A common entrepreneurial mistake

Entrepreneurs, almost to a person, think mostly about "growing" their companies. The thinking goes something like this; "The more customers I have, the more money I have. The more money I have the more employees I can hire. The more employees I can hire, the more customers I can win over."

While I am a big fan of organizational growth, I am a much strong advocate of organizational development. The difference is simple, but genuinely profound in terms of how it can benefit, or do serious harm to your business.

Growth means to increase in size or number. It really does mean more of stuff...inventory, sales, desks, computers, employees, customers.

Development addresses the need to improve individual and company capabilities. To improve our people, the processes we use to produce work product and how we manage the performance of our individual and team behavior is what enables us to grow our companies in a controlled manner(read profitable).

When organizational leaders believe that growth and development are the same concept, what they focus on is growth and the idea of capability improvement is relegated to happenstance, or
in the worst cases, is addressed only when serious problems present themselves after the fact, due to poor capability.

Cash flow problems, personnel issues, things that get lost in the cracks, having to redo the same task several times, product quality complaints...are all more about a lack of development than they are about growing pains. But most entrepreneurs allocate those and other issues to
those growing pains without really understanding or addressing the need to improve:

• individual or group knowledge,
• insight,
• skills or
• capabilities.

One way to improve your organizational development is to focus on hiring. Hire people with the correct history of accomplishment, values compatible with yours and your other key people, demonstrable insight into issues similar to the ones in your company and with the ability to produce more value than they cost the company.

Otherwise you are risking "growing" your company out of business because your capabilities will ultimately not be able to continue to service the demands of the increasing size of your customer base. Then, after the fact, development gets really, REALLY expensive. See paragraph 6 above.

If you want to get a few more ideas on how I think a focus on development can really benefit your entrepreneurial company, visit hmnrng.com