I’ve learned lots of things owning a business. The most important lesson was the value and ability to measure return on labor but it wasn’t the hardest. Once the insight was clear, it didn’t take long to do the measurements and learn how to use them effectively. The numbers are clear and it forces you to think about what you see. In fact, once you see labor RoI it’s hard not to learn lessons.
By far the hardest lesson for me has been understanding how much change any one organization can take at any one time. I’m an entrepreneur and I love change. When I took this Finding Your Why assessment, my why was A Better Way. Finding a better way to do things is a huge strength but only when things need to change. When things are just fine, it can be completely counter productive. Another problem with this mindset is it lacks any prioritization. You can spin your wheels fixing recruiting when marketing is the real problem. It made me realize, I want to find a better way to do EVERYTHING!
Learning Your Team’s Limits
People don’t come to work for you because they want to own their own business. Ok, maybe a few but they are going to be gone after they learn everything they can. Most people just want a job and might like your vision or culture. We as entrepreneurs think everyone else is like us. But what if they really were? We’d hate it. Every employee would want to run the business and would think you’re doing it wrong. What a disaster.
Normal people want to have a path and a purpose. They work for you because your path lines up with theirs or because they don’t have one and want to follow someone else’s. You need to give your employees the path and stay relatively consistent about it.
Owners that constantly redefine the path end up confusing people. At first, some employees like the change. It’s exciting to feel you can throw off the shackles. But by the third or fourth change they are starting to think you are crazy or don’t know what you are doing. It takes them a bit longer to figure out the truth: you are both crazy AND don’t know what you are doing.
Recognize that your team has limits. Each team has a different capacity so you’ll have to look for the signs: exhaustion, constant rework, miscommunications, lack of process, etc. They are pretty obvious particularly when they get bad.
Learning to Limit Yourself
I view a company and its infrastructure like a pipe. You can do work on it and widen the pipe ie grow your company’s capacity but in the end it’s still a pipe with a defined width. If you stuff every idea you have down that pipe, it will clog.
Here a few ways I’ve found to limit what I am forcing down the pipe:
Prioritize. As I wrote in Good Strategy, Bad Strategy, there is usually one or two most important challenges or opportunities facing your business. Work with you team to clear away the clutter and find that most important thing. You as the owner then need to focus all “better way” stuff there. Leave the other stuff alone and let it operate without you.
Find Other Outlets. We had this debate in my Entrepreneurs Organization Forum this week: should you stay focused on your company or try to diversify into other things? After the meeting I started thinking that these two options are not mutually exclusive. Your company needs to stay focused on the most important thing but you can have other outlets. Maybe it’s another company. Maybe it’s a hobby. Maybe it’s a charity. Whatever you lose with the distraction of another activity you might gain in not distracting your core company.
Shift Up a Level. We often talk about working on our businesses rather than in our businesses but I also think we can think about working on our businesses at different levels. You can work on your business by fixing marketing, sales, operations, finance, people, etc. But if those aren’t your big problem, you can shift up a level and start looking at your industry more. Go learn about mergers and acquisitions. Maybe you can channel your energy into finding the right acquisition to set the path for future growth. Or maybe you can find new services that are needed by your market that no one else is on top of.
Expanding the Pipe
Another option is to create more capacity in your company. It’s never going to handle all your whims. It’d be a pretty weird company if it did but it can start handling more over time. Expanding capacity is a difficult process. It requires lots of investment and since you haven’t done it before, you’ll waste a lot of resources on the way.
I wrote about this process in the Black Hole of Business. You’ll need to bring in more experience people as you grow and your current people will need to grow their skills. As they do, they can handle more but there’s a catch to this process. As the company’s capacity grows, its tolerance for your type of thinking declines. You are going to hire people with deep experience in their field. They aren’t going to be up for total rethinkings of your business. The bigger and more successful you get the larger the opportunity cost of completely redefining what you do is.
There are ways around this. You can build innovation units and do special projects but as I’ve seen companies grow, the focus of the company tends to narrow. It has more capacity but only for certain things. That’s why entrepreneurs often sell at a certain point. Either the restrictions of growth or the cost of the investment get to be too much for them.
So remember, entrepreneurs are awesome but we are rare for a reason. If our companies were made up of them, it’d be like a bunch of chimpanzees fighting over territory. Find a way to apply your talents selectively and find other outlets that meet your needs but don’t clog the pipe.
That’s it for this week,
Alan
Thanks for the encouragement. It means a lot. I'm back in the saddle with a post coming this week!
Missing your articles! You planning to release another one soon?