Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com
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The deer in the headlights – we all know the story – the car rounds the bend on a dark night – the deer stands frozen in the glare and cannot move even as its death approaches. Humans sometmes act this way – and sometimes with similar consequences.
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Most of my work is done with middle-market companies – by that I mean well established operations with a proven senior team that has worked through most of the big inter-personnel issues and found a way to work productively together. Under the leadership of a CEO who values open communication and camaraderie – and does not tolerate turf battles and information hording.
It is a real pleasure to work with this kind of company. The challenges may be great but the culture allows them to be addressed forthrightly. There is no substitute for ‘adult conversations’ and close collaboration when business begins to throw major challenges at a team.
I focus on middle-market companies for a reason – a recognition that I am more productive dealing in adult situations. A friend recently put it this way, “Chief, you just don’t do well with kids!” I knew what she meant and it is true. My most unproductive efforts have been with other people’s start-ups.
So that you might understand my approach to advisory work, let me relate a comment from one of my very favorite comediennes – Moms Mabley. Moms was prone to putting it this way – “I’d rather pay a young man’s airfare from New York to California than tell an old man the distance.” For me, it is a matter of investing or wasting my time. Teaching a wanna-be entrepreneur how to be a CEO is simply not as fulfilling for me as working with a CEO who understands the role already. I recognize that is my own particular bent and that others relish what I avoid – but there you are – different strokes as they say.
One of the reasons that I avoid young entrepreneurs and start-ups is that they are so prone to dissipating opportunities. A recent experience brought that tendency into sharp focus. A young entrepreneur – on his third or fourth attempt to start a company – had finally gotten some traction. Business wasn’t gushing out of the ground to be sure but there was business and all the appearance of more to come.
The company was growing – in fact, outgrowing its founding team. As the pace picked up, there was more need for experienced professionals and less for the amateurish players who had participated in the launch. The investors were pushing teh CEO to make the necessary changes. The situation called for decisive action by the CEO. But the CEO just could not bring himself to act in a timely fashion.
The results were predictable. Money was wasted paying the salaries (and eventually severance) of unproductive team members. Additions to the team were delayed because of the scarcity of funds. (Can you see the downward spiral here?) The situation finally did resolve itself. However, by the time it did, it was too late. The company was running out of runway and the investors had decided not to advance any more funds.
The moral of this sad story is “anybody can make the right decision too late – anybody can make the wrong decision precipitously – it takes an experienced and seasoned CEO to make the right decision at the right time.
© Dr. Earl R. Smith II
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Related Articles:
- Moving the Ball
- Lack of Accountability – The Core of Failure
- Angel Investing – Hard Choices or Hard Times
- Sea Change Brings Change
- Knowing Versus Doing – Post-Success Malaise
- Planning and Implementation
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