Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

August 24, 2010

Is Management Obsolete?

Filed under: Growth Management — Tags: , , — Mike Van Horn @ 4:01 pm

In “The End of Management” (wsjonline.com, 8.21.10) Alan Murray says that “managed corporations” are incapable of thriving in today’s accelerating change. He contends, “Traditional bureaucratic structures will have to be replaced with something more like ad-hoc teams of peers, who come together to tackle individual projects, and then disband.”

I reacted strongly to this, since I’m always advising small, growing companies that they need more management, not less.

My response: Okay, so this “ad hoc band of peers” comes together, builds and commercializes a whizbang disruptive new gadget like the iPad, puts it on the market, and I buy one. Wow, it’s great!

Then they disband. But wait. Who provides warranty service if they’ve disbanded? I sure hope there’s some big corporation behind them, interested in self-perpetuation and continuity enough to provide good customer service.

No venture capitalist I’ve ever met would back such a venture. A VC’s first question is, “How will you perpetuate this long enough for me to get my money out?” And nobody will cash out the VC unless they in turn are convinced that the endeavor they’re investing in has longevity and strong management.

A corporation’s biggest stakeholders are its customers, and customers want longevity and continuity. I’ve been buying Dial Soap for decades, and I hope some bureaucratic corporation will keep it available for the rest of my life, with as little innovation as possible.

So Mr. Murray, I think it’s way too soon to talk about corporate management becoming obsolete. For every bumbling bureaucratic corporate dinosaur you name, I can name a company like Google or Facebook or Apple where top management strives to find the balance between creative destruction, disruptive innovation, and profit-generating continuity. The only reason Google can afford to give its engineers this 20% time for new exploration is that its “regular business” is profitable enough to support this workstyle–that is all overhead.

If anything, managing a company like Apple or Google is tougher than managing a staid bureaucratic corporation. But both types have strong corporate management styles and systems and cultures. They’re just different.

I contend that your “ad-hoc teams of peers, who come together to tackle individual projects, and then disband” can only be effective within a larger milieu where strong policies and systems for continuity are paramount. And that requires dang good management.

August 13, 2010

Neglecting HR Costs CEO $1,000,000+

Filed under: Employees and Human Resources,Growth Management — Tags: , , , , — B.J. Van Horn @ 5:13 pm

Here’s a story with a moral. A business owner was driving her red Beemer convertible along a beautiful stretch of straight road, when a four-way stop intersection came into view.  Her passenger saw the rapidly approaching sign and said, “Do you see the stop sign?  Are you going to stop?”  She replied, “ I see it.  I understand the law.  But there is no other car coming from any direction within my view.  I think I won’t stop.” And they continued on.

A bit later a second business owner, alone in his Lexus, came along and drove right through the intersection.  Unfortunately, a CHP car was hidden behind a boulder, stopped him, and said, “Sir, you ran that stop sign.”  The owner replied,  “What stop sign?”

This illustrates the plights of two CEOs that have made the news recently.

1. A civil suit for discrimination was filed in a California court against Lucasfilm by a woman who had received a job offer, then before her start date informed the company she was pregnant. She claimed that in response to this news the company representative who had hired her kept pushing back her start date, finally withdrawing the job offer, just because she was pregnant.

As you know from your Unlawful Harassment training (ahem), discrimination against a person who is pregnant is sexual discrimination and unlawful harassment under both federal and state law. And can any businessperson honestly say that he or she has not heard of unlawful retaliation – and that withdrawing a job offer after a prospective employee tells you she is pregnant sure quacks like the retaliation duck?

George Lucas, head of the company, was called to testify in the suit and basically said “Huh?” when asked how this could happen.  He indicated that he really did not get involved in hiring decisions on that level, had had no interaction with the claimant, and left all those matters to his staff.  His testimony didn’t do the Lucasfilm case much good, and the woman was awarded a judgment of over $120,000 and her high-profile attorney will be pursuing recovery of legal fees over the million dollar mark.

Based on what was reported, I presume that Lucas illustrates a dangerous mindset.  Why was some project manager, aided by a “personal assistant” of Lucas, in charge of hiring at such a high-visibility company?  Had that person been trained in lawful interviewing, job offers, discrimination law?  Why was the process not in the hands of a well-trained HR professional? Did Lucas permit a culture of disregarding HR in deference to operational or financial pressures?  As head of the company, Lucas is responsible for everything that happens even if he never lays eyes on an applicant.  It seems like an expensive lesson that should have been learned much sooner, and should have become part of the organization’s culture early on.

2. The second incident involved the head of Joie de Vivre properties, Chip Conley.  In addition to being an astute and visionary businessperson, he is somewhat of a free spirit.  He posted some less-than-conventional  (although not risqué or objectionable) photos of himself at Burning Man on his Facebook page.  His HR Director gave the opinion that the photos were “a cause for concern” and advised they be removed.  Conley listened, considered the opinion, and then decided the pictures stayed posted as per his philosophy of life and business.  So far, no ill effects have emerged from the decision; but if they had, it would have still been an informed decision and a considered risk taken.  It seems clear that Conley expected his HR person to be his trusted advisor and partner in ensuring the safety and prosperity of his operations –and therefore to speak freely about possible hazards to that safety, advise how to address them, and to have the serious and respectful attention of the CEO when such matters are brought up.

