AS I’VE SAID BEFORE, LOTS of people dream of starting their own business so they can be “the boss”—so they can sit back, bark orders, and watch the money come in. Those people really don’t want to be entrepreneurs, because most entrepreneurs are actively involved in all facets of the organization. That involvement changes, however, over time. During the Startup phase, you may have worn just about every hat in your company and pitched in whenever and wherever you could. As your business enters its Running phase, that needs to change. You now must be the visionary for your organization, which means you can’t be buried in the trenches of day-to-day operations. Your priority must quickly shift to hiring staff to conduct daily operational tasks and then setting up policies, processes, and procedures to help guide their activities. Then, you can focus on setting the course for your company and guiding it toward its future.
In this chapter, we’ll talk about the process of designating tasks and giving authority to others within your growing organization while still maintaining policies, procedures, and oversight to help ensure that the essential work of your new business remains on track (and above board). This chapter also offers guidance for the critical task of establishing a culture of ethics and honesty to help guard against fraudulent attacks from both inside and outside the organization. And, because most entrepreneurs started a business in order to follow their passion, we’ll also look at ways you can use and develop your own interests to help drive your personal growth and that of your business. At the end of this chapter, we’ll take a brief (I promise) but critical look at the situational approach to leadership and how you can use it to develop your most effective leadership style. As I’ve matured in the role of entrepreneurial leader, I’ve developed my own approach to leadership. I’ll open this chapter by sharing with you some of the principles that guide my attitudes and actions as a leader.
A lot of the material in this chapter deals with delegation. That’s because one of the most difficult things for entrepreneurs to overcome is their need to be in charge of every aspect of the organization. But what does being “in charge” really mean? Many entrepreneurs feel it is noble and necessary to be the hard worker who puts in countless hours churning through even the most mundane business tasks in order to play the good role model for others in the organization. Other entrepreneurs continue sinking their time into everyday operational tasks because they simply aren’t familiar or comfortable with their role as a leader. It’s true that working a production line can give you a sense of immediate accomplishment. But by letting nonleadership chores distract you from your primary responsibilities, you might actually be stifling the potential progress of your entire organization.
As an entrepreneur, you need to put yourself in a position to observe customer needs and your own organization’s strengths, weaknesses, opportunities, and threats. Your responsibility as an entrepreneurial leader is to grow your company, and that requires a broader perspective than you can gain by burying yourself in the trenches. Here are 10 core principles that I’ve developed and used over the years to help me delegate more effectively and maintain focus on the essential tasks of leadership.
1. Work toward making the business independent of you.
Entrepreneurs have reached an important milestone of success when they can step away from their business for prolonged periods of time and not be missed. The only way you can reach this milestone is by (1) hiring employees you can trust and (2) establishing a culture reflective of the values that you want to guide your organization. These aren’t simple accomplishments. It takes well-designed hiring processes and a strong commitment to managing your own actions and decisions to build the staff and culture that will enable you to put some space between yourself and the company. But doing so is absolutely essential to your ongoing success. Creating an organization that can function independent of your constant oversight is the only way you will have the freedom to pursue ideas, innovate, and plan strategy—activities that are critical to your company’s ongoing survival and success. And, it ensures that the business can continue on, even if you are for some reason unable to lead it.
2. Build controls that protect the assets of the company.
You can just about count on some internal or external source trying to defraud your business. Checks and balances around your cash and assets will help deter fraud, and they’ll help you detect when someone has a hand in the cookie jar. Attacks on your company may come from outside sources such as the Internet, but most fraud develops from within. The best prevention is to remove temptation and install checks and balances into the processes surrounding your most sensitive assets: your cash and your merchandise. Pay special attention to areas such as check processing, petty cash, payroll processing, expense reimbursements, and invoicing. As most of you know, fraud grows deeper and more sophisticated as you move to the web. In the early days of TRC, we were getting weekly attempts at online fraud through our e-commerce mechanisms. Today, those attacks are hourly in most big online firms. Thinking through policies and procedures and understanding those tasks up-front will decrease opportunities for fraudulent behavior.
Remember, your people are your assets, too, and they need to be protected from temptation and undue suspicion. That’s just one reason that you need proper screening for new hires and well-established physical building security measures. You also can protect your people by providing benefits, flexible work hours, and a competitive market wage. Your customers are your other important assets, and to protect their data and privacy, you need to ensure you provide a safe product and internal security measures.
