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The Guiding Principles of Entrepreneurial Success: The Principles

Digital Library > Building and Inspiring an Organization > Leadership “The Guiding Principles of Entrepreneurial Success: The Principles”

Six guiding principles of entrepreneurial success were derived from a series of entrepreneur symposia held in 1991 and 92.

Based on extensive analysis of the videotaped symposia and the notebooks from the entrepreneurial shadowing, the research team discovered six guiding principles of entrepreneurial success. These six principles represent the essence of the Emergent entrepreneurs’ success in getting past the threshold dividing the smaller Emerging entrepreneurs from those who have fulfilled the promise of size and sustained growth. This threshold was labeled the "Brick Wall". It is the critical point of transition in the growth and development of an entrepreneurial company.

Statistics indicate that many startup firms manage to struggle successfully through the first year or two of their existence. However, something happens soon after. Sales level off, margins decline, cash flow stalls, and competitors begin to pay attention to that early success. Only a few entrepreneurs survive this critical period, or, in other words, manage to get over the brick wall. This brick wall is the critical boundary between an Emerging entrepreneur and Emergent entrepreneur.

The research team, discovered 6 principles for overcoming the brick wall and making the transition to sustained growth. The successful entrepreneurs revealed a consistent pattern of events that served as indicators for recognizing the brick wall and the demand for change in their companies.

Some of the key points the entrepreneurs made had to do with recognizing the signs of the brick wall. For example, trying to do everything and getting burnt out, or working day and night but with no positive effect on sales, being unwilling to make the investments required to grow, or the lack of understanding of pricing for growth. As new companies hit the brick wall, successful entrepreneurs warn that growth must be re-ignited or business failure may result. With growth comes change. Frequently, Entering and Emerging entrepreneurs fail to realize change must occur within themselves as well as how they run their company. These necessary changes are presented in the 6 Guiding Principles for restoring entrepreneurial success.

Table 10 lists the six Guiding Principles to reignite business growth and restore entrepreneurial success. Each principle has several maxims that further specifies the general concept, each of which will be summarized in turn. These principles and maxims represent a "best practices" composite of the successful Emerging and Emergent entrepreneurs. What follows is not intended to represent a typical successful entrepreneur.

PRINCIPLE 1: REINVENTING THE VISION [top]

Successful entrepreneurs said that the entrepreneurial vision must be reinvented. They view their vision of the company as a guide or "big picture" that steers and aligns the activities of the company and the employees. They say that their visions changed as the company matured. Many Entering and Emerging entrepreneurs have a simple "vision" of a positive P&L statement. The Emerging entrepreneur frequently has a more abstract picture of where he/she sees the company going. A clear, albeit abstract, vision is critical for providing direction for the entire company.

Maxims

  • Use the vision to motivate and challenge yourself and your people.
  • Imagine a vision of excellence.
  • Change the vision to take advantage of opportunities.
  • Let your customers and employees shape your vision.
  • Use the vision to create a common purpose.

Maxim 1: Use the vision to motivate and challenge yourself and your people.

Successful entrepreneurs feel a strong need to be challenged, as well as the need to have a goal or a dream to strive for — a moving target of sorts. Using the vision to channel energy into new and exciting directions provides a source of motivation for successful entrepreneurs and their employees. They use their vision for the company to challenge complacency and create a reason and the necessary focus to move forward and grow.

Maxim 2: Imagine a Vision of Excellence.

Successful entrepreneurs distinguish themselves from those who are unable to overcome the brick wall by their intense drive to create the best company possible and excel for reasons other than just personal or financial gain. They have role models, short-term and long-term, and know exactly what and where they want their companies to be. Achievement of excellence in their companies is a key source of enjoyment and satisfaction, as well as motivation.

Maxim 3: Change the vision to take advantage of opportunities as they arise.

Successful entrepreneurs say that their visions changed as their companies matured. Changing technology, changing competitors, and various problems all create new perspectives and new opportunities. The successful entrepreneur’s vision is actively adjusted as necessary. Their visions started out based on what they saw as possible given where their businesses were at the time. As their businesses grew, the successful entrepreneurs’ visions grew. The continuous shaping of their visions allow successful entrepreneurs to see opportunities past the brick wall.

