Entrepreneurship, Second Edition

14.4. Execution

The growth model has execution at its core. Execution depends on the other components in the model—leadership, the opportunity domain, and organizational resources and capabilities—but it has the most direct link to profits. The startup is commonly loosely managed, with fewcontrols, verylittle performance assessment, and a lack of responsibility for outcomes. It often puts an emphasis on sales over profits, with chasing a new customer taking priority over considering the costs of serving that customer, for example. Growth will soon overwhelm operations, however, leaving the company capable only of reacting to inventory outages, overdue collections, diminishing cash flows, and delivery restrictions by suppliers. In addition, uncontrolled growth can lead to poor coordination between activities such as sales and inventory planning.

Without an adequate system of controls, the company can't optimize its decision making and prevent the waste of resources. One startup, for example, had a printing and paper supplier that charged the company more than three times the normal price for copy paper. The owner of the printing business told an employee (who later relayed the remark to the owners of the startup), "They're too caught up in their own growth to notice."

With only so many hours in a day and so many days in a week, it is hard to step back, develop and implement new processes, hire and train people, and ensure everything functions adequately. Yet these control tasks ...