3. Have a solid financial understanding of your business.
Most small and even medium-size businesses don’t have a chief financial officer (CFO) on staff. Instead, they hire an accountant to produce financial statements, file taxes, and perform related obligations. In those cases, the CFO’s responsibilities for managing the financial risks of the business typically fall to the entrepreneur. No matter your organizational structure, as the founder of your business, you must develop a solid understanding of its basic financial statements and the cost of goods, margins, expenses, and income. This advice may seem obvious, but a fair amount of entrepreneurs don’t want to be involved in these aspects because they are too focused on the product or service that led them into the business. Financial oversight isn’t a lot of fun, but it’s one of those things you have to master in order to successfully lead a growing organization.
As we discussed in chapter 8, your people will always be your organization’s greatest asset, so you should fill strategic positions with the best people you can find. The people you place in critical roles should be independent and able to grow within a rapidly changing environment. Most important, they should be able to run with your vision and effectively manage the department or division you have assigned to them. Your key personnel should challenge you and the people who report to them.
Hiring can be a lengthy, grueling process, and you might become tempted to just hire someone and be done with it. Resist that urge. You’ll spend a great deal more time dealing with a bad hire than you will making a good hiring decision. And if you think financial matters are tedious and nerve-racking, wait until you have to go through the process of dumping an ineffective or inept employee. That process can be costly, disruptive, and incredibly demoralizing to those watching the revolving door. Always conduct background checks and contact references for all hires; the investment of time and money spent screening candidates will be repaid by a thoroughly vetted workforce.
5. Create a clear, market-differentiating vision for your product or service.
A great deal of your time and energy as a leader should be spent continually innovating your business around your customer. The intellectual property (IP) created by your company is its market differentiator; it determines not just what your organization is, but what your organization is like. Businesses that copy other businesses typically don’t have sustained success. The companies they’ve copied quickly come up with new innovations to distinguish themselves in the marketplace. In turn, those innovations attract new customers and create new markets.
By carving out your own unique presence and reputation for ongoing innovation, you can secure your market presence, rather than temporarily taking up space in someone else’s niche. Finally, the IP you develop will help establish a higher valuation when it comes to selling or financing your business. Ultimately, innovation defines the entrepreneurial enterprise; without it, you’ll be left to compete on little more than price.
6. Develop an exit strategy designed to maximize the value of the business.
If you haven’t already done so (when you wrote your business plan, as I recommended in chapter 6), when you enter the Running phase of your business, you need to plan for your exit. Whether your exit strategy involves a sale to employees, transfer to a family member, sale to a private equity firm or competitor, or even retirement (remember that retirement isn’t typically a strong exit strategy), you have to visualize your exit plan and then position your company for that scenario. Planning an exit strategy isn’t just about maximizing your payout; it’s also an essential tactic for strengthening the company’s position and enabling it to continue on toward its mission without you at the helm. We talk more thoroughly about the Exit phase of your business in the last part of this book, but forming and following that strategy is a core principle of strong leadership. Your ability to manage, document, and develop your business with the appropriate exit in mind will ensure a smooth transition for all and maximize the organization’s potential valuation.
7. Manage profitably.
Understanding your financials is one thing; managing them is another. As founder, you need to have a solid understanding of how your business will make and spend money. Some entrepreneurs describe themselves as creative thinkers—idea generators with no interest in the money aspect of their business. That’s a dangerous route to take. You need to know exactly how your company will generate profits: not just sales and revenues, but sustainable and growing profits. Further, you need to know how to contain and control costs.
Establishing a yearly budget for every department will be your first step. Your second will be establishing policy and procedures for how money is to be spent and how profit is to be derived. Trust me, if you don’t cap or limit spending, it can quickly spiral out of control. The same is true for establishing pricing policies that don’t give away the farm. Inexperienced salespeople will use price more often than not as their leverage to close a deal. Developing a strategic sales process and pricing guidelines will help protect your bottom line.