Maxim 4: Let your customers and employees shape your vision.

Successful entrepreneurs are concerned about such things as the values and character represented by the company and the employees, as well as the standing of the company in the local community. Values and character, they feel, are important concerns to their customers and employees — their greatest assets. As a result, successful entrepreneurs allow their concern for customers and employees shape their vision in an aesthetic sense. In turn, the response of customers and employees reinforces the entrepreneurs’ thinking.

Maxim 5: Use the vision to create a common purpose that tells your people where you want them to take your company.

Successful entrepreneurs stress the importance of communicating their visions for the company to everyone in the organization. They say that employees must be motivated and aligned toward a common purpose to create a unified front. A focused group of employees, with everyone moving in the same, desired direction, was a key factor in their growth. It is understood that the plans will likely be adjusted along the way, but the destination is known by all.

PRINCIPLE 2: SUCCESS WITH PERSISTENT OPPORTUNISM [top]

Always keeping an eye open for opportunity and positive change is the earmark of successful entrepreneurs. Such characteristics as persistently asking why deviations occur and how they can be prevented or exploited, and an incessant drive to move forward are typical of successful entrepreneurs. It is not a gambling-type of mentality. It is a calculated opportunistic sense of action that is peculiar to successful entrepreneurs. The inclination of opportunity hunting is maintained throughout their career and does not end with the initial founding of the company. Successful entrepreneurs continually seek opportunities within and outside the realm of their current business to create growth essential for long-term success.

Maxims

  • Exploit the changes in patterns.
  • Scan everything to know the patterns.
  • Respond to opportunities in problems … your own, and those of your customers, vendors and competitors.
  • Never be comfortable with where you are.

Maxim 1: Look for changes in patterns and exploit the revealed opportunities.

Successful entrepreneurs do not pre-plan every move they make. They allow themselves room to react to opportunities that may suddenly reveal themselves. Successful entrepreneurs view the deviations or problems they see within and outside of their organization as potential opportunities for growth. There is a strong drive to constantly move forward. Continually seeking and exploiting opportunities is a trademark of successful entrepreneurs. Sometimes, noticing an opportunity in a pattern is luck. For successful entrepreneurs it is part luck, and a lot of pattern studying.

Maxim 2: Scan everything to know the regular patterns so that you can apply a successful concept to different situations.

Successful entrepreneurs devour information on their industries. They keep abreast of new and prevailing trends and technologies in their current and related industries. This is the source of discovering new opportunities. Successful entrepreneurs are always looking for new markets, new applications, new products, or a new twist on an old concept. This scanning behavior is more than just a past time among successful entrepreneurs, it is part of a habit. Another part of that habit is to respond to the opportunities they find.

Maxim 3: Respond to opportunities in problems … your own, and those of your customers, vendors, and competitors.

Successful entrepreneurs do not see problems as barriers. They see them as opportunities for improvements and new businesses. An optimistic mentality prevails among successful entrepreneurs. They are not deterred by temporary setbacks in their ventures. According to successful entrepreneurs, the various problems that they have, and those that their customers, suppliers or competitors face all represent a wealth of potential opportunity waiting to be discovered. It is all a matter of perspective.

Maxim 4: Never be comfortable with where you are.

Successful entrepreneurs proactively seek out their future. They are always looking ahead and asking "what’s next?" They believe that growth will not happen if they are satisfied with the status quo. Successful entrepreneurs have certain targets in mind as they grow their companies but they never stall out when they reach one of their goals. In a constant quest for the new and the challenging, these entrepreneurs are not satisfied with scaling only one wall. Opportunities are challenges to learn new things. Successful entrepreneurs prefer the challenge of growth compared to a comfortable plateau.

PRINCIPLE 3: SURRENDER SOVEREIGNTY [top]

This principle says that the entrepreneur must change his or her management style in order to get over the brick wall. Most successful entrepreneurs say this is the most challenging change they had to undergo. A transformation from a hands-on management to a professionally run company is a core theme heralded by successful entrepreneurs. They say there is a point of development when it is physically and financially infeasible to continue doing everything themselves. Functional specialists are needed to overcome the brick wall.

