Role Dilemmas

The early stages of a startup can be messy, ambiguous and fluid. While clearly defined roles for each founder usually help to sort things out, these roles can (and will) intermix as founders work their way through getting a business up and running. Some of these role entanglements are avoidable, some are beneficial, and some others can lead to serious problems. Founders need to become familiar with these possibilities and consider alternatives to counterbalance and minimize or avoid turmoil within a startup.

During the early stages of a startup, many founders find themselves facing several role dilemmas including executive title allocations. As founders work on putting together an executive team and allocating titles, they must walk a fine line to make sure this distribution is consistent with the resources brought to the table by each individual. Noam Wasserman identifies three key factors in detraining how executive titles are allocated; level of commitment, the idea founder, and capital (human, social and financial). Wasserman’s data analysis also found a 47% likelihood of the CEO title going to the idea person (Wasserman, 2012). Founders can look at other tools and resources to supplement title allocations. Rather than presenting title allocations alone, founders can look at a combination of equity, salaries, or other benefits to balance a perceived compensation gap.

Overlapping roles is another dilemma worth discussing. Overlapping roles provide much needed flexibility as a startup begins to take shape. Once a business takes off, founders should reexamine the scope of each founder’s role. Some of the downfalls of overlapping roles include decreased accountability, confusion over who does what, and increased tension as founders step on each other’s toes (Wasserman, 2012). A recent Forbes article examined some of the reason why balanced teams are important. The article mentions varied perspectives, creating synergy, accountability and separation of responsibilities as some of those key factors (Jen, 2018). Founders should consider extensively these factors during the planning process. By ensuing a balanced and efficient division of labor is in place, entrepreneurs can have an easier time convincing venture capitalists to fund a project. It is also important to remember that startups are dynamic environments and initial roles might need to be adjusted to meet the changing nature of a given startup.

Another situation that can create a role dilemma is when multiple executive team members are also part of the board of directors. The power dynamics at play are complex and can be viewed as a double edge sword. The CEO can benefit from having allies on the board of directors in the form of other co-founders; however, this can become problematic when discussing co-founder related issues with the board or can create confusion over who has final decision authority (Wasserman, 2012). It is important to remember that some executive team member might hold significant equity in the business and this dilemma might be unavoidable. Founders need to address these scenarios during the planning stages and include possible resolutions as part of the executive team exit plan.

Contingency procedures and planning will prepare founders to better handle role dilemmas and many other issues. While it is impossible to account for all dilemmas and issues, founders need to understand the importance of objectivity in dealing with any role dilemma.

References

Forbes Site. (2018, May 11). Retrieved September 25, 2018, from https://www-forbes-com.cdn.ampproject.org/v/s/www.forbes.com/sites/forbesfinancecouncil/2018/05/11/five-reasons-why-balanced-teams-are-so-important-for-startups/amp/?usqp=mq331AQCCAE%3D&amp_js_v=0.1#referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fforbesfinancecouncil%2F2018%2F05%2F11%2Ffive-reasons-why-balanced-teams-are-so-important-for-startups%2F 

Wasserman, N. (2012). The founder’s dilemmas: Anticipating and avoiding the pitfalls that can sink a startup. Princeton, New Jersey. Princeton University Press.