How business decisions are affected by pressure

September 28th, 2015

When one starts talking about the differences between managers and entrepreneurs, one inevitably comes to pondering the way each of them perceives risk.

I recently heard a successful entrepreneur, having sold two large businesses to multinational companies, talking during an event about the manager of one of the companies he founded abroad. The manager had been placed at the top of the company right from the beginning. He did well, the company has grown, and now brings the entrepreneur a few hundred thousand euros a year in revenue, without him actually doing much.

Therefore, at his last visit, he offered the manager company shares, about 20-30%, if I remember correctly. Adding that to the monthly salary he already earned! What did the manager do? He refused the offer. Leaving our entrepreneur perplexed. Why would anyone do that? “How stupid can one be”?

Surely, we’re asking the wrong question, one cannot come to valuable answers by issuing value judgements. But the dillema still holds. Why would the manager refuse the extra money, when he was already having good results and he was already working towards the company’s growth?

In order to find the answer easier, we must first ask ourselves what would have happened had the manager accepted the offer. It’s obvious that having an entrepreneur-shareholder position would have brought him more money at the end of the year, but, at the same time, he would have surely perceived a greater risk: he would have become more emotionally involved in the business. And when you start to identify more with a business, many of the rational, management (!) decisions lose the analytical clarity that is so necessary for important decisions.

Then, when a company passes through rough times, the way it always happens, you begin weighing up your manager monthly pay and the profits you might get at the end of the year, as an entrepreneur. And things begin to fall out of place.

And this is exactly why we need good managers: for things to not fall out of their place significantly. This is why most of the entrepreneurs build the system up to a point and then need a good manager, with complementary skills and a different positioning in relation to risks. To be able to take the company to places where the entrepreneur could not, being too emotionally involved to see clearly and judge correctly.

It’s only a hypothetical example, but there is a high chance that the company would have gone under in twelve months, had the manager accepted the offer to become a shareholder. He probably didn’t put it exactly this way, but rather felt that the role didn’t fit him and chose not to take this step.

„You cease to be an agent the moment someone puts a gun to your head”

I remembered the story above last week, when I read an Irwin Gotlieb interview, a veteran of the U.S. advertising industry. He was talking about a similar phenomenon, but in the world of advertising agencies. What he was saying was that agencies can be a strong business partner and a creative asset only up until they face so much pressure that their main concern becomes how to be more compliant, how to play safer, how to take less risks. And no one wants that from an advertising agency.

“You cease to be an agent the moment someone puts a gun to your head and says these are the CPMs you need to deliver [...]  The moment a client pushes you to provide certain assurances and guarantees, it affects your neutrality. It forces you to think in ways an agent doesn’t think. And it evolves the relationship in a different direction. And by the way, we’re grownups. We willingly accept the terms. But you can’t have it both ways. Once you assume business risks, things change.” (original article:AdAge.com)

I own an entrepreneurial advertising agency, which voluntarily chooses to share the risks with its clients, in order to position itself correctly, as business partners. However, I cannot help but ask myself to what expense.

[this article first appeared on Forbes.ro]

The relationship with your employees: manager or friend?

September 21st, 2015

Lately, a manager’s role in a company came up in a few discussions, in different contexts. And too many times, especially when it comes to a discussion between people in management positions, one will lament about how he, the manager, doesn’t receive the kind of appreciation he would like to receive from an employee. It’s a trap I think most managers fall into at a given moment: How can I make myself liked (or even loved) by my employees, when I know for sure that there will be times for unpopular decisions, criticism and negative feedback, given that they are humans and, consequently, have failures, as all humans do?

How to explain to them that they must work harder, demand more from themselves, try to be better, and do all these exactly when they feel they have reached the limit, and then, still be seen as a friend? Particularly, when you need to take a fast decision, one there is barely time to communicate, let alone clarify, how do you explain someone, without causing distress, that this time they must trust your feeling and your experience even if, for them, it doesn’t make sense at the moment, even if it seems like the wrong decision, one they are forced to accept? How do I do all of this and be liked at the same time, like most of us wish they were?

Actually, the question is whether I choose to do what I know or feel is the right thing to do, or to spare people, tollerate mistakes and, this way, have more chances at being liked or loved. The answer is quite simple once you are perfectly aware of the reason behind what you are doing and if you understand your role entirely.

What is your role in relation to those people? You are a manager. What is a manager’s role? Is it to become loved? Surely not! A manager’s role can be to grow the company, to be effective, to make decisions, to take the business in a direction that can bring him, shareholders and employees more money or one that can make everyone more proud of what they do, or help them grow into true professionals in their field. A manger’s role will never be to become loved. Being loved is not one of a manager’s duties, it cannot be an objective, but merely a result of high quality management. And the faster we understand this the better.

Oh, you wanted to be liked?

Well then, maybe you should have become a comedian, not a manager. Maybe an actor or a musician? You’re looking for friends? You might find some among the people you are working with, it’s not impossible. But I wouldn’t count on it.

If I were to feel alone, I would look for friends outside my workspace. Because, believe it or not, the office cannot make up for all one’s life. And having the expectation from only a few people to fulfill all the needs you yourself don’t have time to fulfill, that is not only impossible, but also unfair.

