Catalytic Mechanisms in Startups

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Jim Collins, the famous author who wrote Good to Great and Built to Last, wrote an article in the summer 1999 issue of Harvard Business Review titled Turning Goals into Results: The Power of Catalytic Mechanisms  (third-party review of it). Every startup should know about catalytic mechanisms. The idea behind catalytic mechanisms is to put in triggers and rights that force change or improvement by their very nature — think tactics that empower the person or user who is often in a position of less power to be more empowered.

Here are some example catalytic mechanisms in startups:

  • No contracts for a SaaS vendor – this forces the SaaS vendor to win the client’s business each and every month as opposed to annual contracts where the vendor might not meet expectations for many months of the contract only to scramble at the end
  • Allowing customers to strike out items that didn’t meet their satisfaction on the bill, and not pay – this forces the vendor to get every detail right and provide a high level of customer satisfaction knowing the customer is empowered to not pay
  • Requiring unanimous approval for new hires – this empowers all team members to have veto power and ensure corporate culture standards, including personal buy-in of hiring decisions

My recommendation is to think through catalytic mechanisms for your startup, even ones that really challenge traditional convention.

What else? What other catalytic mechanism examples do you have?

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