Business: When to add project management

Scott Berkun runs a project management list and from time to time I respond to it. Since the responses are often only on the list and not on the blog, I decided that I would link to last week’s question and post my response.

1. When is it time to create a dedicated manager or PM type role? Is it defined by the # of people you have?

Short answer: when you actually need one, no.
Long answer:

The funny thing about startups is that there are no hard and fast rules that work every time. What you have to look at are the strengths and weaknesses of your current team and the over-all objectives of the company and each team member. Generally people are drawn to early stages startups because they either have a dream or they like the variety and pace (these are your serial entrepreneurs.)

To decide whether it’s time to bring in a sixth person to act as manager or to convert one of your current players to a management role, depends on several factors which only you and your team can know.

Only you know where your product is right now. Do you have a finished and tested product yet? Are you in alpha, beta, or live? How much buzz have you had? Where are you in letting the world know what you’ve got? How extensive is your network? How well do you understand you’re market and prospective customers?

Only an individual knows what their career objectives and skills are. So is there anyone on the team who wants a more business oriented role? Does she have the experience already or is she going to have to learn on the job? Do you have time to let her learn? Would it be better to bring in another person who can focus on all the business stuff? Think about what your company needs to move to the next stage and make that happen. The quality of the team has more of an impact on the success of a startup than the quantity.

At some point you’re going to need to make enough money to support all of you and you’ll want someone whose job is to focus on that. How can you get from where you are to where you need to be? And who do you need to get you there?

What I’m guessing is that if you’re at the stage where you’re talking about financials and your current development model is working then you probably don’t need a PM but a business person. Someone who can take over all the marketing, financial, and planning responsibilities. That person can also act as a PM until you’re large enough to need someone in that role full-time or one of the engineers can take on the PM role. But someone has to worry about the money and it’s better to get that started sooner rather than later. It takes time to build up mindshare. As soon as you have something that can be talked about or demoed someone on your team has to be out there talking about it.

2. How do you transition from a totally organic model to one with defined roles?

Short answer: By preparing for it.
Long answer:

At a startup you all have to be equal but you each have your own areas of expertise and some people will be more equal than others in their defined areas. Each person has to be honest about that. At the startups I’ve worked at the first big danger point was around 40-50 people, when the water cooler conversations got too hard to have. That was when we had to look at adding formal processes to make sure that information was communicated and feedback gathered.

In 1989 I was an entry level software engineer at a 40 person company. I used to eat lunch once a week with the president. He wasn’t grooming me, although he did teach me a lot, we had lunch together because we were the only people at the company who liked this one restaurant. His role and responsibilities were those of the president and mine those of an engineer. It takes all of those skills to make small companies succeed and we have to be able to use them as a team to get the greatest value from them. (I would also like to add that he used to also change the light bulbs and empty the garbage cans. Egoless leadership and a great role model.)

If you and the team keep an open dialogue about what roles each of you is interested in playing then moving to the defined roles will be organic. You also have to be realistic about where the company, product, and personal really are in terms of the corporate objectives. If you can manage that then you can put off worrying about how to transition to defined roles, because it will just happen. I can’t recommend “Confronting Reality: Doing What Matters to Get Things Right” by Larry Bossidy and Ram Charan, enough because unless you really know where you stand you’re not in control of your business.

3. Or do we even need to worry about this at all? Most of my peers think we're successful because of our lack of any management knowledge whatsoever.

Short answer: Yes
Long answer:

If you don’t worry about the future of your company then it won’t have a future. At some point you’ll need to add the management layer. Only you’ll know when. But you don’t have to think of this management person in “an us against them” way or that the management person gets to make all the decisions. It’s just a role. Each person in a startup is important. Especially the founders, who are the company’s drivers and biggest fans.

So in conclusion,

1. Know where your company is and know where you want it to go.
2. Be honest about everything.
3. Talk and listen to each other.
4. Ask yourself, “Is there a compelling business reason for doing this?”

If you can do those things then the rest will be obvious, although not necessarily easier.

Keith also has a really good point about having one person who can make quick decisions.

Technorati tags: product management, startup