THE CHANGEMAKER EFFECT
EARLY STAGE VENTURES
Scaling on stable foundations is essential if ventures are to scale effectively at pace. The correct placement of Founders and any Founding Family and the structure of the scaled entity are both vital. Trial and error wastes precious time, effort and burn cash. Vastly increase your success rates and financial returns using The Changemaker Effect’s proprietary science based methodology.
The Case for Early Stage Ventures
The capability of the CEO and the senior team is the single biggest predictor of future business and investment performance. Knowing whether a senior team is ‘big enough’ though is usually left to trial and error. In the case of early stage businesses looking to scale this is exacerbated further by a lack of attention to structure.
The Changemaker Effect’s human capital practice uses a unique science based system to address this problem and brings real rigour and objectivity to human capital due diligence.
At the heart of the science is the notion that we are not all able to handle the same levels of complexity. An early stage business scaling at pace adds significant complexity. The question to solve is what roles will founders and the ‘founding family’ take in a scaled organisation. Without this attention the added complexity overwhelms them and failure is almost certain.
Even where early stage founders are big enough their inherent dislike of structure is a major problem. Moving a business from entrepreneur mode where all roads lead to the founder and adding structure and clear accountabilities is critical.
A failure to attend to the ‘complexipacity’ of founders, any ‘founding family’ and/or structure has serious consequences as the following case studies will demonstrate.
CASE STUDY 1.
A family office bought Adtech A and subsequently acquired Adtech B and AdTech C a year later. No human capital due diligence was completed on the original deal but it was requested at the point of the proposed acquisitions. The Chairman and CEO both assessed as having very rare ‘complexipacity’ which is often the case with the true entrepreneurs. In this example the issue was not whether the leaders were big enough but the way their talented ‘founding family’ was organised. 80% of the people were mismatched to their role and/or their manager creating communication issues and suboptimal performance. A new structure was created to unravel the chaos. In this case the business had all the strategic capability it needed but it was all being dragged down into operational work. Once the internal talent had been repositioned all that was required was to recruit inexpensive front line staff better matched to operational work making great brand ambassadors.
CASE STUDY 2.
Another early stage company had a founder with the same rare 'complexipacity’. However at age 30 he had not yet grown reliable strategic thinking. He struggled with communication not realising that most people were not capable of seeing what he saw and would regularly make people feel stupid. Working with The Changemaker Effect we were able to help him to understand that a CEO should be hired and that he would do his best work as the brand’s ambassador or poster boy. Alongside the CEO he was able to use our work to demonstrate to investors an attention to human capital alongside just the technology which allowed him to quickly secure $250,000 of investment. Our people intervention is a semi-structured, highly enjoyable experience based interview. No tests. Making full use of existing talent before hiring externally is our approach and this is always very well received. An added benefit of completing the interviews is that the discussions provide additional insights which can be captured and addressed.