Angel To Exit

What Managed Maturity Looks Like

We often discuss maturity as a key metric for a company, and our goal is to take startups and move them from none or initial to managed maturity in a year or two. This is a very aggressive approach for a startup, but many imagine they are already there even before they close their first sale. To a large extent, that is what GWiz measures and often ends up helping founders adjust once they understand what it really means. Here is our roll-up:

Governance and Management
- Members of the Board of Directors:Board membership is designed to advantage the business in sales, marketing, brand, connections, funding, and other key areas of the business and changes over time support demands while maintaining control for effective operation of the business.
- Key individuals and the team:Executive management is composed of individuals with specific expertise in the relevant areas required to run the business and with specific recent relevant vertical high performance experience in similar situations.
- Advisors and advisory boards:Advisory boards and members are high quality and experience in their field, flexible over time, supplement the existing team in areas of weakness, bring good connections and access, and have no force and effect.
- Management structure:Management is structured to support efficient operation suitable to the size of the organizations they manage while providing clear lines of authority and the ability to coordinate and cooperate to meet strategic and operational needs.
- Management authorities and capacity:Management team members have adequate influence, access to information, and capacity to support sound decision-making in order to effectively and efficiently perform identified duties and coordinate across lines of authority.
- Environment, Society, and Governance:All areas of Environment, Society, and Governance, and ethical practices more broadly, are proactively focused on and achieving very positive effects for all constituents and constantly improving.
Marketing and Sales
- Sales people in place and selling:Sales people are in place and selling at the top end of planned levels; and new market development and sales processes are constantly improved.
- Sales training:Sales staff training and activities are working, being tracked, adapted, and improved over time.
- Sales plans and management:Sales plans are in place, being adapted to changing conditions, and are well managed.
- Products/services for sale:A full spectrum of products/services are in place and a stream of new ones are always being developed.
- Customer identification and characteristics:All customer sets in relevant markets are identified, characterized, and being tracked for changes.
- Sales sieve status and operation:Sales sieves are in place for sales processes, measured, being adapted for improved performance, and being allocated resources based on analysis of business strategy.
- The marketing matrix:The marketing matrix is well developed, adapting, and moving toward strategic exit.
Execution and fulfillment
- Fulfillment team capacity:Fulfillment team is able to meet all anticipated demand and adaptation is planned to meet changing anticipated fulfillment needs over time.
- Cost of fulfillment:Fulfillment costs are systematically reduced over time within quality and performance parameters at all anticipated capacity levels.
- Flexibility of fulfillment:Fulfillment scale dynamically across the range of anticipated futures based on predicted changes in volume and pricing.
- Expertise and supports for fulfillment: R&D, service, and support processes are optimized and adapted in advance to support current and anticipated fulfillment.
- Supply chain: A redundant supply chain for fulfillment meets current and anticipated volume and pricing requirements.
- Processing capacity: Fulfillment can be processed at current and all anticipated (increased and decreased) capacity in time to meet the full range of anticipated demand at close to current cost and performance.
- Delivery requirements: All delivery capacity is timely, readily met, and scalable up and down within anticipated volume and desirable cost parameters.
Intellectual property and special sauce
Expertise and intellectual capacity: Top flight experts in relevant fields are engaged to build and enhance an intellectual property portfolio and know how over time.
Copyright portfolio:Copyrights are applied systematically to enhance value and registered for protection against competition.
Patent portfolio:A portfolio of perfected, pending, and provisional patents including picket patents and continuations are used to support long-term portfolio value.
Patent protection legal process:Legal advice is sought and followed on patent issues, patents are enforced against competitors, and the patent process is managed by a qualified legal team.
Trade secret practices:Trade secret identification and protection processes are defined, documented, trained, followed, and contractually mandated, all trade secrets are marked and tracked, and an inventory is in place for identified trade secret information.
Trademark and trade name use:Trademarks and trade names are systematically used to build a presence in the marketplace, brand recognition, and differentiation across the company.
Trademark and trade name protection:Trademarks and trade names are registered with governmental authorities and always properly marked in use and enforced in the marketplace to protect brand and image.
Non-owned intellectual property:Non-owned intellectual property is accounted for and protected to a level commensurate with the potential negative consequences associated with protection failures.
Monetization of intellectual property:Monetization of intellectual property is a strategic element of business planning and operation, and is used for economic and strategic advantage.
Value of intellectual property:Intellectual property is considered a valuable asset, accounted for, inventoried, and specifically reflected in valuations and related areas.

Financial sitution and path

Cash situation: Cash flow positive, >6 months of cash or fungibles, using excess cash to grow.
Sources and levels of investment: Reliable funding through exit is in place at levels required for planned growth and exit.
Investment instruments:Current investments involve priced instruments adjusted to the risks and rewards, or no further funding is needed.
The acceleration curve:We are in the high acceleration phase with substantial share and plenty of growth left.
Exit path and time frames:Exit is in process with existing partners negotiating for exit within a year.

Legal and regulatory situation

Founding documents and provenance: The legal entity has a clear provenance and ownership from scratch, with all supporting documents available for inspection, clear ownership shown by relevant instruments and filings, and is an entity that protects shareholders from tax implications.
Contractual instruments in place:All workers, work, supply, demand, partners, affiliates, and other entities and people related to the business have proper dated, signed, legally reviewed, and binding contracts in place, and those contracts provide clear authority to operate.
Regulatory compliance:All relevant regulatory requirements have been identified and are being met and a regular plan is in place for updating regulatory requirements and meeting them.
Other legal issues and responses:A systematic plan is in place for identifying and meeting all legal events and requirements as they occur and for legal response to external and internal events with legal implications.