Two key areas on the operational side of the business will help you monitor profitability, and those are accounts receivable and interest expenses. Letting your accounts receivable functions slide is a cardinal mistake in managing cash flow. Entrepreneurs who put all of their energies into attracting and winning customers are often gun-shy when it comes to collecting payment from them. The fear of hurting the relationship is paramount in their minds, and it becomes easier to ignore the problem—until they find they are unable to meet payroll. The likelihood of collecting past-due amounts greatly diminishes after 90 days, and many young and growing organizations haven’t dedicated manpower to the collection process.
Increasingly, companies are turning to factoring as a method to speed their cash flow and outsource collections. In factoring, a third party (the factor) purchases your outstanding invoices (a financial asset) at, say, 90 percent of their value, paying in cash, immediately. The factor then is left with the task of collecting from the invoicees (the debtors) while you move on to the next sale. The credit worthiness of your customers determines the purchase rate the factor will offer you for your invoices. For factoring to work for you, your invoices must include a factoring margin, or the factoring cost has to be built into the selling price.
Margin consideration also must be factored into interest expenses on your past-due invoices, bank fees, or credit card balance. You may be able to maintain the minimum balance on your personal credit cards, but it’s stupid, if not impossible, to do so using a corporate account. Credit cards can be a great source of short-term financing, but you must pay them off in full each month to preserve profits. Using these and other techniques to track and manage interest expenses is an essential component of skillful leadership.
8. Don’t copy—be copied.
Startups that have moved into the Running phase of their business life can easily get distracted by their own growth and overly influenced by competitors and larger companies with greater resources. These businesses can be tempted to stray from their original mission by constantly seeking new markets or by copying competitors. Avoid this trap. You have nothing to gain by comparing yourself to the big, established player in your industry. In fact, doing so can demotivate and deflate you, and leave you feeling inadequate and incapable of ever being able to compete. More importantly, those kinds of comparisons can tempt you to try to copy other businesses and their models. That will only deteriorate your market differentiation and thereby leave you with price as your sole customer enticement.
You won’t win the marketplace by copying the big dogs who play in it. Study your competitors to see how you can become even more different from them. Look for ways to do things for your customers that the competition can’t provide. Learn what customers don’t like about your competitors, rather than dwelling on their successes.
You started your business to bring something new and different to the marketplace, and that’s how you will succeed. As a new and growing organization, you can model your business around customer needs better than those large competitors who, in most cases, require customers to accept their model and way of doing business. Watch and listen to your customers, and don’t be distracted by large, well-established competitors.
9. Don’t starve yourself.
Many entrepreneurs pinch pennies for years in an attempt to beef up their bottom line, and paying themselves a ridiculously low salary is a common element of their austerity program. Taking a low salary may be necessary during the early days of your startup, but at some point, your need to provide for your family must overshadow your need to save money. Pay yourself the best salary you can, when you can, and set a realistic goal early in your Running phase to get to that point. Failing to do so not only robs you of money you could use now or save for the future, but it will also negatively affect the valuation of your business when you are negotiating its sale.
Why does your low salary lower the sale value of your business? Most buyers will recognize the expense gap in salary and factor that into their evaluation—negatively affecting the amount they are willing to pay. Buyers know they will have to pay someone at least a current market rate to run this business, so your organization’s current profitability is artificially inflated by your lower-than-market-rate salary.
And, here’s one final reason that you need to pay yourself well for the work you do: running your business is a lot more fun when you are making money!
10. Work “on” your business, not “in” it.
This phrase has been used by many, most notably by author Michael Gerber, who has written extensively on the topic of leadership in small businesses. This golden rule should be your guide to delegating the daily tasks of your business. Ideally, your time as an entrepreneurial leader should be largely engaged with observing and studying your business from every perspective and reflecting on its progress and potential for innovation and growth. You’ll interrupt this process if you spend too much time on any one particular task or area by moving from studying it to doing the tasks involved in it. By remembering that your job, as a leader, is to innovate and grow your business, you’ll be better able to resist the temptation to immerse yourself in today’s mundane tasks so you can maintain your focus on the road ahead.
CEO? PRESIDENT? WHAT’S THE DIFFERENCE?
Your ability to determine your role in the Running phase and to understand your responsibilities and duties as a leader will, in part, depend on your organizational structure. The shape of that structure begins with your title. Many entrepreneurs use the titles of CEO and president interchangeably, but the two roles are symbiotic, rather than identical.
