The recent Federal Government intergenerational report calls for productivity improvements as a significant part of the solution to the alarming (but expected) cost of an ageing population.
Australia’s successful entrepreneurs, while having already made their own contribution to productivity in the early stages of their businesses growth, may paradoxically become productivity road-blocks in the later stages of their business cycle.
At a recent breakfast I chaired on this topic, we identified the “success bias” of many entrepreneurs and founders. Having a proven track record of success, they often have no burning platform to rethink that success formula. For many first generation or start-up entrepreneurs, this formula is usually based on “doing” a lot of hard work. Often new challenges are approached with more doing, rather than new thinking.
However, it’s important not to want to change entrepreneurs, which would be equivalent to trying to turn back the tide. Yet to optimise the productivity of their business and capital may require a shift in mindset (rather than personality): “what worked before might not work now.”
What determines or demonstrates an entrepreneur’s willingness and ability to shift?
- A severe business challenge (failure, high growth, change)
- A significant personal crisis (of health, relationships, purpose)
- Having a view of what the business looks like in 3-5 years’ time
- Being able to answer the question “What would you do with the business today if you knew you were going to die tomorrow?”
- Alternatively (and perhaps less confronting) would be the ability to answer “What would you do if the factory/business burnt down?”
- An honest acknowledgement of how much of their identity is invested in the business and their role.
Having found an entrepreneur who is on the verge of readiness, trust is at the core of being able to help an entrepreneur. Where are they on the trust curve? Building that trust may mean needing to “work around the edges” with them for a period of time, or on issues not directly related to changing the business model, succession or governance.
As an entrepreneur becomes more open to such a conversation, it may be useful to characterise where an entrepreneur or business is in a life cycle, whether through:
- Classic business life cycle models
- Industry life cycles (maturity, growth, decline etc.).
- The complexity model http://youtube/N7oz366X0-8 (Thank you to Dominic Peligana at KPMG for this reference)
- Personal lifecycle – defining a legacy and what’s required to achieve it.
A multitude of approaches are needed:
- Acknowledge that what they are experiencing is “normal”
- Working around the edges (“safe, controlled experiments”)
- Addressing the issue of power and fear of losing power
- Developing an alternative narrative or identity about:
New business opportunity (staying in start-up mode)
Re positioning of the capital (e.g. into a trust, investments, philanthropic fund)
- Developing a “trust matrix” to help people understand the trust journey and where challenges might lie.
Only a select number of founders exhibiting the personal signs of readiness, along with a conducive or persuasive external environment, will be ready to start the trust journey to change the way in which they operate.
But more can be done to identify the characteristics of such founders and the clues that can be easily identified.
Knowing how to build trust in a more structured way rather than a bespoke approach, could allow more entrepreneurs to be assisted, and faster. Key players such as government and banks should become more interested in the redirection of founder entrepreneurial talent in the latter stage of businesses, to unlock growth in productivity and returns.
What is your view? Feel free to share in the comments box below.