No problem - we are there already...

For those who have actually done this, it is a long way to go and a short time to get there a in year or two. But most startups we encounter imagine they are a substantial part of the way toward that goal today, because they have never actually done this before.

The reality is that this level of performance is typically at least 3-5 years from first sales for a strong growth company with a great team and good help. But you can get there a lot faster at smaller scale and be ready for growth and able to adapt to the lack of it by getting systematic and using some tools to help you keep track of it all.

One of the keys to all of this is controlled growth. There is a process that first time explosive growth folks go through, and I thought I would share it with you. This is also one of the reasons good advisors are important in these situations. I wish I had them when I was in these stages the first time, and one of the reasons I do what I do to help grow companies today.

Phase 1 Setting it up: In anticipation of rapid growth and explosive wealth, all sorts of plans are laid, calculations made, assumptions identified, and so forth. You imagine you have it figured out or close enough to be able to do so in case of any changes. And you might be right. But as the saying goes, "No plan survives contact with the enemy." - Prussian Field Marshal Helmuth von Moltke the Elder - 1800s.
Phase 2 First major success: Wow - it worked - and we can do it - so we do... This is the initial state of maturity. Individual heroic effort leads to success. It feels great, you are wildly enthusiastic, and you know you can go from here to wherever without limit. You deserve the accolades you get, but don't get too overconfident. Because you ain't seen nothing yet.
Phase 3 Rapid growth anticipation: So now that you did it once, you can do it again - and it will be easier because you know it all now. And here's where huge mistakes can happen. Since you are so confident, there is a tendency to over-invest. You spend the resources you have in anticipation of rapid growth, and if it doesn't happen or it isn't rapid enough, you consume your resources and the plane hits the ground instead of going up.
Phase 4 Rapid growth (or not): One of three things happen (obviously).
- Oops: You didn't get the next or the next or the next sale - and you likely over-spent to make sure you had enough to grow on, and now you have to go into stasis of a form or put the company out of business. Most first-timers collapse here, spend all their money, and never recover.
- Slow: So you get another sale - at some point - then then another at some point later, and now you struggle to get to cash flow break even or profitability. It is slow going, and you cannot keep doing this barely getting past forever - or maybe you can. Cut costs, keep control, be very careful, and you can survive and adapt, hopefully mature the company to the point where you have solid predictable operations, stability, and prosperity. And the best part of it, you may be able to diagnose the problems as improve over time because you have reached managed maturity and can now grow systematically.
- Fast: Too fast is bad news. And I have had too fast and over spent only to find that the acceleration curve had a top end, and a saturated market (not theoretically but practically) means you have to make it profitable and keep it there and either go public or get acquired - which is the idea of course. The problem with too fast is 2-fold. The first problem is that you cannot predict well enough to optimize and projections tend to be way off. The second problem is you might start to believe too much in what you are doing or in yourself and miss something too important or too big to get out of the way of.
Phase 5 Nothing lasts forever: At some point, the explosive growth, stagnation, or collapse has to end. And when that happens, getting out or staying in is all about timeliness. Go too soon, and you miss the opportunity, stay too long and you end up missing the best opportunity.
Phase 6 The squeeze: But if you are still in, you will inevitably hit the squeeze, as you run out of money, resources, time, interest, or something else that ends up changing your mind and possibly your fortune. This is how companies die, usually painfully to those within them, and for companies that never gained great success, usually with the top decision-makers feeling the hurt.

What does this have to do with maturity?

Everything. The difference between success and failure, more and less success, surviving downturns, getting the most out of upturns, not going out of business when you could succeed, and getting out when the getting is good, lies in the maturity of the company and the people running it.

The maturity levels, derived from the Capability Maturity Model at an overall level is outlined as follows... note you start at the bottom and work your way up:

Optimized: The eternal attempt to optimize everything - I claim it is never reached and if it were reached for a moment, it would be gone the next moment as the world changes. So the term "Optimizing" might be a better name for "Managed", but I didn't create the taxonomy.
Managed: You measure the processes in time to make adjustments so they continue to operate within desired parameters, and use those measurements to make those adjustments to achieve the level of certainty desired for the processes.
Defined: You have documented how the repeatable process(es) work and have the ability to measure the processes as they proceed and identify what goes wrong and what to do about it.
Repeatable: You can do it repeatedly with at least statistically similar enough actions and effects to make it predictable and trainable to others.
Initial: You are doing it for the first time or have completed it once, possibly twice.
None: You have never done this before and you are not doing it now.

One more thing - this maturity applies to all aspects of the company discussed above. All the maturity you want for execution without a mature sales process or a mature legal process, etc. will not get you to a successful company that can handle the changes it will face in the world over time.

Getting there

Clearly, it is far easier to reach managed maturity in a controlled growth or stable environment, and the smaller it is, the easier it is to control, but of course without some substantial scale, you don't get the range of events required to handle what really goes on (to a reasonable level of statistical certainty) because you don't have enough data for statistics to be reasonable applied.

Just as certainly, it is impossible to reach this level of maturity until you are actually selling things, executing on them, getting paid, and paying for the resources you use.

In other words...

Maturation takes time, effort, and experience, and without them, you cannot mature the company, its people, or yourself.

More information?

Join our monthly free advisory call, usually at 0900 Pacific time on the 1st and 3rd Thursday of most months, tell us about your company and situation, and learn from others as they learn from you.

Advisory Session

In summary

Maturity isn't about age, it's about experience, understanding, and systematic approaches to success using the feedback of the world around you in actual execution of your business.