By definition, a chief executive officer is primarily responsible for strategy, including long-range planning and company direction. The president’s role, on the other hand, is tactical, with a focus on operations and a responsibility for ensuring that the daily business of the company is conducted according to plan. In larger companies, the president reports to the CEO, who also acts as the interface between the board of directors and stockholders. Startups without a board of directors or shareholders don’t need to name a CEO, and so the title of president is sufficient for their top leadership role.
As you’ve seen, delegation is a necessary function of leadership. It’s particularly important to delegate tasks that simply aren’t “your thing.” You have to be aware of these tasks, of course, and how they impact your business so you can monitor and manage them properly. Understanding the function, impact, and purpose of every aspect of your business is an essential step in developing policies and procedures to manage it effectively. These policies can provide clear expectations to those you assigned to carry out the tasks and, in worst-case scenarios, prevent or expose embezzlement, waste, and inefficiency.
Even after you’ve delegated responsibilities to others within the organization, you still need to keep them on your radar. Far too many stories of fraud originate with entrepreneurs who take little interest in their company’s accounting functions. You may feel the same disinterest; after all, if you were interested in accounting, you probably would have started an accounting firm. Entrepreneurs are visionaries with passions for creating businesses rather than managing their finances. I can’t name one entrepreneur among my acquaintances who spends a great deal of time in the accounting department.
But before you decide to completely check out of the accounting aspect of your organization, take a minute to consider how many times you’ve heard the stories or read the headlines about the long-term, trusted bookkeeper who quietly stole company funds over several years of dedicated service. Believe me, these people understand the accounting procedures of the organizations they work for. In many cases, the embezzler may have actually been the one that created them. That access, combined with the entrepreneur’s lack of interest and/or knowledge of the tasks, leads to swindles that can cost the business thousands, sometimes millions, of dollars, if not bankruptcy.
So how can you avoid becoming the subject of one of these tragic embezzlement stories?
Early in the development of TRC, I feared embezzlement and worried that I wouldn’t be able to keep my eyes on the bank account. It was important for me to have a fail-safe process in place to ensure that our hard-earned money stayed where it was supposed to. I had no reason for this concern in regard to any one of my employees, but I knew it was my responsibility to put a process in place that eliminated temptation. So what did I do? I did what many startups do and put my wife in charge of the bank account.
That process worked for me in the beginning, until I was able to build a solid set of checks and balances to protect my company’s funds from embezzlers. Like a firewall on your computer system, you need to ensure there are solid measures limiting who can access your money. The trusted family employee should be sufficient, but don’t forget that brothers, in-laws, and nieces have gone down as company pilferers in the past. The key is having those checks and balances I mentioned earlier. As part of those safeguards, don’t assign complete control to a single individual or even to multiple individuals who are close to one another or who can develop a conspiring relationship.
As I said earlier, you can bet that your business will be the target of fraud from some source—internal staff, vendors and suppliers, customers, online thieves, consultants, even partners or cofounders. The prevalence of embezzlement, theft, and fraud reinforces the need for the checks, balances, and financial oversight we’ve previously discussed. But another critical responsibility that you, as an entrepreneurial leader, must fulfill is that of incorporating ethical practices into your business plan and building a culture of ethics and honesty within your company.
You can find plenty of stories of CEOs, founders, and politicians going to jail over fraudulent business practices. I knew that I would never engage in any kind of activity that might defraud my own business, and I felt confident that I had chosen honest people for my staff and put strong practices in place designed to protect them from the temptation to engage in dishonest practices. I never anticipated, however, that temptation would present itself directly to me in the form of a familiar face.
TRC had begun to grow in size and market share when a past associate from Educational Resources called me one day asking if I would be interested in a cooperative advertising deal. I found the offer confusing, since this guy was now working with a competing reseller, but—based on our past association—I agreed to meet with him at my office to hear his proposal.
His proposition was for TRC to stuff one of his company’s advertisement flyers in our daily customer shipments; in exchange his company would pay us. Instead of paying TRC cash, this guy’s company would pay us in product. My ex-associate suggested that I select around $10,000 worth of computers, printers, or whatever I wanted that his company sold in exchange for this service. This kind of advertising and payment method were both common practices, but it was unheard of for one company to send out advertisements for a competitor. The deal didn’t make sense—until I heard the rest of it.
