The Six Styles of Entrepreneurial Leadership

by Ronald E. Merrill, Henry D. Sedgwick

Mar 1, 1995

(TMA Global)

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 with the needs of the company.

Many 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 Craftsman.

The Classic

This is the traditional entrepreneurial management style. It’s also known as the "watch it all yourself" mode of operation. You hire people but you insist on tight, personal monitoring and supervision. And of course, you’ll do all of the really critical jobs yourself.

If 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 personally.

But this is a perfectly legitimate way to run a company—as long as you convince yourself some where along the line that it’s OK to delegate, and that it’s OK not to delegate. It’s pretending to delegate that spells sure disaster for these types of leaders.

Because 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. Your subordinates quickly become disillusioned and the leader is left thinking "I just can’t keep good people."

Confront the problems of this management 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.

The Coordinator

An 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 of business 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 done.

In theory, this type 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 the work—so pick the parts you enjoy and sub the rest out.

A 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.

One 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, read on.

The Craftsman

Craftsmen 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 style.

There 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 like.

Focusing on Management Styles

In 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 success.

A 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.

If you find that you are having trouble making up your mind—on business, personal or even trivial issues— chances are, you’re suffering from decision overload. Delegate some authority, or simplify your operation. Neither of which is an easy task for this personality type.

Businesses 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.

A 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 will never overrule you; if I find one of your decisions truly unacceptable, I’ll fire you."

The Entrepreneur+Employee Team

This leadership 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 growing from the classic style into this mode of operation. It’s company growth that most often forces the change.

That 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 within.

The Small Partnership

This 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 more partners.

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 employment ads.

Regardless of your current management style, and the leadership style you desire to emulate, if you are considering changing your stripes, look to your past for guidance:

  • When you were a kid, did you play sports?
  • Are you a perfectionist?
  • Do you have a history of trusting other people with good results?
  • Did you stay up all night before the Senior Prom to adjust the final decorations after everyone else had called it a night?

Be honest, there are no right or wrong answers to these types of questions—they serve to illustrate your innate leadership style. Accept what you are and make the best of it.

 

____________________________________________________

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. Magazine.

 

Ronald E. Merrill

 

Henry D. Sedgwick
  

Related interest areas

Related keywords

Anderson Bauman Tourtellot Vos A10 Capital Jefferies Conway MacKenzie

Conway MacKenzie Jefferies A10 Capital Anderson Bauman Tourtellot Vos