featured in our book, The Bonfire Moment, from which this article is adapted), we’ve found several common management myths that hinder new ventures. Many entrepreneurs show distaste if not disdain for the typical culture of big companies, which stereotypically includes bureaucracy, hierarchies, irrelevant policies, and unproductive meetings. This distaste is especially strong among founders who see themselves as maverick disruptors. If you believe that it’s possible to reinvent a product, service, or industry, it’s easy to extend that thinking to reinventing the way people work.

But as frustrating as traditional management processes can be, they’ve endured in part because they make it possible to build large, successful organizations full of unpredictable individuals. While we are not apologists for old-school management, we caution leaders not to go too far in the other direction. It’s relatively easy to be a management maverick in the early days of a startup, when a handful of like-minded people share the same passion, goals, and energy. But a startup can only maintain a loosely managed, egalitarian culture for so long, before the likely outcome will be chronic dysfunction and deep internal conflicts.

In particular, we’ve seen three common myths that would be wonderful if true, yet the evidence shows that they can lead to misaligned expectations and strained teams.

The Myth of Scaling Without Hierarchy

It’s no surprise that mavericks hate hierarchy. In large organizations, top leaders often lose touch with the realities of the work and the needs of users or customers. Decision-making slows down, and many teams get stuck in a loop of overexplaining their contributions to deflect blame or just to keep senior management apprised.

There are other reasons why hierarchy has lost its appeal. It contradicts the egalitarian ideal that everyone is equal and implies that some people deserve more power and autonomy than others. It forces people to take narrower, more specialized roles, creating dissatisfaction among those who value variety in their work. It also forces managers to create reporting systems to coordinate a team’s efforts, but many employees experience these systems as red tape. And hierarchy forces managers to do intangible work that’s hard to measure, relative to the more quantifiable and easier to describe work of writing code, closing sales, or spearheading projects. For these reasons, Phanish Puranam of INSEAD rightly asserts that “hierarchy has its discontents, as it seems to violate basic human preferences for egalitarianism, autonomy, and task variety. For this reason, non-hierarchical forms of organization may sometimes enjoy a popularity that exceeds their direct economic significance.”

In addition, people often conflate hierarchy with bureaucracy because they often expand in tandem. All else being equal, 50 people will always need more meetings, documentation, and approval processes than five. Nevertheless, it’s possible to reap the positive aspects of hierarchy in a growing startup without suffering from the downsides of too much bureaucracy. Maverick managers get into trouble when they ban hierarchy in the hopes of minimizing bureaucracy, but unleash chaos instead.

For instance, as the late Harvard Business School professor David Garvin described, Google’s Larry Page and Sergey Brin experimented early on with a nearly flat organization, reassigning engineering managers and having a few hundred people report directly to a single VP of engineering. Their goal was to break down barriers to rapid idea generation and replicate the environment they’d enjoyed in grad school. But this experiment didn’t last long. Too many people were going directly to the founders with minutia, such as questions about expense reports. Projects that needed resources didn’t get them, while redundant work became an issue. Everyone soon realized that at least some hierarchy would be very useful.

Similarly, in 2014 Zappos founder Tony Hsieh implemented a radically non-hierarchical self-management fad known as “holacracy.” But as the company continued to grow, its frustrated teams craved rules and guidance, especially for important functions such as budgeting. Self-managed teams also spent a lot of time haggling with each other, instead of having a manager make quick decisions so everyone could move forward. Within three years, Zappos was forced to abandon holacracy and restore some hierarchy.

The evidence is clear that healthy hierarchy with effective managers can reduce operational ambiguity. It can help align the team around shared goals, resolve conflicts, speed up progress, and ensure that people’s development and well-being are looked after. Adam Galinsky and Maurice Schweitzer of Columbia and Wharton Business Schools showed in several studies that if you need a collaborative team to solve complex problems, you’re better off with a boss in the mix instead of a group of equals.

Further, Wharton professor Saerom Lee studied this tradeoff via a large sample of video game studios. His research found that every additional layer of management correlated to a decrease of about one percent in the average customer ratings of a studio’s games, attributed to less cross-pollination of ideas when managers divide large groups into small teams. On the other hand, adding one extra layer of management correlated with a 14% increase in sales, attributed to a reduction in aimless exploration and dysfunctional conflicts. If your company is in a growth phase that demands focused teams working diligently toward critical product deadlines and commercial goals, this study reinforces the value of putting a few skilled managers in place and overcoming your initial fear of hierarchy.

The Myth of Structural Harmony

Maverick leaders, who see themselves as architects of a coveted team culture designed to attract top talent, often gauge their success by the level of conflict within their expanding teams. Workplace conflict is often assumed to be a result of personal conflict, in which colleagues clash over values, personality traits, communication styles, or bad behavior. Addressing personal conflict might require clearing up misunderstandings, fostering more empathy, or removing one of the parties. But there’s also another type of conflict that’s far less understood and harder to resolve.