My past coworker explained that I didn’t have to actually put the flyers in the boxes. I could throw them in the trash as far as he was concerned. Better yet, I’d never have to see the flyers, at all. All I had to do was take $10,000 worth of his company’s product, then send him an invoice for $20,000 for my bogus “advertising service.” Guess who was getting the additional $10,000 worth of product? This guy was starting a business of his own on the side, and he wanted computer equipment for his own enterprise. Since he was an executive with this reseller, he could submit the paperwork without anyone ever questioning. Now I got it!
This scheme would be easy to pull off, and no one would ever find out. His company was very large, and it was doing deals like this all the time. In addition, he was the one in charge of the program. Nothing could point back to me; I could just say I put the flyers in our customer’s boxes per the agreement. If this executive skimmed product off the top, it wasn’t my problem. Well, I could have gone through with it and received a windfall of much-needed computer equipment. Instead, I threw him out, and told him to stay the hell away from my company. If I had been willing to compromise the honesty of my company by engaging in this kind of unethical behavior, I would have done far more damage to TRC’s culture than could be offset by the acquisition of free electronics.
As my ex-associate demonstrated, even long-term trusted employees can be guilty of unethical behavior. I had seen this happen during my time at Educational Resources, when a woman in accounting was found to be writing checks to herself rather than to vendors. Poorly screened new hires were the source of another criminal act at the company, when a ring of thieves infiltrated the company’s warehouse staff and began creating false customer orders, then shipping the products to acquaintances. Customers can defraud your business as well. At TRC, we lost more than $40,000 to a fraudulent customer operating out of Miami and Puerto Rico who was using quick mail shops to receive product on credit, then vanished without paying. Even though we found the guy’s real name and a business he actively promoted on the Internet, I could not get the FBI to take any action. It was too overloaded with other fraud cases. I felt tempted to dole out some justice on my own, but the prospect of ending up in a Puerto Rican jail was not that enticing.
You can’t safeguard against every form of fraud, but your best protection rests in the culture of honesty and ethics that you build and maintain within your organization. By dealing honestly with everyone both inside and outside your company, and by setting and following ethical standards in all of your business dealings, you close many of the ethical gaps that provide openings to those who want to defraud you. The topic of honesty and ethics may seem trite to you when you first begin your entrepreneurial journey. Most new entrepreneurs don’t have time to think about it as they’re developing their businesses, because during startup, fraud doesn’t seem like much of a threat. When everyone in the company is struggling to bring the business to life, it’s easy to ignore the potential for ethical lapses down the road. But your business plan needs to detail the steps that you will use to set up a framework of checks and balances, establish policies guiding ethical behavior, and periodically revisit your policies to ensure the health and effectiveness of your company’s culture of honesty.
Just as you will be quick to delegate tasks that you don’t enjoy, you will naturally focus most of your efforts on the aspects of your business that appeal to you. In most cases, those areas reflect the core competency of your business and serve as its primary driver of revenue, profit, and growth. Your focus on these core business functions will help you exploit every resource you offer as an entrepreneur, and it can challenge you to continually improve. Your ongoing work in these areas can provide the adrenaline that fuels your personal and organizational growth.
Everything has its costs, however, and the flipside to focusing on tasks that you like is that you can become so engrossed in them that you disregard other essential aspects of the business. Further, you might be monopolizing an area of the business that could benefit from the input and development of other key people on your staff. By shutting others out from important functions of the organization, you might be driving away talent that could support your efforts and bring in innovative ideas, feedback, and criticism. If you’re holding all the knowledge for any aspect of your business in your own head, you’re killing the potential for collaboration and complicating any workable plan for succession. That exclusionary approach also means that you won’t ever be able to truly get away from your business, because you’re the sole source of information or the central, controlling authority for some critical aspect of its operation.
I had hired good people to run every aspect of TRC and managers to oversee them, yet I would still drift back into the trenches. I developed terrible habits of reviewing daily shipments going out the door and releasing web orders that came in to our routing system. What an absolute disruption to the work flow I was. Who needs the president to jump in to see if orders were picked properly or to release web orders prior to someone’s regular approval process?
