tawandamusarurwa
Big Business Ideas
Stephene Chikozho
IN the early days of a new business, the most valuable skills a founder can have are entrepreneurship, vision to identify opportunities and willingness to take risks.
But as the business grows, demands change.
Every would-be African entrepreneur wants to be an Aliko Dangote, Elon Musk, Strive Masiyiwa, Tabitha Karanja, Jason Njoku, Sibongile Sambo, Tony Elumelu, Patrice Motsepe, Johan Rupert or many others, each of whom founded a large company and led it for many years. However, successful CEO-cum-founders are a very rare breed.
Disciplined management skills and corporate expertise are required to coordinate a growing enterprise. Some entrepreneurs are able to make the transition to leadership successfully, while others struggle.
As the business grows, its demands change. Entrepreneurship is needed to spark the business into life, and leadership skills are required to maintain long-term growth.
Management discipline is required to support that growth.
Founders must adjust from being sole decision makers to delegating, and make the transition from entrepreneur to leader. In many cases, entrepreneurs are identified as people who are nonconformist, driven and tenacious, as well as being passionate and focused, with an opportunist mind-set.
Some studies report entrepreneurs as mavericks, unafraid of failure and driven by a passion for success. While there is some overlap, absent from these findings are the traits that define good leaders and managers: organisation, an eye for detail, communication, emotional intelligence and the ability to delegate.
Effective leadership involves encouraging others within the company to realise their potential and excel.
Making the transition
Management can be broken down into three categories: managing by information, through people and through action. Many entrepreneurs have difficulty managing through information, as well as implementing data-based decision making; they often lack the skills to build the systems and communication networks on which large businesses are built.
Many African founders have shown an aptitude for strategy, but they have also been criticised for lacking leadership skills, for micromanaging and, common to entrepreneurs, for an inability to delegate and let managers manage. Researchers identify leadership, the ability of a start-up founder to transition from entrepreneur to leader as one of the major crises that African businesses face as they grow.
They suggest that successful growth often requires the employment of professional managers, who bring to the business an understanding of the requirements of financial markets, banks, and most importantly have the leadership skills needed to manage complex organisations.
Entrepreneurs may possess plenty of ideas, but it takes management discipline to turn those ideas into successful ventures, and leadership skills to move the start-up beyond its entrepreneurial roots.
The function of leadership is to produce more leaders, not more followers
Start-ups in Africa require the spark of entrepreneurship, but growth requires a different set of skills — a founder must transition from being a sole decision maker to being a disciplined manager and successful leader. Those who are unable to make this transition often need to step aside and let the professionals take over. But this is often easier said than done.
Inside the founder’s mind
The majority of founders from the African continent are usually convinced that only they can lead their start-ups to success. There is a great deal of truth to that view.
At the start, the enterprise is only an idea in the mind of its founder, who possesses all the insights about the opportunity; about the innovative product, service or business model that will capitalise on that opportunity; and about who the potential customers are.
The founder hires people to build the business according to that vision and develops close relationships with those first employees. The founder creates the organisational culture, which is an extension of his or her style, personality and preferences. From inception, employees, customers and business partners identify start-ups with their founders, who take great pride in their founder-cum-CEO status.
New ventures are usually labours of love for entrepreneurs, and they become emotionally attached to them — referring to the business as my child, mwana, ingane, nwa, pikin or mtoto — and using similar parenting language without even noticing.
Growing pains
Founders eventually realise that their financial resources, the ability to inspire people and passion are not enough to enable their businesses to capitalise fully on the opportunities before them.
They invite investors or venture capital firms to invest in their companies. In doing so, they pay a heavy price: They often have to give up total control over the enterprise.
Once the founder is no longer in control of the business, his or her job as CEO is at risk.
The first major task in any new venture is the development of its product or service. As was the case with many heroic African leaders and merchants in history, many founders on the continent believe if they have successfully led the development of the organisation’s first new offering, that is ample proof of their management prowess.
They think investors should have no cause for review and should continue to back their leadership. At that point, leaders face a different set of business challenges. The founder has to build a company capable of marketing and selling large volumes of the product and of providing customers with after-sales service.
The venture’s finances become more complex, and the founder-cum-CEO needs to depend on finance executives and accountants. The organisation has to become more structured, and the founder-cum-CEO has to create formal processes, develop specialised roles, and institute a managerial hierarchy.
The dramatic broadening of the skills the CEO needs at this stage stretches most founders’ abilities beyond their limits.
How long should a founder remain CEO?
Given the above analysis, perhaps, most founding CEOs are generally much better in the initial stages of the organisation’s lifecycle and they may struggle as their organisations grow more complex.
Challenges such as streamlining operations, lowering costs and managing an increasing number of employees, products, services, functions, geographies and customers have little in common with the leadership requirements of a start-up, and the increased visibility and dispersed ownership that comes along with going public only further complicates the role.
Founders and succession planning
In businesses, one way or another, succession will have to happen eventually, and it is likely to go a lot better if the founder CEO is involved from the outset in crafting and implementing the plan.
However, if the founder is not as excited about spearheading the effort, it is up to the board to take the lead, and when that is the case, it is vital for them to proactively involve the founder as much as possible.
Stephene Chikozho is managing partner and principal consultant for Urbane Create Agency, a strategy, marketing and advertising agency. He is also the business development and strategy consultant for Beyond Borders Logistics and Tsoka International. He writes in his personal capacity. You can follow him on social media (Instagram, Facebook, Twitter, LinkedIn) WhatsApp +263772409651 or email [email protected]
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