The words “startup” and “uncertainty” are almost synonymous. If you are the founder of a startup, you have identified an opportunity within the chaos of an uncertain market. Although this uncertainty provides the oxygen for many new ideas, it can also lead to the downfall of a startup. It is difficult to create a clear definition of a market segment and product offering when so many variables are unknown.
As you can see below, startups fail for reasons that include to market, financial, product and team.
Many of the problems that relate to startups are external and out of the control of the owners. For instance, deteriorating market conditions or the introduction of a competitor’s solution can have drastic consequences to a fledging business with limited funding and a single product focus. No project management solution or methodology can prevent these.
It is a well-established fact that startups face unique business challenges and high failure rates. The purpose of this document is to help the startup owner understand how various aspects of the project management discipline can help to mitigate and manage risk.
Contrary to the perception of many, project management is not just about a particular process or methodology. As important as the methodology is making sure to hire the right people and to nurture them. You also need to provide them with the necessary tools to plan, share information and collaborate.
Source: Binfire Research
In terms of methodologies, there are lessons that can applied from both Agile and Waterfall methodologies to Startups.
We will share project management best practices that relate to planning, product development, issue management and results tracking. Many startups assume that Lean is the only valid methodology for startups. The aim of this document is not to create a new project management methodology, but to explain how existing practices can be applied to startups.
10 Common Startup Project Management Mistakes
The following is a list of common project management mistakes that startups often make and how to avoid these scenarios. For more details, please refer to our blog posting on this topic.
1. Selecting the wrong Project Manager
A typical startup may not have a person who has PMI certification or has experience with project management methodologies. There is a tendency to take a bottoms-up approach: find the people with the skillset to the work, but overlook the role of managing the project to success. A project manager is not just a coordinator of a project plan. He or she must be assigned responsibility and accountability for the completion of the project.
2. Not turning down requests from the project team
Startups are characterized by small team and flat environment. When managers are colleagues and there is little formal hierarchy, it is often difficult to say no. This is especially the case where open dialog is encouraged and is considered a feeder of innovation.
When a team member has a request a consensus-based culture may make it difficult for the manager to turn this down. Acquiescing to every request can form a dangerous precedent. It avoids short term conflict, but creates a dynamic where the team has too much power relative to management. The challenge for the manager is to find a way to say “no” without losing the sense of team comradery and collaboration.
The best way to achieve consensus is to provide the team with maximum transparency as to why decisions are made. For instance, if there is a request to add a functionality that would help a product, one needs to explain that right now the priority is speed to market.
When your employees understand your priorities and have visibility into the startup’s plans, they will be flexible and work with you. A command-and-control scenario is much less likely to be successful.
3. Inadequate planning for risk
Because risk is inherent in the life of a startup, there is tendency on the part of some startups to underestimate risk. Managing risk is one of the most important aspects of project management. This does not mean that startups need to be completely risk adverse. However, they need to understand the risk and find ways to mitigate against risk.
For example, there is always a risk that a competitor will release a similar solution to the marketplace, thereby denting the long-term prospects of the company. Once a risk is identified, it is incumbent upon the organization to define a strategy to address this risk should it occur. In the case of a new competitor entering the market, the company must define a market segment whose needs can be met profitably. Gaining a deep understanding of a customer segment and focusing on this group of customers can help shield the company from other competitors. The alternative of ignoring risk and hoping that it does not occur is short sighted and irresponsible.
4. Not understanding scope
In many cases, startups do not emphasize the importance of scoping a project based on the belief that scope is fluid and will change. Even if scope does change, it is important to estimate the scope of the project so that at least there is a baseline expectation for both the project team and management.
5. Inadequate system for change tracking
When startups fail to treat project management as an important discipline, one of the biggest casualties is change tracking. If your processes and teams are democratized, there is a risk that everyone will make changes to their part of the project independent of the overall plan.
Whatever project planning methodology one uses, it is important that any change to the project plan be approved and also tracked. A situation where someone randomly changes part of the plan can result in confusion on the part of team members that are not aware of the changes. If the changes are not approved appropriately, changes can be made that are inconsistent with the overall strategy and plan.
6. Skipping Quality Control in rushing to market
It may be tempting to cut corners when rushing to market with a new product. Startup owners are under tremendous pressure to release their product before burning through cash investments.
However, tempting the scenario, it is also very dangerous. As a startup you are only as good as your reputation and a company that misses the mark with its first launch will not survive. Of course, there are scenarios of small beta releases that contain bugs, where “friends and family” are likely to be forgiving.
