Why C-Suite executives fail in start-ups

When in a small company, one should have circus-like skills as they may need to juggle different hats at the same time. [iStockphoto]

A village cockerel can't crow in the city, so goes a loose translation of a popular Swahili saying.

But what about a city cockerel? Can it rule the village? Shouldn't it rule the village? Logically, this should be the case.

However, this logic probably does not apply in the world of start-ups.

Corporate vs start-up culture

There seems to be a challenge whenever a C-suite executive from a large company takes a leadership position in a start-up or relatively small business compared to where they used to work before.

Even when, at times, it is their own start-up.

Take the example of Sky.Garden, an e-commerce firm founded by Martin Majlund. In September 2022, reports emerged of considerations to close the business due to the difficulties in accessing funding.

Mr Majlund, the company's chief executive officer, has an impressive background which saw him once work for Carlsberg Group as Head of Global Marketing between 2012 and 2016.

His LinkedIn profile describes him as an ex-corporate.

Not so long ago, Jumia Kenya also announced the unexpected exit of its immediate former chief executive officer Betty Mwangi who left the business after just eight months.

In a statement from the company that announced Juan Seco as the new CEO, no word was issued on why she left. The statement just noted that she was leaving to pursue another opportunity.

"He (Juan Seco) takes over the mantle from Betty Mwangi who is leaving to pursue another big impact opportunity that has presented itself," said a short statement from the firm dated July 14, 2022.

Ms Mwangi, like Majlund, also has a colourful management career resume.

She joined Jumia Kenya from Britam Group Plc as Group Commercial Director. She also worked as Director Financial Services for Safaricom's M-Pesa.

It is then surprising why such career corporate individuals with outstanding resumes end up having shaky tenures once they join start-ups or businesses relatively smaller compared to where they worked before.

Aren't they supposed to excel? What could be so difficult about being a chief executive officer of a startup or small business when you are from a larger corporate?

Small firm, many hats

Forbes.com details that when in a small company, one should have circus-like skills as they may need to juggle different hats at the same time, Forbes adds.

"The smaller the company, the more hats you'll be asked to wear," says Forbes.

"If you're the admin at a small company, your role might include client relations and onboarding new hires, but it will likely also involve reordering paper towels and dish soap for the break room."

It could be these new roles that complicate this change from a large corporate to a small one. Possibly as well, the reason why upon the exit of Ms Mwangi from Jumia Kenya, she was replaced by an insider, Juan Seco, who previously handled consumer financial services.

Monicah Karanja, head of HR and Administration at Octagon Africa, notes that while these two roles - a CEO of a large corporate versus that of a start-up or relatively smaller business - do not differ in qualifications, the working environment is different.

The environment differs partly because one company (large corporate) already has its market while the other is working towards gaining its market share.

"A CEO of a big company is already going into a company whose processes and structures are in place. In essence, everybody understands what they need to do. And they do not divert a lot from that structure. Very cut out, very to the point," she explains.

Improvisation

But when one is handling a relatively smaller firm, they tend to be expected to be everywhere. Here, she notes, it is not about the structure and processes and there could be improvising involved.

"It is more of driving the market and at times you will do everything to get that market share," she says.

Harvard Business Review does share the same thoughts opining that when one moves from a big company to a small business, one tends to be expected to solve everything yourself.

"This is one of the harder transitions for people joining small businesses," it notes.

This, it explains, applies to almost everything in the company like IT as you may be unlucky not to have an IT department in the firm. As the boss, you might end up planning your own meetings as well.

"If you're going to do something bigger like investigate a new channel opportunity, research it yourself, call prospective customers personally, make some mock-ups (if you can't use Adobe, draw on paper; if you can't draw, sketch; if you can't sketch, ask your nephew), model the growth, and create the PowerPoint deck," reads the article Seven Keys to Switching from Big Company to Small One.

Personality perhaps?

Additionally, compared to large corporates, those in small companies are advised not to think of problems that do not exist.

"Managers at large companies often have the obligation and luxury of thinking about problems that may arise at some future time if things go well," the article reads.

"Even for a small company, taking obvious, easy steps to minimise future risks can be good common sense. But spend little time on this - the risks of enormous success are so remote they aren't worth major planning."

At the end of the day, while an executive in both a start-up and large corporates have almost similar qualifications, Ms Karanja says it boils down to the person.

"It is not much different passe in qualifications, I think it is more on personality dynamics of the person," she notes.