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Managing Growth Frank Moyes Leeds College of Business
Managing Growth Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado Managing Growth
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Today’s Agenda – Managing Growth
What problems are caused by growth? How to build a management team? How do you create a culture? How do you communicate? Managing Growth
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Next Week Exit Strategy Read Bygraves & Zacharakis 14 and Mullins 8
Case: US Labs Speaker - Bob Gill Managing Growth
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Managing Growth is Structured Chaos
Uncertain – future is not clear Unpredictable – trial & error Inefficient – make mistakes Increasing levels of complexity Can’t make major mistakes “Structured Chaos”, Kathleen Eisenhardt Growth is Messy People Are unpredictable Have egos Managing Growth
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What Problems Are Caused by Growth?
What Problems Are Caused by Growth? Managing Growth
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Promoter's Dilemma Need persuasive skills
Promoter's Dilemma Need persuasive skills Importance of can-do approach Many reasons why a venture could fail Investors want to see enthusiasm and optimism Investors will do own due-diligence Impression management – make venture appear bigger than it is White Wave tofu Ham and Eggs Ferranti’s helicopter Invoice numbers and check numbers Company titles Suggest that others are ready to invest now Business Plan – optimistic or pessimistic? JG Des & JA Ster, “Notes from Entrepreneurship Through an Ethical Lens” Managing Growth
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Innovator’s Dilemma Frankenstein Problem
Avoid responsibility of creativity Perceived problem may not be real Telephone in early 20th century – cause tuberculosis, privacy Lending money in 15th century – considered unethical Nuclear power Should entrepreneurs accept the responsibility for the uncertainty of the social costs of their innovations? Tuberculosis Depletion of natural resources Invasion of privacy JG Des & JA Ster, “Notes from Entrepreneurship Through an Ethical Lens” Managing Growth
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All innovation Requires Some Level of Dislocation
Genetic engineering – cloning Human organ transplants - poor sell their kidneys Animal testing Radar detectors Music industry MP3 technology Essays on the Web McDonalds - obesity Managing Growth
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How Build a Management Team?
How Build a Management Team? Hiring and firing GE – every year fire bottom 10% People who are good in starting the company are not the ones to grow it. Barney Feinbloom Celestial Seasons and Horizon Dairies. How improve the odds? Hire people you know. Employee referrals. Headhunters. In-depth due diligence. Experience. Know your industry. Managing Growth
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Relationship Dilemma Roles of founders before and after start venture
Friends vs. boss Husband and wife Using individuals as a means to an end Sever ties when lose value People who start venture may not right to manage growth JG Des & JA Ster, “Notes from Entrepreneurship Through an Ethical Lens” Managing Growth
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How Do You Create a Culture?
How Do You Create a Culture? Managing Growth
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How Do You Walk the Walk? How you treat employees, customers, investors What type of employees do you hire How hard you work How make decisions What do you do when things go wrong? What do you do when things go right? Little things Entrepreneurs want autonomy. Would you expect to promote autonomy amongst employees? Would you tell employees that are short of cash and hold off cashing their pay check? Iraq order for product. Proposal to government at 2x normal price. Difference to go to agent Managing Growth
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Success Dilemma Should all employees own a piece of the company?
How divide the gain What do when employees leave? Minority shareholders JG Des & JA Ster, “Notes from Entrepreneurship Through an Ethical Lens” Managing Growth
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Communications What is going on here? 3 Levels Organized Informal
Communications What is going on here? 3 Levels Organized Informal Style Managing Growth
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Organized Communications
Organized Communications Organized Organization charts, policies Newsletters, Meetings “Device to substitute the pleasures of companionship for the loneliness of toil and dreariness of endless debate.” “Committees are a group of the unfit, appointed by the unwilling to do the unnecessary.” Your management approach Managing Growth
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Informal Communication
Two kinds of information Gossip and rumor Information that can’t or won’t go through formal channels 70% of communication - can not ignore What can an entrepreneur do? Listen Walk about Understand the language Open contacts to outside world Managing Growth
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Style Character Essence of you Managing Growth
Style Character Essence of you 4 food industry entrepreneurs Terry Tierney, Allegro Coffee Todd Woloson, Izze Barney Feinbloom, Celestial Seasonings and Horizon Fiona Simon, Fiona’s Granola Managing Growth
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CCG: Decided Before Started
CCG: Decided Before Started Everyone own shares in company Everyone has access to information on company situation Financial: Income Statement, Cash Flow Orders & sales Customer problems: delivery, quality Everyone has access to founders Door is always open? Walk about Single status – all employees have same benefits Managing Growth
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