We think what is needed is to understand how strategy works in the business. Then informed choices can be made about the skills people need to have to mange the specific requirements of those strategies. It’s always strategy first, then people.
Consider this piece that recently appeared on Entrepreneur.com.
The author, Bernd Schoner, an entrepreneur who successfully sold his startup, says in The 6 People Every Startup Needs: “There’s no magic bullet for startup success, but your team can often make-or-break it.” We couldn’t agree more with that statement!
But then Schoner goes on to say: “there are six key personality types that make for a great team in a typical tech company or startup. Understanding this can increase the odds of success of the business.”
We struggle with that thinking because we think what is needed are the skills to manage specific tasks, not personalities. What we see is the system of strategies that needs to be staffed and managed in order for the company to succeed.
Let’s look at how this works.
The 8 Strategy System to be Managed in Any Business
We think it all starts with how strategy is defined. Forget the academic gobbledegook that strategy is about competitive differentiation or value propositions or some other equally vague or limited notion. That approach makes it impossible to see that strategy is a system within any business or nonprofit.
Our definition of strategy is that strategy is a choice of action.
If you can accept that definition, you will be able to see that there is a system of 8 strategies (or choices of action) to be found at the core of any company, whether it is for-profit or nonprofit.
These 8 strategies are the basis of all organization design and the starting point for all strategy development.
The names of some of the strategies may change depending on whether the organization is for-profit or nonprofit but the basic 8 choices of action remain the same. For example, Business Definition becomes “Mandate” for nonprofits. Most nonprofits don’t do “marketing”. Instead, they do “Communications”. Service Delivery is known as Production or Manufacturing depending on what the company does.
Henri Fayol identified six of the eight on page one of the first book ever written on strategy, General and Industrial Management. Peter Drucker identified the remaining two, Growth and Business Definition, in The Practice of Management, 1954.
Putting People into the 8 Strategy System
Now that we have identified the strategy system of 8 strategies, we can try to make sense of what Dr. Schoner is trying to say when he speaks to each of the “personality types” needed to run a company.
The 6 personality types he lists are: the prima donna genius, the leader, the industry veteran, the sales animal, the superstar, and the financial guru.
The prima donna genius is clearly responsible for managing the R&D/Technology Strategy. This is the strategy concerned with the creation and/or use of proprietary capital.
“I think it’s commonly accepted in a tech startup that you better have someone with technical knowledge,” says Schoner. “You want to have someone be able to lead the technical agenda of the team.” We agree.
The industry veteran, the sales animal, and the superstar are clearly all concerned with managing aspects of the Marketing/Sales Strategy. This strategy is about identifying and capturing customers with the promise of value being made about the product or service being offered by the company.
Schoner tells us “an industry veteran is needed” because “They really have the experience to understand what’s needed in a particular industry”. The industry veteran would clearly have marketing responsibility to for identify the target market and develop the product value proposition. That makes sense to us.
Then there is “The sales animal… the person who knows not just the technology, but also knows how to sell it to a customer”. So now we have the sales side of marketing covered. Selling is all about "capturing" the customer. Again, this totally makes sense to us.
What about the superstar? Schomer says “That’s the guy to build your marketing strategy around. He’s the guy you want to send to conferences and industry meetings.” Clearly, the superstar role supplements the role of the industry veteran in managing the marketing strategy. Again, we defer to Dr. Shoner's judgment on this. After all, he's the one who successfully built and sold his company.
“The financial guru” Dr. Shoner recommends is concerned with the Financial Management Strategy. This strategy is about the sourcing, allocation, and management of the capital, revenues, and expenses of the business. Schoner says “Having the financial personality is important. You want someone who has enough ability to handle numbers”, says Schoner. We can’t disagree with that!
Finally, there is “the leader”. Schoner says it’s important to have one person calling the shots. This person is “the leader”. “It can get very tricky if there are five opinions and all have equal weight. Democracy is great, but not in a startup”.
Obviously, Dr. Schoner’s “leader” has responsibility and final say on all 8 of the strategies. That's what the CEO does as can be ssen in the basic organization chart below which addresses all 8 strategies.
But what about the strategies that are not addressed?
We take the position there are 8 strategies. Dr. Schoner's staffing model has addressed 3 of them. Let's look at what Dr. Schoner's model doesn't seem to address.
It may be that Schoner didn’t have to face any risks in his startup. Any risk experience would have made him aware of the Risk Strategy and perhaps decide to staff it. Either that or he was filling the role of risk manager himself, albeit intuitively. The most obvious risks for startups are legal matters, such as patent filings or contract disputes. Then there are tax and other red tape issues. The list is endless.
And what about the Manufacturing/Production Strategy? Our guess is that Dr Schoner may have sold his company before having to staff or to outsource any production so it wasn't an issue for him.
The same is probably true with the Growth Strategy. The company was likely sold before Schoner had to staff that strategy. As for the Organization Management Strategy, which is concerned with the sourcing, identification, and management of the human resources of the business, we can completely understand why it might be the last strategy staffed in a 6 man startup and is therefore not addressed by Dr. Schoner.
Finally, there is the Business Definition Strategy. Business Definition, known as Mandate in nonprofits, addresses how the company positions itself in the competitive environment. We suspect, as the owner and CEO of his startup, Dr. Schoner was managing this strategy himself, albeit intuitively, with decisions on how the business, as opposed to its products, would be defined in the marketplace.
We are trying to give entrepreneurs like Dr. Schoner a more robust tool that makes making strategy decisions, such as staffing, easier and more understandable. And in doing so, increases the likelihood of success for the business.
Dr. Chandler told us in 1962 that “structure follows strategy” in: Strategy and Structure: Chapters in the History of the American Industrial Enterprise. In other words, figure out your strategy first and then staff it.
That's what our 8 strategy system model can do for your business. If you understand what you are trying to do within each of the 8 strategy categories, you will be able to understand what your staffing requirements are.
So a big congratulations goes out to Dr. Schoner from us on the successful creation and sale of his first startup and we wish him all the best with his next venture!
For more on our thinking, read The Alpha Strategies: Understanding Strategy, Risk, and Values in Any Organization