However, when releasing a product, there is little understanding in a competitive marketplace. Therefore, when it comes to quality control, the same levels of quality from a large organization should be expected from a startup. If anything, a larger company has a portfolio of products and customers to rely on. A startup may only have one shot to impress an audience and cannot afford to misfire.
7. Not creating deliverable schedules
It is never easy to schedule a project, especially when many of the variables are unknown. When releasing a product for the first time to market, one has to make a significant number of estimates. Some of these will be accurate and some of these will fall short.
The temptation of not creating a detailed delivery schedule is great. There are many ways to justify it: we will figure this out as we go along, there are too many factors that we can figure out now, as a startup we don’t have want to be bogged down in meaningless process.
These justifications can have disastrous consequence. In fact, the very process of figuring out schedules helps to get everyone focused on the plan and identify some areas of risk. Use work breakdown structure to break down the project into the smallest possible activity or task. This applies to any methodology that your team uses.
8. Inadequate resource planning
Here is a common startup scenario. You hire young, dynamic and enthusiastic people who are committed to your organization. You give them a lot of responsibilities and expect them to multi-task. Over time, they overcommit to you and without realizing it, they start to burn out.
Larger organizations have more resources and can spread the burden but startups are often thinly spread. It is tempting to give smart people responsibilities that are not qualified to do and assume they will learn on the job. Without enough time and bandwidth, they can also fail on the job.
It is incumbent upon the startup project manager (even if that is not his or her official title) to understand the limitations of the team. Overcommitting people’s time will only lead to mistakes and burnout downline. It is better to identify a lack of resources upfront and alter management. In some cases, it means reprioritizing your employees’ time or it could also mean brining more resources to a project.
9. Not communicating regularly
In a hyper-connected world, there is a tendency to over-communicate. Your employees are likely to use SMS, Skype, Google Hangout and WhatsApp. Although your workers may be available for most of the day, many startup projects forget that there needs to be a rhythm to communication.
What is needed is a regularly time where the whole team can review progress, identify problem areas and work collaboratively on solutions. By bypassing “formal” status meetings, there is a risk that macro issues effecting the whole project will not be addressed.
Meetings need to be regularly scheduled with a predictable schedule of topics.
10. Not using project management software
Some startups consider project management software too complex for their needs. With the proliferation of online project management software, it is hard to imagine why some startups adopt this attitude.
The aversion to using project management software is so strong that some vendors have stepped into the niche by claiming that their team collaboration solution is not project management software.
We are not advocating the use of a particular solution or project management software. In fact, if the team wishes to use a physical Kanban Board, this is an acceptable approach.
The most important thing that there needs to be a way to document roles and responsibilities and to map out the project plan accordingly. Even the most rudimentary tool such as excel spreadsheet is better than avoiding the use of project management software.
People: How to Build a Startup Organization
Before we look at the discipline of project management, we need to start with building your team. Mature and well-funded organizations have the budget and bandwidth to hire professional project managers and then to train their teams on methodologies. A startup is less likely to have these resources so it is critical that each hire be vetted for compensatory traits.
Hiring the Best Startup Team
If you are a startup, there is a good chance that you cannot find all the talent you need in one location. You may also need to stretch your budget and rely on staff that are located in places where labor costs are less expensive. In our globalized and virtual economy, more and more startups are relying on remote workers to fill vital roles within the organization.
Hiring remote workers comes with risks. Startup employees require certain characteristics that are not as important in other workers: flexibility, emotional maturity and self-motivation. A startup environment is dynamic and quick paced if your workers cannot readily adjust to change, then it is unlikely that they will be able to contribute to you in the long term.
The hiring process is labor intensive and can be distracting for the startup owner. Below is some guidance for how to recruit for a startup:
Recruiting for a Startup: What to Look for in a Candidate
When filling a position, it is important to explain to candidates that your company is a startup and there are specific requirement and expectations that come with the job. In the job description, we suggest you cover the following:
- Explain the requirements and commitments from a startup. Many job candidates do not understand that a startup is unique. It is easy to confuse a startup and a small business. In reality, although no two startups are the same, there are key differences between startups and other businesses. Startups may require a different level of commitment and dedication that other companies do not even need.
- Expectations for work-life balance. If the job requires travel and long hours, this, this needs to be stated. Why? Because some potential employees may assume that a startup provides more flexibility that it does. In reality, the startup environment can be very taxing and require a level of dedication that is beyond the capacity of many employees.
