In the world of fast growth technology companies, innovation is a pre-requisite. But while the start-up phase of a business is always wildly exciting for those involved, it’s often relatively low-risk: if you’ve got some VC backing, a clever idea and some smart people, and to all intents and purposes you have very little to lose. If the idea’s good enough, and you market it well enough, you’ll be off the starting blocks.
But once you've created something that looks successful, that can change fast. Suddenly, you feel as if you have something to lose. You become aware of the potential capital value of your business. You feel your plans must have credibility with your investors, some of whom now sit on your board. And all the while you experience a personal sense of relief that your initial idea beat the odds. This conspires to tempt you to avoid any additional risk or pain of your own making. Consciously or unconsciously, your team senses your preference for pain and risk avoidance and becomes led by it. Slowly, decision by decision, your exciting start-up stops preparing for a remarkable future.
Avoiding getting stuck at this stage and continuing to innovate is closely tied to founders’ and early shareholders’ motivations for building the business. If you want to build a significant company that makes a difference in the long-term, that has to remain your daily driving force. The distractions of new risks and pressures you face cannot stand in your way.
If you just want to make money – and there are plenty of tired cynics out there who do – don't expect or profess to be an innovator. Successful innovation usually takes too much faith and sacrifice for those motivated only by money. In my view, no matter how much importance the world places on it, ‘shareholder value’ can never be at the top of an innovating company's agenda. Indeed, shareholder value in new high-tech high-growth markets often drives conversations about an exit strategy. But where the exit strategy is a regular subject at the board level, it's usually because the vision has faded. Unfortunately this can encourage phoney forms of innovation aimed at positioning, postured partnerships and box ticking for analysts or potential acquirers.
While my co-founder and I nurtured our fragile idea for the first few years, we deliberately kept shareholder interests out of sight, despite being the biggest shareholders ourselves – and when we did seek external investment and additional shareholders, we did so carefully and on our own terms. Since then, we’ve been fortunate to have a board that understands innovation and our enduring vision for the market.
True innovation requires commitment to developing unproven ideas and possibilities that have the potential to make a contribution to the world. Figuring out how to make money from these ideas has got to play second fiddle to innovation. Done right, the money part is often easy. The hard part is the bravery and persistence to nurture and parent the fragile ideas that take us to the future. As a leadership team at Mimecast, we've learned that innovation is drawn from a vision and deep intent that’s owned lucidly and pursued doggedly from the highest levels of the company.
- Peter Bauer is the CEO of email management company Mimecast