Avoiding The "Founder's Trap"
In any small business,
the owner’s or founder’s way of doing things tends to prevail. Not surprising - they’re the one who set the
business up in the first place.
One of the things about which people continually complain is
that they have no freedom to change things - even if it’s for the better (in
their eyes). During my career, I’ve seen
family businesses “lose” the next generation because Mum or Dad wouldn't let
them do things differently. Result: the
business either dies, or has to hire in “outsiders” who again get frustrated by
the perceived intransigence of the founder (as we’ll call him/her from now on)
and leave.
If a small business is to survive, it’s important to avoid
the “Founder’s Trap”, i.e. “My way or the highway” described above. The “next generation” need to appreciate that
the founder has spent (and continues to spend) plenty of blood, sweat and tears
building the business to what it has become.
On the other side, founders often fail to grasp that the
next generation have grown up with different experiences and may be more “in
touch” with a more effective way of doing things. I remember the surprise and delight of one
founder in his eighties when his children showed him the power of a Facebook
advertisement that cost only a few dollars.
He’d never considered this before because it just wasn’t on his
proverbial “radar”, but he was missing a vital trick in his particular market,
as he found from the enquiries that suddenly started coming in.
So what does this all mean?
Not revolution, but rather evolution. It involves the founder understanding
that they should (and can) let go gradually.
After all, they made plenty of mistakes when they first started, and
they’re in the best position to pass that experience on to those who follow
them. Equally, “Nobody lives
forever”. This is why so many banks
require “Key Man Insurance” when they can see that a business relies on one
person only for its success and ability to pay off its banking lines. If they can see that there’s more than one
pair of “safe hands”, they feel more comfortable.
Equally, the “next generation” have to find it within
themselves to allow “Mum”, “Dad” (or
whoever it may be) the time to build confidence in them. From personal experience and observation, I
can say with all sincerity that this can be very hard.
I have spent more than half my life delivering
change in different world markets from the most developed to “emerging”
economies. With more than 20 years in international financial services around
the world running different operations
and lending businesses, I started my own Consultancy to offer solutions for
improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.Labels: Leadership, Productivity, Strategy, Teamwork
Long-Term Thinking Works
When a business
starts, it’s all go-go to win business and generate sales to get the cash
in. Resources are scarce; everyone’s
focused on the “now”; there’s little time for thinking beyond the end of the
week…
Sound familiar? If it
does, then your business is like hundreds of thousands of others.
According to The
Economist (6th February 2016 Ed.), the Family Business Institute
has calculated that only 30% of family businesses survive into the second
generation, 12% into the third and 3% into the fourth. This means that, for most family or small
businesses, the chances of surviving beyond the founder’s lifespan are 7-3
against.
Why? The answer may lie
in:
- Failing to concentrate sufficiently on long-term planning;
- The “Founder’s Trap”.
Focusing on the first factor, small businesses by their vary
nature concentrate mostly on the present (maybe out to the end of the
year). What falls on the table gets
done, whilst the rest risks getting put off until it becomes “urgent” in its
own turn. People aren't focusing on the “important”,
only the “urgent”.
Developing staff is one of the most vital things one can do
to contribute towards business continuity.
The advantages are:
- Owners have more time for strategic thinking;
- Owners can concentrate on developing new business whilst
staff manage the existing business;
- Staff can keep things running if the owner(s) are away sick
or on business;
- Staff feel valued and are therefore likely to be more
motivated and productive;
- Staff turnover reduces;
- Customer service generally improves;
- The business grows stronger and more profitable.
This takes time, which will be in short supply in the
start-up stage. However, the discipline
of doing it benefits the business in the long-run and makes it more
“disaster-proof”.
What happens if people feel that the boss is focusing too
much on the short-term? Answer: they’ll
search for somewhere that looks like it has
a long-term future…
I have spent more than half my life
delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in international financial
services around the world running different
operations and lending businesses, I started my own Consultancy to offer
solutions for improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.
Labels: Customer Care, Leadership, Selling, Strategy, Teamwork
Eliminate Waste
A major problem for
many organisations and businesses is waste.
By this, I mean waste of time, inventory, over-engineering, delays and
others.
The Toyota Company developed a concept known as Kaizen, the purpose of which, as I
understand it, is to improve productivity (and therefore profitability) by
eliminating waste. The Kaizen concept identifies seven typical
types of waste to be found in any and every organisation, all of which can be
remembered using the simple acronym “TIM WOOD”:
- Transportation
- Inventory
- Motion
- Waiting
- Overproduction
- Overprocessing
- Defect
If you want to know
more about these types of waste, read any decent book on Kaizen or process
improvement and you will find their full definitions, but to keep it short:
Transportation:
moving something when you don’t really have to do it.
Inventory: surplus of raw materials or finished goods.
Motion: anything from looking for tools to do the job,
gathering information by looking through catalogs, walking back and forth
between operating areas.
Waiting: waiting for material or information.
Overproduction: making something you don’t need/don’t need
right now (typically resulting in “inventory” waste).
Over-processing: unnecessary packaging or “bells and
whistles” that the buyer doesn't really need.
Defect: producing substandard product/service
due to other wastes above...
I recently saw a small but typical example: the MD of a
company asked one of his staff to ask another member of staff (who wasn’t in
the office) to send out a memo to all other staff about an event. This was motion waste:
- Asking someone else to do something of which the MD was
perfectly capable - especially as it was
his invitation and wouldn't take long to write.
- Unnecessary request as the staff required to send the email wasn’t
there.
When this was discovered, another member of staff:
- Produced and printed a memo giving details;
- Scanned and saved it to a pdf file;
- Attached it to an email and sent it out.
… a perfect example of “over-processing”. The details of the event (all of 10 lines)
could just as well have been sent as the original email by the MD himself...
When this sort of thing happens at the top, no wonder
there’s waste all the way down.
When thinking about wastage, ask a simple question about
each process: “Can we bill the customer for this?”
Yes? Keep it.
No? Look to eliminate, automate or streamline it.
Sometimes we have
to keep non-value adding processes (e.g. Health & Safety legislation, quality
control, documentation). These are known
as “non-value added, but necessary”. If
these are essential to producing a zero-defect product/service in safe
conditions, they stay. But… Make them as
streamlined as possible.
Productivity will rise; costs of doing business will
fall. Your staff may even be more
motivated…
How do you identify what needs to change? Ask the people on the production line or who
manage customer service. They’ll appreciate
most the wastage for both the organisation and its customers/users.
Expect and encourage brutal honesty.
What happens next is encouraging a bottom-up approach to
allow the “shop floor” to suggest, test and implement measures to minimise
waste. This may mean that something that
has “always been done this way” must change.
The “traditional” approach to improvement is top-down, with
managers cascading changes down their line, without realising that these may
impact others in the organisation. What
this means is that you need a cross-functional team and preferably people who
are as close as possible to the “action”.
The role of management is to facilitate change, not bring up self-serving objections to preserve
their position. If there’s a critical
Health & Safety issue or Quality Issue, that’s “non-value-added, but
necessary”. However, in most cases it’s
not insurmountable.
None of this happens without training. Don't expect people
to get it right if you don't show them what to do.
Once you do, sit back and prepare to be amazed.
I have spent more than half my life
delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in international financial
services around the world running
different operations and lending businesses, I started my own Consultancy to
offer solutions for improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.Labels: Leadership, Productivity, Strategy, Teamwork
