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Necessary Losses

Brodsky describes the difficulties he's encountered since delegating control of his company to a team of managers.
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Street Smarts

Sometimes, letting go of your company's reins is the only smart choice. That doesn't mean you have to like it

I got into trouble with my managers last week. I offered somebody a job. You'd have thought I'd committed a crime. They were furious at me. I thought, "What did I do to deserve this?"

Understand, this is my company. I'm the founder and the CEO. I created the entire business out of nothing. I was the one who stayed awake at night in the early days, worrying about making payroll and collecting receivables. I hired everybody back then. Hey, I've been hiring people for 30 years. But now I can't do it anymore.

Why not? Because six months ago I made a decision. I finally realized that if the relationship between my company and me kept going the way it was, one of us was headed for trouble. So I appointed these managers to run the company. I told them to do whatever they thought was necessary, and they established procedures for things like hiring. I have to learn to follow the procedures. If I don't, nobody else will. I'm trying to break myself of old habits, but it's hard.

What's hardest, though, is how it feels. You walk into your own company and, basically, nobody talks to you; people don't really ask for your advice anymore. It's not their fault--they've got jobs to do. I wanted this. But do you know what it's like to be ignored in your own company? I come in and sit in my office, and I feel like a stranger, as if I don't really belong there.

Believe me, I wasn't eager to get into this position. I put off delegating authority to my management team for as long as I could. Who wants to give up being the chief cook and bottle washer in his own company? I knew I wouldn't like it. Sure, the managers told me that our problems were serious and that I was creating a lot of them, but I didn't listen. So what if we lost a few people? So what if morale wasn't the greatest? So what if the managers spent a lot of time putting out fires? They were getting paid, weren't they?

I don't know what convinced me in the end. Maybe it was my own unhappiness with running a business that wasn't in constant crisis anymore. Maybe it was the nagging memory of what had happened the last time I'd tried to build a company. Maybe my managers just wore me down. Whatever it was, I finally gave in and agreed that we had to change.

The business--an archive retrieval and courier company--had grown well beyond the start-up stage. It needed things I couldn't provide--things it couldn't acquire as long as I was always around, making the key decisions and running the show.

So I took myself out of the chain of command, put my management team in charge, and brought someone in to help us develop the systems we'll need to keep the company healthy over the long haul.

Looking back now, I have to admit that the company was ready for the change long before I was. People were desperate for order, structure, and predictability; they wanted to know what they were walking into when they came to the office each day. Me? I prefer chaos. Deep down, I like having problems. It's hard to admit, but I enjoy the excitement of working in a crisis atmosphere. That's one of the reasons I get so much pleasure out of starting businesses. You have nothing but problems when you're starting out. You're always on the firing line. You're juggling a dozen balls, and you can't afford to let any of them drop. Everybody is counting on you. No one questions your decision-making process. You're almost like a god in that situation, and you run on pure adrenaline. It's exciting, stimulating, and challenging, and I love every minute of it.

But that stage doesn't last. If your business is viable, it eventually reaches the point at which it can sustain itself on its own internally generated cash flow. When it gets there, it moves off the danger list and begins to develop a whole new set of needs.

You can't ignore those needs. I did once and lived to regret it. Back in the 1980s, I had another fast-growing company, a messenger business. It took us seven years to go from zero to $120 million--and about 14 months to go from $120 million back to almost nothing. We wound up in Chapter 11. Where did I go wrong?

In hindsight, I went wrong right at this juncture. The company needed management, stability, and structure, and I kept it from getting them. I was so desperate to sustain the head rush of start-up chaos that I made a hasty series of bad acquisitions. I wouldn't back off. I made all the final decisions and didn't let the managers do their jobs. In the end, I paid a steep price.

I'm not going to make the same mistake again, but delegating authority doesn't come easy to someone like me. In fact, I can't think of anything more difficult in business than changing the way your company is run--going from one-person rule to professional management.

What's more, this is not an area in which I have any great expertise. I can give you a ton of advice about starting a business---and I frequently do, as readers of this magazine can attest. But I'm a novice when it comes to creating management systems, and I knew it when I began this process. In thinking about what lay ahead as best I could, I decided I faced three major challenges.

The first challenge was to find someone else to manage the transition for me. I'm not talking about hiring a new CEO. Whenever a founder decides to step back, people always start searching for a replacement, and it's rarely the right solution. Look at Ben & Jerry's. I knew we didn't need a new boss, and we didn't need new managers. What we needed was a new management system.

There was simply no way I was going to be able to oversee my own company's transition to team-based management. All my instincts led me to resist the change, even to undermine it. To me, management is boring. I don't have the patience for it. I don't like sitting in a staff meeting with 10 people discussing how things should be done. My attention span isn't long enough. I want to be in the thick of the action, making my own decisions and living with the consequences.

People like me aren't any good at developing a management team. We don't know how, and we don't want to learn. We thrive in unstable environments. Indeed, we breed instability, and management is all about creating stability through planning, organization, and commitment. To do that, you have to operate in a different time frame. For an entrepreneur, a long-range plan is a week. For a manager, a short-range plan is a year.

So I realized that someone else had to lead the process--a professional manager, a person who found building companies as exciting as I found starting them. There are consultants who specialize in such transitions, but I can't think of one I'd feel comfortable turning my business over to. Nor was I about to bring in a big-company executive who knew nothing about operating in a small-business environment.

