'The typical successful entrepreneur
is a mature and careful person
who fearfully recognises
that there is much more
he doesn't know about his business
than he likes.
He's thirsty for help
from any credible source.
He's in a hurry,
but only because time is precious.'

James MacManus,
Marketing Corporation of America.

Whether you're an employer
or an employee,
you will have to make more decisions
and assume responsibility for them.

HOUSANDS of managers, particularly those trapped midway up corporate ladders in vertically structured companies, face uncertain futures. Businesses, desirous of survival beyond the year 2000, are ripping up organisational charts and calling in hatchet men to slice off midriff executive flab.

Like most business trends, this one started in the United States, where companies - large and small -  peeled off layers of staff during the recent prolonged economic downturn. Corporations in Europe and the United Kingdom followed suit.

Now it's happening here.

Out to pasture

Many, if not most, of these consummate corporate players are too young to be put out to pasture. And they're too attached to the perks and perceived safety of job tenure to go-it-alone. So they'll seek new little function boxes in other corporate organisational charts.

But they won't find them.

 

Businesses  -
even big
businesses  - now
want people with
entrepreneurial flair.

They don't want managers. They want people with gumption and gall to run their own shows.

So, if you're already out on our ear or if you've survived the first round of head chopping but feel you may be next to find your head on the block, ask yourself a simple question:

'Do I have what it takes to be an entrepreneur?'

If you answer 'no' ... if all you want is a nice safe job that comes with a medical aid plan, a pension fun scheme and, possibly, a set of corporate wheels, you'd better start changing your attitude.

Fast.

So to stay in business and thrive, follow this ...

FIVE-POINT SURVIVAL PLAN

  1. Become an entrepreneur.
  2. Develop 'intrapreneurs'.
  3. Encourage employee initiative.
  4. Encourage the development of spin-off companies.
  5. Lacerate red tape.

In what remains
of the 1990s and beyond
the turn of the century,
corporations will need go-getters,
not mid-level
executive memo junkies.

Become an entrepreneur.

Before you can become one, you have to know what an entrepreneur is. There are almost as many definitions as there are management gurus, who seem to replicate with the rapidity of mushrooms in the veld after a Highveld thunderstorm.

However, let's start with a couple of dictionary definitions.

Collins Standard English Dictionary defines the word as 'an organiser of business or trade who brings land, capital and labour together for some definite commercial undertaking.' It's a definition you could apply to anyone from the chairman of the Anglo American Corporation to a wheeler-dealer in the less savoury parts of Johannesburg's Jules Street.

Reader's Digest Reverse Dictionary is more in tune with the times. It describes an entrepreneur as: 'Businessman undertaking ventures involving risk and initiative.'

The operative words in that definition are risk and initiative.

Bearing this in mind, what are your chances of survival as a refugee from old-fashioned pyramidal structures?

Pretty good, according to Peter Drucker, Austrian-born doyen of business consultants. He claims that people brought in the traditional management culture of big business make the best entrepreneurs.

He argues that entrepreneurship is a discipline. And like all disciplines, you can learn it. Entrepreneurship, he says, requires the ability to build and manage a growing operation, because if an operation doesn't grow, it's dead.

'While the archetypal entrepreneur relies on instinct and reflex, the trained manager, versed in corporate culture, prefers deliberation and considered judgement,' Drucker maintains.

Not all management gurus agree.

One who doesn't is Tom Peters. He reckons that if you've been schooled as a manager in big business, your chances of succeeding in the new business world aren't bright.

Performing one function

Too many of them [traditionally trained managers] lack overall management perspective. They've spent 80% of their careers performing one function.

Schooling
in conventional
retail management,
entrepreneurial flair
and a large dollop
of chutzpah
ensured success.

'Many who spent their careers as staff specialists are deficient in people skills. They don't have the fire in their bellies or the willingness to take substantial risks; the boundless determination to beat the big challenge.'

The fiery American consultant isn't always right. Sometimes he doesn't even come close. To prove my point, you need look no further than Raymond Ackerman.