During different periods of growth, I managed to acquire similar “hovering” habits in other aspects of the business. I either outgrew these addictions on my own or had them driven out of me by the forceful pushback of the assigned coworker or manager. I really give those employees credit for putting me in my place. I know why I developed those task-centric habits. I wanted to keep busy and see immediate results of my work. The Startup phase is a fast-paced, multitasking circus, and it’s hard to come off of the high of that momentum. It takes a great deal of discipline for any entrepreneur to adjust his or her role in the company—and sometimes a bit of coaxing from coworkers along the way.
The bottom line is this: for all of the reasons I’ve laid out in this chapter, tasks are not what you, as an entrepreneur, should be working on in the Running phase of your business. You’ll harm the performance of your business; you’ll harm the performance of your staff and drive away talent that you desperately need; and you’ll fail to become a true leader. Like a ship’s captain who spends all of his time checking the engine pressure rather than guiding his vessel, you can’t afford to bury yourself in the daily operational tasks of your business. You have to focus on leading change, leading innovation, and leading the organization toward its stated goals and mission.
The key to successful entrepreneurial leadership is having a passion for pursuing a specific purpose that you and your followers support and believe in. Effective, committed leadership energizes everyone in the organization and creates a catalyst for individual and organizational growth. Even people who have never shown interest or aptitude in leadership seem to naturally fill the role once they begin pursuing their entrepreneurial passion.
Given my belief in this “natural” evolution into leadership, I associate the situational theory of leadership most closely with the entrepreneurial experience. Research from Professor Victor Vroom, Professor Arthur Jago, and psychologist Fred Fiedler support this theory, which says that the best type of leadership is driven by situational variables—in other words, effective leaders actually change their leadership style in response to the situation before them.1 Think, for example, of the entrepreneur who is faced with constant change as she builds a company from the ground up. Just as change is a constant for the organization, that leader’s style must be constantly evolving as well.
Every situation presents a point of motivation for a successful leader. Yes, the leader’s big-picture focus has to be on sustaining and growing the business, but the leader also has to be able to focus on dozens of smaller issues in order to achieve that larger goal. This multipart focus is part of what motivates entrepreneurial leaders.
Corporate leaders, on the other hand, are motivated largely by self-fulfillment. They want to accomplish a task or an assigned goal, but for the most part, they do it for positioning, recognition, accomplishment, influence, promotion, or some other form of self-gratification. I’m not saying that corporate leaders lack team spirit, but ultimately, their motivator is some form of individual recognition within the organization. After all, people choose to work for a particular company for their own personal reasons, and they make contributions during their career ultimately for their own personal reasons as well.
As an entrepreneur, however, your core motivation is company/mission centered. Your focus is on growth, vision attainment, and preservation. True, being the founder, you have personal motivations as well, but they are practically congruent with the company’s interests. As an entrepreneurial leader, you believe that you are in control of your future, success, and failures. Corporate leaders believe someone else controls their future, and their self-preservation is tied to their employer’s performance assessment. Your self-preservation is tied directly to the preservation of your company. This difference makes you a completely different leader than your corporate counterpart.
Leadership is not management. Managers administer, while leaders innovate, develop, motivate, persuade, and create. Leadership is not about giving orders; it is about influencing. The influence must be genuine, transparent, and built on trust. Followers agree to be influenced because they believe in the cause, goal, or outcome. Business leader Alan Keith said, “Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen.” People get excited about being a part of something extraordinary like starting and running a successful business. The leader shares a vision that people see as achievable and worthy of effort.
This is how the situation serves as the motivation. It is the focus for the entrepreneur. The entrepreneurial leader assigns a goal or reward to the situation—a goal that the followers visualize, understand, and agree to pursue. The leader’s style can be charismatic or dictatorial, but the promise of accomplishment overrides everything. Entrepreneurs don’t need motivation. They need to motivate. Their motivation is manifested already in their internal desire to accomplish their mission through the work of others.
Often for entrepreneurs, the situation goal is grand, and that alone is captivating, enticing, and engaging for followers. The followers understand the enormity of the goal, and they respect the leader for the risk he or she assumes while they fill a support role to make it happen. Working toward the goal is exhilarating to the followers, and their job becomes more than work; it becomes a contribution to a mission. The entrepreneur recognizes and fosters this, which is how a great leader can get followers to achieve remarkable things.
