On Letting go and building your business


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On Letting go and building your business

  1. 1. CET 171 SP 2011 Class - UC Berkeley <ul><li>Delegation is about hanging onto what you want to let go of – responsibility </li></ul><ul><li>And letting go of what you want to hang onto - control (Tim McConalogue 2008) </li></ul>Leadership Perspective Stephen A. Pieraldi March 15, 2011
  2. 2. Topics for Dialog
  3. 3. But first... Philosophy!
  4. 4. Strong Leaders Earn and Keep Respect <ul><li>Regard your soldiers as your children, and they will follow you into the deepest valleys; look upon them as your own beloved sons, and they will stand by you even unto death. </li></ul><ul><li>If, however, you are indulgent, but unable to make your authority felt; kind-hearted, but unable to enforce your commands; and incapable, moreover, of quelling disorder: then your soldiers must be likened to spoilt children; they are useless for any practical purpose. </li></ul><ul><li>Sun Tzu </li></ul><ul><li>Q: Why is the war metaphor so associated with business management vs. the peace movement? </li></ul>
  5. 5. Power is the Great Motivator <ul><li>The four stages: </li></ul><ul><li>1 – Dependent on others </li></ul><ul><li>2 – Primarily interested in autonomy </li></ul><ul><li>3 – Manipulation of others </li></ul><ul><li>4 – Loss of ego and selfless service </li></ul><ul><li>“ Contrary to popular opinion, the best managers are the ones who like power and use it.” </li></ul><ul><li>(David C. McClelland and David H. Burnham, 2003) </li></ul>
  6. 6. Mapping the Four Stages to Growth <ul><li>The four stages: </li></ul><ul><li>1 – Dependent on others - Startup </li></ul><ul><li>2 – Primarily interested in autonomy – Growing the team </li></ul><ul><li>3 – Manipulation of others – Ramp and scale </li></ul><ul><li>4 – Loss of ego and selfless service – Growth or exit </li></ul>
  7. 7. 1 – Dependent on Others – ALL IN <ul><li>As we start something new, depend on others to validate our vision and ourselves </li></ul><ul><li>It ’s normal to build up some ego to support the rough early going of a business and team building exercise </li></ul><ul><li>Others are required, in almost all cases, to execute our vision </li></ul><ul><li>Others contribute to the dynamics and vitality of our original vision and our effort </li></ul>
  8. 8. 2 – Primarily Interested in Autonomy - Planning <ul><li>As the growth of our vision matures we retract / step back </li></ul><ul><li>We want our team to take ownership </li></ul><ul><li>We feel the need to focus and find autonomy in the chaos </li></ul><ul><li>Our focus is shifting to less interesting things and things we are outside our core competency </li></ul><ul><li>We are never really satisfied with how the vision is changing </li></ul>
  9. 9. 3 – Manipulation of Others - Execution <ul><li>We want control back! </li></ul><ul><li>The pressures of “business” are keeping you from getting work done </li></ul><ul><li>More people and less direct control has you working through others to complete your vision. You want results </li></ul><ul><li>If they would only get this or that done… I could let go! </li></ul><ul><li>Micro Management activates </li></ul>
  10. 10. 4 – Loss of Ego and Selfless Service - Success <ul><li>“ We are not just our behavior, we are the person managing our behavior.” (The One Minute Manager) </li></ul><ul><li>Leading by example </li></ul><ul><li>Allow others and yourself to fail </li></ul><ul><li>High expectations with high rewards </li></ul><ul><li>Your vision is the key, but not having shared ownership is the door </li></ul><ul><li>Delegation with accountability </li></ul>
  11. 11. Managing by the Numbers! <ul><li>Growth requires people. Understanding people allows you to grow. </li></ul><ul><li>“ Our company started looking like a company and we started to feel the need to put processes in place — something we just weren’t inclined to do because it all felt too ‘managed’.” </li></ul><ul><li>Managing by the Numbers, 301 Great Management Ideas, Sara Noble) </li></ul><ul><li>“ Companies have set changes that pattern to how many are employed in the effort.” (Wayne McVicker 1997) </li></ul>
  12. 12. Power Starts the Engine – Letting go Keeps it Running <ul><li>The five points of power: </li></ul><ul><li>1 – Position Power </li></ul><ul><li>2 – Task Power </li></ul><ul><li>3 – Personal Power </li></ul><ul><li>4 – Relationship Power </li></ul><ul><li>5 – Knowledge Power </li></ul><ul><li>Q: A few personal examples from the class? </li></ul>
  13. 13. Putting it all Together John Adair (1973)
  14. 14. Common Business Elements <ul><li>We all share growth issues </li></ul>Human Capital Financial Capital ----------------------------------- Common problems for all size companies --------------------------------------------- $0X Engineering Sales Marketing Channels / Distribution Fulfillment
  15. 15. Common Inflection Points Find Value / Revenue Entrepreneur Founder CEO Fund Manage Scale Ramp Investment Round Investor Expectations Professional CEO Operating Expectations Time Experimentation Accountable Repeatable Inflection Point s ROLES Seed A B C D Exit All In Build Team Lead Us Define Us
  16. 16. Yet Many of us Fail (Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By Scott Shane) “ Failure” here measures closure. But using a sample of the closed firms, an economist at the SBA a few years ago asked those founders whose businesses closed whether they perceived their start-up effort to be “successful” or “unsuccessful.” Approximately 70 percent of those founders whose businesses closed viewed their start-up efforts as unsuccessful.
