Entrepreneurial Leadership Means Managing a State of Continuous Turnaround

Being an entrepreneurial business leader is a big challenge. It takes a combination of skill, personality and sheer endurance to do a tough job day-in, day- out. It’s always been the case, but in the 21^st century there is unprecedented rate of change to be dealt with and that makes the job a whole lot more challenging.

Markets are now continually being disrupted by combinations of regulation, consolidation, globalisation and technology. For the past five years these four horsemen of the economic apocalypse have galloped roughshod over businesses, against a backdrop of severe recession in some parts of the world and unprecedented growth in other regions.  But if recent valuations of companies such as Uber,  Airbnb, Dropbox and Xiaomi are to be believed  boom - or even bubble – in the West is back

The entrepreneurship demonstrated in these firms and their resulting stratospheric valuations is so often based on exploiting or causing change in the marketplace. But once the disruptive breakthrough has been made, and the IPO achieved minting a fresh pack of billionaires, it can be downhill fast to eventual oblivion. 

Complacency creates Detroit

That’s because the same things that create opportunity create threat as soon as a business model is established. And with complacency over this fact you get Detroit. No wonder that Albert Einstein defined insanity as doing the same thing over and over again, expecting a different result.

Of course, we all publically subscribe to the mantra of embracing change, yet most of us would admit privately that it can be scary and hard to get to grips with. Yet as leaders we are required to ensure our organisations stay ahead of the pack.

One typical traditional response to a threat is to retreat to safety.  In pre-history that meant running back to your cave as fast as your legs could carry you. In a modern company it manifests itself as a search for `truth` and consensus through analysis and data gathering.

But as the German military strategist Helmuth von Moltke once remarked `No battle plan survives contact with the enemy`.  So if chaos is the order of day how are we supposed to lead our enterprises out of the early stage and avoid subsequent decline?

I’d argue that this search for the `right answer` only slows the decision making process and makes the organisation even more vulnerable. Speed is of the essence and, in truth, more often than not good enough is good enough because we have to attack continually - to disrupt or be disrupted. The only safety lies with always being ahead of the game.  And to do that requires being in a state of continuous turnaround.

Culture of innovation

The challenge for entrepreneurial leaders, then, if they are to build sustainable value in their businesses is to create a culture of innovation that is both top-down and bottom-up.  This means encouraging and using talent wherever it is found - from a company’s own staff, its partners, universities and business schools and so on.

Successful modern leadership too is predicated on authenticity - `walking the talk`.  To nurture innovation requires making change the norm and demonstrably allowing staff to try new things without fear of failure. This necessitates understanding the difference between control and guidance.

Like parenting, this requires the right balance between providing a clear governance framework and giving staff free reign otherwise culturally corrosive disappointment will soon result. This is vitally important because, as a company grows, it is likely that a new management of lawyers, accountants and generalist MBAs brought into the organisation will have a more conservative approach to implementing major change than a founder.  They may quickly become consumed with maintaining the present or replicating culture of the company from whence they came, rather than looking to the future in the context of the organisation that now employs them.

Shortfall in skills

This may be compounded by a shortfall in skills in technology amongst these professionals, particularly compared to their less-experienced-in-other-respects colleagues in different parts of the organisation. Clearly understanding the technology platforms that are the basis of innovation let alone the core of most highly successful entrepreneurial companies is now a pre-requisite. But it’d be my observation that too few are building technology skills into succession planning at higher levels or making it a requirement for leadership recruitment.

Too often this results in founder having to re-take the reins. Witness Bill Gates, back at Microsoft.  He's guiding new CEO Satya Nadella as the former CEO Steve Ballmer admitted that, as Gates’ attention was consumed by his Foundation, he wasted decade as mobility changed the company’s world and more agile competitors appeared in the majority of its business segments.

Still, Ballmer’s now got a nice new playing field in the shape of the Los Angeles Clippers NBA team on which to focus his bluster and blow his own billions.  I suspect Gates will be steering well clear on this occasion.