The task of the CEO of a company is to ensure that the operating costs are at a minimum, a continuous growth and expansion of the company and the profits are maximized at all times. He has to always ensure that the new ventures survive to their fulfillment in that they produce the desired results on their maturity. Very few initiatives that are launched in areas with potential make it to maturity without being stifled by the mature ventures. Some mistakes that the executives make include;
Part 1.Failing to provide the right kind of oversight
Distractions on many occasions tend to make the managers fail to follow the rules that are laid on follow ups. Most managers focus their attention onto knowing if the company is making any revenue from its current operations instead of focusing on knowing the prevailing changes in the market and the changes in tastes and preferences of customers. They do not provide enough funding to the new ventures as their attention is not directed to them and this is a recipe for failure of the growth initiatives. They spend less time focusing on the venture including the teams and cannot be able to solve problems that arise when they are conducting reviews. The CEOs are on most occasions short of time to deal with the new ventures hence, they should delegate to a manager whose main role is to monitor the growth venture (McKinsey and Company, (2012). The CEOs ought to create conditions needed for growth i.e. urging them to focus on the long term goal, removing inhibiting factors to the new ideas and putting in place a management system.
Part 2.Not putting the best most experienced talent in charge
Employing students who are recently from school because failure from these does not have much effect on the corporation’s performance but he only leads to the company’s failure. On the other hand, the staff that have long term experience in a particular field do not like being given a lot of responsibility as they see this as a demotion from their position hence they won’t be motivated to work. Taking the company’s most experienced manager is the best option because he or she has established network within the organization and he knows the company culture at heart (McKinsey and Company, (2012). They know what venture will be profitable and what will fail because they have been in the corporation for long, can interact with customers, have knowledge on product development process, they are curious and can spot a need that has not been met and make it an opportunity that the corporation can tap into.
Part 3.Staffing up prematurely and assembling a wrong team
When an opening arises in the company, some managers shift staff from one department to another without first accessing their capabilities in the field. The managers should take time to set up a team of staff members according to their track record instead including the capabilities and behaviors they have exhibited in the past. This should be a continuous process as it ensures the staff love what they are doing and they are capable to do the tasks in hand.
Part 4.Taking the wrong approach to performance assessment
Some companies use same metrics in running early stages of business as in the mature stages of the business. In mature stages the metrics in use should be revenue, unit volume and earnings when they are compared to the profit and loss modules. The early stages should use some metrics such as combining various skills, number of interactions with the customers each month and ability to know and respond customer complaints. These need to be assessed and changed on a continuous basis. Financing should be provided after careful consideration has been made on the effectiveness of the procedure to ensure that the right approach is put in place. Continuous assessment and formation of teams as the members tend to be focused and motivated in these sections.
Part 5.Not knowing how to fund and govern a start-up
Some managers ensure that the same annual budgeting plan is followed and implementing for a startup program even their needs are not predictable. The funding for a startup ought to be separated and protected from the annual budget cycle of the company and special rules set up for the same. Setting an independent budget that is only distributed when a specific milestone is achieved. Leaders for these ventures are reprimanded if they use the funds that are set aside for growth ventures to other initiatives (McKinsey and Company, (2012). These projects take long to mature and internal rates of returns and the discounted cash flows are made on a continuous basis.
Part 6.Failure to leverage the organizations core capabilities
Isolating the new ventures from the established ventures is wrong because they are interdependent to the other departments. These departments include the sales, market research, legal expertise, customers and payroll systems as these help the new growth ventures to cut costs and save on time. Encouraging the managers to support these startups through resource sharing, promoting various behaviors and skills they in turn grow the organization.
Growth initiatives are important for an organization to expand continuously and remain competitive with the other upcoming companies. Acquisitions are expansive and are not a cost effective option for most companies. Therefore, the managers need to delegate more of their time to these departments and appoint the capable and appropriate to head and steer them to their maturity and overall profits for the organization.
References
McKinsey and Company. (2012). Sales growth: Five proven strategies from the world's sales leaders. Hoboken, N.J: John Wiley.
