Center for Management of Emerging Companies

Welcome to the Website and Blog of the Center for Management of Emerging Companies

Welcome to the website and blog of the Center for Management of Emerging Companies, which is part of the GL&B Institute for Management Training and Studies and dedicated to identifying, explaining and disseminating information regarding the best practices of managers of emerging companies around the world.  It is intended that the website become a trusted and valuable resource for enterpreneurs, managers, investors, professional advisors, scholars and policymakers by providing a steady stream of new content including blog postings on the Emerging Companies Blog, which has been in existence for several years, White Papers, articles, books and training programs.  Please review the materials closely and subscribe to obtain e-mail updates when new information is posted to the website.

Founder's Fatigue - Identifying and Handling It

While the original founders will always be known for their roles in identifying the idea for a new venture and packaging that idea into a business model suitable for investment support and attraction of other required resources there is some truth to the proposition that businesses that enjoy long-term successes actually have two or more groups of founders that make their mark at different stages of development.  An obvious example is the point where the founders add outsiders to the executive team, either voluntarily or at the insistence of investors.  While much is made of the adversarial relationship between founders and the “professional managers” the newcomers can contribute expertise that takes the firm in new and better directions and can bring a fresh and objective perspective to the strengths and weakness of the strategies selected by the initial founders.

A “new” team of founders is particularly necessary when the original trailblazers “hit the wall” and begin to struggle with key long-term decisions and day-to-day operations.  Starting a new business is hard work and like most things that require intense effort and long hours the persons involved are at risk for growing fatigued and stale.  Fatigue generally sets in gradually and the signs are often difficult to find; however, a a recent post on the CincyTech blog provided a nice overview of some of the symptoms that something is going on.

Ignoring symptoms of “founder fatigue” can have dire consequences.  For example, if a founder fails to acknowledge negative feedback on products and services those items will start to drift farther and farther away from what the market is looking for and eventually the market will turn elsewhere for solutions.  In addition, a founder who fails to take honest criticism seriously begins to lose the trust of managers and employees as they begin to worry about whether the bad news will eventually overwhelm the business and destroy the dreams that were so much a part of the initial excitement associated with the firm.  Flat metrics can be a sign to investors that the founder has reached the limits of his or her skill set as a manager and that a new CEO from outside needs to be brought in to change the trajectory of firm growth.  Such a change may happen quickly once the evidence is uncovered since investors are often short on patience and take on portfolio companies with a limited time horizon.  Finally, troubles with building internal and external relationships will eventually stifle growth initiatives and founders need to understand that what seemed to work at the beginning is not going to be adequate when the company is growing quickly.  In some cases this means changing, and often reducing, the roles of employees and/or professional advisors who provided great support for the founder during the early days.  Such transitions can be painful and it may be best to bring someone new in to handle sensitive restructuring issues. 

Founders are unlikely to admit to fatigue on their own and this means that someone, such as an investor or a trusted advisor, needs to keep an eye on how the founders are coping with the day-to-day stress of running the business.  Financial statements and other formal reports are obviously important tools in the process; however, setting aside time for regular, clear communication on a face-to-face basis is an essential diagnostic tool.  During these meetings founders should be encouraged to talk about problems and issues that are causing stress for them and which may impair the progress of the company.  When problems and issues are put on the table it becomes easier to have a candid conversation about the best way for the founder to continue to contribute to the firm.  Sometimes a change at the top of the organizational structure is the best path to take and in those situations the founder will at least have a good understand of how he or she was being affected by the pressures of leading the firm.  In other cases, just having someone to talk with is enough for the founder to emerge revitalized and better equipped to fend off the symptoms of fatigue and continue at the helm. 

Emerging Company Capital Raising Under New JOBS Act

Extensive, and somewhat controversial, changes were made in the regulatory framework for financing of emerging growth companies when the President signed the ‘‘Jumpstart Our Business Startups Act’’ (“JOBS Act”) into law on April 5, 2012.  This report describes some of the main features of the JOBS Act, which includes easing requirements for going and being public, permitting “general solicitation” of investors in Rule 506 and 144A offerings under certain conditions, creating a new “crowdfunding” procedure to allow issuers to raise up to $1,000,000 if extensive disclosure and reporting obligations are satisfied, creating a new exemption that parallels existing Regulation A that would facilitate raising up to $50,000,000 in capital and increasing the maximum number of shareholders for private companies to 2,000.

Project Management in Small High Technology Firms

Project management is important for companies and this certainly applies to small- and mid-sized firms challenging larger enterprises in a dynamic environment characterized by intense competition, globalization and customer demands for quality and timeliness.  A good deal of research has been done on project management in larger organizations; however, relatively little has been written about project management techniques in smaller companies with much more limited resources.  One exception is a paper written by Murphy and Ledwith that reported the results of a survey of more than 100 owner/managers of small high technology businesses in Ireland regarding various issues and techniques associated with their attempts to implement project management systems and techniques.

Key findings of the survey, as well as a review of related empirical studies by the authors of the paper, included the following: the critical criteria for assessing whether a project was “successful” included time, cost, quality and client satisfaction; the critical factors that contributed to the “success” of a project included top management support, clear goals and objectives, planning and control, resource allocation, risk management and client consultation; respondents strongly agreed that a well defined project management process was necessary for projects to be successfully implemented and that previous experience was a key factor in implementing an effective project management system; and respondents acknowledged that large organizations approach projects in a different manner than smaller firms and that organizational structure affects project management.