In his formative business years, he toiled for the Greatermans Group  - still a sizeable fish in the South African corporation pond. He parted company with the group in 1965 and, shunning conventional wisdom, took over Pick 'n Pay, a small supermarket in Mowbray, Cape Town. Within a few years, he had built it into a nation-wide retailing legend.

Liberally translated from Yiddish, chutzpah means audacity, insolence, gall. It's one of the staple qualities of the true entrepreneur. The former Prince of Wales, the late Prince Edward, reputedly had it in good measure  -  even before he became entangled with the American divorcee who cost him his throne.

Thrift and frugality

Historians report that Edward's father, King George V, was well-known in royal circles for his thrift and frugality. And he tried to instil these qualities in his eldest son. However, the Prince, much to his father's dismay, was something of a spendthrift.

While at school, Edward wrote to his father to plead for an increase in his allowance. The King responded by sending his son a stern note of reproval. He urged the Prince to change his ways and 'learn to think like a businessman'.

Couriers subsequently delivered a note from Edward to the King at Buckingham Palace. It read: 'I have taken your advice. I have just sold your letter to a collector for 25 pounds.'

That's entrepreneurial chutzpah. Here's another example.

When the parents of eight-year-old Samantha three a party, they allowed their little daughter to stay up late and watch the fun.

But there were strings attached.

Samantha had to receive and hang up the guests' coats as they arrived. Unobserved, she quickly slipped into the kitchen for a saucer. She then place a lone 20-cent coin in it and left it on a ledge in the hallway. When the first guest arrived, he gave the little girl his coat and, noticing the coin, put a 50-cent piece in the saucer.

After the party, when the last guest had departed, Samantha's astonished parents found her counting her profit for the evening: R22,70.

Little Samantha displayed all the qualities essential to successful entrepreneurship:

  • initiative;
  • the courage to tackle risks;
  • the desire to provide first-class customer service;
  • the desire to make money, and
  • chutzpah.    

Businessman of the Year

These five elements form the only common link between the success of urbane, well-educated Ackerman and that of fellow South African go-getter Herman Mashaba, 1994 Businessman of the Year.

Ackerman challenges Peters' entrepreneur theory. On the other hand, Mashaba, who guides the destiny of the Black Like Me range of beauty products, almost makes a mockery of Drucker's contention that managers trained by big business make the best entrepreneurs.

After matriculating, Mashaba needed to find the cash to survive. So he took to the streets. Becoming a wheeler-dealer, he traded  -  sometimes illegally in terms of the country's repressive racial laws  -  in anything on which he could lay his hands.

'When I think how the government plotted to keep us [blacks] stupid, it makes me mad with rage,' he told Linda Shaw in Sunday Times Magazine (January 27, 1995). 'Now I find myself in a situation where I have to run an entire company with no idea of how to do it. I have to rely on my instincts, and hope the advice I'm given is good.

'But, strictly speaking, I'm unqualified for the job I do. And that's scary. Not to mention frustrating.'

Mashaba is the type of hands-on business person who American business journalist Tom Hickman calls 'a seat-of-the-pants, shirt-sleeve opportunist'. But Mashaba also fits Drucker's more formal definition of an entrepreneur  -  at least to some extent  -  in that he's not afraid to ask for help.

As the internationally renowned management consultant puts it: 'He knows enough to know what he doesn't know.'

Characteristic of the entrepreneur breed described by MacManus in the quote at the head of this chapter is Sol Kerzner. He introduced entertainment-starved southern Africa to better-than-Las-Vegas-style night life by providing raunchy shows, casinos and five-star hotels in the now defunct TVB states.

Belying his pseudo-American accent, Kerzner stems from a typical middle-class white South African background. Mom and Dad ran a popular family hotel in downtown Durban.

After university, the young Kerzner saw the potential in the then grossly under-exploited and under-developed tourist industry. And, despite criticism, he took a number of breathtaking risks to launch a complex of luxurious hotel, casino and entertainment resorts that today extend far beyond the shores of Africa.

I said earlier that Ackerman and Mashaba share five common attributes. I was wrong. There are six. And they share it with Kerzner and all successful entrepreneurs.

Entrepreneurs make things happen. And they get personally involved in the action.

So activate yourself ...

