Posts Tagged ‘Entrepreneurship’

Tolstoy’s novel Anna Karenina starts with one of the most famous lines in all of modern literature: “All happy families are alike; each unhappy family is unhappy in its own way.” In the case of family businesses though, we can safely assert that most of the unhappy ones tend also to be unhappy in the same way. It usually boils down to who gets how much and who is in charge of what.

When the founder of a company brings family members into the business, this can increase the potential for internal conflict by a significant factor. One of the most common manifestations of this phenomenon occurs when the owner—usually, but not always, the father—offers management positions to some or all of his children. When the children are also part owners of the business, the problems compound. And when the company transitions to new leadership, as when the founder retires and selects one of the siblings to run the company, the potential for conflict goes through the roof.

Here is a case in point from my own consulting practice. A younger sibling was appointed as general manager of a small company while an older sibling continued in a subordinate managerial position within the structure. The older sibling was somewhat miffed at not being considered for a higher position, especially that of general manager. The older sibling was starting to take out that frustration on the younger sibling. Conversely, the younger one was starting to act in a dictatorial manner in order to make clear to everyone “who the boss is.” A rivalry that had been seething beneath the surface for years now had the potential to erupt into a volcano of disruption that the company could ill afford.

The younger sibling had the foresight to get my advice about managing the working relationship. My advice was simple: “You are the boss, so act like it. That doesn’t mean to be insensitive or harsh, but you are the one who has to answer to ownership for the company’s results, not your sibling. We need to talk together to ensure that you both know where you stand and the dynamics of your personal relationship don’t hinder the dynamics of your business relationship.” Is that a tall order? Perhaps, but what are the alternatives?

The key method I advocate for dealing with these issues is what I call ‘The Outsider Test of Behavior.’ Simply put, if a family member is behaving or performing in a manner that would be deemed unacceptable for an employee or manager that doesn’t have a familial relationship with the company’s ownership or senior leadership, then that behavior or performance is probably unacceptable, even though that person is one of the family.

Therefore, if family members have an ownership stake or occupy various management positions within the company hierarchy, they still have to let whoever is in management do their job, whether those people are family members or not. They can’t just decide to change things because they happen to have a familial relationship. Nor can they question the authority of other executives and managers, reverse decisions unilaterally, or otherwise disrupt the good functioning of the company, all simply because they happen to have the ‘right’ DNA.

The company has a fiduciary responsibility to employees, clients, suppliers, and financial backers (e.g. the bank and outside investors), and family members have to work within that reality. If they are part of ownership, they can exercise their responsibilities as shareholders through the board of directors (if they are a member) or at the annual meeting, just like any other shareholder. If they are part of management, they have to exercise their managerial functions and carry out their responsibilities in the same manner as any other manager in the company, all the while respecting proper rules of authority, responsibility, and decorum. They should also be held accountable for performance and behavior just like any other member of the company.

Of course, all this assumes that the family member who is in a managerial position within a family business is actually capable of exercising the functions of that position. If not, then the CEO or senior manager overseeing that person must work with the rest of the management team, ownership, and possibly the board, to ensure that that person is either removed from a position of authority, or removed completely from the company.

All of this can be very hard on the family member who has the ultimate leadership responsibilities, whether it is still the founding family member or the one who has succeeded the founder. It can also be hard on family members who are in positions or who have ownership stakes that they feel are unjust given their status within the family or self-perceived capabilities. But like I said above, what is the alternative, run the company into the ground?

Family members who are privileged to be involved in a successful business should realize how lucky they are to be in that position. Most people aren’t born on third base, much less second or first, so the situation must be seen for what it is: a great opportunity for individual and collective growth in a win-win dynamic, not a bone of contention within a scarcity mentality.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

This is the final installment in my series on the applicability of military leadership principles to organizational and business leadership.

There is nothing worse than a group of people who are kept in the dark about what is happening and why it’s happening. Contrary to mushrooms, people do not grow well in the dark. Everyone in an organization must be fully informed of the mission and vision, and the plan to achieve them. If the situation changes, they need to know what’s changed and why, at least what is relevant to them and to their responsibilities and tasks.

In the military this is known as situational awareness. When everyone knows what is happening and why, they can adjust their own analysis, plans, actions to support the organization’s objectives and achieve the mission despite the evolving situation. Often in companies and other organizations, employees, managers and sometimes even key executives don’t the full picture because the senior leadership is hoarding information.

Don’t be afraid to let the light in and to keep everyone in the loop. You have little to lose and everything to gain, as your people will then have the information and knowledge to adjust to the new situation. This can only make their contributions more relevant, timely, and powerful. That is what empowerment is all about.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

A well-functioning team has higher cohesion and unity, which means it functions better. This generates better performance, which contributes to morale and creates a generally happier group of people. When people are busy, they are less prone to gripe and whine, and they also tend to be happier than if they are bored.

Most businesses can’t afford to spend a lot time on team based training. This is for the obvious reason that any time in training is time not in selling, production, operations, and generally trying to please customers. The equivalent to team training in a business is sound organization and structure, where everyone knows their role and there are well honed processes and systems for creating value for customers, distributors, suppliers, etc.

