What's So Hard About Building a Good Management Team?

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Most first-time entrepreneurs I know are risk-takers characterized by a can-do attitude and a fair amount of impatience with those who focus more on process or power than on achieving goals. Frequently, it is this lack of regard for process and hierarchy that drives these entrepreneurs to risk their livelihood and retirement on a new venture. Ironically, this maverick mentality can also make it difficult for entrepreneurs to assemble an effective management team -- a critical component to any successful company.

Entrepreneurs are typically good leaders who value vision, loyalty, and leadership in their colleagues. They often scorn "management," associating the concept with people who value position, salary, and power over doing the right thing. But leadership and management require two very different skill sets, both of which are essential to an organization's growth and success. A leader is like the medieval chieftain or warlord who fought side by side with his men, winning their loyalty and respect with his courage, skill, and commitment. The warlord recognizes the importance of each man and draws power from his personal relationship with each warrior. A manager, on the other hand, acts more like a modern-day military general, who has little contact with the soldiers he leads. The general directs his army with foresight and confidence, doling out strategy and discipline in doses that bolster the health of the brigade.

Organizations always need leaders -- individuals who can emotionally forge individuals into a committed team focussed on one goal. However, at a certain stage, organizations also need generals -- individuals who balance process and risk in order to maximize the organization's chance for success.

During the early years of Evolutionary Technologies International (ETI), I read every problem report and was aware of every customer's status. I reviewed all product plans and development schedules in detail. As we grew, that attention to detail was no longer possible. There were too many customers and too many projects, and I began to spend more time fundraising and addressing our channel strategy. My solution for this increasing level of complexity was to promote employees who had demonstrated talent and leadership. I counted on their judgment to make the right decisions and alert me to any topics that needed consensus across groups or that put the company at risk.

This strategy worked at first. Because we were a small team that had worked closely together, we shared much of the same knowledge about products, customers, and the market. But as our momentum increased, we added more and more people without this background and perspective. I always advocated promoting from within -- advancing individuals who were up to speed on our business and who had already earned the respect of their colleagues. In theory, this worked. In reality, the pace of business required my first managers to promote people who didn't share our common knowledge and who made decisions that weren't necessarily in keeping with our previous practices -- not out of malice, but simply because they didn't see the business in the same light as the old-timers.