As any team grows and people take on more specialized roles, there’s an inevitable rise in structural conflict. These disputes emerge naturally from the roles people play, especially amid competition for limited resources, the desire to steer the team’s strategy in one direction or another, and as a built-in check-and-balance between departments. Here are some common examples of structural conflict:

• CEOs and CTOs clash over timelines. CEOs frequently get impatient for product launches, because they’ve already made big promises to investors and customers. But CTOs feel pressure to make every product as good as possible before it launches, without accruing excessive technical debt.
• Product managers and engineers clash over speed and quality tradeoffs. Product teams typically want to launch new features quickly to keep competition at bay, while engineering teams first want to fix as many bugs as possible.
• Finance almost always tries to restrict spending by marketing, human resources, and other functions, who in turn almost always feel their budgets are too low.
• Sales VPs often push to give discounts to new customers to increase revenue, while CFOs hate discounts that hurt profitability.

Often those involved don’t recognize that these tensions stem from the natural checks and balances inherent in their roles. And in their frustration, they may not see the genuine value of structural conflicts that prevent the company from going too far, too fast in any given direction. Maverick managers get in trouble when they try to solve structural conflicts as quickly and decisively as personal conflicts, usually by blaming one of the individuals involved. They seldom consider that if, for example, the CFO and the sales VP traded jobs, they would probably still argue about discounts from the opposite perspectives. The biggest mistake many leaders make is to marginalize and disempower one function over another in an effort to resolve the conflict.

Instead, we urge leaders to address structural conflicts by acknowledging them, asking those involved to clarify their priorities, and accept that some tensions between functional roles can never be fully resolved. This means that it’s sometimes okay to let the product team turn up the heat on sales, and vice versa. Allow finance to have an honest debate with marketing about their budget. But remind everyone that, in the end, the overall organization’s goals have to take priority over any department’s goals.

The Myth of Sustained Heroics

Maverick founders love heroics — the long hours and dramatic efforts that are often required in the early months of a startup when the cofounders and early hires face do-or-die pressure. We tend to celebrate such heroics because they reinforce cultural norms such as hard work, ingenuity, and resilience in the face of obstacles. Years or even decades later, some founders still brag about the time they worked 20-hour days for a month to hit a product deadline, perhaps while sleeping on the office floor and eating nothing but cold pizza.

It feels great to the hero. The adrenaline that comes with intense focus and unlocking an epic win can be addictive, as are the accolades of colleagues and friends after a period of heroics. So, it’s not surprising that some leaders try to sustain that intensity. But trying to perform heroics consistently, month after month, is extremely dangerous, for at least three reasons.

First, heroics create a single-point dependency that is guaranteed to break down, probably sooner rather than later. When a hero repeatedly swoops in to save the day, colleagues feel less incentive to build their own skills and take ownership. One person’s heroics today nudge others toward learned helplessness, which sets up future problems. Over time, prolonged patterns of heroics, or “overfunctioning” behavior, trigger “underfunctioning” in response: colleagues become passive, resist taking on more responsibilities, and increasingly depend on the hero. This response then frustrates the overfunctioning hero, who often ends up burned out. The result can be inefficiency, mutual resentment, underskilled teams, and unreliable systems.

Alex Komoroske, a successful product leader at several Silicon Valley companies, shared how his impulse toward heroics hurt his workplace relationships: “I thought…the others weren’t as strong or capable as me,” he writes. “I came to resent the people who weren’t also constantly heroically sprinting, who it seemed to me were just being whiny or lazy. Over time I found myself pointing fingers, or pushing those people away, closing myself off to their perspective or insights.” Komoroske eventually realized that these opinions were distorted and unfair, and ultimately the reason why fires kept needing to be put out in the first place.

After a stretch of overfunctioning and distorted opinions of the team, some heroes start thinking, “I do much more than my peers, so I deserve more.” For instance, Daniel and Kyle (pseudonyms) cofounded a European fintech company with distinctly different management styles. Daniel, the CEO for the startup’s first 10 years, focused on assembling strong teams and wrestling with the most important problems, while delegating day-to-day decisions. He wasn’t easy to work for, often calling people out publicly for poor judgment, but he would always give them a chance to come back with better ideas. Kyle, after holding several executive roles, eventually succeeded Daniel as CEO. He was much more prone to heroics because he had a rare gift for mastering new disciplines quickly — he was a coder, a data scientist, a strong operating executive, and a corporate finance whiz who orchestrated their IPO. Because people loved working with Kyle, and he loved getting into the weeds on all kinds of details, he soon became the chief problem solver for relatively minor issues that Daniel would have delegated.

In a conversation with us shortly after he stepped down as CEO, following a long and successful run, Kyle reflected on his journey. “I always felt Daniel didn’t work as hard as I did to build this company. But he was the face of the company, and the public loved him. I only realized lately that I constantly overworked myself, because I was trying to prove to people that I deserved to be recognized just as much. Things would have probably been better for me if I realized that sooner.”

Creating a hero culture is not the way to build an enduring business. Instead, think of heroics as a “break the glass in case of emergency” option — and think hard before breaking that glass. This advice is not meant to diminish the value of deep commitment or hard work; just be mindful that disruptively solving problems that others were hired to address will have unintended consequences and can undermine your goals. Instead, invest your time and energy into building a stronger team and effective systems, which will help your people solve most of their own challenges without needing you to save the day.

. . .

Not all maverick ideas about running an organization are doomed to result in negative unintended consequences. We are always excited to see companies find success via unconventional management methods. But if you’re tempted to try the specific maverick practices described above, proceed with caution. Instead, redirect your instincts toward the rigorous use of evidence as you experiment with new ways of working.

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