“If you don’t drive your business, you will be driven out of business”. B. C. Forbes
Running a start-up is like driving a car. It is full of enthusiasm to achieve the targets with a caution for mistakes and failures. Driving a car for the first time scares people but a joy of driving experience succumbs the fear of failure. One of the questions bothers me who sets the speed of start-up and how. If we compare a start-up with a car, the speed can be increased/decreased by the driver using an accelerator. To drive on road safely, a driving license is must, similarly should we consider a driving license for CEO of start-up to drive efficiently (at right speed)?
Situation 1 – ‘Learners ’: Most of us had driven a car for the first time in life at some point. There were many challenges such as negotiating with traffic, acquiring the license but as we drive more, we learn with knowledge and experience of being on the road. There are many similar questions came to mind before starting up a company.
Think of a situation where a car-driver does not know where to go? Even if he decided the destination, after an interval, he changes his/her strategy to reach destination. Will he be able to reach on time? Another situation could be, if a driver knows where to go but does not know how to go? Will it work? Imagine about a car without driver (CEO), only with passengers (employees), will it go somewhere?
It is perhaps the reason why 90% of the start-ups fail when they don’t know four key characteristics (discussed in Forbes article on 16th Jan, 2015):
1) Lack of market need for the product (They don’t know their destination even after hiring car)
2) Ignored business process, models and scalability (They don’t know the capacity of car eg: engine capacity, maximum speed and max distance coverage per day)
3) Tremendous focus on growth simply ignoring cash management (Focus on covering distance without thinking fuel storage)
4) Limited versatile experience to deal with challenges (e.g. Experience of driving a car by a driver on rocks, beach, mountain, sand and road)
Situation 2 – ‘Speed lovers’: First time drivers are not expected to drive faster as it may result in accidents, perhaps, same holds true for start-ups. Some companies are more productive with quick services returns such as consultancy firms. Though, others may not get quick returns such as insurance companies OR manufacturing firms; profitability are shown minimum after 5 years of inception of business. The fastest cars (Chiron, Ferrari etc) are designed to drive at fast speed so do some start-ups (Flipkart, Snapdeal etc). Professor Mark Frigo from De Paul University wrote extensively about strategic risk management. He made his point in regard of driving in a recent article in Strategic Finance “The fastest race cars in the world have the best brakes and the best steering to enable them to be driven faster, not slower. Risk management should enable organizations to take the risks necessary to grow and create value.” Speed of car is partly related to driver experience, knowledge and competence as many competent drivers find slow speed driving difficult and disoriented.
Surprisingly, in every part of world, there is mandatory driving licence for the driver of cars but there is no driving licence needed for a CEO. A start up essentially requires a “driving licence” for CEO to drive the vehicle efficiently. This will support in achieving organisational goals and reduce start- ups failure rate that is not recognised yet.
There cannot be a regulation to impose compulsions to acquire driving license OR a qualification to be a CEO. In fact, some of the most successful CEOs of our time didn’t have a university degree (Dhirubhai Ambani, Bill Gates, Mark Zuckerberg etc). May be there is a need for a course to be designed that can equip the CEO to answer few questions such as:
- How to research idea, prepare business model and check copyrights/patents
- How to create business plan to provide vision, mission and objectives of organisation
- What is legal structure of business example documentation, license required
- Who is the driver of your business ( you, a group of people or a paid CEO)
- What is my target market and who is my customer? Why they will value my product/service?
- Who and how website of the company will be created?
- A standard course on ‘Basics of marketing’
- How will you fund this business?
- A standard course on risk management to understand what may go wrong
- Discussion among Entrepreneurs and forums such as Entrepreneur café
Giving the start-up revolution in the country, there is a strong need for new age educational companies that can tackle the requirement mentioned above. The traditional universities may not be the best places to acquire the “driving license” for the new age CEOs. CEOs of Startup need quick yet solid inputs on tips-of-trade, insights of the mature business world and learning for survival in startup world. In India, companies such as UpGrad, IvyNext, SimpliLearn are coming up with courses that can cater this niche market. Indeed, 2016 is the exciting time for EdTech start-up.
Acknowledgment: Ruchi Agarwal, Doctoral Researcher, University of Edinburgh for her inputs and views
originally published in The Economic Times: http://blogs.economictimes.indiatimes.com/snakecharmer/ceo-driving-license-insights-for-start-ups/