The technology sector is currently one of the world’s biggest growth markets, but in the UK this growth seems to be slowing. This could at least partly be due to a common flaw in the managerial practices of many tech founders, whose reluctance to delegate can quickly become unsustainable for fast-developing businesses. Could they learn lessons, both positive and negative, from successful tech industry leaders, such as Elon Musk?
The rate of growth in the UK tech sector is forecast to slow to 0.4 per cent in 2019, a dramatic drop off from 4.8 per cent in 2015. This is due to a number of factors. Not only is current global economic uncertainty making potential financiers and investors more hesitant, but UK-specific disrupters, such as Brexit and the prolonged period of comparative under investment by the UK Government, are also having an effect. UK tech companies are also experiencing a shortage of skilled workers.
In the USA, it is a vastly different story. From the large corporates, such as Apple and Facebook, to fast-growing newcomers, such as Netflix and Uber, Silicon Valley is thriving. The entrepreneurial spirit of many of its companies’ founders is best exemplified by engineer and tech magnate, Elon Musk. From the development of electric vehicles at Tesla to working towards commercialised space travel at SpaceX, Musk has made a name for himself as an almost obsessive innovator, whilst amassing a net worth exceeding $20 billion.
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Despite his track record of success, Musk is not necessarily a good role model for UK start-up founders, however. He does of course have positive attributes, such as his optimistic personality and dedication to removing barriers that might lie in his way. His achievements speak for themselves – he built the world’s largest ever lithium-ion battery in under 100 days and his SpaceX programme is actively working towards the colonisation of Mars. Whatever else can be said about Musk, his ambition is unparalleled.
However, Musk has also repeatedly displayed problematic tendencies when it comes to his management style, which could be partly due to his failure to adhere to any particular mode of entrepreneurship. Some entrepreneurs tend to have a passion for one specific pursuit, found a company to fulfil it, and then nurture it throughout its life cycle, taking a hands-on role as CEO. By contrast, ‘serial entrepreneurs’ prefer to start up one company based on a specific idea, build it up to a point of profitability and then sell it on, before moving on to their next business venture.
In this regard, Musk has time and again attempted to both have his cake and eat it. He has founded a number of different companies in different fields but has also attempted to keep a rein on their day-to-day management. With a keen-eye for concept development but without the specific skill-set necessary to manage a vast cohort of employees, his failure to delegate and invest his resources in building a strong team around him has left Musk working a purported 120-hour week and opened him up to widespread criticism.
On occasions, his tendency for over-optimism has led him to make bold claims and inspiring promises, which he then fails to deliver on. For instance, despite promising to meet with every injured Tesla employee, many claim he never has. In his high-profile position, it is inevitable that he will be held accountable for not following through on such promises and managerial duties. Additionally, following a long period of erratic behaviour throughout 2018, some onlookers believe he has become a victim of burnout.
Failing to delegate is a common trait among start-up founders, whose feeling of personal responsibility for their company’s success can breed a tendency to overwork. The ability to build a talented team, with diverse skill-sets, becomes more important as a business grows and prioritising this is essential to its continued success and expansion.
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When building a team, it is important to start by considering the business strategy, so as to align any potential hires with the outcomes it is driving towards. Business leaders should also be open to advice when it comes to the hiring process. If they adopt a closed mindset, there is a risk that they could end up with a team of individuals much like themselves and therefore miss out on the benefits that come from having a diverse range of personalities, skill-sets and backgrounds.
The ability to attract talented individuals is also important and to do this, the business has to provide exciting and welcoming opportunities. Employees want to feel they have autonomy in their day-to-day work lives, with control over specific projects, whilst gaining skills and furthering their own professional development. For many employees, a career is not just about making money, but also making a difference and having a positive impact on the world and its communities.
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Tax-efficient rewards and schemes can also provide a great incentive for the workforce, while simultaneously benefitting the business as a whole. These include the Enterprise Management Incentive (EMI) scheme, which can be established by private companies with assets of £30 million or less. These schemes allow key workers to gain an equity stake in the business by issuing them with share options which, once exercised, can be used to acquire shares. Schemes such as this can be particularly effective at incentivising key managers and encouraging their loyalty.
When founding and subsequently managing a tech start-up, entrepreneurs need to identify a set of core business values and then live up to them. This includes learning to delegate effectively and create a workplace that people want to join. Leading by example in this way, tech founders will be able to use their own skills to the full, whilst building a fulfilled and capable team of people around them and stimulating business growth.