  17. 17. The CEO Dream… <ul><li>Those who did : </li></ul><ul><li>Steve Jobs (Apple) </li></ul><ul><li>Bill Gates (Microsoft) </li></ul><ul><li>Larry Ellison (Oracle) </li></ul><ul><li>Michael Dell (Dell) </li></ul><ul><li>Jeff Bezos (Amazon) </li></ul><ul><li>Charles Coffin (GE) </li></ul>Those who did not : Steve Jobs (Next) Larry Page (Google) Evan Williams (Twitter) People you never hear of Jerry Yang (Yahoo) (JIM COLLINS is the author of Good to Great and co-author of Built to Last)
  18. 18. Hands on Behavior <ul><li>You ’re the creator </li></ul><ul><li>You ’re focused on short term results </li></ul><ul><li>You ’re shorthanded </li></ul><ul><li>It ’s ideal to be close to the action and customer </li></ul><ul><li>Your skills fit the job you created </li></ul>
  19. 19. The Time to Transition <ul><li>You ’re no longer creating or “over creating” </li></ul><ul><li>You ’re focused on long term results </li></ul><ul><li>Your role is staffing for scale </li></ul><ul><li>There needs to be an abstraction of front line information for long term planning </li></ul><ul><li>Your skills no longer fit the job you created </li></ul>
  20. 20. Directive Behavior <ul><li>Set goals and objectives </li></ul><ul><li>Plans and organizes work in advance </li></ul><ul><li>Identifies job priorities </li></ul><ul><li>Clarifies the leaders ’ and employees’ roles </li></ul><ul><li>Establishes time lines </li></ul><ul><li>Determines methods of evaluation and evaluates work </li></ul><ul><li>Shows or instructs the employee how to do a specific task </li></ul>
  21. 21. Activating Behavior Ken Blanchard Company 2001
  22. 22. You ’re Long in the Tooth… <ul><li>Signs of micromanagement </li></ul><ul><li>What follows are some signs that you might be a micromanager – or have one on your hands. In general, micromanagers: </li></ul><ul><li>Resist delegating; </li></ul><ul><li>Immerse themselves in overseeing the projects of others; </li></ul><ul><li>Start by correcting tiny details instead of looking at the big picture; </li></ul><ul><li>Take back delegated work before it is finished if they find a mistake in it; and </li></ul><ul><li>Discourage others from making decisions without consulting them. </li></ul>
  23. 23. Putting it all to Work <ul><li>Startup </li></ul><ul><ul><li>All about you </li></ul></ul><ul><li>Grow a team </li></ul><ul><ul><li>All about them </li></ul></ul><ul><li>Ramp & scale </li></ul><ul><ul><li>All about us </li></ul></ul><ul><li>Growth & exit </li></ul><ul><ul><li>Everyone wins </li></ul></ul>Studies of VC ’s investment criteria describe the quality of management team as key determinant of venture financing. We contend, however, that some VC’s may be willing to fund ventures headed by poor administrators with the expectation to replace them in the future. We conjecture that VC’s with higher risk tolerance, greater involvement in venture governance, and proclivity for trust-based collaboration with co-investors will be prone to take on financing of robust ventures headed by weak leaders. A survey and interviews with 50 U.S. VC’s supported these hypotheses . ( “Are Some Venture Capitalists More Likely Than Others to Replace” Founder-CEOs? Dmitry Khanin, J. Robert Baum, Ofir Turel, Raj V Mahto)
  24. 24. Startup (iForem) <ul><li>You are all in and have do all the work </li></ul><ul><li>You ’re working from funding to funding and there are never enough resources </li></ul><ul><li>Issues that you are not educated or expert in are now your daily tasks </li></ul><ul><li>Your personality vision and commitment drive the company </li></ul><ul><li>Frustrations are second to panic </li></ul>
  25. 25. Grow a Team (IES) <ul><li>You are taking on new responsibilities requiring your focus away from the vision and much needed work </li></ul><ul><li>You need to multiply your ratio of effect to get things done but are stuck trying to transfer knowledge and assign skills to staff </li></ul><ul><li>The dynamic tension is both good and bad hourly </li></ul>
  26. 26. Ramp & Scale (Neoforma) <ul><li>People and systems are needed to channel production </li></ul><ul><li>The vision is changing and shaping </li></ul><ul><li>Culture is developing and demanding process and systems </li></ul><ul><li>Funding/customers is a constant demand </li></ul><ul><li>Goals and objectives are moving to MBO ’s and the creative spark is now absorbed into mundane process taking longer than you want </li></ul>
