The founder's dilemma - managing growing companies - Entreprising CEO

Chief Executive, The, Jan-Feb, 1995 by Robert Donnelly

There are distinct phases in the natural evolution of all companies, with rather predictable time frames from start-up to maturity. Since businesses exhibit all the idiosyncrasies of the people who run them, they generally evolve in similar ways.

All businesses begin with a founder who develops a solution to a problem. Steve Jobs, who pioneered the personal computer, and Bill Gates, who created user-friendly software, are but two examples. Eventually, if successful, the business evolves into a large enterprise such as Apple or Microsoft that offers a range of products and services. The founder's dilemma is how to manage the transition, sustaining creativity while introducing techniques that maintain agility and focus, and prevent the company from aging prematurely.

Part of the solution lies in the creation and implementation of a succinct, clear, and motivational statement of the founder's vision and mission. Charles Smith dreamed of overnight package delivery, and FedEx had a theme: Use us "if it absolutely positively has to be there overnight." And others, from both large and small companies:

* Disney: "Our purpose is to make people happy."

* Merck: "We are in the business of preserving and improving human life."

* Readers Digest: "Creating products that inform, enrich, entertain, and inspire our customers worldwide."

* Matrix Essentials: "Just do business with salons only."

* LensCrafters: "Lenses in about an hour."

In the beginning, the founder and his or her loyal "soul brothers" - those co-workers who possess similar expertise and share the same business vision - work diligently to formulate their mission. However, as the company expands and new employees are hired, the vision often blurs, and the founder becomes increasingly busy dealing with organizational dynamics. The more people involved, the more ideas thee are on how to run the business. Eventually, the founder doesn't have time to explain the ultimate goal to all employees. Look at IBM: Trying to get any message across in a company that large is like walking through an ocean of peanut butter. One solution is to hold an annual, company-wide planning meeting that re-emphasizes the mission.

Another problem young companies inevitably run into is difficulties with cash flow, production, marketing, and human resources that require hiring experienced professional managers who have expertise in dealing with crises. This expansion often leads to fragmentation of the company's mission and infighting among the managers, founder, and soul brothers. Thus, the company's focus shifts from satisfying the customer and the marketplace to dealing with internal infighting. Unless the founder is a prudent planner, all this usually happens somewhere between the 10th and 15th year of existence.

A current example of seat-of-the-pants management is Ben & Jerry's, the Waterbury, VT-based ice-cream maker. The social assessment section of the company's 1993 annual report states, "No one at Ben & Jerry's has ever managed a $150 million company. People are receiving their training on the job, and in many places, it shows."

Frequently, a start-up team's inexperience, coupled with the rapid growth the founder sought, can be deadly. If the situation is not dealt with quickly and successfully, a growing company with great technology can easily become a victim of its past success. Once that happens, both technology and the competition can pass it by.

The key is to continuously focus your team on the company's purpose. You need to connect that purpose to the team's values - such as customer satisfaction, quality products, and good service - so there is no temptation to stray from the goal. For example, Paul Servino, founder of Billerica, MA-based Wellfleet Communications, makes it clear to all employees that the firm's sole mission is to link local area networks for companies. Thus, Wellfleet's employees don't waste time on issues unrelated to that mission. Perhaps most important, the personnel manager, responsible for hiring, must thoroughly absorb the company's mission and values, so he or she can imbue all new workers with the same goals and values.

Dean Butler, one of the founders of Cincinnati-based LensCrafters and now head of start-up Vision Express in Nottingham, U.K., seeks to offer products and services that set it apart from its competitors. To this end, Vision Express stores offer a superior quality-price relationship and remain open until 9 p.m., unlike those of their competitors, which close at 4 p.m.

If you're planning to start a business - or you're struggling through corporate adolescence - always remember this rule: Create a mission that captures your vision in a simple, exciting way and stick to it. Then nurture it by educating new employees. Most important, make sure you - and all your employees - live it every day.

Robert M. Donnelly is chairman and managing partner of Alpha International Management Group, a New York-based consulting firm that works with growing companies.