There are lots of ways a business can get into trouble. Finding yourself positioned badly when the economy suddenly shifts or changes direction is one way. Letting technological change get you crosswise to the labor supply is another.
Some business problems, though, we make for ourselves. One of the classic ways that entrepreneurs and CEOs get their companies into trouble results from a habit. It is difficult for us to break our habits — the good ones, the bad ones, and the ones which have outlived their goodness.
In a start-up, growing business, for example, change is constant, and our human attachment to our habits that once worked, but no longer do, can present a problem. Especially when it’s your habit and you are the boss.
When we take a look at entrepreneurs especially, and small business managers more generally, the successful ones share some key behavior characteristics.
One of those is energy. One way or another, entrepreneurs are the main source of energy for the business, and they tend to devote that energy to developing and protecting their infant businesses.
Out of necessity they become protective of the company name, its style, ethos, its product and service quality, and the way it conducts itself — the “brand” in today’s jargon.
In focusing their energy, many entrepreneurs become control freaks, putting more and more energy into details and “systems.” This is necessary at the beginnings of a business when its style and “culture” will be established. Over time, though, control of the details becomes a habit.
The habit is often reinforced by the erratic way real businesses grow — in spurts. Growth usually brings a shortage of cash, which, in terms of hiring priorities, makes workers more attractive than managers. The lower priority for management selection and hiring, naturally enough, creates more problems for the boss. Unguided workers will often find ways of doing things that are just all wrong for one reason or another. In fixing these problems, though, entrepreneurs often find themselves spending their days “putting out fires” instead of focusing on growth and development of the enterprise.
It is not that these things are not important. They are, but they can often be handled more effectively by others.
In the book, “Landslide: LBJ and Ronald Reagan at the Dawn of a new America,” author Jonathan Darman, compares the management style of the two presidents. Reagan, he writes, “understood an important distinction that Johnson never grasped: being in control and being successful aren’t always the same thing.”
President Johnson became famous for his attention to details, even to the point of spending late nights poring over Vietnam bombing targets. President Reagan, by contrast, became famous for concentrating on national strategy; selecting people for tough jobs and letting them do them.
In the end, I guess, presidents and the rest of us end up doing what we think we do best, based on our experience and training. President Johnson’s controlling management style worked up to a certain point, for the detailed knowledge he acquired gave him confidence and kept department heads and staffers on their toes. President Reagan’s method worked because he had confidence that he could “read” people well and assess their capabilities and weaknesses — and select the right ones for the job.
There are risks in both management styles, of course. The controlling style tends to gain momentum and place ever more demands on the top executive. This happens because lower level managers and supervisors become less and less willing to make a decision. It’s easier to pass the decision up the line, because that’s where it’s going to be made anyway.
Delegation-style management has its own risks and worries, too. It is truly a kind of faith-based system in which managers — and workers, too — fully recognize that the leader has placed his or her faith in them and believes they can and will live up to that responsibility. Most often they do, but the exceptions can be spectacular disasters.
What’s the right thing to do for the entrepreneur CEO? Start by knowing yourself and what you are good at. If you’re great at details but have some doubts about your assessments of people, make sure that you get good advice about keeping your company “management balanced.”
If you are a good judge of people but not good at (or interested in) details, then bring someone into the company to exert the kind of control you need.
If you pick the management style that best fits you and beef up your shortcomings, it will work out best for the success of your business.
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