George Gendron

Management By Going Away

The value leaders add to their companies is often very different then what they imagine it is.

 

FYI: From the editor

Reading this month's cover article, by Donna Fenn, I was reminded of a story about a guy I know. I'll call him Ted. He's a former investment banker who decided a few years back that he'd done enough deals for one lifetime. What he really wanted was to have his own company.

So he started looking around for a business to buy. He wanted to find a small company that was "undermanaged," that he could improve by leveraging his years of financing young growth companies. Within six months he hit upon an acquisition candidate. The company made a product that he fell in love with as a consumer. He was impressed with the quality of the design, the workmanship, even the assembly instructions. He set up a meeting with the company's owner, who -- as luck would have it -- was nearing retirement age. One thing led to another, and Ted wound up buying the company.

With his ownership papers in hand, Ted said good-bye to Wall Street, moved his family to a new country home near the factory, and went to work as the hands-on CEO of his own business. He was thrilled by the change in his lifestyle and by his new role as company owner. It wasn't long, though, before he began to grow a bit frustrated. He'd assumed that his presence would revitalize the business, but nothing much had changed.

Then tragedy struck. Ted was at home one night when he got the phone call that every parent dreads. His oldest son had been killed in a car accident.

Ted was devastated. He realized that he needed time off from the business. So he sat down with his three top managers, all of whom had been with the company for years, and asked them to run it until he felt well enough to return.

For the next year Ted put the business out of his mind as he tried to come to terms with the death of his son. The financial statements would arrive, and Ted wouldn't even look at them. He had no contact with the managers. He didn't set foot in the factory. Finally, at his wife's urging, he decided to sell the company.

His first step was to figure out what had happened in his absence. When he started to investigate, he was stunned. Sales were skyrocketing, and profits were going through the roof. Everywhere he looked, he saw improvements -- in the manufacturing process, in collections, in marketing. The managers had discovered new distribution channels, new ways of prospecting for business, new products that could be sold to old customers.

In the end Ted wound up selling the business to his management team, using his own considerable financial skills to put the deal together. The managers were scared when he broached the idea. They didn't think they could handle the responsibility. But Ted convinced them that they were already functioning as owners. Left to their own devices, they'd done things that neither he nor the previous owner had dreamed they were capable of, and the business had taken off.

I can't tell you how many times I've heard some version of that story. A trauma of some sort forces a CEO to step back from the business, and the company responds by performing better than ever.

We hear so much about the subject of leadership, and yet precious little attention is paid to the importance of knowing when and how to simply leave people alone. Don't get me wrong. I don't buy the concept of completely self-managing enterprises. But sometimes leaders lead best by doing less. What's more, I suspect the value that leaders add to their organizations is often very different from what they imagine it is.

Think about that as you head to the beach this summer. And don't be surprised if your company is doing better when you return.

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