Your responsibility as an entrepreneur is to influence, direct, and keep the mission prominent and focused. You can accomplish this through effective communication, which has four components: communicating expectations, listening, delegating, and providing feedback. You also must develop the ability to filter incoming information effectively. This skill will help you discard useless and time-wasting information, and pick up on opportunities that often are missed by managers within your organizations. You must develop an ear to listen and an eye to spot growth or innovation opportunities through all forms of feedback. That way, you will be able to pick out the tiny nuggets of information that can be used to exploit a competitor’s weakness or enhance an existing strength of your business. This ability to filter, process, and use incoming information is an essential skill you must develop in order to lead your organization through change and adapt your leadership style to the situation at hand.
Leadership at TRC was like climbing stairs. Each landing was a new goal and achievement to strive toward. My job was to continually put these small goals out for the company to attain and then to recognize and reward everyone for their efforts in reaching them. This process provided my team with continual positive reinforcement for hitting targets while also moving us closer to the goal outlined in our mission statement “to be the most recognized provider of volume software licensing in the education market.”
There was a time when I thought I had taken TRC as far as I could under my leadership. We hit a dry spell in terms of creativity and growth, and I considered hiring a new president to run the company while I migrated to chairman of the board. My thought was to find someone with executive experience that could introduce new concepts, processes, or expertise. I felt that someone else could do a better job in the CEO position—maybe even be better qualified to lead the company than I was. Thankfully, I changed my mind and came to realize that no one was better qualified than I was to guide my company and my team.
Feelings of isolation can happen with entrepreneurs, as it did with me, which can lead to a sense of tunnel vision. Lack of exposure to peers, mentors, board members, or forums can lead to stale views and a sense of entrapment within your own company. I got my grounding by talking to other entrepreneurs about the dry spell I seemed to be in. They helped me realize I still had much to offer and that I probably needed to shake things up a bit to revitalize the spark. By establishing new goals in all facets of the company and placing expectations on the managers of those areas, I was able to pull my leadership out of the doldrums.
During this period of self-reflection, I began to think about what it would take for my organization to obtain $100 million in sales. We were approaching $30 million at the time, and the $100 million mark didn’t seem out of line. In fact, the more I thought about it, the more unacceptable the idea of not being closer to that milestone became. Now I had to shift my energy toward charting a course toward making this goal a reality. I was refocused and revitalized. I was back at the helm!
The vision I provided to my team was crystal clear. Everyone could see it, and my team members knew what I required of them in order to make it happen. I communicated rewards to individuals, but I also made sure there was a universal understanding and acknowledgment of their achievements throughout the organization. All of us were working to grow TRC to the point where it would be acquired by a company that shared our mission and would provide the capital to scale TRC even further. For their effort, every individual at TRC would receive the additional benefits and opportunities of this larger parent organization. I wanted to build careers for my employees, and this strategy promised numerous avenues for personal development that simply weren’t available at TRC.
TRC employees did extraordinary things to move the company toward its goal. On several occasions, employees took it upon themselves to work all night, literally sleeping in the office to meet deadlines. What a surprise it was for me to arrive at the office around 6 a.m. to find employees crashed at their workstations and realize they never left from the day before. I’m not trying to give you the impression that I ran some kind of a sweatshop, or even that I condoned these all-nighters. In fact, I encouraged people to get home to their family. But we also fostered a culture in our organization that when things needed to get done, all of us at TRC would put forth extraordinary efforts in order to meet those demands. Our employees went well beyond extraordinary efforts on more than one occasion, and they established a bond and an attitude that permeated the office.
As I said, the dedication and hard work my employees exhibited reflected the overall culture of TRC. Every leadership skill and approach we’ve discussed in this chapter plays a role in creating a culture that furthers the interests, goals, and mission of your organization. As a leader, you—and your actions—will set forth the values that will form your organization’s guiding principles and determine the success of its development. A strong organizational culture revolves around core commitments, to growth and innovation and to promoting the organization through every means possible. That means selling the organization, all the time, every time. In the next chapter of this book, we’ll talk about incorporating the sales ethic into your organizational culture so that every act and idea generated within your company walls is aimed at the goal of promoting your products and services and growing your business.