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Encourage entrepreneurial managers

Encourage entrepreneurial managers
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First Published: Wed, Nov 25 2009. 09 48 PM IST

Updated: Wed, Nov 25 2009. 09 48 PM IST
I had mentioned in an earlier column how it is hard for a large company to be entrepreneurial. And how start-ups usually lose much of their entrepreneurial spirit and agility as they scale up.
The founders usually get involved in other stuff—managing investors, putting in processes, being the public face of the company, managing conflict, hard coding the business model and rolling it out—doing stuff that is supposed to build the organization and take it to the so-called next level.
So while the organization is getting built, the founders often take their eyes off the entrepreneurial ball. This may not happen immediately. However, it usually happens over time as the organization gets larger and more complex to manage.
After a few years, what was a mission for the small, focused team that started the company becomes merely a job. You are no longer trying to change the world, you are simply going for more mundane things such as sales growth, maintaining Ebitda (earnings before interest, taxes, depreciation and amortization) margins, ensuring you meet the investors’ quarterly result expectations, employee retention and so on. Things that are traditional and managerial rather than entrepreneurial.
Somewhere while making the transition from a start-up to a big organization, companies run the risk of losing their entrepreneurial soul. While being a bigger company has many advantages, it is important that companies try to also retain the entrepreneurial culture in the process.
The problem is that the founding entrepreneurs usually create a cadre of managers under them and not entrepreneurs. There is massive capacity-building of people who will execute and not enough of those who will create and build.
Retaining the entrepreneurial spirit has to be driven from the top. The founders have to recognize the problem and be committed to solving it. Although many pay lip service to this, few actually walk the talk.
The first and most important thing to do is to ensure that you hire the right kind of people. You need a rare breed—entrepreneurial managers. These are typically people who have worked in a large organization, and despite having performed well, are dissatisfied with excessive controls and yearn for greater independence than they were offered. People who are somewhat irreverent, but at the same time understand the need for organization-building and the right kind of controls for ensuring performance and governance without stifling creativity. And they must have all this without compromising on the competencies required to actually do the job.
Such managers are rare, but if you don’t recognize that these are the kind of people you need, you will get them only by accident and then you wouldn’t know what to do with them.
Once you have a few of these on board, what you need to do is agree with them on expectations and then empower them. If you don’t, you will be wasting a precious resource and chances are they will leave in some time any way. So give them all the assistance they need and ensure you don’t get in their way.
Of course, the risk here is that if you make a wrong hire and then empower that person, you could have a serious problem on your hands. However, after a couple of mistakes, you will soon figure out who the right persons are and what to look for.
You are now no longer an entrepreneur alone; you have to assume the role of creating other entrepreneurs internally.
Close the loop by ensuring a generous wealth-sharing plan. These are the people who will take the organization to the next level. Ensure that they are rewarded well for their performance—way beyond market, usually through employee stock options. A performer must never even think of looking elsewhere.
In any company, there will be people who will resist the empowerment of others—most notably the people under them. Get rid of the control freaks, no matter how technically good they are. In the long run, they will ensure that the organization remains small.
Break up operating units into small teams. Large teams usually create more ground for conflict. Creating alignment among a larger number of people is more difficult. Smaller teams work faster. This means that you need to get the same output from a smaller team as you would have from a larger team. So you need to raise the bar for hiring and recruit only very high-quality people at all levels in the company.
Finally, you need to ensure that everyone has the freedom to speak his or her mind. Encourage a culture of independent thinking with a high tolerance of dissent.
Build an argumentative company.
The author is co-founder and chief executive officer, InfoEdge (India) Ltd, which runs the Naukri.com website. He writes a monthly column on careers and enterprise.
Respond to this column at onthejob@livemint.com
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First Published: Wed, Nov 25 2009. 09 48 PM IST