Scaling a business based on people is likely to limit your growth.
Pavlo recently spoke with a well-established but frustrated business owner; this particular business owner is an engineer whose company is not growing as quickly as it could.
He has traction and a reputation after 28 years, but he can’t grow beyond an 11% growth rate. Every time he steps on the accelerator to expand, he takes one stride forward and two steps back.
Engineers are generally careful, as seen by the way their factories and manufacturing lines are constructed. For them, seeing what you’re doing makes it simpler to perceive progress, and when you can see something, you can delegate it much more easily because you can point to it.
Managing the commercial systems it is the tricky piece because how do you see marketing? How do you see sales? How do you see operations? How do you see administration? It’s there that everything was stumbling.
Think about what the commercial system is and consider the commercial elements of the business: Marketing and sales and operations and administration and managing people and managing money. All of them interplay with each other. They are all linked together no differently to the way your production process plays out.
As you run through the production process, the shape and value of the product you create, evolves. The same applies as you proceed from one business system to the next.
It operates in a methodical manner, with the first individual beginning with marketing and the second individual securing sales. The next step is operations, followed by administration, and we began mapping out this process since an engineer would enjoy it.
The business owner got this right and STILL was stuck at 11% growth – so what was the problem? People! He experienced that people disrupt the systems. Considering this, how do you get this issue of delegation right?
In this podcast of the Money Show Pavlo picks up on how to delegate right.
When you’ve been working for yourself independently, it’s easy to keep track of things. You don’t have to have meetings, and you don’t have to worry about other people’s lives and issues. You do it all yourself, and you end up burning the midnight oil. You’re working 16 to 18-hour days, ensuring that you’re up to speed with everything, but eventually you can’t do that anymore. You need other people to come in.
Pavlo runs a small exercise with business owners who are struggling with this:
This exercise depicts the typical amount of time spent by a company owner thinking about his business.
He sleeps around 8 hours per night and he’s awake for 16 hours. Some calculations tally that he has spent around 160,000 hours thinking about his business over the last 28 years. With all that contemplation, he’s ultimately got into deep, deep realms of complexity, which finally lead to a point when things begin to become simple.
With that in mind, the business owner is going to try to assign certain work to a manager in his company.
This business owner has five managers who are all well-established. They’ve each been there for an average of 11 years. So, we carried out a comparable calculation. 11 years… 250 odd working days at 8 hours a day. They are managers, and when they go home for the weekend, they are not thinking about the business. They’ve been pondering for an average of 20,000 hours.
You have 160,000 hours in the business owner’s mind and a total of 20,000 hours in the managers minds. Delegation becomes a tremendous challenge right away because you’re truly thinking and seeing things so differently based on how your team perceives and thinks about things. It starts there and only becomes a problem if the context isn’t set correctly and there’s no alignment in understanding what and how is being delegated.
The most common error that founders, owners, and CEOs make is assuming that the individuals to whom they delegate know what they’re doing and care as much as they do.
To overcome this gap, you have to delegate a complete, holistic SYSTEM, not just an outcome, and you need to revisit the whole system from time to time to ensure it is intact and functioning slickly.
Delegation doesn’t begin or end with an instruction. It’s an ongoing relationship with your team.