In a well-trained team, everyone has a particular role to play, which means they can work to their full potential.  Well-organized and structured businesses function more effectively and efficiently. There are well-defined roles and responsibilities for everyone, with clear lines of authority, communication, and accountability. This generates opportunities to employ individuals up to their full capabilities and potential. The larger the business organization, the more there are opportunities for varied and challenging employment, opportunities that correspond to the unique strengths and competencies of employees and managers. This includes possibilities for advancement for those with high leadership potential.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

This is the 8th installment in my series on the 10 principles of military leadership, which I started with a blog post on February 20th. Each of my blog posts since that date have covered these leadership principles, which are used by military forces to teach, develop, and evaluate leaders at all ranks. They are applicable in all walks of life and all situations, and especially in businesses and other organizations.

Decision-making is fundamental to leadership. There are two components to this principle. First, decisions must be sound. Second, they must be timely.

Sound decisions are appropriate given the level of resources and the intended effect. They are arrived at rationally, if at all possible, after considering various options and their possible direct and indirect effects. It doesn’t matter if the decisions are made hastily or intuitively, providing there are means in place to manage the inherent risks of uncertainty. Finally, decisions are sound if the majority of the followers buy into them and there is no major resistance to their implementation. The final characteristic requires that decisions be explained and understood by everyone involved in carrying them out or supporting them.

Timely decisions are ones that are taken at the right time to have the best effect. The best decision taken and implemented at the wrong time is useless. Timely decision-making requires assurance and boldness. Most of this book is about sound, timely, efficient, and effective decision-making in support of business objectives.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

This is the 7th principle of military leadership that we are examining for its general applicability in business and organizational life.

You have to assume that everyone in your team or organization has the potential to be a leader, until they prove the contrary. This is because everyone wants a challenge in their work and career. Often, though not always, this means they want to assume greater responsibilities, and this can require supervisory functions, planning the work of others and giving them direction, and interacting with peers, superiors, clients, etc. All of these require leadership, even if not in a formal manner.

There are three main things to develop leadership potential of your followers. The first is to provide the best example possible, to be a role model for them, as well as your peers and superiors. When you give the example yourself, you set the ethical, behavioural, and professional standards for your team and the wider organization. This gives your followers something to aim for in their own performance. The second approach to develop your followers’ leadership potential is to provide them with developmental opportunities. Even if they don’t formally have responsibilities, you can give them additional tasks such as leading a small team on a project, gaining buy in from a group of collaborators or clients or other business partners, preparing a presentation, representing your group in organizational events so they get exposed to a broader environment and see how things work at higher levels of the organization. This also helps them to understand the challenges you face as a leader.

The final approach to developing leadership is to provide formal training, as well as informal mentoring and formal and informal coaching. Formal refers to the fact that the objectives being in line with official organizational goals and are a matter of policy or organizational culture. Informal refers to development that is done in an ad hoc manner according to the needs of the person being developed. Mentoring involves providing support and advice by a more experienced person, often with the approval and involvement of the organization. Coaching is more deliberate and active and aims to develop specific skills in practice, based on observation by a designated expert. A leader can both be a mentor and a coach.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

I’m continuing the list of leadership principles that I will be discussing in one of the chapters of my forthcoming book,Brilliant Manoeuvres: How to Use Military Wisdom to Win Business Battles.

In this principle, it’s obvious that one needs to substitute the word subordinates or followers for ‘soldiers.’ The point though, is that too many managers and executives in responsible positions simply don’t know who they are leading. They make people decisions without knowing the most basic facts about their subordinates’ strengths and limitations, their goals and aspirations, their personal and professional circumstances. Instead, they just assume that everyone is a replaceable cog in the machine.

The best and easiest way to get to know your people is to talk to them. Ask them what they are working on and why they are working on it. Not in an investigative manner, but as a simple conversation. Ask them where they are from, what their goals are, what their understanding of the company’s goals are and how they fit into that scheme. It’s amazing what will happen when you simply ask people to talk about themselves.

It is also critical to promote the welfare of your subordinates. This doesn’t necessarily mean giving them everything they want. Sometimes tough love is needed to get a person on the right track, to provide the learning and development they require by getting them outside their comfort zone and pushing them to perform at a higher level. To do this, you need to know what makes them tick, what they need to improve, and how to best employ them to their best potential. The German World War II general Erwin Rommel said that the best form of welfare for his troops was first class training. By this, he meant that they had to be developed to their utmost capabilities, both as individuals and as teams. This is what would ensure their success and their survival in battle.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

This is the fifth installment in my series highlighting and discussing military leadership principles. Even though these principles have been developed over decades, and even centuries, of military practice, you will find that they are highly applicable to leaders in all walks of life, and especially business.