Owner/managers of small firms realize that larger organizations arguably have certain advantages over smaller firms with respect to project management—greater capital and resources and greater specialization; however, they did not accept the notion that project management was too complex and costly to be used by smaller firms.  When asked for specific ideas about how project performance could be improved they suggested making sure that project tasks took priority over other work, more control of project teams, clearer goals and communications channels and more emphasis on fact finding and client input at the conception stage.  The most popular project management tools and techniques among the respondents included formal project planning software, Gantt charts, project teams and change control processes.

Definitions of Entrepreneurship

Few topics in the business area have attracted more attention among academics and journalists than entrepreneurship and this report describes efforts to reach a consensus on a fundamental question: “what is entrepreneurship?”  Efforts to make the traits and characteristics of the individual “entrepreneur” have led to unsatisfactory results and it would appear that the more viable and useful approach is to view entrepreneurship as a process that includes the discovery, enactment, evaluation and exploitation of opportunities to create future goods and services. 

Thornton's 3Ds of Management Styles

Managers have a wide array of choices with respect to management styles and Thornton's 3Ds of Management Styles attempts to simplify the matter by identifying three basic styles: directing (“tell employees what to do”), discussing “ask questions and listen”) and delegating (“let employees figure it out their own way”). Each of these styles has its advantages and disadvantages depending on the situation and the choice determines how managers go about other activities such as communication, goal-setting, decision-making, performance monitoring and establishing rewards systems.

Evolution of the Organizational Structure

When an organization has just been launched and only a small number of persons are involved there is generally ample opportunity for face-to-face communication among the members of the group and the need for a formal organizational structure is generally low provided that sufficient attention is paid to strategic planning and setting mutually agreed goals and objectives.  As organizations grow from very small (i.e., less than 20 employees) to relatively large (i.e., 80 or more employees), one notes significant changes in the management of workflow and structure becomes an important managerial challenge. At some point the range of activities and tasks that need to be performed within the organization expands to the point where the founders no longer have the time and skill to personally oversee all of them and a key challenge for the firm is the manner in which the founder delegate responsibilities and decision making authority to lower-level managers and new executives who join the founders as organizational leaders.  This report discusses some of the steps that should be taken for an orderly transition.

Business-Level Strategy

Growth is a key goal and objective for emerging companies and management must carefully determine the best way to combine the core competencies within a firm’s functional departments to provide the firm with the best opportunity for achieving and sustaining a competitive advantage in its chosen environment.  This report focuses on the process of setting business level-strategy, which includes (1) selecting the domain(s) in which the firm will be competing for scarce resources (e.g., capital, personnel, technology, inputs and customers) and (2) positioning the firm in each chosen domain so that its function-based core competencies are most effectively leveraged to establish a competitive advantage.  The overall goal of business-level strategy is to protect the firm’s position in its current domain and, if possible, enlarge the domain in which the firm can operate with a competitive advantage.

Maximize Returns on "People", Not "Capital"

Undoubtedly the primary obsession of investors and the managers of the companies in which they have invested has been maximization of returns on invested capital and this has long driven the decisions of managers as they have developed their strategic plans and objectives.  There are, however, other ideas that are quite intriguing.  Bryan and Joyce, for example, have argued that managers should expand their traditional strategic focus on maximizing returns on capital to maximizing returns on “people” and that this requires recognition of the important role of organizational design in strategic planning and execution.  This report provides an introduction to some of the arguments made by Bryan and Joyce, as well as their suggestions for redesigning organizational structures and human resources policies to take into account the dynamic changes that have occurred in technology that now allow for collaboration and sharing of knowledge.

Leadership Attributes

Extensive time and resources have been devoted to the search for “attributes” and “traits” of effective leaders, as well as characteristics of dysfunctional leaders.  Much of this work has been conducted under the umbrella of settling debates about whether leaders are “born or made” and, to the extent that genes are not totally responsible for leadership success, what strategies can be used to teach people how to execute the behaviors though to be associated with effective leadership.  Leadership is important to the progress and success of emerging companies and this report provides an overview of some of the more interesting research on "leadership attributes" and the conclusions of researchers that their is hope for teaching persons in leadership roles how to execute the behaviors associated with effective leadership.

Factor and Framework Conditions for Knowledge-Based Entrepreneurship

A few months ago we featured a report on knowledge-based entrepreneurship in India.  Continuing with that theme, it seems relevant in these difficult economic times to take note of the various facilitating factors or framework conditions that researchers have identified for “knowledge-intensive entrepreneurship” to flourish and sustain.  For example, the Global Entrepreneurship Monitor has cited ten such factors or conditions, including financial support; government policies; government programs; education and training; research and development transfer; commercial and professional infrastructure; internal market openness; access to physical infrastructure; cultural and social norms; and intellectual property rights protection.  Gupta, focusing specifically on facilitating and supporting technology-based entrepreneurship in India, suggested similar types of supporting activities, including creating the right environment for success (i.e., entrepreneurs should find it easy to start a business; ensuring that entrepreneurs have access to the right skills, both entrepreneurial (i.e., how to manage, finance and grow businesses) and functional (i.e., technical, product development, marketing, human resources, etc.); ensuring that entrepreneurs have access to “‘risk capital” and enabling networking and exchange so that entrepreneurs can learn quickly from the experiences of others.  Policymakers should heed this advice in developing their plans for re-igniting real economic growth and dynamism.