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Are you a barrier to growth?

10 October 2018

The passionate entrepreneur may not always turn into the successful manager a growing business will ultimately need.

On 21 June 2017, Travis Kalanick, Uber’s controversial CEO, finally announced his decision to step down.

But it took months of turmoil for the entrepreneur to accept what was needed: drivers deleting accounts over strike-breaking; accusations of industrial espionage; a video of Kalanick arguing with a driver; and claims that sexual harassment went unchecked.

It was thus an extreme case in two senses: the extraordinary success of the business that Kalanick had founded; and the exceptional number of problems that ensued as it grew. It seemed the radical, visionary entrepreneur had proven to be a lousy manager.

Though Uber was an extreme case, the problem is a common one for start-ups. In 2013 Steve Tobak, an executive coach, wrote in Inc Magazine that there are five common pitfalls entrepreneurs fall into when trying to step up to the CEO mark: they’re too invested in their own vision; they aren’t willing to make the hard choices; they don’t have a passion for managing; they don’t get marketing; and they usually aren’t willing to step down.

Indeed, according to Kate Burton, an executive coach who has worked with Microsoft, KPMG, SwissRe and Waitrose, the problem may be as fundamental as good managers and successful entrepreneurs having different personality types.

“Entrepreneurs are the kind of people who see the big picture: they’re visionary and fast-moving,” says Burton. “Managers need to temper things through systems and processes – getting things done through people calls for a different mind-set. An entrepreneur needs to be innovative and run with their ideas, which can be a high-risk strategy.   A successful manager is driven by attention to detail and metrics, is mindful of risks and takes steps to mitigate against them.”

Let it go and let it grow

As a business matures, its founder’s focus will inevitably shift away from its core activity and towards the challenges of running a successful, growing venture. For Sheena Marsh, founder and Director of Oxford Garden Design, that has meant spending less time doing the garden designs she loves, which inspired her to start the business in the first place.

“I started as a sole trader, then took on my first employees in 2011,” says Marsh. “Now we’ve got 27 staff members and have just reached £1 million a year turnover. I love designing gardens but, the more the business has grown, the more I have moved away from that. I do no design any more, and I don’t go and visit clients any more, which I also used to love.”

But Marsh believes that it’s a mistake to cling on to all responsibilities. Instead, it’s crucial to trust and empower those you appoint.

“It’s only by letting go that I’ve been able to allow the business to grow,” she says. “Building up a team that can function without you depends on empowering the right people and giving them responsibility. Trust is a fundamental principle. I encourage them to come up with solutions to problems before they come to me. I love managing people – with a background in teaching, it comes naturally to me.”

Which way out

Not all entrepreneurs adapt so easily. Many, like Kalanick, cling on to power until they are forced out, damaging both the business and the individual. Fortunately, there are solutions, but first the CEO may need to recognise his or her own weaknesses.

“People I have worked with successfully have been willing to recognise that they’re not perfect, and that there are other ways,” says Kate Burton. “They’ve been willing to get help, rather than just doing things their own way. And they’ve been willing to listen.”

Help can take the form of personal or business coaching, or consultancy. It can help business leaders to build a team of people they trust, accepting that they don’t have all the answers.  Ultimately, though, some business owners will need to accept that stepping aside will actually improve their company’s fortunes.

“It is better to elect to step down than to be ousted,” Burton says. “And there needs to be an exit strategy*. They need to be able to step away, rather than doing the Rupert Murdoch thing of carrying on into their dotage and being unable to let go!”

 

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

*Exit strategies may include referral to a service that is separate and distinct to those offered by St. James’s Place.

 

Some of the products and investment structures documented within this article will not be available to our clients in Asia. For information on the funds that are available please get in touch.

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