Necessary Losses

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.