A Tough Balancing Act

Typically, technology startups are formed because a few smart engineers have identified a new opportunity. They work hard on the technology, making sure they deliver innovation that differentiates them from their bigger competitors. They approach their initial customers and refine the product based on the feedback from these early adopters. The focus is still very much on the technology and the founding team is burning the midnight oil but enjoying the work.

Then comes the product launch and the exposure to a broader customer audience. While initial users are willing to accept an imperfect product, the development team becomes swamped with “trivial” requests from the mainstream users –– a polished interface, a GUI, a comprehensive user’s guide, more features and so on.

The startup quickly finds itself trapped between its big goal to create disruptive technology and the more mundane task of responding to customer requests. Management must make the hard decision on where to put resources. This is a difficult dilemma. On one side, the team continues to lead with technology innovation, potentially widening the gap with the competition. On the other, responding in a more tactical way to customer requests is more likely to secure orders and the cash that is essential to the growth of the company. And, let’s not forget that the former appeals to the technologists in the startup while the latter draws from the sales team and most likely investors who want to secure their investment.

Unfortunately, there’s no baked answer. It’s a matter of strategic versus tactical. The decision often is driven by elements unrelated to the technology and its users. Engineering input always is welcome, but the reality is that the business will impose the final decision. A key one is the cash-flow situation. If the startup is cash-strapped, that means responding to customer requests and securing the orders. If the financial outlook is brighter, the founders have more choices and could hire one additional engineer to cover customer requests while the core continues to innovate.

Accepting an investment from an industrial partner could exacerbate this challenge. Chances are high that the partner will force the startup to alter product development to suit its short-term needs.

Quite often, management will have a critical role to play at times when those difficult decisions are made. There could be dissension from the founding technologists who love the technology and believe the startup is selling out for financial reasons. All too often, it can become emotional and personal. A good leader will make sure that the team stays unified when the chosen path seems to favor one part of the company over another. The leader will make sure that everyone on the team feels included and buys into the final decision. The startup cannot afford to lose key contributors or have internal dissention at those critical stages.

Startup leaders must wish for a magical lens to see what’s coming next and what the future’s going to be like. But decisions have to be made with imperfect, partial information. Everyone who embarks on a startup venture should understand that decisions are made at different stages in a company’s existence and frequently due to funding or available talent.

It’s wise to remember that the technology industry is dynamic and always changing. Startup founders are well advised to be honest with themselves and avoid the trap of falling in love with their ideas. Egos need to be left in check, too. Instead, I advocate flexibility and adaptability. Assumptions built into the business plan six months ago have likely shifted. There is no shame in changing the startup’s focus.

For the most part, startup founders and CEOs are adaptable, but change is never easy and it comes with a certain amount of pain and long, intense internal discussions. It is necessary for the survival of the startup.