Why small businesses stay small

A power culture is crucial for startups, but you can’t scale when power is concentrated. Things break because, at scale, owner-managers can’t decide everything in real time. To scale without breaking you need a role culture with devolved expertise and power.

Letting go of that control is a huge emotional leap for entrepreneurs. It requires the maturity — and humility — to recognise that you are not always the smartest person in the room. It requires personal growth before financial growth. It requires being honest about your own limitations.

Some small business owners accept these limitations and plough a profitable niche. Some entrepreneurs level up and bring in professionals to manage phase two of growth.

And, sadly, some do neither and are stuck in the middle: overtrading while infrastructure buckles.

If you are depending on a company like this for all or part of your competitive advantage, the prudent strategy is to find alternatives. Because pride will invariably come before a fall.

Why things never get done

Have you ever been in a meeting when it becomes apparent that all anyone in the room is going to do is describe problems? People around a table will compete to describe things in increasingly obfuscatory language until others recognise in that language terms they have heard before, from sources that they hold credible. They then reassure themselves that the right language is being used around the problem.

Everyone goes away happy. Six months later, when nothing has been achieved, more language will be found. But at some point, people are going to start asking: why hasn’t anything been done about this?

It’s one of three things: time, money or risk. The first two are easy to solve and easy to explain. There isn’t time to achieve this. OK, fine. We don’t have the budget. OK, fine. No one argues with that. If people want something badly enough they will always find more time or more budget. So that is not why things don’t get done.

The real problem is aversion to risk. It generally goes unspoken because people don’t want to admit they are afraid. But the truth is, people don’t want to expose themselves to the risk of (a) failure and (depending on the neurosis level in play) (b) being seen as an imposter. Therefore they will say things instead of doing things. They will say things that sound like they are doing things.

Every time we endeavour, we run the risk of failure. So what? Literally the worst that can happen is you learn how not to do something next time. You fail and you get to play again with better information. Failing — because you acted — takes you a whole lot closer to success than sitting around finding words.

This process is broken

Process 1. Diagnosis — Broken

  • You’re in Starbucks.
  • You order your coffee.
  • They ask you your first name.
  • Reluctantly you give it (OK, I confess I always say my first name is Mr Customer).
  • The barista writes your name on the cup and passes the cup down the production line.
  • You wait.
  • Finally Barista Number 2 puts a cup down on the counter and calls out “Double espresso?”
  • And eight people say “Yeah, me!”

 

Process 2. Diagnosis — Broken

  • You’re in McDonalds.
  • You use the machine to place your order.
  • You pay and it spits out an order number.
  • You go and look at the screen.
  • Your order number is being prepared.
  • Now your order number is ready to collect.
  • “Quarterpounder with cheese?” calls the McDonalds worker.
  • And eight people go: “Yeah, me!”

Guys, why are you doing things?
In every organisation there are multiple processes just like this.
Show up, ask yourself questions. Make changes. Live better.

 

Quality is a feeling

The great irony about quality is that, as soon as someone asks you to conform to a benchmark, they are forcing a product that is by definition generic.

That leaves the space open for someone to compete with something genuinely outstanding.

Quality is why the mega-budget Hollywood production falls off the abyss while the indie flick from left field, shot on super 8, catches everyone’s hearts.

Quality is the passion you have, the care you take, the finesse you demonstrate. Not the hoop you jump through. Quality is what you bring, not what someone takes away.

Quality isn’t a number, quality is a feeling. Quality is yours and quality is portable: you can take it with you when you go.

Why serious freelances avoid online “marketplaces”

The best freelances are not on Upwork. Or Hopwork. Or Bipwork. Or Bopwork.

There’s a reason you went into business for yourself and it wasn’t to give away your margin, your terms, brand equity, story and client relationship to someone else. If you want to hang around passively waiting for the call so that someone else can decide your worth, get a job already.

But you knew that, so you’ll be as excited as I am by the latest news from the world of joyless commodity “freelancing”. The merged entity Elance-oDesk, the world’s number one place to source generic work for very little, has rebranded as Upwork. The rebadging is tacit admission that there was zero equity worth keeping in either brand. That’s amusing in itself.

