Is Good Custodianship or Stewardship the Key to Startup Success?

Startups are often praised for their innovative ideas, agile approach, and disruptive business models. However, there is another key factor that often goes unnoticed but is equally important for startup success: great custodianship or stewardship. In this article, we will explore the concept of custodianship and/or stewardship in the context of startups and argue that it is a crucial factor in achieving long-term success.

What is Custodianship or Stewardship?

Custodianship or stewardship refers to the responsible management of resources entrusted to one’s care. In the context of startups, this means managing the company’s resources, including its people, processes, finances and more, in a way that benefits not only the company but also its stakeholders, such as employees, customers, and the wider community.

The Importance of Custodianship or Stewardship in Startups

When starting a new business venture, founders often focus on developing innovative products or services, finding customers, and achieving growth targets. However, there is another crucial factor that determines long-term success — how well the founders steward and care for the startup by ensuring that people are accountable for key areas of the business or organization that need ‘stewarding’ well. Great custodianship and stewardship of a company may be just as important as the initial business idea or execution.

What is Custodianship?

Custodianship refers to the responsibility of founders and leaders to carefully oversee and protect a startup. As custodians, they are entrusted with safeguarding the company’s resources, culture, and future. This involves making prudent decisions, prioritizing long-term sustainability over short-term gains, and leaving the business in a stronger position than when they started. Rather than viewing the startup as something to exploit, custodians see themselves as caretakers tasked with nurturing its growth.

The Importance of Stewardship

Stewardship expands on the concept of custodianship by focusing on wisely managing all aspects of the business for the ultimate benefit of stakeholders. This includes employees, customers, investors, and the broader community. As stewards, founders aim to create value for others rather than just extract value for themselves. They recognize the startup does not truly belong to them but has been temporarily placed in their care. With this mindset, decisions are consequently made by considering all parties impacted rather than just shareholders or investors.

Why Custodianship and Stewardship Matter for Startups

Startups face immense challenges during the early growth stages that can threaten long-term viability. Without a sound custodial approach, well-intentioned but short-sighted decisions may undermine the business. Some key reasons why stewardship is so important include:

• Sustainability — Startups require careful resource allocation and risk management to survive the lean years. Focused custodians ensure funds are invested prudently rather than spent hastily in pursuit of unsustainable growth.
• Culture — The culture set in a startup’s early days can power its trajectory for decades. Stewards shape an environment where people want to build a lasting company rather than just chase quick wins.
• Innovation — Sustainable innovation stems from a stable foundation, not constant upheaval. Custodians lay the groundwork for ongoing creativity by developing loyal customers and committed employees.
• Reputation — How a startup conducts itself from the start forms lasting impressions. Steward leaders act with integrity to build trust within communities on which future partnerships depend.
• Succession — An orderly transition when founders move on protects what they built. Custodians groom successors who can continue nurturing the business vision.
• Impact — Stewardship focuses on benefiting all stakeholders for the long haul. This ethos attracts like-minded customers, talent, and partners for mutual growth.

Traits of Effective Stewardship/Custodianship-Focused Leaders

While not all startups require the same leadership style or approach, founders exhibiting strong custodial and stewardship traits tend to guide companies most successfully over the long run. Some hallmarks of steward-focused leaders include:

• Humility — They recognize abilities and assets are on loan from others, not signs of personal superiority. Success is shared.
• Service — The focus is on contributing value to stakeholders rather than accumulating power or wealth for its own sake.
• Prudence — Risk-taking is balanced with responsibility. Resources and relationships are protected for continued prosperity.
• Integrity — Upholding high ethical standards in all dealings builds trust that supports a startup through difficulties.
• Development — Leaders invest as much in cultivating others’ talents as in their own ambitions. The business survives the founders.
• Sustainability — Shortcuts compromising the future are avoided. Steady, responsible growth preserves what has been achieved.
• Vision — While flexible to changing conditions, stewards hold clear guiding principles for the company’s long-term direction.

Real-World Examples

Some startups demonstrating steward leadership qualities that contributed to enduring success include:

• Microsoft — Bill Gates focused on developing loyal customers and partners through reliable products rather than quick profits alone. This sustained the company for decades.
• Amazon — Jeff Bezos prioritized investing profits back into infrastructure and innovation over dividends, fueling Amazon’s continued market leadership.
• Intel — Founders Gordon Moore and Robert Noyce nurtured a collaborative, employee-focused culture where people wanted to build careers, not just jobs.
• Southwest Airlines — Founder Herb Kelleher developed a low-cost model ensuring the business remained viable for customers through economic ups and downs.
• Patagonia — Yvon Chouinard established an entrepreneurial, purpose-driven brand committed to environmental stewardship for the long haul.
• Warby Parker — Co-founders Neil Blumenthal and David Gilboa
• cultivated strong customer relationships and a philanthropic mission from the outset to differentiate the brand.

The Verdict — Stewardship is Key

In summary, great custodianship and stewardship should be top priorities for startup founders. Leaders who view themselves as temporary caretakers tasked with developing a sustainable business model, loyal customer base, collaborative culture and positive reputation will guide their ventures most successfully in the long run. While innovation and execution are also vital, stewardship provides the stable foundation on which continued growth depends. For startups striving to build companies for decades, not just quarters, responsible leadership will be the difference between those that endure and those that fade.

This article was written by Jon Warner, Executive Chair of Citizen Health Strategies (CHS), Chair of One I/E -a Startup learning- focused Non-profit, and US Ambassador for the ECH Alliance -The Global Health Connector.