Big Red Car here. Early riser today, lots to do. Going to be warm today.
Today we take up the issues of stewardship and accountability as it pertains to the startup world and life in general.
The VC funded startup world is driven by OPM (other people’s money). Most VCs are investing as stewards of limited partners. Startup entrepreneurs are taking VC money as stewards of that same money.
Stewardship is the duty of care for another’s property which entails administration, safeguarding, prudence.
In the business context of startups and venture capital, we are talking about money invested by a venture capitalist and received by an entrepreneur to start a new business enterprise.
From a legal perspective, we are creating a fiduciary relationship, the highest relationship based on trust in the legal arena.
It is so obvious as to promote Captain Obvious to Colonel Obvious.
Accountability is the duty to report to those whose money one has taken — over which you are a steward — what you have done with it and the prudence, safeguarding and administration you have undertaken to discharge your duty of stewardship.
Accountability is reporting the quality of your stewardship.
Duty of care
The nature of stewardship and accountability triggers a duty of care.
The duty of care manifests itself in things such as:
1. A duty to create a business plan for the use of the OPM to create a successful startup.
2. A duty to safeguard the money physically as it is invested in the startup.
3. A duty to account for each penny in accordance with the plan.
4. A duty to create an oversight function — such as a Board of Directors — which is able to work with management to increase the probability business success.
Again, these are all Colonel Obvious at his best. Not an exhaustive list by any means.
So, let’s get down in the weeds and discuss some things that Big Red Car thinks are a manifestation of stewardship and accountability which are not as obvious.
1. The Big Red Car thinks the probability of success in any enterprise is dramatically enhanced when there is a well articulated and documented Vision, Mission, Strategy, Tactics (what was once upon a time called a Business Plan), Objectives, Values and Cultures. You will recognize these as these as the basic building blocks of any business.
The impediment to doing this is often the time necessary, a current faddish reluctance to do such planning in many instances fanned by VCs themselves who preach product development over planning, unfamiliarity with such planning by young entrepreneurs and a failure of Boards to insist upon it.
It is neither adequate stewardship nor adequate accountability.
2. Boards fail to require sufficient annual planning such as annual business plans with discrete objectives which can be used as measurable performance and annual budgets. They focus on product and burn rate indeed but not planning.
3. Management fails to do sufficient brainstorming to discover the right path to align efforts because they do not brainstorm.
4. When something goes wrong and the fallout is no longer giving off light and heat, management fails to focus on “after action” accountability. What went wrong? Why? Who was involved and responsible? What did we learn? Do we need to change anything?
5. When a project is completed, a similar effort should be made to assess how the project was managed and what was achieved. A simple exercise in accountability.
This is basic post mortem planning. It should be done much more frequently.
Here is a white paper to assist you in doing just that — The Post Mortem Review. Use it.
6. Insufficient “management by wandering around” or serendipitous discovery.
In looking at your duties, consider the stewardship and accountability implications. Have a nice damn day, ya’ll.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car! Get off to a great week knowing the Big Red Car is rooting for YOU! If you need some advice or CEO coaching call The Boss 512-656-383 or firstname.lastname@example.org. Tell him a Big Red Car sent you.