- Experience in a similar environment. If you are seeking to fill a programming position, you will list any programming languages needed. If you are seeking to fill a startup role, you should consider candidates’ experience in a startup environment. Has the person worked for a startup before? If not, try to understand how they have worked in dynamic and fast changing organizations.
- Personal traits. When creating a job posting, we suggest that you list some of the specific characteristics that you are looking for. The ability to cope with stress is important. The most often overlooked trait is the ability to work well with team members.
- Quick learner. In startup environment you need people who can learn on the job, fast! Nobody is fully equipped to know the project’s ups and turns. You need somebody who can adapt and find solutions for unforeseen problems fast.
- Ability in wearing multiple hats. An employee needs to be flexible and able to work on multiple tasks involving different disciplines.
- Ability to accept constructive feedback and open to give feedback to others. In short people with no excessive egos.
Tips to Help with the Hiring Process
The margin for error when hiring for a startup is much smaller. One bad hire can cause a delay in your product development or market launch. Here are some smart hiring practices for startups.
- If you are hiring a remote worker and conducting the interview remotely, insist that the interview by conducted via Skype or a similar tool. This will give you visibility into the candidate’s home office. You will get insights into their level of organization and they present themselves professionally. Your employees are the public face of your company and how they position themselves will reflect upon you and your organization.
- Test prospective employees. If you are hiring a new employee for a coding role, then give them a sample scenario and ask for them to create a code in real time. There is almost no role that cannot be tested with a real life scenario.
- Aptitude testing. You will not release a product to market without testing it thoroughly (hopefully), so we suggest that you take the same approach when bringing a new employee into your organization. Tests can be written such as the Caliper or Myers-Briggs or you could provide role-play scenarios where candidates need to fill out an assignment or respond to a situation.
- Check references thoroughly. One of the biggest mistakes that hiring managers of startups make is to skip the reference checking step. One should never rely on written references alone. Ask the candidate for a references at the last three places of employment and call each of the references.
- Meet a candidate before hiring them. This may seem obvious, but there are people applying to work via remote and are even hired without meeting the hiring manager. Even if budgets are tight, we strongly recommend that you find a way to meet a candidate before hiring them. You cannot gauge body language, chemistry or communication skills via a Skype Call.
Process: Project Management Methodologies for Startups
Chaos: The Default Project Management Methodology
The most common project management methodology for startups is no methodology at all. Many startups believe that they are operating in a fluid environment that requires innovation and speed to market. There are few resources for a formal project management methodology and even fewer people with formal training.
The logic to the Chaos Method (we are using this term loosely) is that startups operate in unchartered competitive battlefields. Rules and process slow down innovation and speed to market whereas flexibility is the key to success.
The problem with the Chaos Method is that it simply does not work. To use the battlefield analogy, even foot-soldiers in a guerrilla war need structure and discipline. No matter how skilled and powerful the army, victory occurs when Generals plan ahead.
Many entrepreneurs are drawn to San Tzu’s famous quote that “in the midst of chaos, there is also opportunity.” But San Tzu also gives us a more concreate roadmap for achieving this victory. A more relevant quote for a startup owner is “victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” In other words, chaos may be the battlefield but victory comes from careful planning.
Despite its popularity, startup owners that fail to define processes during the development of their initial solution increase the likelihood of failure. There are methodologies such as Lean that are designed specifically for startups. Even if the startup does not formally embrace a methodology, there are elements of both Agile and Traditional processes that can be used by startups in planning, development and execution.
Lean Startup: The “Traditional” Project Management Methodology for Startups
Any discussion about Project Management and Startups needs to include an analysis of the Lean Startup. The Lean Startup was a concept developed by Eric Reis in 2008 and has gained a core and devoted fan base within the startup community. Reis applied the principles of Lean Management that was used in the 1980’s by Japanese auto manufacturers to startups. Lean is based on eliminating wasteful resources and increasing productivity in manufacturing by using Just-in-Time Inventory and Kanban Boards.
The application of Lean to Startup project management has had a significant for companies such as Dropbox that have adopted this approach.
Although one of the outcomes of Lean is to spend less money, cost savings is not the driving force. Lean is designed to put in place a process for the development of a new product.
The MVP (Minimum Viable Product) is a Lean concept. A startup is unlikely to have the resources to create the ideal product. The idea behind the Minimum Viable Product is to build a product as quickly as possible that solves the problem. This accelerates learning, enables feedback on a product as opposed to a concept and allows for the next iteration to occur.
