TEACHING THE TEACHER...Francine Hardaway...

Although I routinely rely on my talented friends and colleagues as outsourced resources for the FastTrac program we offer in Phoenix, and they always impress the participants, every once in a while a speaker ignites the group in a special way. Last night, Nigel Brooks (www.bldsolutions.com) gave a presentation so intense that the participants not only sat rapt throughout the break, but also stayed beyond the end – no mean feat, because each session ends at 8:30 PM.

Nigel’s presentation was a great riff on what business is actually all about. He developed the themes of entrepreneurship, leadership, and management in business, and detailed the role of each one. An entrepreneur, he said, is the one willing to take the risk to turn ideas into products and services to start a business. That’s different from a business owner, who starts a business to create a sustainble enterprise, probably to enhance his lifestyle (or so he or she thinks). Not all business owners are entrepreneurs (some are actually risk-averse) and not all entrepreneurs can deal with the chores involved in building a business around of their ideas.

I had never heard it put quite like that before. But Nigel’s take on it answers a question I always ask myself: why are entrepreneurs such lousy business people?

Because they’re not supposed to be business people, dummy. They are supposed to be innovators. The most meaningful way to understand the phenomenon of entrepreneurship, according to Nigel, lies in analyzing the personality profiles of people in the workplace. 46% of workers favor process, and 44 favor structure. Only 6% are idea people. I’ve forgotten what the other 4% favor, but it’s not important. The 6% are the entrepreneurs; the ones who take risk, fight authority, and create cool products and services. In the best case, a professional CEO comes in after the entrepreneur and runs the business, while the entrepreneur stays on and continues to create. Think about Bill Gates, who took himself out of the CEO role at Microsoft so he could be Chief Software Architect, or Howard Schulz, who took himself out of the CEO role at Starbucks. These guys are innovators, and they want to stay in roles within their companies that will allow them to continue to innovate.

There’s a third category besides entrepreneur and business owner, and that’s the manager – the hired gun who doesn’t own the business but allocates its resources to keep the company in business. Most successful businesses end up in the hands of professional managers.

Each of these roles is appropriate to a different stage of the business, and Nigel identified three stages. In the first stage, the entrepreneur starts the company and concentrates on the product or the service, developing its features and benefits, securing patents and trademarks, and figuring out the value proposition.

In the second stage, the product or service gets a business built around it. At this point, what’s required are leadership skills – the ability to motivate people to perform to their highest potential. Sometimes, this is where the founder gets deposed in favor of someone with more charisma. Here, too, the business must begin to address the needs of all its constituencies: employees, investors, customers, regulators, suppliers, and competitors.

And in the third stage, the business must become sustainable. That’s the stage where management comes in, and the needs of third party investors are addressed. The needs of those employees who require structure and process are addressed here, too.

From this framework, it becomes apparent that there’s a reason early stage companies are not attractive to capital. The leaders and managers are not yet in place, the management team doesn’t act like a team, and the product hasn’t been tested in the market. There’s really nothing to invest in –yet.

According to Nigel, good companies are built by transformational leaders who build high-performing, self-managed teams from a base of sound values. No matter what the product or service, it’s the people who really make a business successful, and the leaders who empower the people. That’s why venture capitalists, when they invest in a company, often shove the founder aside for a tried and tested management team they’ve worked with before.

Although I deal with these issues on an almost daily basis, dealing with them is different from considering them and thinking about their meaning and repercussions. Nigel made all of this come alive for us in a new way last night. You had to be there…