Many coaches, writers and commentators advocate that small business owners should work on their businesses as a project and not in them as an operative. They cite the change from ‘in’ to ‘on’ as the key to growth from a one-man entrepreneurial enterprise to a multi-million Pound turnover, multi-employee sustainable firm.
But there’s a danger that, for many owners, this mantra is misunderstood.
Owners of small businesses must never cease to work ‘in’ their businesses, whatever size they eventually achieve.
That’s not to argue with the mantra, for as a metaphor the mantra is very valuable. It’s just open to misinterpretation by owners who risk becoming physically detached and disengaged from their people. A detached owner ceases to understand what’s going on in their firm and the opportunities and risks that are growing in their absence.
Those who advocate working ‘on’ rather than ‘in’ must re-think their dogma, to describe a state where the ‘on’ and ‘in’ poles combine. This combined state is not as simple to understand, but it avoids owners making fundamental organisational mistakes.
As a vivid example, Ernest Shackleton, the Polar leader, worked daily with his 28 men, taking part in the toil of travel over the Antarctic ice, spending energy looking after their mental and physical wellbeing and spending evenings in his shared tent planning and re-planning. He worked in. And he worked on. Not one or the other.
To understand the complexity of working both in and on, let’s look first at the multiple roles played by the owner in a small firm. And to then interpret these roles let’s look then at the central activity of leadership as the mechanism by which stuff happens in the firm. Finally, let’s also look at how it comes about that owners can follow the dogma of ‘on’ over ‘in’ to become detached from the firm and their people.
To understand the different roles, it’s useful to look at where the owner would like the firm to get to ultimately – let’s say the goal is a medium-sized firm with say 100 staff and a turnover of £10m. There are many forms that this enterprise might take, encompassing centralised and de-centralised and franchised structures. The form is beyond this present discussion.
The owners or shareholders appoint directors – plural, since most bigger firms have multiple owners and several directors. Shareholders may appoint themselves or others. Those directors form a board to make and direct the strategy of the firm.
That board appoints an executive – the MD or CEO – to implement that strategy and lead the firm day to day. The MD appoints managers – a management team -to explain the strategy to the employees and to create the necessary day-to-day action. The managers appoint the employees. Each role – director, MD and manager – acts as agent of the owners.
The small business owner plays all these roles.
The problem with promoting ‘on’ over ‘in’ in a physical, detached and literal sense is that the owner plays shareholder and director leaving out the essential roles of MD and manager. The employees are left to get on with things without the all-important leadership.
Without leadership there is only chaos.
The MD is a manager. Managers are leaders. Leadership is the political activity of persuading employees to do what the manager wants them to.
Leadership in small firms is mostly dyadic. That is, the manager builds a one-to-one relationship with each employee. As the firm grows to have hundreds of employees, leadership evolves to include leader-to-group and leader-to-whole-firm mechanisms. Leadership is an intervention. The leader ‘intervenes’ in each employee’s life.
There are myriad methods by which intervention occurs and by which intervention causes the follower to change behaviour in favour of the leader’s instruction. It’s beyond the scope of this present article to discuss these leadership approaches but suffice to say that as a result of leader-follower interaction, behaviour change occurs.
Stuff happens in a firm through leadership.
For leadership, and persuasion, there must be opportunity for interaction. The leader must be working ‘in’ the firm for interaction between the leader and each employee. So how does this interaction occur?
Rule of Eights
Take a familiar organisational structure. The most basic fighting unit in an army, the section, comprises eight men commanded by a corporal. And eight army sections make a company of sixty-four men commanded by a captain. A lieutenant-colonel then commands eight companies of 512 men. The exact numbers differ army by army and regiment by regiment but the form has persisted, even as far back in history as the Romans. It’s the ‘rule of eights’.
There are some very good reasons for this time-tested structure both in the military and in business. Primarily it’s because the leader can monitor and influence the activities of eight subordinates whilst still doing productive work themselves.
Typically therefore, a small firm MD will think about appointing a manager when the number of employees in the firm exceeds eight. A firm of 24 staff would therefore have two or three managers lead by the MD. In this case the MD may double as a manager leading eight as well as leading the two managers, themselves leading eight.
As with the military, this ‘rule of eights’ is not hard and fast and depends on context. It could be eight or it could be 30. Eight is however a good overall start point before looking at specifics.
Typically as the MD gains more employees her or she changes their involvement. When working ‘in’ their firm they take on the big problems, like fronting the biggest bids, managing the biggest projects and closing the biggest deals. They use their big expertise where it’s needed rather than behaving as a front-line operative. And they move to being a trainer, mentor and coach to their staff.
As they employ managers to whom they delegate, their direct involvement evolves to be the leader of change. With 512 staff, they work day to day with their eight senior managers, leading, training, mentoring and coaching them. Those eight senior managers work day-to-day with their eight junior managers and so on. But at least for much of their time, they are still working ‘in’ the firm. And of course, those eight senior managers lead, train, mentor and coach their subordinates, just as the MD did before.
The MD and management team never abandons their director role though. Nor, as shareholders, would they abandon their owner role. At board meetings and when working together on strategy, they are working ‘on’ the company.
The Dangers of Detachment
Imagine if the MD of an eight-man firm worked only ‘on’ their company. Under the above argument, the MD and manager roles would be missing. No one would be influencing the employees toward the owners’ and directors’ required goals. No one would be leading.
Under such a detached regime, employees would see reduced interest in them as people by the owner. No one would be working with them now – no one would be bothered about the quality and effectiveness of their work. No one would be worrying about satisfying their needs. No one would be interacting with them. The result would be poor employee commitment.
Poor commitment prevents any leadership effect that does exist and increases staff intention to quit. High-performance ideals like staff engagement are impossible and the firm stagnates.
Staff are then left to cope as best they can. Instructions are issued by the detached MD, but the leadership, training, mentorship and coaching needed to implement these instructions are missing.
Taken to the extreme, the result can only be the ultimate demise of the firm.
We have here a paradox in interpreting the ‘on’ over ‘in’ mantra. On the one hand, the owner must avoid being trapped doing ‘in’ activities like serving in the shop, writing reports or designing circuit boards. On the other hand, they shouldn’t be permanently detached in the ‘on’ activities like building the strategy, setting up new subsidiaries and meeting fellow business owners.
There are two perspectives that help us make sense of this paradox: operations and strategy.
Taking an operations perspective, the owner seeks to optimise the firm’s effectiveness according to its chosen strategy. Operations is rich in hands-on leadership. Operations makes profits today. Here the owner works ‘in’ the business and is MD and manager.
Taking a strategic perspective, the owner seeks to say in which markets and with what resources the firm operates. Strategy is rich in detached activities. Strategy makes profits tomorrow. Here the owner is working ‘on’ the business as a project.
But someone must still cause strategy to happen. Someone must impress strategy on operations. The board must task the MD – even if the owner is the MD. And the MD must involve managers and employees. It’s here that working ‘in’ and working ‘on’ become one in the same – it’s called management and owners must embrace it.
Management is a complex, multi-perspective, multi-level, multi-activity, multi-skill occupation. It’s not a simple dogma but it’s the essential reality for business success.