Agile: A Flexible Methodology for New Product or Service Development
Agile is an incremental and iterative process that accelerates development that focuses on delivering working applications with less attention paid to formal processes and methodologies. Agile uses achievable near- term objectives and goals and focuses on delivering a “sprint” in a short time frame. One of the benefits of Agile is that project is flexible and can be adjusted based on outside factors such as customer input and market conditions.
In many ways, Agile is suitable for a startup that does not have the luxury of an extended timetable to take their product to market. Agile works in an environment where there is a lack of long planning. With Agile, there is the flexibility to change direction based on new input from the market. Each sprint is of short duration (2 to 6 weeks). If there is a misalignment of product features and customer needs, the project focus can be adjusted on short term notice.
Technology: How to Select Project Management Software for a Startup
There are close to 200 free and commercial project management software solutions today. It is sometimes overwhelming for the startup owner to prioritize his or her requirements and find the right tool for the business. We provide an evaluation framework called the S.M.A.R.T. method so that starts can select tools that meet their requirements.
The S.M.A.R.T Framework for Project Management Software
What is S.M.A.R.T.? S.M.A.R.T. standards for Scalable, Mobile, Adaptable, Remote and Transparent. Not only is it an easy acronym to remember, but it is also a summary of the most important features that a startup will need from project management software.
Let’s review each one individually:
Scalable: As a startup, your company could grow at a rapid pace. Some startups gravitate to low-grade project management software that is made for small number of users and/or limited functionality. Although these solutions lightweight solutions are good for the early stage of a startup, there is a risk that when the organization outgrows the tool, it will need to start again using another tool.
The solution is to start with an online project management software that scales and can grow as your team expands.
Mobile: Your startup team is on the go and away from their desktop. Project management software needs to be mobile enabled so that team members can be notified of updates to the project plan, they can access documents and can collaborate on team related tasks in real time.
Adaptable: Because startups in their early phase of growth often dismiss the discipline of project management. Instead of procuring project management software, they look for collaboration software so that the team can remain in constant contact. This is a mistake.
Project management software needs to be adaptable to any project management methodology including Lean, Agile and Waterfall. A startup may use an Agile method for one stage of their growth, but also use Waterfall for larger and more complex projects. By purchasing project management software that can be used across multiple methodologies, the startup trains everyone on one tool that can be used for multiple purposes across the organization.
Remote: Many startups hire virtual teams that are comprised of remote workers in multiple locations. If there are documents that the entire team is working on, then they must be made available in one central location. Remote team members need to collaborate in real time about project related issues; we recommend project management software with collaboration functionalities. Specific functionality within project management software can enable brainstorming, soliciting feedback and crowdsourcing of information.
Transparent. Team members within a startup are expected to assume great levels of responsibility. In particular, they typically are empowered to update the status of each task they are working on so that a project manager does not have to own this role. Everyone on the team needs real time visibility on the status of each task.
Project Management Functionalities for Startups
There is a new generation of Project Management that is works well in the startup environment. The old Microsoft Project was based on the model the model that one project manager would control the project plan.
Startups tend to be decentralized and democratized. The project manager players less of a role on the day to day management of a project. Project management software can play a significant role in enabling teams to collaborate and share information while ensuring that project deadlines are on track.
Here is a look at some of the software features that are of particular relevance for startups.
- Gantt Chart for Team Visibility. The Gantt Chart is often associated with Microsoft Project and is considered by many as too complex. The truth is that Gantt is one of the most powerful project management tools. Gantt is perhaps the best way to visualize an entire project in one view. It helps keep the team focused on deliverables and deadlines.
Today, there is online project management software that includes simplified Gantt Chart. For instance, Gantt Chart can be integrated with Task Lists so that the Gantt is automatically created. Furthermore, the Gantt can be interactive so that changes to the timing of a task can be made directly into the Gantt Chart itself.
- Kanban Boards. The Kanban Board is another simple and elegant visualization of the project plan. It is also a powerful tool that is used to keep the team focused on a small number of high prioritized tasks. Everyone in the startup can see the status of each tasks and follow the Task from when it enters to the queue. As it moves from the “Working On” status to “Waiting for Approval” to “Complete”, the entire team has visibility.
- Interactive Whiteboard: Your startup team is not going to located in one place, but you still need to collaborate. Conference calls and emails do not work well and it is not cost effective to fly people in for meetings. Interactive Whiteboards are the most productive way to conduct group discussions, especially when the contents of the meeting need to be recorded.
- Message boards: In a dynamic and rapid-paced environment, it is a challenge to get team members to provide feedback or comments on new ideas. Startups use electronic message boards to create a virtual environment for asking colleagues for assistance without scheduling time for a brainstorming session or meeting. This way, people can contribute their ideas and thinking during off-peak hours.
