The year 2004 is right around the corner. Will you be planning some growth for your company? Will you be planning some growth for yourself and your leadership skills? Entrepreneurs often fail to scale -- that is, adapt leadership capabilities to growing business needs. They underestimate, or totally overlook, the challenges that growth will place on their leadership and management skills. As a growing company undergoes major upheavals, you, the owner, will find your relationship to that company changing. Many of the traits and talents that served you well in a smaller company will become hurdles as your operation expands in size.
Measure to scale
John Hamm's recent article in the Harvard Business Review, "Why Entrepreneurs Don't Scale," offers valuable insights on this issue. He notes, "A leader who scales is able to jettison habits and skills that have outlived their usefulness and adapt to new challenges along the way."
Hamm identifies four tendencies that work at some stage for business leaders but become Achilles' heels or weak spots as the company grows.
1. A tendency to be loyal to comrades, those who were there from the beginning or who lived through tough times. That loyalty persists even when those comrades are giving signs of failure or an inability to keep up with the changes that growth demands. Hamm calls this "stubborn loyalty, at the expense of an organization's success" and notes that it is extremely common in growing companies.
I heartily concur. The remodeler must make some tough decisions as to who has the skills to take the company to the next level and who doesn't.
2. A tendency toward task orientation or focusing only on the job at hand. Leaders who fail to become more strategic end up with an ever-growing to-do list and blurred priorities. "Leaders able to scale ... learn to extract three or four high-level goals ... and focus their teams," Hamm notes.
There are remodelers who own $3 million dollar companies and report spending barely any time working on the company (as differentiated from in the company). This simply won't fly. Bigger companies demand management and leadership time that only an owner can provide. They cry out for a strategic vision and direction against which every activity is measured. As a company grows, risk grows, and a remodeler has to be reading the vital signs and motivating employees to move in the right direction. A few hours a week as a company grows to multi-million dollar volume won't do it.
3. A tendency to be single-minded, which can turn into tunnel vision as the company grows. The owner of a growing company is much like the clown who has to keep many plates spinning. He can't focus just on sales or just on estimating; there are many endeavors that must be recognized, acknowledged, and prioritized.
4. A tendency to work in isolation. This trait can be powerful in an entrepreneur and disastrous in leading a larger company with an increasing number of stakeholders. As the company grows, there are a growing number of employees, clients, subs, and suppliers, plus the leader.
Take a hard look
These four tendencies of an entrepreneur work for a small, start-up company but restrict the growth and success of a larger enterprise. As Hamm notes, leaders who grow "make concerted, sometimes uncomfortable, efforts to do what doesn't come naturally to them for the team's sake."
So as you look ahead to 2004 and decide what might be required to grow your company, don't forget to include yourself and your skills in the plan. --Linda Case, CRA, is founder of Remodelers Advantage Inc. in Fulton, Md., a company providing business solutions through a network of experts and peers. (301) 490-5620; [email protected]; www.remodelersadvantage.com.