  27. 27. Growth and Exit (various companies) <ul><li>It ’s time to let the business grow with seasoned domain experts (sales Cxx staff) </li></ul><ul><li>You need a succession plan </li></ul><ul><li>Your vision is complete to a % of your desire but you have to accept its state and success as is </li></ul><ul><li>Process and accountability are the order of your day now </li></ul><ul><li>You may want to leave to pursue new ventures </li></ul><ul><li>What next? </li></ul>
  28. 28. Pass the Baton! <ul><li>Prepare for the next step of your company every day </li></ul><ul><li>Have preset options laid out so you can evaluate and execute. When you ’re in the heat of things you won’t have time to plan </li></ul><ul><li>Be a good citizen to your stakeholders </li></ul><ul><li>Exit gracefully one way or another – Pass the baton in your mind, then actions, finally reality. </li></ul><ul><li>In short, take the power you started with and convert it to letting go. When you let go and participate in the process you will have more power than you ever imagined before. </li></ul>
  29. 29. Q&A <ul><li>! Do you think is applies to other models outside of “startups”? </li></ul><ul><li>Audience questions? </li></ul><ul><li>If there is time at the end, or people stay longer there is a small game to play! +1 </li></ul>
  30. 30. References Wayne McVicker (2005). Starting Something: An Entrepreneur’s tale of Control, Confrontation & Corporate Culture: Ravel Media, LLC McConalogue (2008). Hanging on and Letting Go: BlackHall publishing Ltd. Samuel B. Griffith, B.H. Liddell Hart (1971). The Art of War: Oxford University Press Edward De Bono, (1996). Textbook of Wisdom: Penguin Books Online (1990). http://igniteyourbiz.com/blog/management-by-the-numbers-161-500-employees/ Bass, Bernard M., Bruce J. Avolio, Dong I. Jung, and Yair Berso. &quot;Predicting Unit Performance by Assessing Transformational and Transactional Leadership.&quot; Journal of Applied Psychology 88 (2003): 207–218. Andy Aboagye Isaac. (2010). Organizational Behavior p. 321-322. Prentice Hall, 9th edition. Fiedler, F.E. & Gibson, F.W. (2001). Determinants of Effective Utilization of Leader Abilities. au.af.mil. Fiedler, F.E. (1986). The contribution of cognitive resources to leadership performance. In L. Berkowitz (ed), Advances in experimental social psychology. NY: Academic Press Fiedler, F.E. and Garcia, J.E. (1987). New approaches to leadership: Cognitive resources and organizational performance. NY: Wiley. Blank, Warren, John R. Weitzel, and Stephen G. Green. &quot;A Test of the Situational Leadership Theory.&quot; Personnel Psychology 43 (1990): 579–597. Fiedler, Fred E. A Theory of Leadership Effectiveness. New York, NY: McGraw-Hill, 1967. Graeff, Claude L. &quot;The Situational Leadership Theory: A Critical View.&quot; Academy of Management Review 8 (1983): 285–291. Graen, George, and William Schiemann. &quot;Leader-Member Agreement: A Vertical Dyad Linkage Approach.&quot; Journal of Applied Psychology 63 (1978): 206–212. Greenberg, Jerald, and Robert A. Baron. Behavior in Organizations: Understanding and Managing the Human Side of Work. Upper Saddle River, NJ: Prentice-Hall, 2000. House, Robert J. &quot;A Path-Goal Theory of Leader Effectiveness.&quot; Administrative Science Quarterly 16 (1971): 321–339.
  31. 31. Further Reading Kirkpatrick, Shelley A., and Edwin A. Locke. &quot;Leadership: Do Traits Matter?&quot; Academy of Management Executive 5 (1991): 48–60. Kinicki, Angelo, and Robert Kreitner. Organizational Behavior. Boston, MA: McGraw-Hill Irwin, 2006. Luthans, Fred. Organizational Behavior. Boston, MA: McGraw-Hill Irwin, 2005. Podsakoff, Philip M., et al. &quot;Do Substitutes for Leadership Really Substitute for Leadership? An Empirical Examination of Kerr and Jermier's Situational Leadership Model.&quot; Organizational Behavior and Human Decision Processes 54 (1993): 1–44. Steers, Richard M., Lyman W. Porter, and Gregory A. Bigley. Motivation and Leadership at Work. New York: McGraw-Hill, 1996. Stogdill, Ralph M. &quot;Personal Factors Associated with Leadership: A Survey of the Literature.&quot; Journal of Psychology 25 (1948): 335–71. Stogdill, Ralph M., and Bernard M. Bass. Handbook of Leadership: A Survey of Theory and Research. New York, NY: Free Press, 1974. Vroom, Victor H., and Phillip W. Yetton. Leadership and Decision Making. Pittsburgh, PA: University of Pittsburgh Press, 1973. Wren, Daniel A. The Evolution of Management Thought. New York, NY: Wiley, 1994. Yukl, Gary. Leadership in Organizations. Englewood Cliffs, NJ: Prentice-Hall, 1994.