- Document Collaboration: Startups typically don’t use Enterprise tools such as SharePoint. However, they still need to find a way to store and share documents in one place and to limit the access of these documents to authorized users. When considering a project management tool, look for one that includes Document Collaboration functionality.
- Real-time Status Notifications: Project management software needs to recognize when a team member reaches a project milestone such as completing a task. Alternatively, the team member could change a deliverable date. Real time status notifications provide the entire team with an update so that there is less of a reliance on a project manager to run interference and coordinate all tasks.
Review of Project Management Software Vendors’ Suitability for Startups
|Features Review of Project Management Vendors
|Real Time Notification
Benchmark Data from Startups Software Buyers
In order to help you understand how other startups view project management software, we recently released the Future of Project Management Survey. Below is a summary of the research from the Startup Segment.
Startups’ Perceptions of Project Management Software
In general, startups were the most concerned about the complexity of project management software. 34% of startup respondents either Strongly Agree or Strongly Disagree that project management software is too complex to use. Although this is not a majority of respondents, startups were disproportionately concerned about complexity relative to respondents from all other company segments.
In contrast to concerns about complexity, the overwhelming major of startup respondents do not agree with the notion that project management software is for project managers alone. Reflecting the flat organizational structure of startups, 56% of respondents Strongly Disagreed and 22% Somewhat Disagreed that project management software should only be used by Project Managers.
The vast major of respondents from Startups believe that all team members should have access to Project Management Software. In fact, only 6% of respondents disagreed with this statement. The rest were either Neutral (11%) of Disagreed (83%).
72% of respondents indicated that Project Management Software should be used for team-related document sharing.
Almost 80% of respondents Agree or Somewhat Agree that Project Management Software should be used for team collaboration. This is suggestive of perception that software today is no longer for simply managing a project plan but should support the various other tasks associated with getting work done, regardless of whether a specific project plan is used.
With respect to whether customers or partners should have access to project management software, 50% of respondents were neutral. Only 6% of Startup respondents disagreed with this notion, which is significantly less than 28% of all respondents (including SMB and Enterprise) who disagreed with this notion.
What Startups Should Avoid When Purchasing Project Management Software
Below are some basic mistakes that startups tend to make when purchasing project management software.
Not conducting a needs assessment
You are in the market for project management software because your startup has reached a level of maturity that mandates its use. There is probably a specific reason that you have decided to purchase project management software. Perhaps you have outgrown your existing tools such as Asana or Trello. Or, you have received new funding and your investor is requiring more discipline in the business.
If you ignore a thorough needs assessment, you may end purchasing software simply based on a Google search for “online project management software.” Either you end up overpaying for functionality that you may never need or you purchase software that will not address your short term needs.
Ignoring long terms needs when buying software
For a startup, a three-month timeframe can seem like an eternity. One of the biggest mistakes you can make is to purchase project management software that does not take your future needs into consideration. Will you need to integrate into the workflows of your partners? Is your industry subject to regulation or any other unique requirements? Remember that project management software needs to scale for the future growth of your company. Do not buy for today’s needs.
Forgetting to review the licensing contract
There are some software vendors that provide ambiguous pricing information to encourage companies to overbuy. If your needs are for a six-month project, only purchase software that does not require a multi-year agreement. Very often, vendors push you to a premium product offering. If your startup does not need advanced functionalities such as integration into third party applications that you do not use, then make sure to only buy what you need.
Not asking for internal feedback on software requirements
Project Management software is no longer geared towards project managers. Everyone on the team will likely access the software, update their status and use the software to collaborate with team members. You need to understand how your current team work so that the software you purchase can dovetail with existing practices.
Making a purchase without using the software
Almost every online project management software provides a free 30-day trial to try out the software. We suggest that you try out a at least two different vendor solutions and that you create a sample project plan. Don’t just focus on the look and feel – make sure that the software works for you needs.
Underestimate the importance of UI
There are some extremely powerful project management software packages that are either difficult to use or require training. If you don’t have the time or resources to train your team, then you should make sure that the software is intuitive to use. Remember that user utilization is important if the software you purchase is under-used, you will not get the value.
Not performing due diligence on the software vendor
Software vendors come and go and the last thing you want to do is make a long term commitment to a platform that ceases to exist. Before purchasing software, make sure that the vendor has been in business for at least 3 to 5 years, has referenceable case studies and at least 500 customers.