Moving from Startup to What?

How many founders recognize this point in the organizational life cycle?

Led by vision and passion, the founder brings an almost heroic commitment to the cause. A small number of other highly committed volunteers and relatively low-paid staff keep operations afloat. The organization is entrepreneurial and jumps on opportunities. It focuses on accomplishing mission, creating programs and keeping them running. Organizational structure and management style are relaxed, informal, and creatively developed for the particular organization’s culture and style. Loosely defined and sometimes overlapping staff and volunteer roles and responsibilities are tailored to leadership personality and interests rather than necessary functions. Communication among staff and key volunteers is frequent and fluid, and they feel kind of like a family. In organizations initiated by a charismatic and entreprenuerial founder, boards typically function as «following boards» that faithfully take the lead of the founder and offer relatively little independent challenge or significant support.

At this stage, an organization may face the predictable, inherent challenges—and trauma—of the pressure to grow. Or die. Early successes will generate publicity, which will attract more clients and interested partners. The leadership then needs to make a shift from focusing on establishing a vision and a solid program to the more complicated focus on management of capital, capacity, and resources, and on developing a sustainable business model.

This is typically a painful and difficult stage of transition for organizational founders. The key staff and volunteers are working very hard, but getting tired of carrying a full load and not being able to get traction for growth. Founders and boards discover that charisma and cause are not sufficient skills for manage a growing organization. The demand is for structure and planning. The habits are of flexibility and enterprise. And in tough economic times, the organization may not be able to afford to change. You’ve got a crisis point.

What makes the difference in being able to choose a strategic response? If there is capital to invest–or if you can secure new funding, this can be an excellent problem because you’ve got resources to organize and hire for structure and growth. If not, but there are willing and capable partners, a founder can consider mergers or other restructuring. If there’s no money to risk and no partners, then what?

After you’ve already considered everything and tried almost anything, by which I mean cash “triage,” crisis fundraising, cleaning house, transformation (perhaps through wildly exciting fresh program partnerships and Crazy Eddie-intensity marketing), then what’s left is dissolution.

And if you have to go there, it is possible to go there honorably and responsibly. A strategic plan (really) for dissolution can help you bequeath programs and other intangible organizational assets, provide “hospice care” to stakeholders, acknowledge and celebrate the precious and valuable life the organization led. And the lives it touched.