Are You the Bottleneck in Your Business?
It turns out that for an organization, being prepared to navigate technological change has many elements in common with having to manage leadership transitions. Hence, the assessment has become a popular tool for business owners interested in preparing their companies for a change in ownership even if digital disruption is not on top of their minds. We are currently doing several assessments on companies owned by baby boomers, part of the so-called “silver tsunami” preparing for the next phase of their lives.
As we do these assessments, one central theme keeps emerging time and again: the outsized influence many of these owners have on the organizations. I touch on this in my book, Venture Perfect, using the term “The Boss is the Bottleneck.” As I have seen in practice across many companies, the evolution and development of businesses leads to an organizational structure in which the founder, who is usually the sole-owner, ends up becoming the hub and to which all the functions such as marketing, sales, operations, and finance end up reporting to.
The owner becomes the decision-maker, resolver of issues, and arbiter of conflicts. However, this model can persist for years and be quite rewarding. Quoting from the book:
“To be sure, this organizational structure can be very effective, and in industries that don’t change much, a company can even thrive. All functions are focused on execution, and if there are no changes in the external environment, they can help the company generate profit for long periods. Some bosses who are at the center of these kinds of structures even like it and want to keep it that way because the daily fires and activities give them a sense of control and the attention they like.”
The problem, however, is two-fold:
- These types of organizations are not very nimble. Since they are driven by the strength of the personality of one individual, there is often little room for learning or collaborative leadership.
- They are critically dependent on the “boss” to be able to fully function. Therefore, in companies like this, the owner rarely takes a vacation, and if out, has one eye and one ear in the office. More importantly, when the boss does want to pull back and slow down, or perhaps exit, this becomes very challenging.
The remedy for this is to first recognize this in the company and then take deliberate steps to create a functional framework that is suitable for the culture and business model of the company. Then, the owner must empower leaders within the company or attract new talent that can fill in the gaps revealed by the functional framework. If done right, with the new organizational structure, the owner might also find themselves to feel energized again and have a new perspective participating in the business as part of a better functioning team.