This principle has two main components. The first is to communicate your meaning and intent, and the second is to lead your people in carrying it them out. To do this, you first have to know what it is that YOU want to achieve. For this, you need a plan. Then you have to tell your followers or subordinates want you want to achieve, the general strategy and scheme of manoeuvre to achieve it, and then your plan to carry it out. You may have to be fairly directive, and give specific instructions to various teams or subordinate leaders, but it is usually best to give them a mission and then let them find the best way to achieve it. In the military, this is known as mission command, as opposed to directive command (where you give every detail of what to do).

Finally, once the plan is being implemented and the operation or project is underway, you have to actively lead your team. This means being at the right place and right time to make decisions, providing guidance and direction to respond to unforeseen events and conditions, correcting mistakes, and providing reinforcement to successful undertakings, encouragement, and generally stiffening resolve in the face of the inevitable obstacles and resistance. In the military, they often say that no plan survives contact with the enemy, and that is just as valid in business and in any other undertaking.

I will continue with the second group of five military leadership principles next week. Have a good weekend.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

Lead by example. We all know it’s an important leadership principle. Some would say it’s THE most important leadership principle. I remember when I was still in the Canadian Army. One day, we were being addressed by our general and he said, “Ladies and gentlemen, what is the most important principle of leadership?” Most of the officers in the room immediately shouted out, “Lead by example!”

Why is leading by example so important? I think there are three main reasons. The first is that people want to follow someone they believe is worthy of being followed. This means that the leader must demonstrate the qualities of character, commitment, and attitude that the organization or team espouses. In other words, the leader must set the standard and be a model for others. The best way to do this is by leading by example.

The second main reason leading by example is so important is that you can’t as a leader (or in general for that matter) ask someone to do something that you can’t or, worse, aren’t willing to do yourself. People tend to view leaders who say one thing and do another as hypocritical. It undermines morale and cohesion in the team, and it separates the leader from his or her followers.

The final reason, and perhaps the most important one, is that leadership means being in front, by definition. If you want someone to attack that hill, then you had better be close to the front so that others will follow you. If you want people to adopt certain behaviours in your organization, you have to be willing to adopt them yourself, and before all the others. This doesn’t mean you have to be the best at absolutely everything, but it does mean you have to be willing to move first, to take the same risks as everyone else, and be where the decision point is. You can’t do that from the safety of your bunker.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

By definition, a leader is someone who is out in front, who takes personal risks to get others to do something they wouldn’t necessarily want or think to do themselves. Responsibility is therefore the very essence of leadership. If you want to test your own leadership propensity, watch how often you yourself take the lead, willingly go out in front and say, “It’s okay, everyone. I’ll do it.” Or simply, “I know what to do, or where to go. Follow me.”

There are two aspects to responsibility. The first is responsibility itself, the willingness to take on a task or other burden for the benefit of others. The other aspect, and perhaps even more critical, is that of accountability. The word responsibility contains the root ‘response.’ In other words, someone who is responsible is someone who is answerable for his or her decisions and actions. This is compounded when you take on the responsibilities of a leader by the fact that the leader becomes answerable not just for him- or herself, but also for the decisions and actions of others. That is what separates true leaders from people who just claim to be leading.

The willingness to seek and accept responsibility therefore boils down to a willingness to decide on behalf of the group, or society, or an organization or team, to make plans, give direction, to act accordingly. To answer for all of that, to give account of it. Finally, we can see that leadership is therefore a profoundly ethical practice.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

I’m continuing my series highlighting a different leadership principle each day. These will be described in greater detail in my forthcoming book, Brilliant Manoeuvres: How to Use Military Wisdom to Win Business Battles, to be published in the fall of 2012 by Global Professional Publishing.

We all have strengths and limitations, or weaknesses, to be less politically correct. You build on strengths and find ways to compensate for your weaknesses. No one can excel in everything. However, as a leader, you must at least try to excel in your field of endeavour. As I pointed out in my previous post, people will naturally tend to follow leaders who are competent, and who know how to win and succeed. You must therefore align your strengths to achieve professional competence in your particular field so you maximize your chances of success.

This principle is therefore really about self-awareness and self-knowledge. The more self-aware you are, and the more you know what makes you tick and what you’re all about, the more you can focus your efforts on building your stengths and limiting your weaknesses. What are some of the ways to limit your weaknesses? You can ally yourself with people with complementary skill sets, knowledge, or personality traits to yours. That way, your weakness can be offset by your colleagues’, and you can concentrate on your strengths. Another is to find a way to improve on certain key skills and competencies, if it is absolutely essential that you possess at least a modicum of capability in that area. Finally, you can simply avoid or minimize your exposure to situations that would require you to perform in an area of weakness. This is probably the least effective and least realistic approach, simply because you don’t always control those conditions. That is why it is important to build a team with skills and knowledge and traits that are complementary to your own and to acquire a bare minimum competency in key areas that can’t be avoided.

All this takes honesty and integrity, to recognize where you’re strong and where you’re weak, and to admit that you need to do something about it. But, without that honesty, you can’t really attain your full potential and thus, develop your full professional competency.

Tomorrow we’ll look at the third leadership principle from my list, Seek and Accept Responsibility.

© 2012 Richard Martin. Reproduction and quotes permitted with full and proper attribution.