The six styles of entrepreneurial management.
There are six styles of entrepreneurial management -- and any one of them can work. As long as you're honest about which type of manager you are, and you run your company accordingly
Too much management literature preaches "good management" as if it were a generic skill that comes in a plain white box. The reality is that there are all sorts of ways to manage -- and all of them can work. Here are six organizational setups for entrepreneurial companies. You'll undoubtedly recognize yourself in one of these styles or in a combination of several. The challenge is matching your style with your company's goals.
Many entrepreneurs prefer to run their businesses single-handedly, to maximize their independence. There are three ways to run a company without management assistance; we call them the Classic, the Coordinator, and the Craftsman.
The Classic, the traditional management style of the entrepreneur, might be described as "watch it all yourself." You hire people, but you insist on tight, personal monitoring and supervision. And of course, you do all the really critical jobs yourself.
If this is your style, you are probably reluctant to admit it. People criticize entrepreneurs for being unwilling to delegate. Management consultants contemptuously exhort entrepreneurs to reform their evil ways, to cure themselves of the neurotic need to supervise everything personally.
Piffle. This is a perfectly legitimate way to run a company -- as long as you recognize and admit that it is your style. Problems so often encountered in businesses of this type do not arise from the management style as such. They arise from the delusion that team management is being used. It's the management "experts" who are at fault. By delegitimizing the Classic entrepreneurial style, the experts have intimidated entrepreneurs into pretending to delegate. It is OK to delegate, and it is OK not to delegate; it is pretending to delegate that is disastrous.
Because you think you are using team management, you let your business become too big and too complex to run by yourself. So you hire managers to join your "team," convinced that you are delegating authority to them. Unfortunately, you don't really trust them. So you keep yanking back the reins. Your subordinates quickly become disillusioned. The best leave, and you lament that "I just can't keep good people, so I have to do it myself." Others turn off, and you lament that "my people just can't be relied on, so I have to do it myself."
The standard prescription is psychotherapy. You must, you are told, cure yourself of your aversion to delegation, your neurotic phobia of losing control. We have a different viewpoint: Whose business is it anyway? (In both senses of the phrase!) Where do people get off, telling you to revise your psyche? Just exactly why do you have to delegate?
Our advice is simply this: Decide whether or not you are going to delegate. Then make sure your company plans are compatible with your decision. If you are not going to delegate authority, you must limit the complexity of your business. There is a limit to the number of tasks you can cover personally. There is thus a trade-off involved in adopting the Classic style. If your chosen business is very complex, it will have to be kept small. If it is simple, it can grow fairly large.
An alternative to the Classic style is the increasingly popular Coordinator method, which allows you to run a good-sized business with very few employees. This type of business is sometimes called a "virtual corporation" -- but you don't have to incorporate.
The essence of this style is that you job out most of the business. You simply organize the enterprise and make sure that everything gets done.
In theory, you could job out everything: Arrange for someone to manufacture your product. Get brokers or reps to sell it. Hire an accounting firm to do your books, and sell your receivables so someone else has to do the work of collecting accounts. You could even retain a contract research lab to do your R&D! You could sit in your office, coordinate, and deposit the checks.
In real life, you generally need to do part of the work yourself. But you can do what you enjoy doing and are good at, and get rid of all the other work. Of course, you do have to work with other people and monitor all the jobbers who are supplying you. You will have occasional problems -- particularly if your business involves tight deadlines. Getting suppliers to perform on time is the hardest task.
As a Coordinator you could grow a multimillion-dollar business without a single employee. If you're willing to have a few assistants, you can grow even bigger. Some Japanese trading companies operate that way and do massive volume with only a few people.
Why isn't the Coordinator style more popular? We suspect it is due to the notorious cheapness . . . uh, fiscal conservatism, of entrepreneurs. It's a great deal cheaper to do a task in-house than it is to job it out -- at least, it may appear that way. That is generally false economy. One cardinal error is calculating costs without accounting for the value of your time. It is true that it costs you "nothing" to, say, solder circuit boards yourself. But is that the best use of your time?
If your answer to that question is yes, your style is probably the Craftsman. You can maximize your control over your business if you do everything yourself, making your business literally a one-man (or one-woman) show. Obviously, this approach limits the size to which your business can grow.
This style makes the most sense if your biggest concern is the quality of your output. It's an attitude characteristic of craft types, although many entrepreneurs in other businesses also adopt this style.
There are a number of advantages to doing everything yourself. Everything is done right because you do it. Expenses can be minimized. Operating with no employees can dramatically simplify your life -- no payroll taxes to worry about, no concerns about OSHA, labor unions, workers' compensation insurance. No hiring or firing, no supervision problems, no need to be concerned about pilferage.
The problem with doing everything yourself is that you must do the tasks you don't like as well as those you do. So if Craftsman is your chosen management style, think carefully about streamlining those portions of your business that generate work you dislike.
In the end all the single-manager styles impose limitations on your business. It cannot grow indefinitely unless you give authority to other people. However, most entrepreneurs don't want to build Fortune 500 businesses. If you choose to adopt single-person management, make a conscious decision: how big do you want your company to become? Then evaluate whether your style will be able to handle that size.
A tip: Most authors warn that entrepreneurs who take on too much tend to make bad decisions. But our experience indicates a different symptom: if you take on too much, you tend not to make decisions. If you find that you're having trouble making up your mind -- on business, personal, or even trivial issues -- chances are, you're suffering from decision overload. Delegate some authority, or simplify your operation.