Obviously, this is not an excuse to act disrespectfully, nor a way to justify deviant behaviors, common among plenty of managers. A management position does not exclude empathy, and human quality is important in any job or function. What I am saying is not that we should forget to be human, but that in management there will come a time when you will be forced to take hard, questioned decisions and you will not be able to please everyone.

And trying to do this only guarantees failure. Getting used to this idea might provide very helpful along the way.

better human beings?

July 1st, 2014

Entrepreneurship is about resilience more than about anything else. The question is never if at some point it’s going to be hard. The question is how hard and, above all, to quote a fictional character, how much you can get hit and keep moving forward.

I have been thinking about this lately, not because things have gotten worse, but because talking to a friend made me wonder if entrepreneurship can really make you a better human being.

I know that it can definitely make you a better profesional. It’s a complete experience. When you work in sales, for example, you have to learn to sell and in order to do this, you have to develop skills like listening, persuasion, negotiation and others, but you can do without being the most organized person on Earth. If you work in project management, you need powerful organizing skills and a sense of urgency. Listening can be a big plus, but it’s not mandatory. And so on…

Well, in entrepreneurship sooner or later you get the full package. No two days are the same and not a week goes by without having to solve a problem that nobody around you knows how to solve. Because, guess what, every-f*cking-unsolvable problem escalates to the guy with the biggest responsability. It goes up to the highest floor where someone has to solve the unsolvable and cut the red wire before it all blows through the roof.

So he finds a way to solve it. Not because he has the know-how, not because he is smarter or faster, but because no amount of self-induced bullshit can make the problem go away. It will stay there until it gets done.

This every-day-by-day-by-day-solve-it-or-it-blows type of experiences sure make you a more powerful professional, every day more prepared for anything that gets thrown at you.

But does it make you a better human being? How could it?

so you want to be an entrepreneur

April 21st, 2014

So you’re thinking of becoming an entrepreneur, right? Take a seat. Now, I supposed you’ve already heard all the good parts: freedom, being your own boss, fancy cars, maybe some nice suits, wordwide recognition and the subtle envy you can feel everytime someone asks you what you do for a living and you proudly say: I am an entrepreneur, I have my own company! You’ve heard them. But let me tell you some of the things you didn’t hear about entrepreneurship.

It’s the end of the month, you are sitting at the office with your great hand-picked team who are everything a manager could dream of. You take a glance at your expensive watch and you decide it’s time to call it a day, but feel the need to refresh your gmail one last time before you go home for the weekend, and see that you have one unread email. It’s from your accountant. You know that accountants don’t deliver good news. Ever. So it would be better if you didn’t open it, nothing is going to blow up until Monday morning.

A true entrepreneur

But you do open it. Not because you are a masochist, but because you are a true entrepreneur. A do-er, not a coward. You make things happen for a living, you push them forward. Or pull them, or whatever it takes to get them done! And it usually takes a lot.

So you open the email an there it is: the taxes that need to be paid on Tuesday morning the latest. You look at the sum and then you quickly check the online banking account to see how your cashflow looks like. You know what you’re going to see, but somehow, you are still waiting for a miracle. And sometimes miracles happen. you know? Just not today.

Today, the taxes are equal to the money in the bank, and that might be good news for Tuesday, but it’s also really bad news for Wednesday, when the salaries to your beloved hand-picked-everything-a-manager-could-dream-of team need to be paid.

No pointing fingers today. Or tomorrow.

Here goes your weekend. You have two full days to find a solution for this and another two days to make the solution work. It’s not the first time this happens, but it could be the first time you fail to find a solution. So you split your time between solving this and writing a speech in your head just in case on Tuesday morning you’ll have to tell your team that the money will be a little late this month. And, if you come to think of this, what you would be basically saying would be that their rent and money for food will be a little late.

Oh, yeah, and by the way, it’s your fault! There is no doubt about this. You are not an employee at a big company, so you can’t find yourself excuses by looking at your collegues, stupid company procedures or your boss. Remember, YOU are your own boss, just like you always wanted. :)

Sales not working? Maybe you should have fired the sales team by now. You hand-picked them, not the HR department, remember? Market going down? Someone (not telling who) should have seen this in advanced and should’ve taken measures.

If, God forbid, everything crumbles to pieces, some people will get fired, other people will leave because you can’t pay them enough, but there will be this guy who would have to stay and clean things up. It’s the entrepreneur, the do-er, the make-things-happen-guy. You still remember him, right? Oh, and by the way, it’s still the weekend.

This is how an entrepreneur’s end of the month  tipically looks like. Of course there are exceptions. Both positive and negative. And there are also other many challenges, this is just one of them. I know what some of you are thinking: this won’t happen to me. My company will work perfectly from day one. Well, it’s technically impossible, but I really hope you’ll be the exception entrepreneurs around the world have been waiting for. A glimpse of hope.

Freedom is not won, it’s traded

Being an entrepreneur myself and looking back, I feel like we have somehow failed the next generation of entrepreneurs. We were so blown back by the freedom we’ve had that we yelled it all day. And when you yell, people gather around you. We were honest but we didn’t show the whole picture. I think people need to know that entrepreneurship si not only about freedom, it’s also about hard work, compromises, giving up on things and taking risks.