Now for a short quiz:  Based on the two drivers described in my story, which one was Lucas and which was Conley?  Which are you?

B.J. Van Horn is Senior Professional in Human Resources at The Business Group. She helps CEOs and other top execs avoid such expensive lessons.

August 10, 2010

O Woe Is Me! I’m Doomed!

Filed under: Growth Management — Tags: , , — Mike Van Horn @ 10:58 am

Here’s “small business growth killer #1,” and it’s a point of view that pertains to a lot of people, probably most of us at some time. Since I’ve been there too, I’m putting it in first person.

“Things aren’t working well for me now, and I’d really like to make my business work better. So I take steps to make that happen. But secretly I’m afraid there’s no solution. There’s nowhere to go. I’m on a downward track and it’s only a matter of time till I crash and burn. It’s scary to even look at that. I’m doomed! I’m stupid for going down this wrong track for way too long. I’m going to have to give up everything I’ve done and shift to a whole new business model. I’m way too old for this. Why didn’t I do this years ago? Look at all the opportunities I’ve missed! What a dunderhead I am! I’ll never learn. I’m doomed. I just want to crawl into a hole and forget about it. Why can’t I win the lottery?!? “

Now even if I don’t have these thoughts consciously, they’re running in the back of my head when I wake up at 3:00am.

But this below-the-surface negative energy detracts from my positive “go-get-‘em” energy, so making progress becomes a real slog. I’m constantly sabotaging myself by missing deadlines and dropping commitments. This happens because I have to drag this load of negativity around with me all the time.

What can I do about this? First of all, I can ‘fess up. Tell someone what’s going on in my mental back room. Someone credible. Not someone who will give me sympathy, and bemoan how tough things are. Not someone who’ll make a negative judgment about me. Not someone who then tells me their own hard luck story. It needs to be someone who will listen, then say, “I get it. Now what are you going to do about it?”

That’s the “business therapy” function of The Business Group. It makes a huge difference to our members who confide in their peers. I unload my sad story and fears onto them, and instead of sympathizing or judging, they problem-solve. They say, “Why don’t you do B instead of A?” I often find that my group has given me a $10,000 idea! My business improves. The negative load is lifted — at least until the next thing comes along.

Or my Business Group members may say, “The old way isn’t working. Looks like you need to change your business model. We give you permission to do this. No blame. What would work better for you? What would it take to do that? What are the next steps? How could we support you? What do you commit to do by the next meeting?” This takes a significant load off me. Then I can look around and notice opportunities I couldn’t see before because I was so blinded by fear and resistance. Then, I think, “Wow! I could do that!” And so I do.

A wise anecdote states, “When you are ready, the Universe will provide for you.” What this means is, if I open my eyes, I’ll notice things that were there all along. I meet a great connection. Someone calls out of the blue. “Create your own luck” means stop wallowing in bad luck and apply my talents in a way that people who appreciate what I offer can connect with me. Hire me. Pay me big bucks. Thank me profusely.

There’s nothing like a run of enjoyable, appreciative, lucrative clients to dispel the fear of failure!

But I must be careful not to bury my head in my work again, pull in my opportunity antennas, and once again start down the slope to, “It doesn’t work.” This is why The Business Group has regular planning workshops, review sessions, and monthly commitments. To keep all of us honest, happy, and prosperous.

August 2, 2010

The 3 Barriers to Small Business Growth

Filed under: Entrepreneurship,Growth Management,Not yet categorized — Tags: , , , , , , , , , — Mike Van Horn @ 4:10 pm

Your business is growing and profitable, then BOOM, you hit a speed bump. Or you get stuck in a swamp. What happened? The bigger you grow, the tougher it can be to grow yet larger. I call this the “paradox of small business growth.”

As your company grows, you’re likely to run into three barriers at different stages of growth. Seems to me these are dang near universal!

Barrier #1. You’re a solopreneur, yet you want to grow beyond what you can handle working by yourself. But you get stuck in “the business is moi” trap.

Your growth challenge: Learn how to find good employees, then trust and manage them well.

Barrier #2. It’s you and the crew, but further growth is limited because everybody reports to you, and it’s running you ragged.

Your growth challenge: Learn how to be the CEO and entrust day-to-day operations to your skilled managers.

Barrier #3. You’re a successful, strategic CEO of your growing company, and now it’s time to move on to the next thing—sell, retire, start something else. But you’re so tied to the business, you can’t bear to turn it over to others.

Your growth challenge: Learn to let go.

I’ve been working with owners at all three levels for a lot of years. Here’s what they have in common: They have a management style that has worked very well to get them where they are. But to get to the next level—and they definitely want to get there—they must change what works. “It works, but break it anyway!” And this is very painful.

Many can’t make the leap. They decide to stay the same, and come up with very convincing explanations why further growth is not desirable for them. Alas.

There are straightforward ways to tackle these barriers. Once you see them laid out, you say, “Oh yeah, I could do that. I just need some guidance.”

This fall I’m going to offer a program that addresses each barrier. (You can only be at one barrier at a time.)  I’ll elaborate on each of these barriers in later posts.

In the meantime, I’d love some examples from the Peanut Gallery. If you read one of these and moan, “Ohh, that’s me right there you’re talking about!” let me know your story. Where do you want to go; what’s in your way?

We learn best from each other. You learn to transcend your barriers by seeing how others have done so (or even by watching them be stuck).

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