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Life without Steve

 

I don’t want to clutter the web with my addition to the obits for Steve Jobs, who died earlier today. As I sit typing on my MacBook Pro, listening to iTunes in a café in central Paris, using a wifi connection I found using an iPhone app, I hardly need remind anyone of the impact Mr Jobs has had on our lives.

When I left university no one had a computer. I learned computing on an Apple Mac — a giant beige box — because I was apprenticed to a graphic designer. The Mac was then known as an expensive, exclusive professional tool for media and creatives. You couldn’t get one on the high street: reps came. In the Mac-related magazines I bought, Jobs, by then long gone from the company he co-founded, was a dirty word, routinely drubbed as a loose cannon. Friends mocked me for my geeky Mac obsession — which they saw as self-consciously alternative and “creative” — even as they rebooted their PCs after MS Office crashed for the eighth time and their hard disks had been eaten up by worm viruses and adware.

By the time I had saved up to buy a second-hand Mac, Apple as a company was near death — victim of its own arrogance and attachment to vertical integration — and it looked as though it would go the way of Betamax. Then we had the second coming of Jobs, the birth of the affordable, trend-setting iMac, the iPod and the regeneration of a brand that today dominates our daily lives. Gradually, the desirability of Apple products permeated public consciousness and those who had mocked a few years earlier now boasted. I knew Jobs had won when status-conscious corporate types started with the “sent from my iPad” rather than the “sent from my Blackberry”.

Here’s what I want to take from this. The sacking of Jobs from his own company and his subsequent return — not only to rescue it from the brink of banruptcy but also to transform the computing, the entertainment and the communication industries — is a salutory lesson for all companies. Jobs’ firing was a product of corporate power politics and nothing more. Jobs was judged not corporate enough, too fiery, creative and entrepreneurial to play well with others on the board. He was basically kicked out for possessing a challenging personality and a fierce vision. These things can be threatening to those who don’t have them, but without them somewhere in your company, you’re sunk. Apple threw the baby out with the bathwater and paid a terrible price.

Jobs was re-hired for the same reasons he was fired. In the interim he had founded Pixar and learned many lessons. He had matured somewhat but lost none of the vision and, by all accounts, little of the fire. On his return, aside from recreating the brand, Jobs deliberately altered the hierarchical structure of the company to avoid the kind of fiefdom- building and power-play that harm innovation. Executives at Apple now radiate out from the CEO in a circle. Power is spread: the head of the online store, for example, doesn’t get to choose what is stocked, nor the design. Project leaders are appointed based on talent for the particular job at hand and no other reason.

The vertical hierarchy is over. It’s an artificial and outmoded structure, based on nothing but our own vanity. As Facebook has shown, the world is now a network and in a network, collaboration and crowd-sourcing of ideas and information are the routes to success. If companies persist in rewarding individual performance with pecking order status and power over others, they will only encourage zero-sum competition. Positions of power are usually won by the people who most want power, not by the people most able to innovate. Once positions of power are obtained, the executives concerned are no longer coming into work to do their jobs. They are coming in every day to maintain and defend their position. Politics take precedence over productivity. New ideas threaten such power structures and are crushed. We’ve all seen it. No wonder few companies can really innovate.

Innovation requires trust, mutual respect and collaboration. Companies with traditional vertical power structures can and do achieve innovative miracles, by plucking individuals away from their daily routines, creating task forces and suspending power-politics for a limited brief and a limited time. It works, but there is an erroneous consensus that this kind of “peak performance” microcosm cannot be maintained on a daily basis. Yes it can. Jobs did it. You change the structure, you change the reward. You reward innovation, you reward collaboration, you reward challenges to the business model and challenges to the status quo. You reward drive, curiosity and creativity. And — as Google does — you reward these with autonomy, rather than power. Autonomy is all we really need to be satisfied. Power is how we usually get it. But that can change. When we all do this, we may all produce something as majestic and world-changing as Jobs did.