Edition 299 – Square Pegs, Round Holes

SQUARE PEGS, ROUND HOLES

My friend and colleague from Portland, Oregon, Gary Furr, wrote a great piece in his weekly newsletter recently about the leadership qualities of individuals that he’d observed in his work amongst his clients. In particular, he referenced an example of a manager recruited from small business to run the operations of a much larger one and the issues that small business thinking created in a larger business. You can find his article here:  https://garyfurrconsulting.com/grow-your-leadership-to-grow-your-business/

It was a great piece of writing that had me thinking exactly the opposite.

Over the years, I’ve worked with countless small and family businesses that are looking to grow bigger. The reasons for growth are many and varied and include:

  1. Identifying a niche in the market that has yet to be exploited.
  2. Developing a complimentary business that will yield higher returns from little additional cost.
  3. Wanting to grow a business to sell it.
  4. Endeavouring to accommodate a generational transition for the business so that Mum & Dad have grown it sufficiently to enable multiple siblings to take over.

In many of these businesses, the thought has turned to recruiting individuals who have big company experience and, by extension, should be able to help turn a small business into a big one. Rarely, if ever, have I seen it work.

Here’s a couple of examples:

  1. The recruitment of a general manager from a large company into a family business, primarily as a means of corporatizing the business whilst taking advantage of a significant industry skill set. In the end, it failed for three reasons:
    1. The individual failed to understand the dynamics at play in a family business.
    2. The decision making process in family business is very emotionally driven, which the individual couldn’t get their head around.
    3. The individual was looking to build a corporate management structure in a business of just over 20 people. Before too long, everyone would end up with “Manager” in their job title, which meant a lot of issuing of instructions, but very little actioning of them.
  2. The recruitment of a number of senior managers with corporate backgrounds to take charge of various divisions as the business went through a growth phase. It ultimately failed for three reasons:
    1. A number of the managers were great at issuing instructions via email and phone – but not necessarily engaging face-to-face with the people they supposedly led.
    2. Almost all of the managers were great at the high level stuff, but were shocking at the micro detail.
    3. All of the managers failed to take ownership of tasks and problems to the point where finger pointing became the order of the day, rather than action and resolution.

In each of these business situations, the big business corporate mentality was moved on and in the process:

  1. Decision making improved rapidly post experiment.
  2. Turnover grew.
  3. Record profits were generated in the years afterwards.
  4. The owners and limited management team now in place very much have their finger on the pulse and resolve issues almost in real time.
  5. There is a greater understanding of what the business does, how it makes money and how processes can be made more efficient by putting the owners and managers on the shop floor.

It’s an interesting observation and one that goes against the grain of most business books. However, I’ve found over the years that a lot of business books are written by people that have either not been in business, or operate only from the top floor of the office tower. Neither of those really understands what drives the success of small and family business.


This Week’s Tip

Be careful what you read.
A billion dollar success story is not necessarily the recipe for success in your own business.

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