Posts Tagged controlled chaos

A Tale from the Past: What it Takes to Start a Successful Business


I read a blog a few days ago that said you do not need experience to be a successful entrepreneur. So what do you need? Do you need a degree from an Ivy League school or a large pot of money from a notable investor?

Let me tell you a story from my personal experience. I once worked for a man who came from humble beginnings. Sam was the man. Sam’s family had a hard time putting food on the table coming over from the old country. Sam had a brother that did not fit in anywhere so the Sam felt a duty to take care of him. Sam did not make it through high school because he was pressed for his family’s survival.

So what did Sam do? Sam went into the screw business. Now your first thought might be, “who did Sam try to screw?” If so, you have the wrong idea! Sam’s business had to do with making screws in the fastener industry. Sam started in a small garage at home and at first started with selling products, but Sam often told me his success came not from selling, but from buying. Before starting his company Sam worked as a buyer for another company.

As Sam’s business grew, he started manufacturing screws and with a few of his friends formed a partnership and eventually a corporation. Sam had an absolute passion for the business and made it his business to learn every facet of the business. Over the years Sam and his partners grew the business in to an extremely successful business in the industry. The company grew out of the garage to a large manufacturing facility with thousands of high-profile customers.

Sam led the company from obscurity to a thriving business and Sam mastered every person’s position in the entire company. I kid you not! Sam was faster than a marathon runner and would see how every employee performed in their job. Sam followed this routine the entire day, each and every day. Sam showed his passion for the business and did not think of it as work.

I did not mention I came to Sam’s company late after his partners had left or retired. My role at the company was vice president of finance. By this time, the company was already a public company. By the way, Sam could do my job even though he did not have a high school diploma. Sam made it a point to know everyone’s job inside and out. Sam drilled me at lunch each and every day to keep me on track. Sam would let me know when I eventually mastered my job.

Sam started thinking about retirement and sold the company to a Harvard MBA. By the way the Harvard MBA’s name was Ned and he was a marathon runner. Ned bought the company with money inherited from his wealthy father. Every company that Ned bought he started to bring in his own people to manage the company and do everything by the book. One-by-one each company Ned took over started to lose money and eventually failed. Ned was a turnaround expert in the wrong direction.

Sam saw the handwriting on the wall and decided it was time to get out and semi-retire, but Sam loved the business too much and went back out on his own. During our final time together, Sam told me to look for another job because Ned wanted to bring in his own people after he left. I learned more from this job than any job I ever had thanks to Sam.

So why did Sam succeed? Sam did not graduate from high school, but admired others like myself who had a good education. Sam did not have a large pot of money to start. Yet, Sam grew out of his garage to a manufacturing facility and eventually became a public company. What do you think it takes to build a successful company? Did Sam have experience, and, if so, what role did it play in his success? Did Ned have experience in the companies he took over?

Do you have some ideas about why Sam could build a successful company? Do you want to know more about what I think it takes to start a successful business. Learn more.

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Innovation: Small Firm versus Large Firm


I theorize that innovation works best in a small firm because different goals exist than in the larger firm. Some justification exists in the literature supporting this theory. Large firms place improving shareholder value through stock price appreciation ahead of discovery of innovative solutions (Crochetiere, 2011). Corporate managers concern themselves with shareholder wealth enhancement and emphasize short-term profitability.

Founders of small innovative firms put products and services first ahead of profitability. Steve Jobs offers a good example with his obsession to create computers for students. Job’s passion put product ahead of profits (Deutschman, 2000). Jobs exited from Apple when the company put the focus on shareholder wealth instead of perfecting the product (Levy, 2011).

Small business owners starting a company should consider their goal. A founder should consider if the motivation is to cash out or extinguish a burning fire to solve a problem with a new product or innovative service. A firm that opts for the latter should avoid acquisition by larger firms and keep it simple.

Crochetiere (2011) found evidence suggesting large firms produce fewer patents and innovations than smaller firms.  Larger firms not only produce fewer patents, but lose stakeholders and their acquisitions result in greater variability in stock prices.

What is the goal for innovation in your business? If you need help planning your strategy click here!

References

Crochetiere, B. (2011). Transcending technological innovation: The impact of acquisitions on entrepreneurial technical organizations. (D.B.A. 3482298), Walden University, United States — Minnesota. Retrieved from http://search.proquest.com/docview/909085620?accountid=35812 ProQuest Dissertations & Theses (PQDT) database.

Deutschman, A. (2000). The second coming of Steve Jobs. New York, NY: Random House.

Levy, S. (2011). The revolution according to Steve Jobs. Wired. Retrieved from http://www.wired.com/magazine/2011/11/ff_stevejobs/all/1

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Creating a Setting Right for Innovation


Scholars widely acknowledge entrepreneurs as the engine driving innovation and creativity. In this article I want to examine what facets contribute to a successful setting for driving innovation and creativity.

A vision has to propel the entrepreneur to pursue a cause or solve a problem. The vision often comes from a gap between what consumers want and what is currently available. The entrepreneur must persevere to fill the gap. Overcoming setbacks, frustration, and ambiguity is a critical part of the entrepreneur’s mindset (Quinn, 1985).

An entrepreneur has a long-term mindset to overcome obstacles and keep costs low. This mindset takes risks and obsesses to achieve the end goal. The innovator has to have autonomy to let imagination take over and find workable solutions. Experimenting with new ideas allows the entrepreneur to see what works and what does not (Quinn, 1985).

Breaking accepted rules, challenging authority, confronting risks, and causing conflict are part of the behavior of innovators (Baucus, Norton, Baucus, & Human, 2008). These ingredients are all part of the entrepreneur’s toolbox. A founder values people who can thrive in chaotic environment (Quinn, 1985).

A setting conducive to these attributes avoids excessive rationalism, bureaucracy, and intolerance. Employee incentives should avoid control motivations. A flat organizational structure helps avoid control motivations (Quinn, 1985).

Does your work setting have these characteristics? How can your firm support a setting to foster innovation and creativity? Want to know more? Click here.

References

Baucus, M. S., Norton, W. I., Jr., Baucus, D. A., & Human, S. E. (2008). Fostering creativity and innovation without encouraging unethical behavior. Journal of Business Ethics, 81(1), 97-115.

Quinn, J. B. (1985). Managing innovation: Controlled chaos. Harvard Business Review, 63(3), 73-84. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=8500002474&site=ehost-live

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