It’s Not All About You: Building an Entrepreneurial Organization

There was a time – way back in the 20^th century – when a super-smart entrepreneur was all a company needed to produce great results.  And everyone else in the organization?  Just cogs in the leader’s brilliantly designed machinery.

But those days are gone.  Most of the routine, repetitive work has been off-shored or automated.  Jobs no longer involve tasks such as bolting a water pump onto an engine block.  The work that’s left involves design, sales, analysis, customer care, and the like.  It’s work that requires companies and their people to be creative, nimble, and responsive, to exercise judgment and work as a team, coordinating actions from a constantly changing playbook.  We’re no longer in the industrial age.  We’re in the innovation age.

So how does entrepreneurship work in the innovation age?

To be successful in today’s environment, the spirit and practice of entrepreneurship needs to permeate the whole organization.  A dynamic organization can’t rely on just one person, the entrepreneur, to identify the opportunities, design methodologies, and determine all the actions, while everyone else stands around waiting to be given orders.  Instead, people throughout the company must be engaged in the entrepreneurial process, creating an entrepreneurial organization.

But that’s harder work that takes more energy.  So the key question is: how do you convince employees to get involved in this way?  How do you breathe the entrepreneurial spirit into every corner of your operation?

The most successful companies have realized that it begins with a compelling sense of purpose.  Employees want to know why any of it matters.  Employees who were bolting water pumps onto engine blocks didn’t need to know why their work mattered.   Today, “why it matters” matters.

This concept is explored brilliantly in a great book: Firms of Endearment: How World-Class Companies Profit from Passion and Purpose.  The clever title is memorable.  And the authors do a great job of showing how mission-driven companies that organize around a compelling purpose have ended up being some of the most successful companies out there.

Now, that’s great for companies that are involved in a sexy business like finding a cure for a dread disease or designing a rocket ship to Mars.  But what about, say a distributor of construction fasteners?  Nothing against fasteners, but it doesn’t have quite the broad appeal of curing cancer.

Yet the founding entrepreneur was surely passionate about the company.  What was driving him?  You know the likely answer: pride of accomplishment, a chance to build significant wealth, etc.  That’s the compelling purpose of the founding entrepreneur.  So how do you share that with the whole team?

The best answer I’ve seen is called open book management.   The best version is called The Great Game of Business.  The recipe is simple:

1. Give your team the tools to follow the action.  As in sports, there is a scoreboard in business, with numbers that show all the key stats.  In sports it’s runs, hits, errors.  In businesses it’s sales, margins, cash.  For people to get caught up in the game, they need to know how the team is doing.  They have to be able to see the scoreboard as the game is going on (seeing the box score after the game is done is too late).  And they have to be able to make sense of it.  In baseball they have to know what RBI means; in business they have to know what accounts receivable means.  So teach them.
2. Give them a chance to contribute and make a difference.   Get them involved in planning and decision making, providing an opportunity for them to contribute their ideas.
3. Undergird the whole thing by giving them a real stake in the venture’s success.  You can do that with a profit sharing bonus.  But cash is always in tight supply at growing companies.  So stock ownership may work better.  It saves cash and promotes a longer term outlook.

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