Thursday 19th June 2008
Hone your leadership skills
Know your strengths
It’s assumed that entrepreneurs make good leaders, but I’m not so sure, writes Michael Jackson. They may be able to create something out of nothing, but that’s not the same as having the skill set of a business leader who can grow and control an organisation effectively.
All good CEOs will have a clear strategic vision of what their company stands for. This includes obvious things such as market strategy, sales and profit targets, but also the company philosophy in relation to employment and environmental factors.
Few would disagree that prioritising business objectives is a key task for a business leader. By contrast, entrepreneurs can often prioritise, but there is a question mark over whether they are able to begin doing this quickly enough, particularly when a business is growing very fast.
Clarity can lead to dogmatism with entrepreneurs, particularly when the founder has broken the mould by taking a particular contrarian view that really succeeded. The problem here is that markets change with competition – among other things – and business models need to change to reflect accordingly.
A “free” business model might work to gain critical mass, but once that has been achieved, the key to growth will be to extract more value from your customer base (for instance, by charging for services that were previously free). I can see an entrepreneur rejecting such a change whereas a more rounded business leader would most likely embrace it.
Been there, done that
Experience often breeds success, but this may not always be true. Entrepreneurs achieve success by disrupting traditional industries; they excel by spotting breakthrough opportunities and making them reality. This is, in effect, just the opposite of an experienced businessman who follows the norm and succeeds because he has a relentless focus on detail.
In this case, both are leaders, but the contrast in style could not be more pronounced. In fact, it is very rare for an entrepreneur to have real attention to detail. The creation is the fun and exciting part, not the day to day.
This is best illustrated by how few entrepreneurs take their companies public and the frequent failure of those who have (you don’t have to be a lip reader to imagine what Richard Branson and Alan Sugar would say about remuneration and nominations committees lasting longer than the actual board meetings).
Traditionally, entrepreneurs are not good delegators: the ego that has made them successful often prevents them from trusting others. Excellent business leaders generally are, however, and in some ways that’s the defining difference between the two.
Delegation can be confused with “dumping” – giving other people stuff you can’t be bothered with – but when done properly, delegation empowers other members of your team by giving them greater responsibility. It can be a very strong leadership tool.
Empowerment means giving people authority and this can extend down to the most humble employee. Giving people the power to exercise their discretion on, say, credit notes or upgrades runs totally contrary to traditional values in large companies where discipline is seen as the key. It can and does work but only if thought out really well.
So if you’re an entrepreneur with big ambitions, be sure to hire your successor ahead of time and then do what all successful entrepreneurs should – build a boat and sail around the world with your mobile phone surgically attached to your ear.
Michael Jackson is chairman of Elderstreet Investments, the leading technology venture capitalist which he founded in 1990. He was formerly chairman of Sage, the FTSE-100 accounting software group with which he was closely involved for over 20 years, since its unquoted days. He is also chairman of PartyGaming, one of the largest online poker businesses in the world.
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