A pyramid.
A multi-level system with many levels.
IBM it is said in the 1990s, the early 1990s,
when IBM got into a great deal of trouble,
had something like 18 different levels in its hierarchy.
A hierarchical organization with such a tall pyramid,
if there's a great idea at the bottom and
the idea has to make its way all the way up to the top of the pyramid.
And then all the way, all the way,
all the way down to the bottom of the pyramid to implement it.
Pretty unlikely ideas are going to survive that.
Pretty unlikely anyone's even gonna try if they're way down here
at the bottom of the pyramid.
So these pyramids, hierarchies are pretty old fashioned.
Many companies, including start-up entrepreneurship organizations,
prefer flat organizational structure.
Somebody is in charge, there are a few senior managers,
maybe you know vice presidents and then others report to them.
And the reason for this flat structure is that it's much simpler,
much quicker, much more flexible, much more agile.
And it's much more likely that ideas will come from the field and
move up to the place where people can make a decision on those ideas and
actually implement them.
Much more likely that with a flat organizational structure,
you're going to be able to implement your strategy quickly and
well, and most important, you're gonna be able to change your strategy.
Because strategy can't be set in stone, it has to be flexible and
adapt quickly to changes in the marketplace.
One more word
about strategy and the start-up life cycle.
There's a basic problem with strategy in a start-up and structure in a start-up.
You start day one with a founder or a team of founders, usually a team of three.
A manager, a technology person and a salesperson.
And then you start to hire and you find good people.
Today we have a talent shortage in many areas, so
it takes quite a lot of time to find the right people and hiring is one
of the key decisions that you're going to make as a start-up entrepreneur.
So you need to do it well and take your time.
Spend time, I know companies where the CEO will spend an entire day with a potential
hire getting to know them, having lunch, playing squash, or tennis with him.
And really learning who the person is and what their goals are,
their abilities, their skills, their motivation.
So, this takes a lot of time.
The problem is you don't have time as a start-up.
In some ways, a start-up is like a baby antelope born in Africa in the Serengeti.
And the antelope is born, baby antelope with it's long legs.
And in a very short time it's standing on it's legs and in an hour or
two, it's able to run with it's mother.
And it has to do that because there are lions out there.
And the lions are coming after you.
So a start-up is a baby antelope.
And you'd have to run from the time you are born, or
else the lions will catch you.
How do you do that?
Well, here's a model that I learned from a highly successful entrepreneur,
named Yehuda Zisapel, who started a company called RAD,
R-A-D, 34 years ago in 1981.
And he's used this model to create a 120 spin off start-ups.
Some of them in which he invested, some not.
Half of them in the area of the mother ship, the RAD original company.
And the idea is that you encourage your employees to go off and
start their own companies with their idea.