Q. I recently purchased a small business. Now, for the first time in my life, I am in charge. I have a good group of managers who know the business and the industry better than I do. They can and do run the company with almost no direction from me. My question is, what do I do? How can I add value?
You have purchased what we would call a fully evolved midsize business. You do not need to direct the day-to-day activities of the business. As you said, the business can run without you. However, that does not mean that you won’t have a major impact on the long-term success of the company. You can pull five levers to create value:
1. Determine the direction of the business – You should take responsibility for setting goals for the company, developing a strategy to achieve those goals, and ensuring that you have the appropriate systems in place to support goal achievement. Set revenue and profit targets. Determine how you will achieve them (e.g., expanding geographically, adding new products or services, increasing share of market in your current business, etc.). As the leader, you own the vision, the mission, and the strategy. Establish policies that will allow your company to achieve its goals.
2. Ensure the right people are in the right roles – You are the head coach. You decide who plays where. Determine the skill sets needed to succeed in each role and put the right person in the right job. If necessary, redefine the roles. By the way, sometimes there is no one in your company that has the skill set you need nor is there a person who is likely to be able to develop these skills in an acceptable timeframe. In such cases, you’ll have to go outside of the company to get the talent you need. These can be very tough decisions, but they are important.
3. Develop people – If your company is to move to the next level, your people will have to grow and get better. It is your job to make sure they have the opportunity to do so. Identify the areas where your people need to grow and send them to classes, bring in outside trainers or create a self-study program for your people. We have one client who pays his people a bonus for reading books he approves.
4. Communicate and motivate – You have set the direction. Now, make sure that your people understand the direction in which you want to take the business and that they understand their role. By the way, this is not a one-time job. You’ll have to communicate the direction repeatedly through multiple channels—over communicate. Further, make sure that your systems are aligned with and support your direction. Your compensation system, your measurement systems and your performance management system should be incenting people to do the things you want done.
5. Enable people and remove roadblocks – Empower people. Delegate authority and hold people accountable for results. If you don’t, you are the roadblock to your company’s success. This shouldn’t be a problem since you admit that your people know the business and the industry better than you do. Make sure that your people have the tools to do the job correctly. Don’t send a man with a shovel to do a job that requires a backhoe.
You are new to managing managers. Doing this well requires you to demonstrate a completely differently skill set. Focus on the five levers detailed above and you’ll be on the right path and don’t hesitate to reach out for help if you need it.