The founders’ advantage: an ownership mindset
I caught up with the founders of a business with a few million dollars in revenue last week. They are growing quite quickly and haven’t raised any capital. We were discussing incentive schemes and some of the challenges their team was facing (people not acting in the interests of the company, leaving problems unsolved and not wanting more customers because that means more work).
Here was my feedback:
If you can establish and maintain an ownership mindset in your team, you’ll create more value, build a strong culture and have less distractions as you grow your company.
To build an ownership mindset, it is important to consider the following:
Aligned incentives: value is created and shared appropriately
Culture: an empowered team that takes responsibility for the outcome, for their actions and wants to contribute to the success of the company and the team
Mission: everyone on the team is clear on where you are collectively going, why you are doing it and what the journey entails
These are a few examples that I’ve seen in the best companies I’ve worked with:
Founders make the team feel like owners
Team members know if the company wins, they win. Incentives drive behaviour.
This is often set up through an ESOP or employee incentive program. At a minimum it should include key team members, however, it is often helpful having a broad-based ownership program because it means you can talk to your team as owners of the business, encouraging a sense of openness, responsibility and collaboration.
It also means you can all celebrate the wins (and rewards) together when things are going well, and in tougher times, it encourages everyone to lend a hand or tighten the belt if needed (this worked well for a number of companies I’ve been involved with back in 2020, when there was a lot of uncertainty and we needed to manage costs).
Founders walk the walk. They value creativity, transparency and a supportive culture
Creativity, with a sense of urgency
Large companies tend to throw money at problems, which creates laziness and opportunities for founders. A real advantage for founders is the potential to solve problems creatively, using a scrappy approach, together with a sense of urgency.
A great example I saw recently was a small tuck-in acquisition with a company I’m working with. The founders were having some supply chain issues but saw that their best customers wanted a product they didn’t stock (and couldn’t easily get), so they bought a small (unprofitable) company that had supply and they were able to profitably scale it to satisfy their customers' demand.
It reminds me of an old saying that I like: “If the problem can be solved by money, it's not a problem, it's the cost”
Transparency
The team knows what’s going on, how it drives (or impacts) value and what they can do about it.
Key metrics within the business (including revenue, profitability and growth drivers) are shared with the team. When there is a major opportunity or problem, it is acknowledged quickly and shared with the relevant people so that it can be actioned.
Supporting each other
The team knows they have the authority to act. You’ve got their back and they’ve got your back.
This is even more important in tough times. Taking action creates positive energy and momentum.
One of the things that always makes me smile is seeing founders reward team members who’ve helped them through a tough time.
The team believes in the mission
Everyone on the team knows where you are all going and why.
There is a clearly communicated plan. The plan may change, but there is always a plan.
The founders’ advantage
While all of the above can help build a great company, in a competitive hiring environment it can also help attract top talent. Larger companies tend to pay more, offer better benefits and may have a more prestigious reputation, so when you can, ensure you offer:
A strong culture: being part of a close-knit team, building towards a common vision
Broader experience: a role with more responsibility together with exposure across the business to learn; and
Ownership (or similar): where the team can benefit from their work, from being part of the team and from the success of the company
You’ve got the ability to set yourself apart and build a team with a shot at greatness.