BECOME AN ENTREPRENEUR

DEVELOP 'INTRAPRENEURS'.

An American business writer, Mark Hendricks, describes employed people who initiate their own projects in-house as intrapreneurs. 

'Advocates of intrapreneurship,' he reports in Entrepreneur (July 1994), 'say it can keep restless would-be entrepreneurs satisfied as employees, tap reserves of creativity and talent that would otherwise lie fallow, and allow companies to do things they couldn't otherwise consider.'

It isn't a new idea. Harvard Business Review mentioned it back in the early 1970s. And bookseller-cum-business author Gifford Pinchot outlined the concept in his book Why You Don't Have to Leave the Corporation to Become an Entrepreneur (Harper & Row).

Pinchot, who runs a small training consultancy outfit in partnership with is wife in Branford, Connecticut, doesn't just sprout theory. He put his money where his mouth is when he gave an employee the nod to freelance from within the company.

Linda Desrosiers takes home a monthly pay cheque signed by Pinchot from the training consultancy. But he encourages her to sell the books he has written on the side for a share of the profits. The arrangement calls on Desrosiers to rent a warehouse to store inventory for her own account and pay her own packing and postage costs. She also sends out her own invoices and collects the money when it falls due.

Closer to home

Let me give you another example  -  this time a lot closer to home.

Nicole Sinoff, who now runs her own successful advertising consultancy, wasn't exactly an entrepreneur. And she wasn't exactly an employee.

She was both.

Officially Nicole was an account executive with Adlab, an ad agency I established and ran in Johannesburg for several years. Although I was responsible for paying her salary, I encouraged her to think like an entrepreneur. So, like any self-employed business person, she identified her own markets, made her own pitches to potential clients, contracted creative talent to render the ads, dealt with reproduction houses and media representatives and made arrangements to collect moneys due.

And, of course, she reaped her share of the profits when things went well.

While Nicole is now a fully-fledged entrepreneur, when she worked for Adlab she fitted the Pinchot description of an 'intrapreneur'  -  a person who runs an entrepreneurial business inside a business.

So, if your employees have the aptitude ...

LET THEM GO FOR 'INTRAPRENEURSHIP'

ENCOURAGE EMPLOYEE INITIATIVE.

The arrangement I had with Nicole and the arrangement Pinchot had with Linda were both informal. In both cases the lines dividing employer and employee were far from clear.

One such company is the $17-billion multinational giant Xerox Corporation. Xerox looks very carefully at proposals for new business undertakings put forward by employees. In 1989 it even set up a special division, Xerox Technology Ventures, to concentrate solely on appraising and funding employee-generated ideas that have profit potential but don't quite fit in with the company's mainstream business strategy.

Even large
organisations,
tiered on relatively
formal corporate
structures, are beginning
to realise the value
of exploiting employee
initiative. 

A Xerox engineer, Denis Stemmie, invented a portable, battery-powered, plain paper copier. Xerox Technology Ventures thoroughly checked out his idea, liked what it found and financed product development.

The benefit to Xerox: it had an innovative product to penetrate a market segment that it hadn't thought of.

So don't give ideas from your employees the brush-off ...

ESTABLISH AN IDEA BANK AND GIVE EVERY IDEA YOUR FULL CONSIDERATION
 

 ENCOURAGE THE DEVELOPMENT OF SPIN-OFF COMPANIES.

When Xerox Technology Ventures agreed to finance Stemmie's plan to produce a go-anywhere plain paper copier, it urged him to manufacture and market it himself under another name. So,
with the Xerox Corporation's blessings and material help, the engineer established a spin-off company.

QuadMark Copiers made its début in the market by unveiling its $349 portable copier at the Las Vegas Consumer Electronics Show in January 1994. As part-owner of the fledgling company, Xerox will share in the profits. In return, Stemmie can rely on practical help from Xerox.

Although the multinational supplied the start-up capital, QuadMark isn't part of Xerox. Financially, it has to stand on its own two feet. If it doesn't hit its sales and financial targets, 'big brother' is unlikely to bail it out. Stemmie will either have to find additional capital  -  probably by selling off some of his shares  -  or by folding the operation.

