A design approach to building your company

The typical approach to entrepreneurism is to focus on diligently designing and developing your product or service: build it, start selling it, and grow.  I propose that it is time to rethink this. There is a fundamental step missing.  Why don’t we spend as much time and energy designing and developing our companies?    

I would argue that corporate design is more important than the product. A systemic path for growth is critical.  Once you have a solid product, execution should become the focal point.  In most industries, definitive product differentiation is rare. Rarely have I seen failure because the product didn’t work – it was because the company was not or could not be designed for success.  

Consider your next step as a science experiment.  Set your hypothesis and then identify the variables and assumptions that support your hypothesis. Create a plan to test these assumptions.   For example, your model assumes you can sell your product for $100,000 to a midsize company—prove it.  Your go to market assumes you can sell the product to be used for a specific purpose in a specific market—prove it.  Your model assumes your implementation costs are less than $10,000—prove it.  Taking an experimental approach allows for the inevitability that sometimes you will be wrong, and you need to be able to adjust your financial projections and your approach.

Setting the right expectations with your investors and your board sets the foundation of your relationship with them.  Admit that there are things yet to be known.  I see most entrepreneurs commit to milestones, setting a “gate” for the next stage based on the ability to accomplish that specific goal.  This assumes you can accomplish everything you envision, and that is extremely rare.  Make it clear that you are going to validate your models by testing and adjusting— before you spend the funds to grow.  I have found that investors are more impressed when you know the details of your model, the most critical levers, and the elasticity of your assumptions, rather than unfounded growth predictions.  I have always known my risks and I share how I will test and address them.

You are not ready to grow just because you proved that your founding team can deliver once.  You must design a process that is repeatable, predictable, and profitable.  Most companies can do anything once.  The question is whether you can systemically repeat it.   

This repeatable process is dependent upon coordination across your entire company. 

By creating a well-designed system, you can ensure alignment and a process that flows efficiently and effectively.  Your system determines what your organizational structure should be, rather than your organizational structure dictating process. If the company is designed with intent before you build out your executive team, the talent you need to hire becomes clear and apparent. Your expectations of them are clearly defined rather than each new executive telling you what they will deliver. Additionally, you can hire someone who can grow into the position, because the system is already designed – allowing you to foster passion and desire in the new hire while creating an exciting growth potential for their career. 

Taking the time to design your company may feel like you are slowing your ability to go to market, but in the end, it will accelerate and secure your eventual growth.