Startups: Vai-Thee-Fuss?. Don’t let business come in the way of internal processes 

A reader responded to my column dated June 3 on the importance of internal processes in startups, asking whether it was not true that implementing strong internal processes in early-stage startups or larger firms almost always led to a short-term business loss. This is such an important question, and I promised that I would answer it in the next column. So, here we go.

There may or may not be a short-term business loss, but without processes there will definitely be a medium-term negative impact on business and the long-term outlook can become quite messy. The reality is that over 90 per cent of activities in any company are repeatable and, hence, having a strong process to drive these activities significantly improves productivity and reduces errors. 

While trying to follow set processes, there are occasions when a short-term deal may have to be sacrificed. Unfortunately, while it is easy to measure the loss of business in this transaction, it is very hard to estimate the huge future loss of business due to lack of processes. Hence, firms tend to go with the short term and convince themselves that they will implement processes tomorrow, after concluding the deal today. As we all know quite well, tomorrow never comes.

There are a few key reasons why process implementation in companies, especially startups, gets postponed or is dropped altogether. The topmost reason is that the top management pays lip service to processes and pretends to be a huge process driver but, when push comes to shove, it prefers to break the discipline if it means another deal. A couple of years back, a founder requested me to help implement some key processes in his startup. I began enthusiastically but quickly realised that the founder was the one breaking regulations because it was his startup and hence his rules. I politely declined any further involvement.

Secondly, employees do not have the maturity to understand the benefits of processes, especially because all the benefits lie ahead and it becomes hard to quantify future gains. They prefer to focus on what they can easily see on the table right here, right now, and aren’t too keen on tomorrow’s gains. 

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To be fair, communicating this clearly is the top management’s responsibility. In the early part of my corporate career I was in sales, and when my company started putting in strict processes for order processing and payment collections I felt quite annoyed because I was sure this would only reduce the business; so I can understand the angst of employees who manage operations. 

Thirdly, team members are used to doing stuff in a certain manner and, when fresh rules are implemented, they rebel saying we have always done things differently here. And, finally, converting processes into easy-to-understand sheets is not that simple. The tendency is to develop process documents that are so complicated that the easier option is to ignore the sheets and continue doing things like before.

Managements that bite the bullet and focus on long-term process discipline, instead of short-term gains, give themselves the best chance of creating great organisations.

The writer is a serial entrepreneur and best-selling author of the book ‘Failing to Succeed’; posts on X @vaitheek