by Ronald E. Merrill, Henry D. Sedgwick
Too much literature preaches "good management" as if it
were a generic skill that comes in a plain white box. The reality is that there
are all sorts of ways to manage and all of them can work. Entrepreneurs
classically will recognize themselves in each of the following styles, or a
combination of several styles. The challenge is to match your own style
entrepreneurs prefer to run their businesses single-handedly, to maximize their’
independence. There are three ways to run a company without management
assistance: the Classic, the Coordinator, and the
is the traditional entrepreneurial management style. It’s also known as the
"watch it all yourself" mode
hire people but
you insist on tight, personal monitoring and supervision. And of course, you’ll
do all of the really critical jobs yourself.
this is your style, you are probably unwilling to admit it. People criticize
entrepreneurs for being unwilling to delegate. Management consultants
contemptuously exhort entrepreneurs to reform their evil ways, to cure
themselves of the neurotic need to supervise everything
this is a perfectly legitimate way to run a
long as you convince yourself some
along the line that it’s OK to delegate, and that it’s OK not to delegate. It’s
pretending to delegate that
you think you are using team management, these types of leaders let the business
become too big and too complex to run alone. So they hire managers to join their
team, convinced they are empowering them with authority. Unfortunately, you
don’t really trust them, and hence, you keep yanking back the reins.
quickly become disillusioned and the leader is left thinking "I just can’t keep
style head on by deciding whether or not you are a leader who can delegate. If
you cannot delegate, then by virtue of your decisions, you must limit the
complexity of the business.
alternative to the classic style is the coordinator method, whereby leaders can
run a fairly good-sized business with just a handful of employees. This type
structure is sometimes called a "virtual corporation" and the essence of its
style is that most of the sub-tasks are jobbed out. The leader does little more
than organize the enterprise and verify that everything gets
of entrepreneur can job everything out: arrange for the product to be manufactured;
get brokers and reps to sell it; hire an accounting firm to handle the books and
sell your receivables to someone else to do the collections. In real life,
however, even this
type of entrepreneur has to do some of
work—so pick the
parts you enjoy and sub the rest out.
coordinator can grow a multi-million-dollar business without a single employee.
If you’re willing to have a few assistants, you can grow even bigger. So why
isn’t the coordinator style more popular? Theory has it that it has to do with
the conservatism of most leaders—the plain fact that work is cheaper if produced
in-house. That, however, is generally false economy.
cardinal error is calculating costs without accounting for the value of time.
It’s true that it costs an entrepreneur "nothing" to say, solder circuit boards,
but is that the best use of the time available? If you answered "yes" to that,
are leaders who maximize their control over business by doing everything
themselves. Obviously this approach, like the classic approach, limits the size
of the business. This style makes sense if the business’ biggest concern is the
quality of the output. It’s an attitude characterized by craft types, although
many entrepreneurs in other businesses also adopt this
are advantages to doing everything: everything is done "right" because the
expert does it; expenses are minimized; and operating without employees can
simplify your life. The only problem with this rosy scenario is that the leader
must do the tasks he or she likes, as well as the ones disliked. Advice for the
craftsman: streamline your business and job out those tasks you don’t
Focusing on Management Styles
the end, all the single-leader styles impose limitations on the business. It
cannot grow indefinitely unless a group of people shares in the authority and
responsibility. For those leaders who feel most at home in single-style
management, stay clear of large, growing businesses. Evaluate how large of an
operation you want to lead and follow your instincts toward
tip: Most authors warn that entrepreneurs who take on too much tend to make bad
decisions. But experience indicates a different symptom: if you take too much
you will probably fail to make decisions. Period.
you find that you are having trouble making up your mind—on business, personal
or even trivial issues—
are, you’re suffering from decision overload.
some authority, or simplify your operation. Neither of which is an easy task for
this personality type.
beyond a certain size cannot be managed by a single person; a management team is
required. What is the size limit? That depends on the complexity of the
business. Manufacturing, particularly if it involves high technology, can be
very complicated even on a small scale.
complex business needs a top management team in place, with several people, each
of whom has decision-making authority in a particular sphere. That means you
have really delegated, saying in effect, "You make the decisions in this area. I
you; if I find one of your decisions truly unacceptable, I’ll fire
The Entrepreneur+Employee Team
strategy gives the entrepreneur the most control within the big business
leadership styles. Authority is delegated to key employees, with the
understanding that final authority rests with the entrepreneur. Few start-ups
can afford a host of high-level employees, most often leaders find themselves
the classic style into this mode of operation. It’s company
growth that most often forces the change.
transition, however, is not as easy as it might appear. Don’t hesitate to
delegate: Do it all at once. This forces the transition, rather than muddling it
over a longer period of time where people question your sincerity and are less
apt to rise to the occasion. Be firm and explicit. Announce to one and all that
the company has grown and is successful, so much so that the old ways of doing
things won’t work anymore. Point out
the opportunities for promotion, and
make an effort to promote from
The Small Partnership
once-popular leadership style has all but disappeared among today’s modern
management techniques. However, it may be on the comeback. Leaders who adopt the
small partnership style have considerably less control and autonomy in this type
of structure, and they must share tactical decisions with one or
In compensation for this loss of control, small partners
receive a substantial advantage: the assistance of others who, like you, have a
real stake in the company and share your motivation to make it succeed in a way
no employee can. Like you, they are hungry.
One of the most
effective and widespread ways to organize a company around small partnership
lines is to make it an "inside-outside" partnership. One partner takes all of
the "inside" tasks—operations and management. The other partner handles
marketing and sales. But even small partners eventually face the limit of their
abilities and must decide to manage a dynamic firm that won’t grow any
larger—only better—or change.
The Big Team Venture
This style puts
the leader right on the back of the tiger. Prepare before you saddle up. In
addition to capital, you need a growth-company management team. Make sure the
team you shepherd is good. You can’t afford to skimp here. Cut corners with
these tigers and you’ll soon find yourself cutting out
your current management style, and the leadership style you desire to emulate,
if you are considering changing your stripes, look to your past for
When you were a kid, did you play sports?
Are you a perfectionist?
Do you have a history of trusting other people with
Did you stay
up all night before the Senior Prom to
final decorations after everyone else had called it a
there are no right or
wrong answers to
these types of
questions—they serve to illustrate your
leadership style. Accept what you are and make the best of
Excerpted from "The New Venture Handbook," by Ronald E. Merrill and Henry D.
Sedgwick (copyright 1993) and reprinted by permission of the publisher. AMACOM,
a division of the American Management Association, in Inc. Magazine . Reprinted
here with permission from Inc. Magazine. Copyright 1994, Inc.