Management style - size matters

When it comes to success in business size (of the enterprise) matters a lot.

In a small company decisions are taken by the boss - who is totally aware of all the detailed issues that influence the decision.  He/she might take advice from staff, but in the end will take the final decision alone. 

Why? Because many decisions in a small company have the potential to kill the company or at least make it very sick. So all that matters is the outcome.  If it goes pear-shaped the mortgage goes down the tubes.  The decision may be a reasonable one but all that counts is results.

In a large company all this is different.  Even if things go badly wrong, the decision-maker will probably survive as long as it is generally agreed that the decision was a reasonable one.  So the emphasis is on consensus.  A person banging on about what a stupid decision something was is likely to be a problem if things go south, So you had better shut him/her up and get him/her to agree even if he/she is muttering under his/her breath. (any way out of this his/her thing that is PC enough for me???)

The other important factor is that Managers in large organisations are selected for a lack of interest in detail (yes its one of the things personality testers look out for), so often they have difficulty staying focused long enough to get all the arguments.

Have you ever tried to convince a line manager that a decision should go a particular way and

1. The manager’s eyes glaze over as you get to the 18th reason why this is a bad/good idea
2. He/she eventually turns to others in the meeting and asks what they think.

This is standard management practice.  The manager isn’t really interested in the detailed issues, just on making sure there is general agreement and above all that the decision sounds like it is sensible and is generally in line with the corporate strategy. 

What does this mean in practice:

1. In a large company if you really want to influence a decision become an expert in lobbying others before the meeting.  Most decisions are stitched up before they are discussed.
2. The phenomina of Groupthink means that potty decisions can be made and the one person who’s career is going to damaged by a bad decision, and who is coincidentally the only person who can prevent a bad decision, isn’t actually that interested as long as consensus is perceived to have been achieved.  As goupthink is all about consensus (rather that whether something is correct or not) such meetings are fertile breeding grounds.

I think this explains why entrepreneurs who start a company are often really bad at running them once they get to a certain size.  They want to make all the decisions and to know all the detail but they cant.

It also means that if you are running a small startup - think twice before hiring that corporate hot-shot sales director.  You may just get 2,000 reasons why the sales targets were not met this month.  Running a small business means there are no excuses.  If the sales target isn’t met it really doesn’t matter what the resons are.  You just need it to be met.    Corporate types often don’t see it this way - which I think explains the death of so many startups that have enough money from a VC to pay a bloated salary to a sales director with an impressive corporate CV. 

Bob
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