Managing startup companies seems to contain two distinct risks related to creativity: Too much and too little.
The first risk is abound when the company lives in the literal or proverbial "garage". While the company is not bigger than what can be managed directly from "the corner office", everything appears fine.
The stress point typically comes at the time when the number of employees is so big that relying on non-written policies and word of mouth standards is not good enough. There are some areas where creativity should not run too unchecked - or you have "to explain" to the IRS and Co.
The founder may belatedly realize that there really isn't consistency in the way customers are served or the way employees are treated, remunerated, or promoted. This may well happen after customers and employees have discovered and been turned off by the inconsistencies.
This obstacle is typically reached when the organization becomes more than two layers deep. The CEO may trust and communicate directly with the people s/he hired, but the next level of employees has been on-boarded and supervised by others. As people come with different backgrounds, they may well behave according to different play-books.
This "Management by Indiana Jones" - we make it us as we go - may work for a while but what is expedient and convenient is not always legal or long term sustainable. This is not because people are trying to commit crimes but because adhering to rules and regulations requires knowledge and understanding of rules and regulations.
Many organizations crash at this point because the original founder doesn't have the capacity, maturity, background, or interest in running a big organization. Understandably, inventors thrive on inventing, they don't necessarily thrive on managing.
That is OK. Google hiring Eric Schmidt was not a bad thing for the company. But recognizing that it can be needed takes some humility on the founder's part. It may also require giving up a bit of ownership to hire a professional CXO. But owning 100% of a bankruptcy is not better than owning <100% of something viable.
The second risk relates to Research and Development.
We cannot manage people to be creative. On the contrary, experiments show that we can improve efficiency in performing standard tasks but "out of the box thinking" needs freedom to explore and make mistakes and tweak - and may not even take place while at work.
The best inventions may not even look that great when they are first dreamt up.
Often, upper level management just can't imagine that power is not a motivator for some people. Consequently, specialists are often promoted as a reward in spite of their own strengths and wishes - to the frustration of both manager and subordinates and to the detriment to the department which gets a mediocre manager for the price of an eminent thinker.
Business School thinking accords status to span of control - the number and breath of the people referring to a position. How else can we better reward eminent individual contributors, thinkers who don't desire to become managers?
On February 10th, KQED had this very interesting interview with Alec Ross, the author of "The Industries of the Future". I have no idea who Robert Thomas who penned a comment on KQED's website is, but he touches on two points related to this organizational conundrum:
"The most joyful celebration I ever attended for any coworker in thirty-seven years of Silicon Valley engineering work life was upon the occasion of his long-sought demotion from middle management back down to Individual Contributor. What has come from Silicon Valley, ... - and what was contributed here by such as Bill Hewlett - has been the primacy of the Individual Contributor. The most successful hardware engineering operations operate in such a way that management acts as excellent support staff.
The world that springs from our Schools of Communications - public relations, advertising, market research and journalism - operates with the top-down model, where the great man in the corner office is the acme and all aspire to touch his robes. That's the explanation for the media's fascination with Jobs and Zuckerberg and Brin and Musk et al. They reflect every journalist's dream of becoming Managing Editor.
Ignorance of this character of our industry in our region and the inability of journalist observers to see any aspect of it is the reason that attempts to instantiate it elsewhere fizzle, over and over again."
The first paragraph recognizes that Individual Contributors in R&D are a finicky lot who need freedom to do what they do best. The role of management is to set a vision, secure funding, and get obstacles out of their way. Over-managing slows down creativity.
The second and third paragraph is a statement to how differences in company culture and individual motivation will skew people's perceptions. While Thomas spears the press, he could as well have pointed to that managing R&D may differ from what takes place in the operational part of the organization; the part that through advertising, sales, service, and production secures incoming cash flow - and thus the funding R&D is happy to benefit from.
Thomas' comment on Individual Distributors brought me back to an old business textbook, Henry Mintzberg's "Structures in Fives". While Mintzberg doesn't have a special chapter for R&D, he writes about "The Professionel Bureaucracy": "The organization hires highly trained specialists.....and then gives them considerably autonomy in their work."
Mintzberg covers both the simple organization (that could be a founder startup), the adhocracy, as well as the transition into bureaucracy - a nasty word, I know, giving associations to long lines at the Immigration desks at the airport and not exactly nimbleness. In Mintzberg's use of the B-word, it primarily means getting polices and procedures in place and the linked (but condensed) article from 1980 may be worth a read.
As freedom loving as any organization may be, to protect the company from legal problems, keep high integrity of its Intellectual Property, and as proper governance, some policies do have to be in place and adhered to.
(As for management, robots don't care if you manage them top down, bottom up, or sideways. People are a little more complicated - particularly in Startupland where many are - and everybody think they are - hired to be Individual Contributors.)