Getting to scale: the Entrepreneurs curse

As Kim and I spend the week noodling on our 3 year strategic plan (more golf, less work??) this just in from John Hamm, from my local Sydney paper. A great read for entrepreneurs. The short version is here:

One of my favourite articles on the topic was by the academic John
Hamm in the Harvard Business Review earlier this decade. His
classic piece, “Why entrepreneurs don’t scale” should be mandatory
reading for business owners. A friend recounted his own inability to
scale the other day, and said he ticked each of the four boxes that Hamm
says stop entrepreneurs scaling. They are:

Loyalty to comrades: the excessively loyal
founding entrepreneur is the growing organisation’s worst enemy because
they will not make the tough staffing decisions.

Task orientation: the entrepreneur is the
organisation’s weight-lifter – brilliant at executing short-term
projects, but lacking in long-term strategic ability.

Single-mindedness: the entrepreneur is too
insulated and does not communicate well enough with staff or accept
opinions different to their own.

Working in isolation: The brilliant, isolated
entrepreneur struggles to present his venture to the world. They don’t
enjoy leading the sales effort or being their enterprise’s public face.

I’ve got my own thoughts about why so many entrepreneurs don’t scale:

Scale tales: Business plans are full of material
about where a venture can grow, which is all exciting, though rarely
happens. Hardly any business plans I read have detailed information on
how scaling can be achieved. They are too light on execution.

Poor systems: Strong systems and structures
provide the foundation to scale ventures. They make it easier for
entrepreneurs to work on, rather than in, the business. Too many
entrepreneurs chase growth first and worry about systems later.

Lack of self-understanding: Some entrepreneurs
love repeating their business idea everywhere possible and stick close
to their core product. Others find running a large organisation, with
more staff and bureaucracy, stifling. It feels like a job. They can’t
make the transition from entrepreneur to chief executive, or don’t want
to. They should have sold their business to a large player as it took
off, and moved to their next start-up.

Capital: Some entrepreneurs wait too long to
access capital. Being well-capitalised at the start, even if it means
giving up more equity, can be advantageous for businesses that want to
scale. Sometimes you have to let go of equity to get a smaller piece of a
much bigger pie.

Relationships: If want to scale a venture rapidly
you need a business partner on the same page, an understanding life
partner, and a willingness for a different work/life balance.

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