Top 10 Pitfalls of Inexperienced Management Teams

Last Updated Jan 26, 2011 12:20 PM EST

Top 10 Pitfalls of Inexperienced Management TeamsI've worked with and consulted for hundreds of startups, entrepreneurs, and relatively inexperienced management teams. I also was an inexperienced executive myself, once upon a time. Lots of water under the bridge, I can tell you that.

Now, I wouldn't begrudge anyone the unique growth experience of learning from his own mistakes, especially the wisdom and humility that only failure can impart on the executive ego.

That said, savvy managers listen to the voice of experience. They may choose to ignore the advice, but they still listen. Information is power, forewarned is forearmed, and all that.

When asked in a CNBC interview what keeps her up at night, Christine Day, CEO of fast-growing, high-flying athletic apparel maker Lululemon Athletica, said, "Scaling the growth. Our growth has been phenomenal, and that puts a lot of pressure on a young management team."

Day, who spent 20 years at Starbucks, most recently as President of the Asia Pacific Group, knows her stuff. Scaling the business is one of my Top 10 Pitfalls of Inexperienced Management Teams. You'd be well-advised to avoid them.
  1. Thinking you've got it all figured out. Or that the answers are self-contained within your four walls. One of the biggest differences between mature execs and novices is the understanding that the management team and the board do not have all the answers. Source far and wide, debate, then make decisions.
  2. Failing to say no to opportunities. The number one pitfall is taking on too much, starting too many projects, spreading resources too thin, and failing to focus on what's most important: execution and growing the core business.
  3. Staying the course too long. That said, entrepreneurs often stay the course when there are clear signs that they're pointed in the wrong direction, i.e. customers want B instead of A, customer traction isn't happening as planned, or the market isn't materializing.
  4. Hiring other inexperienced executives. If you're scratching your head and wondering how dumb is that?, you're not alone. I can never figure out why entrepreneurs do this, but they do, and their boards, VCs and all, let them. It happens all the time. The result: the blind leading the blind.
  5. Hiring executives just for their experience. All too often, entrepreneurs know they need to complement their relative inexperience with executives who've been around, so they hire people with big corporate backgrounds and overlook key qualities like how well they'll do in a fast-paced, collaborative, entrepreneurial environment.
  6. Underscoping the challenges of scaling the business. This is huge for high-growth companies where it's absolutely critical to scale the operation - human capital, IT infrastructure, processes, facilities, equipment - in sync with growing demand. It's a real tightrope to simultaneously maintain growth, quality, and profits.
  7. Failing to moderate risk-taking. In an effort to maintain the entrepreneurial spirit that got them to where they are, inexperienced executives will oftentimes shy away from organizational processes and systems that are needed to facilitate growth. That often results in a shoot from the hip mentality or, even worse, constantly shifting strategy du jour.
  8. Suddenly becoming overly risk averse. That said, clamping down on calculated risk-taking based on sound risk-reward analysis is just as bad an idea as playing it fast and loose. In today's highly competitive global market, playing it safe won't help you maintain market share. Quite the opposite is true.
  9. Lack of marketing competence. All too often, especially in the technology industry, marketing competence is an afterthought. Executing on the product or service and customer traction are the keys for startup success, no doubt, but marketing intelligence will improve the odds. Finding competent marketers seems to be the rub.
  10. Going public too soon. There are benefits to an IPO - primarily as a source of capital and currency for acquisitions. But the downside - SEC and public scrutiny, Sarbanes Oxley, and most importantly, management team distraction - can negatively impact a company's ability to execute when it needs to be firing on all cylinders.
In light of all that, you'd almost be tempted to avoid inexperienced entrepreneurs and executives. But that, my friend, would be a mistake. Anecdotally speaking, those with experience don't necessarily do any better than their novice counterparts. I guess experience has its own pitfalls. Hmm ... sounds like a subject for another blog post.

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Image courtesy Flickr user horslips5

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