There is a great post at GenuineVC, by David Beisel, talking about Growing Up from Tribal Mode into an Organization. David clearly articulated an important transition that all rapidly growing companies struggle with, the transition for the “tribal” best athlete mode to the “hierarchal” specialization mode. This process can be hard on founders, as they need to change their management style. The transition can be even harder for the team because it no longer will have as much direct access to the founder and will have reduced involvement in many aspects business. Not all team members, founders included are able to make this transition. My guess is this transition usually occurs somewhere around 50 employees. My quick, unscientific, poll of VCs and entrepreneurs, suggests the transition needs to happens somewhere between 40 and 80 employees.
The transition from Tribal Mode into an Organization mode can best be summarized as: In tribal mode you are valued by your ability to solve the start-ups most pressing issues; in organizational mode you take ownership of issues, and should not be distracted by other efforts outside your “area”.
David’s observations are spot on, but I think there is another important transition that is often missed by many Entrepreneurs, VCs and veteran big company managers. The difference between Project Management vs. Organizational Management.
As a former Management Consultant, I witnessed the difference between project management and organizational management. As serial-entrepreneur, I believe that in the hectic early stages of a start-up project management is more critical than organizational management. Why; because a well planed start-up changes quickly, like the roles in a well executed project plan. The structure and tasks in project differs as it moves to completion, just as the structure of a start-up needs to change as the business gets closer to launch.
It is important to consider; just because someone successfully ran a 500 person organization, it does not mean they are any good at project management.
To contrast the difference between project management vs. organizational management, I pulled documents on each topic and ran it through a linguistic tagger. Notice the difference in the concepts that emerge:
Tagged Concepts for Project Management:
Tagged Concepts for Organizational Management:
- organization / organizations
- theoretical / theories
Both types of management are critical. But have no illusion, they are very different. Project Management is goal driven and geared to completion of objectives. Results tend to be binary – either the objectives were met or the team failed. Reduction of risk is paramount, distractions are not tolerated (think revolutionary results). Project Management is great for one time projects like commercializing a revolutionary technology in the shortest time possible.
Organizational Management is much more about ongoing optimization and predictable outcomes. Think continuous improvement, ongoing operations and repeatable tasks. (The results tend to be evolutionary). Organizational Management is critical if you want to offer constantly high quality service.
So what is the key take away? - Entrepreneurs and Boards need to realize when they are transitioning from Tribal Mode to Organizational Mode...but that is not enough, they also need to consider whether they are managing a project or has the business matured enough that it should be managed as an Organization. Transition too soon and you can be bogged down with bureaucracy, Transition too late and your costs and quality will get out of control.