Newsletter #3: Not just for Entrepreneurs. For Managers too.

Last week’s newsletter received an even more positive response than the previous week, so thank you all very much for all the great feedback.  I introduced a little scorecard at the end of the last newsletter so you could give me some feedback on the relevance of the newsletter. Last week’s scored a resounding 4.8 stars. Pretty impressive. Please let me know how you find these newsletters – your comments help me keep it relevant and real.

One of the things that generated a lot of discussion unexpectedly from last week’s letter was the bit about coffee. It’s becoming as personal as religion and politics. For all those whose favourite coffee shops I didn’t mention, thanks for sending in your comments. I’m going to have to learn how to mark off spots on Google Maps and publish Adam’s List of recommended coffee shops around the world.  My favourite comment, though, was from Barry in New York who doesn’t have a cappuccino machine at home but uses a high-speed blender to heat and froth the milk. You’re going to have to post a video; this is going to be a must-see!

I got carried away in the last newsletter, and promised to pick up on the last point,, which is where I’ve carried on this week’s amazing insights to life, the universe, coffee, and everything else.

  • Most people in management positions weren’t promoted because they’re good at being managers.
    One of the modules I present on management development programs to junior and mid-level managers representing many of the prominent companies on the South African and global landscape, is called “General Management” and is, I guess the introduction to management, or Everything you Ever Needed to Know about Management, but Never Knew you could Ask. I usually begin with a question that stems from Small Business Management 101 – a book called the E-Myth Revisited by Michael E Gerber.  It’s the must-read for anyone in business or wanting to go into business for themselves.   One of the staggering statistics quoted early in the book is the percentage of businesses that fail in the first 5 years. When I ask the class to take a guess, I get answers ranging from 60% to 80%, and they’re all wrong. Only one out of every twenty five businesses makes it past the first five years. That means 96% of small businesses fail in the first five years.  For small business owners, this should be a wake-up call.  For managers in my classroom, it usually creates an interesting statistic to add to their artillery of interesting facts that don’t concern them but that make them sound really smart at braais (barbecues for those outside the borders or SA).  But there’s a reason I ask this question to managers in the corporate world.The discussion then explores why small business failure is so high.  I get suggestions from the class:  Cash flow problems. Lack of marketing. Lack of this, lack of that…and all of which are true, but the real reason goes right to the heart of what Gerber calls the E-Myth, and it goes something like this:

    Spot the error or the common misperception in the following statement: “Most small businesses are started by entrepreneurs in the hopes of making a profit.”

    The discussion in the classroom then picks apart every word in the sentence. Common suggestions begin with the words hope and profit.  My answer to those two is that nobody has a crystal ball, and nobody knows for sure, so of course there’s an element of speculation or hope in the initial phases of starting a new venture. And of course businesses are started in the hopes of generating a profit – have you ever met someone who started a small business in the hopes of making a loss? Or Breaking even?  So after elimination of pretty much everything else, the only word left on the board is entrepreneur.

    According to Geber’s research, and verified by my own encounters with small business, most small businesses are not started so much by the Entrepreneur, but by what Gerber refers to as the Technician, or a person with a technical skill. An accountant leaves his job (or gets retrenched more likely in today’s economy) and starts up his or her own accounting practice.  The qualified electrician or plumber or builder opens their own business offering their technical skills as a service.  Gerber calls that the result of the entrepreneurial seizure, which is based on the fatal assumption.   I love the description of the Entrepreneurial Seizure.  You can just imagine the scene at the bar when the hopeful individual says, “I’ve got a great idea…I’m going to start my own business.  Hell, I can do it way better and I can make far more money…”  And then more rounds of drinks are ordered, following which people discover they have hidden talents and can dance like a Beyonce or sing like Sam Smith.  Or do the Hora in a hammock, (which actually happened) which didn’t end well.

    But the truth is that the Entrepreneur doesn’t start the business in most cases. It’s the technician who starts the business because they make the fatal assumption:

    Just because you know how to do the technical work doesn’t necessarily mean you know how to run a business that produces the product of that technical work.”

    Think about many of the small businesses (let’s choose coffee shops, seeing as they’re an integral part of this newsletter) with which you’ve had personal experience. Coffee shops, particularly those that are not franchised, sometimes get it right, and sometimes get it horribly wrong.  Sometimes the food or the coffee is just right, and sometimes, it’s slow, or overcooked, of the order is wrong, or the coffee is too milky, or they’ve boiled the froth and ruined the coffee.  (There’s cappuccino secrets in there – the milk needs to be between 65o and 75oC (150 – 170F) or it boils and spoils).  Sometimes you get your food in minutes, sometimes you wait hours. And it all boils down (if you’ll excuse the pun) to management of the operation.  Just because the owner of the coffee shop knows how to make a cappuccino, or bake a cake, or make a great salad, doesn’t mean they know how to run a coffee shop.

    Then the million dollar question hits the classroom:

    “How many of you were promoted to your positions of management because you are great managers?”

    This is usually where the smiles stop, because 90% of the people in the classes I’ve taught were promoted to positions of management because they were good at their technical function, not because they were great managers.  These are middle managers of banks, insurance companies, manufacturing firms, finance houses – the trend runs across the spectrum.

So what does that mean?  Managers and Entrepreneurs alike face the same challenges. The only difference between the two is that those in corporate employ have a more robust safety net compared to those who are out there on their own.   Both are managers of people, strategy, marketing, finance, and operations, and both need to master similar basic disciplines of management in order to be more effective and produce successful results, be that on the KPI’s at your next performance review, or on your income statement at the end of the month.  Understanding these principals made the difference between working a 25 hour day to fight fires for a handful of customers, and being able to service more than 5 times the number of customers in less than one tenth of the time, which leaves me free to grow the business and add value to my customers.

Books and Writers
Some readers asked for more about my writing (and your writing, if you’ve got writing on your bucket list).  But once again, this newsletter has just passed the comfortable length you can absorb whilst enjoying the average cup of coffee. Although, if it’s an average cup of coffee, it’s not worth drinking. Coffee should be exceptional.

I’ll pick up on this next time, but I did spend the weekend working on the exciting ending of my third novel which I completed yesterday.  Writing is a great creative avenue, but it can become a job, and as such, you need to manage it like a deliverable. I try to write 1000 words a day (apart from this newsletter), and sometimes I battle with writer’s block, just like every other writer.

Writer’s block is a signal that your creative energy needs to reboot. You’ve been at it too long. Sleep on it, drink a glass of red wine, have a whiskey, get out, go play tennis, or soccer, or ride a bike, go for a run, take a walk but clear your mind completely, and stop trying to force yourself to come up with a solution. Leaving the problem allows your mind to wander, and you’ll think of something soon enough. Now I’m off begin editing of novel #3.

If you haven’t read my first two books, visit www.adamrabinowitz.co.za.   Lost Soul – Immortality is available for Kobo and on Amazon, as well as on the shelves Exclusive Books, and  Porter’s Rule: Slave to the City is available on Amazon, and will be released in softcover just in time for Christmas.

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