So, if it looks good ...

LET IT FLY SOLO

LACERATE RED TAPE.

Nothing strangles initiative, innovation and creativity more than red tape.

Red tape is a
symbol of the worst
type of bureaucracy
in both the public
and private sectors. 

When active, it's characterised by tortuous, inefficient paths of two-way communication.

The path from the top downwards is often choked with meaningless directives of the 'thou shall' and 'thou shall not' type.

And despatches sent on the upwards path, which seldom works, are commonly ignored.


At many South African companies, plans are hatched in the boardroom. Captains of industry and commerce firmly discourage the breeding of ideas at lower echelons.

But progressive companies overseas have discovered an untapped source of gold.

They're siphoning off a rich crop of ideas that have long remained buried in boiler rooms.

Pay dirt

One of those to strike pay dirt is Jack Stack, chief executive officer at Springfield Remanufacturing Corporation. He has introduced what Jay Finegan describes in Inc (March 1995) as a revolutionary management system based on the philosophy that companies can thrive if they tap into people's universal desire to win.

Stack claims he snatched Springfield, formerly a division of International Harvester, from the jaws of doom in 1983 by giving everyone in the company a say into how to run the business plus a stake in the financial outcome.

In 1979, the International Harvester board told Stack, then employed as the plant manager, to shut down Springfield. Four years later, he and 12 fellow managers offered to buy out the division for $9-million in what he calls 'one of the most lopsided, leveraged buyouts in corporate history'.

The 13 new owners managed to scrape up only $100 000 between them. So they had to borrow $8,9-million  -  a debt-to-equity ration of 89:1.

If you
implement
an 'open door'
policy and invite
employees at all
levels to pop in and
kick new ideas around,
you'll be surprised at
the constructive
suggestions that will
filter through
from the shop
or factory
floor.

'Brain dead'

Although the bank they approached thought that they were 'brain dead', it lent them the money. At the end of the first three months, according to Stack, the company had 'a negative net worth'.

To stave off almost certain oblivion, Stack and his co-directors created a planning ritual that focused on controlled, predictable growth and operation, and the creation of wealth.

Nothing new or earth-shattering so far.

Almost every company in existence  -  and most that are no longer with us  -  have the same focus. What was different about Springfield was the new management's insistence that every employee contribute to planning. And to encourage participation, the company introduced a bonus that rewarded those who helped in planning and hit the targets they set for themselves.

Stack calls his system of control 'open-book management'.

The system:

  • gives every employee unimpeded access to the company's financial information;
  • encourages workers to monitor the progress of their  plans, and
  • includes a stock ownership scheme that gives every  employee a stake in the financial success of the company.  

Managers and
factory floor
supervisors get together
with all the workers every
fortnight to discuss the
company's
financial status.

'There's so much finger-pointing in business,' Stack observes. 'People say "It's their fault," or "Those guys in sales are bums". But if you get people to buy into the plan, they develop a sense of ownership. It becomes their plan.'

Springfield executives consult employees on everything, even proposed capital expenditure.

Stack points out that the workers know what the figures mean because the company trains them to think, act and plan like owners. Springfield, in fact, spends more on the financial education of its workforce than it does on job or skills training.

Why?

Does it work?

Let the figures speak for themselves.

When Stack took over as chief executive officer in 1983, the company turned over $16-million a year. This had rocketed to $105-million by 1995. Over the same period, the workforce grew from 119 to 750.

So slash the tape that constricts and ...

Financially
aware employees
know what is at
risk, what is to be
gained and how
they can make a
difference.

LET YOUR PEOPLE HELP WITH PLANNING

If you want to run your own show in a company with a streamlined 'new look' profile, you're going to have to...

learn to lead, not manage.
Previous   Next

  Authors Note
    Introduction: Prepare Yourself for the New Business Order
     
1. The Evolution of Change
     
2. Give your Company a 'New Look' Profile
     
3. Run Your Own Show
     
4. Lead, Don't Manage
     
5. Cross Train Yourself
     
6. Become a Self-Contained Profit Centre
     
7. Think Network
     
8. Benchmark Yourself
     
9._ Have Heart
     
  Return to FunZone!