As Kim and I spend the week noodling on our 3 year strategic plan (more golf, less work??) this just in from John Hamm, from my local Sydney paper. A great read for entrepreneurs. The short version is here:
One of my favourite articles on the topic was by the academic John Hamm in the Harvard Business Review earlier this decade. His classic piece, “Why entrepreneurs don’t scale” should be mandatory reading for business owners. A friend recounted his own inability to scale the other day, and said he ticked each of the four boxes that Hamm says stop entrepreneurs scaling. They are:
- Loyalty to comrades: the excessively loyal founding entrepreneur is the growing organisation’s worst enemy because they will not make the tough staffing decisions.
- Task orientation: the entrepreneur is the organisation’s weight-lifter - brilliant at executing short-term projects, but lacking in long-term strategic ability.
- Single-mindedness: the entrepreneur is too insulated and does not communicate well enough with staff or accept opinions different to their own.
- Working in isolation: The brilliant, isolated entrepreneur struggles to present his venture to the world. They don’t enjoy leading the sales effort or being their enterprise’s public face.
I’ve got my own thoughts about why so many entrepreneurs don’t scale:
- Scale tales: Business plans are full of material about where a venture can grow, which is all exciting, though rarely happens. Hardly any business plans I read have detailed information on how scaling can be achieved. They are too light on execution.
- Poor systems: Strong systems and structures provide the foundation to scale ventures. They make it easier for entrepreneurs to work on, rather than in, the business. Too many entrepreneurs chase growth first and worry about systems later.
- Lack of self-understanding: Some entrepreneurs love repeating their business idea everywhere possible and stick close to their core product. Others find running a large organisation, with more staff and bureaucracy, stifling. It feels like a job. They can’t make the transition from entrepreneur to chief executive, or don’t want to. They should have sold their business to a large player as it took off, and moved to their next start-up.
- Capital: Some entrepreneurs wait too long to access capital. Being well-capitalised at the start, even if it means giving up more equity, can be advantageous for businesses that want to scale. Sometimes you have to let go of equity to get a smaller piece of a much bigger pie.
- Relationships: If want to scale a venture rapidly you need a business partner on the same page, an understanding life partner, and a willingness for a different work/life balance.
Recent Comments