Why is it hard to lead an entrepreneurial venture? Part 2 of 3
Buckle your seatbelt. Last week I wrote about how the entrepreneurial leader constantly operates out of his/her comfort zone. This week I want to address what I would call the “erratic pulse” of entrepreneurial life. The erratic nature of life is a result of a variety of influences.
Here’s a short list of things that create chaos for new and growing businesses:
- Technology
- Industry trends
- Consumer tastes
- Regulatory environment
- Economic health of the marketplace
- Competition
- Funding trends
- Personal issues of management team, such as life events, health, economic status
Riding in a Lincoln Town Car vs. a Jeep. Do these things impact large companies as well? Of course; Both small and large companies travel on similar roads. But in a big company setting there is a way to absorb the shock, to reach into a deeper pocket, to shift resources and people around to adapt. In entrepreneurial ventures, the ups and downs happen without any shock springs.
That means the entrepreneur, and his whole entrepreneurial team, has a bumpy ride. One that in which failure is frequently encountered, according to Jay Walker, founder of Priceline.com. According to him, “You’re not going to fail once. You’re going to fail a lot. In fact, you are going to do much more failing than succeeding!”
It’s hard to prepare and manage a team when change and failure are encountered so often. Employees often have trouble dealing with the ups and downs, so the leader has give confidence to the team even when they might not be feeling so upbeat.
Look at it this way, if you knew you be travelling at high speed along a road full of potholes and speedbumps, which ride would you pick?
This entry was posted on Monday, April 26th, 2010 at 10:00 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 2nd, 2010 at 9:58 am
Jonathan says:From a human-interest perspective, the spectacular failure of large companies tends to be the most fascinating (and therefore most covered by the media). I wonder if there is an opportunity to do a systematic study of small businesses (less than 50 employees) that have gone under, and whether there are any commonalities between them (restaurants, start-ups, retail stores, manufacturers, etc.). While you could write about about Enron or AOL or Countrywide, I’m guessing that what caused them to fail was different than what causes the vast majority of new businesses to fail.
May 3rd, 2010 at 10:31 am
Deborah says:There was an interesting study done in 1995 that found “The root cause of small business failure is almost invariably a lack of management attention to strategic issues.” They make an interesting comparison of how management works in a small vs. a large business:
“In the larger organization, management is seen primarily as a predictive process concerned with the clarification of long-term objectives, the formulation of appropriate policies to meet such objectives and the feedback of information to indicate successful or unsuccessful achievement of predetermined goals (cf. Faulkner and
Johnson, 1992). In contrast, management in the smaller firm is primarily an adaptive process concerned with manipulating a limited amount of resources, usually in order to gain the maximum immediate and short- term advantage. In the small firm efforts are concentrated not on predicting but on controlling the operating environment, adapting as quickly as possible to the changing demands of that environment and devising suitable tactics for mitigating the consequences of any changes which occur.”
Jennings, P. L. & Beaver, G. (1995). The managerial dimension of small business failure. Strategic Change, 4(4), 185-200.