Maxims

  • Surrender the sovereignty of decision making.
  • Hire management specialists to get back the fun of being an entrepreneur.
  • Align people in the fight direction.
  • Motivate and empower.
  • Adapt and grow your management style.

Maxim 1: Surrender the sovereignty of decision making.

Successful entrepreneurs say that one of the most difficult challenges for them was to let go and turn over some of the authority for making decisions to others in the company. They understood their role had to change to one of coordinating efforts and leading the company. Starting early on, a company requires hands-on management, with complete involvement of the entrepreneur in everything. Getting over the brick wall requires just the opposite. Successful entrepreneurs said that it is necessary to recognize, and then be able and willing to let go, listen to, and work with the people they hire. These are the people who will help make the transition to growth.

Maxim 2: Hire management specialists to get back the fun of being an entrepreneur.

Surrendering sovereignty does not mean turning the company over to somebody. It means hiring management specialists. Successful entrepreneurs described again and again how they reached a point where they were working 16 hour days and running every aspect of the company, with indications that each extra hour of their time was paying back less and less. It was no longer fun being an entrepreneur. Hiring specialists enabled them to get back the fun of being an entrepreneur and lead the company to the next level of growth and fulfill their visions.

Maxim 3: Align people in the right direction.

Rather than concentrate on the day-to-day operations of the company, successful entrepreneurs entrust these details to the specialists, and work on aligning and focusing their employees in the right direction. Again, surrendering sovereignty does not mean relinquishing control. Nor is it purely delegation of authority. It is also the alignment of thought processes of those to whom the entrepreneur transfers authority. With proper alignment and maintenance of the alignment process, they still share in the decision making. Successful entrepreneurs reduce resistance to change and overcome the brick wall by telling the people where they want to go, by persevering, and by working harder than anyone else. Along those same lines, they stress the importance of leading the company and getting the people excited about reaching the next level of objectives.

Maxim 4: Motivate and empower.

Successful entrepreneurs say that they could not get over the brick wall by themselves. They needed help from others. They also say that it is more than simply hiring laborers and giving them a job to do. To lead the company over the brick wall, successful entrepreneurs say that it is important to motivate the people by recognizing them as individuals and allowing them to share in the problems and successes of the company.

Maxim 5: Adapt and grow your management style as your company adapts and grows.

This entire process of surrendering sovereignty is an interactive process between the entrepreneur and the company. Successful entrepreneurs say that they changed as the demands of growth and of the company required it. However, these changes in management style represent premeditated commitment to change. What distinguishes successful entrepreneurs from those who are unable to overcome the brick wall is the fact that the former recognize they too must change along with their companies. Growth requires successfully adapting and personally growing.

PRINCIPLE 4: BECOME YOUR COMPETITORS’ WORST NIGHTMARE [top]

Successful entrepreneurs seek to become their competitors’ worst nightmare through customer satisfaction. They consistently indicated superior customer service as their core competitive advantage over the competition. A flexible and aggressive posture is necessary to satisfy the customer. In fact, it is necessary to maintain viability and achieve growth. Successful entrepreneurs said that the key is to make the satisfaction of customers the central focus of the company, with no boundaries on the imagination as to how or how much to satisfy customers.

MAXIMS

  • Create new standards for customer satisfaction.
  • Make satisfaction synonymous with your company name.
  • Create a customer orientation within the company.
  • Create and use a value system focused on satisfying the customer

Maxim 1: Become your competitor’s worst nightmare by creating new standards for customer satisfaction.

Satisfying the customer means going the extra mile and being willing to break the industry norms on expected service. Successful entrepreneurs never do just the minimum when it comes to service. They beat the competition hands-down on customer satisfaction and use this as their niche. Successful entrepreneurs set new standards and then use their service capabilities to catapult themselves over the brick wall. They recognize that customers will remember when they go out of their way to satisfy them. Perhaps more important is that customers never forget suppliers who do not satisfy them.

Maxim 2: Make ‘satisfaction’ synonymous with your company name.

Successful entrepreneurs try to create an image for their companies that tells the customer: We know your name, we know who you are, you are important, and we know how to please you — watch us prove it! Doing business with a successful entrepreneur’s company is synonymous with satisfaction. This dedication to the customer creates a competitive advantage that competitors have extreme difficulty matching.

Maxim 3: Create a customer orientation within the company.

