DEKA's business model is to get paid by big companies to develop new technologies, which DEKA then licenses to the big company to use; they are perpetually in stage one. DEKA has never dealt directly with consumers, nor has it manufactured or sold the products it produces - with the exception of one attempt. The tale of Dean Kamen and the Segway illustrates how motivating engineers to work at a company whose value comes from new inventions is very different from motivating people to work for a consumer products company, a company that manufactures things, or any company past stage one.
DEKA's work on a wheelchair that could climb stairs led Dean and his engineering team to realize they could make a self-balancing, all-electric two-wheeled device - what the world now knows as a Segway. Dean felt that "his" two-wheeled device would revolutionize how people travel in urban environments. Dean did not want to license it to someone else to manufacture and market and thereby lose control over the invention, because he felt this was a unique opportunity to create one of the largest and most profitable companies in the world; he envisioned a company producing tens of millions of Segways a year.
Dean was afraid that some large automotive company would copy his idea, so he wanted to ramp up manufacturing as rapidly as possible. He insisted that the company develop the capability to manufacture large numbers of Segways before the first production prototype was built or the first Segway had even been shown to any potential customer. Essentially, Dean wanted stages one, two, and three to happen in unison. Such an accomplishment would have been unprecedented, but Dean was never scared to do things that had not been done before. Dean was and is a fabulous leader of innovation, which is to say that he is great at leading projects, especially those supported with ample resources and time. Dean had no experience leading projects that create complex low-cost supply chains, manufacturing processes, or processes for selling and marketing products to consumers, but that did not stop Dean from thinking that he could figure out how to reinvent these tasks, as he had reinvented so many other things.
Dean understood that he would need help. He hired several experienced automotive executives and a few marketing executives from large consumer products companies. He then proceeded to ignore their advice and overrule their decisions, calling them bureaucrats or "Mouseketeers" when he didn't like what they were telling him.
Different stages, different motivators
Dean knows how to motivate teams of engineers engaged in stage one, a purely project stage, but he is not skilled at motivating teams in stages two, three, and four, when processes are essential for success. It is demotivating to skilled and successful people working to create processes to be mocked for being bureaucrats, have their requests for critical resources ignored, and have their decisions overruled by someone who does not understand or appreciate their skills. Dean's love of challenging open-ended projects is directly related to his aversion to processes.
STARTUP LEADERSHIP: HOW SAVVY ENTREPRENEURS TURN THEIR IDEAS INTO SUCCESSFUL ENTERPRISES
Author: Derek Lidow
Only hire people you are willing to fire, otherwise you will compromise the success of the enterprise, Derek Lidow tells Ankita Rai
In the book you write that “fewer than one in four entrepreneurs who start out remain in business for more than five years.” What are the key things entrepreneurs get wrong, which leads to such high failure rates?
There are two distinct sets of failure modes in the early life of a new enterprise. The first set of failure modes apply to over one half of all the entrepreneurs – they lose interest. The second set of failure modes revolve around the entrepreneur and the team that he or she assembles. That is the team loses interest. The book discusses four situations that cause this loss of trust: one, the entrepreneur doesn’t hire the right people for the key positions and does not fire the poor performers; two, the entrepreneur gets distracted with non-essential goals causing frustration and inefficiencies; three the entrepreneur creates an ineffective organisation, and, finally, the entrepreneur does not understand how to get his team to work together effectively.
Please share some classical hiring mistakes committed by entrepreneurs.
Another common mistake is hiring a friend or a lover, someone whose friendship you value more than the success of the enterprise. Only hire people you are willing to fire. The third common mistake is to hire the first people willing to join you. You need to hire people who will be major contributors. A good technique for avoiding these problems is to offer, “let’s try working together for six months and see how we like it. After that time it will be clear how important you are to the future of the company.”