I believe that an important measure of the success of an entrepreneur is in detaching himself/herself from the business organization he/she created.
I mentioned in my previous blog that an organization must have its own objective(s), independent of those of the entrepreneur(s) who founded it. That objective must be on the lines of providing some service, adding some value, to a set of customers, through information, labour, or goods. The organization must keep growing till it successfully serves all the target customers, by which stage, it may have already evolved its objectives.
In this life cycle of the organization, the founder/entrepreneur has only one special role, and that is, to guide the organization through its infancy. He may play other roles, but doing so simply means replacing an employee with himself, i.e., serving as that employee. Let me elaborate further on that.
When an entrepreneur sets up his company, he is typically the only person working for it. He then adds people to his organization, as he realizes that he cannot do everything. Like in a software company, he hires a peon, a receptionist, an accountant, developers, team leaders, etc. as necessary and as cashflow permits. He handles all unassigned work himself. Another way of looking at it is - he defines a hierarchy, starts filling people into the slots of roles, and puts his name into the remaining slots.
Now this is where a small entrepreneur generally messes up. He becomes possessive of the slots that he has put his name on. Alternately, he subconsciously believes that if he puts others in every slot, his presence in the organization will not be justified. So even if he can afford it, and even if he finds people more qualified than himself, he avoids replacing himself in some positions. I have also observed that most hierarchies are filled bottom-up, and the
entrepreneur avoids appointing senior people till it becomes absolutely
necessary.
This mistake inevitably hurts the growth of the company. The entrepreneur actually acts against the interest of the company by not choosing people better qualified for the jobs that he has been handling. This happens most for management roles - the entrepreneur is the most possessive of these, and refuses to let managers and CEOs handle the company he set up. As a result of this, many profitable companies fail to grow beyond a basic size that the entrepreneur can directly handle.
The entrepreneur's key strengths are generally focused - they could be innovation, or technical expertise, or superior management skills. Unless it is the third (and it rarely is), he should try hard to restrict his involvement to the area of his expertise, as soon as he possibly can.
He should appoint managers to handle each functional area, such as administration, development, production, marketing, HR, etc. as applicable. He should choose a CEO to supervise the overall operations and ensure growth of the company as per defined plans. He should define the objectives and value systems and plans of the company, and then appoint a board (it can be informal) of directors to ensure alignment of the company with those. Those directors may be able to do this job better than himself. He should himself be on the board, but not necessarily as the CEO or chairman.
These actions will free the founder from doing things that he is not good at. And they will free the company to grow beyond the limitations of abilities or vision of the founder. With capable executives at the helm and a mature board to direct it, the company will progress faster towards its objectives. The entrepreneur will stand to gain financial returns as an investor, satisfaction of accomplishment as the founder, and the pleasure of doing only what he enjoys as a professional.