Successful entrepreneurs work to make the customer the focus throughout the entire company, from the janitor to the president. They do this by setting an example, showing their commitment, and by communicating their expectations. They also make the employees feel important and necessary for satisfying the customers. Creating a customer orientation is more than writing up policy manuals, it is the core of successful entrepreneurs’ activities.

Maxim 4: Create and use a value system focused on satisfying the customer.

Many decisions must be made that affect customer satisfaction when the entrepreneur is not present. Values guide employees when the entrepreneur is not watching. Successful entrepreneurs say that a properly nurtured system of values will tell employees the right thing to do. By expressing values that reflect esteem for the customer, the entrepreneur’s service expectations are made clear. Successful entrepreneurs shape their company value system to create an environment favorable for satisfying the customer and then turn this environment into a competitive advantage.

PRINCIPLE 5: NURTURE THE ENTREPRENEURIAL SPIRIT [top]

Successful entrepreneurs nurture the entrepreneurial spirit in their top people. A continual influx of new thought is part of the process of growth. The entrepreneurs identified an ever-present need to maintain the drive and entrepreneurial mentality of their employees in the effort to overcome the brick wall because it is people’s entrepreneurial spirit that creates and finds opportunities for growth. Successful entrepreneurs said that as the company grows, the encroaching bureaucratic, organizational hierarchy stifles the employees’ entrepreneurial spirit and intensity and therefore, their spirit must be nurtured.

Maxims

  • Hire people who share your values and passions.
  • Allow your executives to learn wisdom.
  • Let go of executives that the company outgrows.
  • Reward your top people when they contribute.

Maxim 1: Hire people who share your values and passions.

Successful entrepreneurs surround themselves with people who think like they do with respect to business philosophy and values. They are not necessarily looking for people with the exact same managerial style or personality, but rather people who live by the same basic principles. For example, the entrepreneur may seek out people who passionately believe in the same customer service philosophy, or who respond to fellow employees and the community in the way the entrepreneur believes is appropriate. Successful entrepreneurs help create and nurture these passions and drives by hiring and grooming people who fit the organization and who match the entrepreneurs’ value system.

Maxim 2: Allow your executives to learn wisdom.

Just as successful entrepreneurs realize that they were not born with some mystical gift of entrepreneurism, they also know that a part of nurturing and developing their top people is letting them learn from their mistakes. Wisdom is an accumulation of experiences — good and bad. Successful entrepreneurs recognize the need to give their managers the freedom to make decisions and build their confidence. A central part of igniting people’s passions and entrepreneurial drive is giving them the opportunity to make decisions and take risks. Successful entrepreneurs have discovered that people put more into their work when they are doing something that they helped develop and that they believe in. Allowing their top people to learn from their wisdom and to develop their own from experience is essential to nurturing their entrepreneurial spirit.

Maxim 3: Let go of your executives when the company’s growth outstrips their capacity to grow.

Staffing decisions are some of the more difficult ones entrepreneurs facing the brick wall have to make. Many times, top people are friends. But, it may come to pass that some of the top people and the company have grown in opposite directions — there is no longer a fit. The company may have surpassed their capacity to grow — they have reached a plateau in terms of their capabilities that re-training cannot overcome. Successful entrepreneurs recognize that they must let go of these people and move on. They must cultivate and nurture new executives. This decision and the handling of it need not be callous and there are numerous ways to handle it, but it must be done if the company is to overcome the brick wall.

Maxim 4: Reward your top people very well when they contribute.

After carefully selecting and nurturing their top executives, successful entrepreneurs know that they must then reward them well for their contributions. They understand that people must be challenged and motivated to excel and then rewarded for rising to meet the challenge. It is the quality of the decision-making process that must be emphasized and rewarded because good decision-makers are the basis for the future growth of the company. To maintain an entrepreneurial atmosphere, their top people must see personal gain and value in their efforts. However, rewarding their top people is not the simple application of some bonus formula. It is a critical, subjective decision that successful entrepreneurs make for each of their top performers.

