[YS Learn] What steps early-stage startups can take to build lasting companies that can endure any crisis

The success of most high technology companies has been defined by the kind of growth they have displayed. The unprecedented computing power and growth of technology has built marketplaces and companies that wouldn’t have existed 20 years back.

Large scale and unprecedented growth with billion-dollar valuations have been the mark of startups and entrepreneurs. 

While these created jobs, new opportunities, and newer industries, the pandemic has given everyone a reason to step back and take a pause. A Harvard Business Review report stated, few companies from the tech boom of the mid-2000s had the foresight to temper their pace in anticipation of the long journey that lay ahead. 

Lasting businesses take time to build. As the cliche goes — overnight success takes over 10 years. And few companies are started with an expiration date in mind. However, few companies have thought about the strategic roadmaps and value they need to build to endure any crisis. 

HBR looked at several companies and identified key elements that led to their success and growth. 

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Building scalable systems away from founder-driven decisions 

It is the founder that defines the vision, culture, and initial path of the startup. In the early days, key decisions are taken by a small group of individuals — founders and the core team. 

“In backing any company, we’re acutely aware of founders’ mindsets and rally behind those that are building with an attitude of responsibility,” explained the report. However, a lasting company needs a strong system of leadership that is set up in the early days. 

This helps delegation and decision making distribution across the organisation. These help set up people practices that help in retaining, training, recruiting, and developing the right leaders across all levels. It also helps create decisions aligned with the values and vision of the company. 

The report highlighted an example of Disney. In the 1950s, founder Walt Disney pioneered a multi-strategy approach for his company that served as the template for “sustained growth”, not only for Disney but also for countless other organisations. 

Every employee goes through the same rigorous development process that emphasises vision and values, behaviours over intentions, and purpose over task. By committing to such training, Disney trusts every employee as a brand steward who can make decisions without onerous oversight.

Look at overall societal impact with your value framework

HBR writes, in Jim Collins and Jerry Porras’ research of “visionary companies” that had endured for over 50 years, they did not find a single company that stated “maximising shareholder wealth”, “profit maximisation”, or even “maximising growth” as a driving force of their activity. 

These companies all accepted profitability as core to sustainability, but that wasn’t what motivated or guided them. Instead, what defined the companies Collins and Porras described in Built to Last was a deep commitment to a core set of values that provided the company with a sense of purpose – an understanding of the role they played in society and how they created value for others. 

Core values served as these companies’ conscience, providing guidance for not just what ends to pursue, but what means to use to achieve their aims.

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The ability to pull second and third acts 

As Harsha Kumar, Partner, Lightspeed Venture Partners, said, product-market fit isn’t a one-time job; it is a lifelong process as startups need to keep evolving. There will be multiple transitions. A great first act doesn’t mean there are no repeats. There will be regulatory changes, market preference changes, and technological growth, founders need to be prepared and anticipate these shifts. 

“In the tech industry, Microsoft is a great example of the power of executing more than one act. CEO Satya Nadella understands the necessity of “growth mindset” rather than a fixed one. He recognised that Microsoft had to move beyond thinking about Windows as its core, so he pushed the company to build Azure, the cloud computing service that now accounts for over $34 billion in annual revenue,” said the report. 

The power to endure 

By focussing on endurance, companies end up building moats that help them through times of crisis. It also gives them the focus needed to build better products and services over and over again. They realise that markets change and there is a need to build and endure. 

The HBR report said, “We focus on endurance as a fundamental design principle because we believe the best businesses are intrinsically aligned with the long-term interests of society. Economic gains hinge on respect, and companies today cannot earn respect unless they are committed not only to objectively examining the consequences of their creations but also evolving to have a holistically positive impact on society.”