Going From Small to Big

July 18, 2013 in Strategic Skills.

This article is brought to you by entrecity.com.

Going from small to bigEntrepreneurs often do a great job of conceiving ideas and developing them into businesses. They do it best at the start-up stage and especially when the number of people involved is small. Start-ups can go through many changes before a proper company structure can be established.

It is at these initial stages that good entrepreneurs shine. With the freedom from a rigid structure, and at a time where they can use their judgement and gut feel, entrepreneurs are able to take advantage of the situation to make innovative business models and eventually companies. As the company is small, there is less of a need to communicate and justify a lot of the decisions that are being made. Giving the entrepreneur more space to run free.

As the company finally becomes successful and grows bigger, the old approach of using judgment to make a decision becomes a difficult thing to do because there now arises a need to communicate the decisions and the decision-making process to many more people(stakeholders) involved with the company.

In fact, the requirement of proper corporate governance and a structured approach of doing things become standard for the company. Sadly, not everyone can understand the fuzzy logic used by the entrepreneur, so it is necessary to set up proper rules and regulations, specifications and operating procedures to ensure the smooth running of the company.

But guess what? This is exactly why the entrepreneur starts to fail. As they are required to use a structured process in decision-making, it can become difficult to communicate the reasons and processes they have used to make certain decisions. As they are answerable to many stakeholders, they need to suppress their gut feel and use a logical and defined method to come up with decisions. Thinking with the heart now becomes unprofessional and unacceptable. The very reason why very unique and innovative decisions were made and why the company became successful in the first place was because of the ‘thinking with the heart’ approach, which has now become unacceptable!

It is at this stage of company growth that many entrepreneurs start to look ineffective. In many cases, the entrepreneurs who had created very successful companies did not end up operating the companies as they became big. A famous example was when Steve Jobs was fired from Apple Computers in the early 80’s. In certain cases, so-called professional management teams are often brought in because the entrepreneurs seemingly start to fail and can no longer make effective decisions.

To think that entrepreneurs are failing is a big misconception. Entrepreneurs begin to look ineffective because they do not have the freedom to make the decisions the way they used to. They are no longer allowed to use their internal judgement process or to think with their hearts.

Should they be allowed to run things using their strengths, to think with their hearts, everyone would stand to benefit from the outcome.

The challenge today would be to create a growing company, that has the structure for it to scale and fit all its stake holders, yet at the same time allow entrepreneurs to provide direction. This can be done when the structure allows for entrepreneurs to lead and make decisions and then to have a group of professional managers translate those decisions into actions that can be executed in a structures way according to corporate governance and operating procedures. If this kind of relationship and decision-making process can be developed, we will see stronger companies emerging.

It is a difficult thing to do, because in the initial stages of building your company, you are more focused on staying above water. This structuring is often ignored to give more attention to building the idea and the company.  Once a company grows very big, the original group of people who started the company, in many cases are no longer directly associated with the running of the company.

“So, my advice would be to set up a structure that still values the entrepreneurs’ skills – allowing them to continue to think with their hearts – and you will see an even better outcome for your company. In the long term, let them become mentors, advisors or the visionaries, not the CEOs.

I have personally gone through the experience of changing my decision-making process from one that used my heart to think to one that used my head to think. I discovered that the more structured the process I used and the more I relied on as complete a set of data to make a decision, the less satisfying the outcome has been. In fact, when I stopped relying on my gut feel and started depending on a much more structured process to satisfy others who were also important stakeholders of my company, I became less effective with my decisions.

After a prolonged period of less than satisfactory results, I analysed what went wrong and realised my problem was that I did not utilise the biggest strength I had, which was to think with my heart, and each time I did that, I achieved good results. So, each time I find myself going into a downward spiral of performance, I remember how I did it best with my heart and I start to become more gung-ho in using my heart to help me make decisions.” – Mr Inderjit Singh, The Art and Science of Entrepreneurship.

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