PRINCIPLE 6: UNSTOPPABLE COMPANIES THROUGH TEAMWORK [top]

The successful entrepreneurs demonstrated and continually encouraged teamwork as the route to success. This encouragement filters through the company’s employees, creating an appreciation and understanding of each other’s roles. It is this strong sense of teamwork and focus that the entrepreneurs cited as the basis from which superior customer satisfaction is achieved and growth beyond the brick wall is made possible. It is necessary to see that everyone is working in the same direction rather than working independently. Successful entrepreneurs said that teamwork is a way of getting the employees to feel they are a part of the company, not observers. It is a way of keeping a culture of smallness as the company gets bigger.

Maxims

  • Use teams to align people toward common goals.
  • Scale the team to match the problem.
  • Cross train for team readiness.
  • Use teams to beat down turf wars.
  • Use teams to build mutual respect — a team value.
  • Build teams one person at a time.
  • Reward team results to prove you value the team.

Maxim 1: Use the Team to Align People Toward a Common Goal.

The power of individuals can be levered through teams. Successful entrepreneurs say that it is essential for the entire company to be focused in a single direction. They build teams to create a single, concerted effort. Individuals on the team reinforce one another. As the company grows and the number of employees increases, day-to-day job responsibilities can cause people to lose sight of the main goal. By encouraging and facilitating teamwork, successful entrepreneurs help their employees point themselves in the right direction. Successful entrepreneurs know that interdepartmental coordination and cooperation is critical to get the entire company over the brick wall. Building effective teams means breaking the barriers of thoughts and responsibilities so that employees work together to achieve this objective.

Maxim 2: Scale the Team to Match the Problem.

Different problems require different approaches. Successful entrepreneurs recognize the need to tailor teams, their size, scope of responsibility, and their composition, to the particular situation at hand. There is no cookie-cutter special team that can address every issue a company faces as it grows. There must be flexibility and a creativeness to match the team to the problem.

Maxim 3: Cross-Train For Team Readiness.

Effective teams are not groups of people isolated in each department. They penetrate the organization with no regard for departmental lines. Successful entrepreneurs recognize the value of flexibility and extend the concept to the training of their employees by insisting on cross-training. To successful entrepreneurs, cross-training allows people to cover for each other, it creates tactical readiness, it instills a sense of understanding about what other people in the company do, and it helps the employees see where they fit into the bigger picture. Building a cross-trained network within the company creates a solidarity among the employees that serves as an essential catalyst for growth.

Maxim 4: Use Teams to Beat Down Turf Wars.

Conflict is a natural part of human interaction. In order to evoke maximum performance and contribution from their employees, successful entrepreneurs recognize that this conflict must be dealt with. They use teams to put out interdepartmental fires and to eliminate "battle lines". They cultivate synergism within and between teams and actively intervene to eliminate all antagonistic behavior. Cooperation is essential for effective teamwork.

Maxim 5: Use Teams to Build Mutual Respect — A Team Value.

People will not work well together if they do not respect their fellow employees. As successful entrepreneurs build teams, they build a value system along with it. Mutual respect is a critical team value. Employees learn consideration for each other by working together, toward a common goal. They learn respect from how the entrepreneur treats them. Successful entrepreneurs recognize that they are the role models for interpersonal relating in the sense that his or her actions set the tone for intra-team relationships. Mutual respect is an attitude that must be deliberately developed to generate effective teams, and it is simultaneously a natural consequence of effective teams.

Maxim 6: Build teams one person at a time.

Although they purposefully build teams, successful entrepreneurs are very aware of the fact that teams are made up of individuals with unique personalities and egos. Different people have different motivations and need different types of encouragement to perform well. Successful entrepreneurs carefully hand-pick individuals who are best suited for the team’s task, and then groom the team to maximize every member’s potential. In the process of developing the team, these entrepreneurs do not hesitate to intervene in the group dynamics to make sure that each person is contributing.

Maxim 7: Reward team results to prove you value the team.

All of the motivation and encouragement that the previous maxims have called for must be accompanied with a reward system for team accomplishments. Successful entrepreneurs build and maintain unstoppable teams by rewarding the team for positive results. People need to know that their contributions are valued and that they will be duly compensated for their efforts — in the form of special recognition, wages, or some other reward. Rewards play a critical role in motivating team members to cooperate and to be fully committed to company objectives. Successful entrepreneurs use rewards to prove that they value the team and that they recognize its accomplishments.

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