I needed someone whom I knew extremely well and trusted completely, whose thought process I both understood and respected. A major part of this person's job, after all, was going to involve dealing with me. I was very anxious about the whole process. My company is my baby. Other people helped raise it, but it began as a sparkle in my eye. So I had to have complete confidence in whomever I hired to take it to the next level.

In the end, I was lucky; one of my best friends was perfectly qualified for the job. His name is Sam, and he's a world-class manager who has built and sold seven businesses in seven different industries. He agreed to take me on.

The second challenge I faced was to find something else for me to do in the company. I mean, if I wasn't going to be running the business anymore, how was I going to spend my time? I have many outside interests, and I put a lot of effort into them, but I couldn't just walk away from my company. I still loved it. I loved the concept. And the company earns a lot of money. I wanted to stay involved.

And yet I realized as well that I had to get out of the way. I knew I wasn't going to enjoy my reduced role. I've always had a hard time not being the guy who provides the final answer. I want to be included in every decision, and I have trouble accepting that people can make decisions without me. I have even more trouble going along with decisions that aren't the same as the ones I would have made.

So what was I going to do? Sit alone in my office with the door closed, biting my tongue and grinding my teeth? Or fall back on old habits and undermine the entire process?

I've learned over the years that the best way to break a bad habit is to replace it with a good habit. So I asked myself, "What are the best jobs for me?" One of them is sales, no question. I enjoy selling. I'm good at it. And I have a lifetime of contacts to draw on. I'm also pretty good at negotiating deals and overseeing projects. As it happens, we're in the final stages of putting together the financing for a new facility we're building next to our present warehouse.

I have my work cut out for me. For the next two years, I'm going to divide my time between making sales calls and supervising the construction of the new building. Those two jobs will keep me involved with the business--and out of everybody's hair. I'll stay away from the office as much as possible. I won't attend staff meetings. I'll let my managers make their own decisions and do my best to abide by them.

But old habits die hard.

Which brings me to the third challenge: sticking with the process. There are moments, I confess, when I wonder how long I can keep this up and how far I can go. My goal is to turn 100% of my authority over to my management team. I figure I'm about 70% of the way there. I still have the final say on some issues---major financial commitments, for example, or adding new positions. Not that we've spelled out the areas I'm holding on to, but I think the boundaries are pretty clear to my managers. Occasionally, they'll ask me what I want to do about something. I try to make as few decisions as possible.

Sam tells me that I shouldn't have to make any decisions at all. As long as the managers stay within the budget and meet the financial goals, why should I care how they do it? In theory, he's right, but I still have a lot of growing to do before I can practice what he's preaching. I just hope I can stay the course.

Don't get me wrong. I like the results so far. I can see a tremendous difference in the company already. Our employee turnover is way down, mainly, I think, because we're doing much better at hiring. Under the new procedures, we now require that two people interview every job candidate. To me, that rule was a luxury. But what can I say? It works.

Meanwhile, my accounting department has done a complete turnaround. Before, I could never get enough information when I wanted it. Now I'm getting more than I need--from the same people. The funny thing is, I'd always blamed the head of the department for the problem, but it turned out that I was the real culprit. She reported to me. All she needed was more structure and a new boss, and she became a star.

In fact, most of our employees are thriving under the new regime. Morale is higher than ever. Why? I can think of only one reason: people want structure. They want to know what the rules are, and they want the same rules applied evenhandedly across the board. They don't want us to deal with each case individually, as I used to do. They actually work better when they think everybody is getting equal treatment. If you'd told me that a year ago, I'd have said you were crazy, but I can't deny what I see with my own eyes.

Of course, we're nowhere near the end of this process, and the hardest part lies ahead. I still have to relinquish final control. That means accepting the fact that I'm really not needed to run the company anymore.

I remind myself, though, that there's a big payoff if we're successful. For openers, I'll have the satisfaction of knowing that my business is in good hands and will continue to grow without my direct involvement. Also, I won't have to try to be the "manager" of a steady, viable, established business--a role I hated so much that part of me always kept trying to prevent the company from reaching that stage and forcing me into that role. And last, I'll be free to spend more of my time doing what I love most in the world: starting my own businesses and helping other people start theirs.

But in a way, the payoff is beside the point. I didn't really have a choice about stepping away from my business. If I'd continued to run it, my management-by-crisis style would have done it in. I know that. I also know that I wouldn't have been happy changing my style (even if I could). Here's the bottom line: I may prefer chaos, but what I prefer doesn't count now. My company has reached the stage where what it needs is more important than what I need. Besides, it can't give me what I need anymore. So letting go was my only smart choice.

The trouble is, no matter how inevitable and healthy that choice is for my business, my employees, and in many ways even for me, I won't soon forget how much it hurts.

Norm Brodsky is a veteran entrepreneur whose six businesses include a former Inc. 100 company and a three-time Inc. 500 company. Bo Burlingham is an editor at large at Inc.

Last updated: Dec 1, 1997

BO BURLINGHAM | Staff Writer

Burlingham joined Inc. in 1983. An editor at large, he is the author of Small Giants. Burlingham is also the co-author with Norm Brodsky of The Knack; and the co-author with Jack Stack of The Great Game of Business.




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