April 29, 2009

A San Francisco financier was recounting a conversation he had with an entrepreneur some years back. The CEO was considering hiring a CFO, but was hesitating.

“He didn’t want to pay someone. He didn’t want to give up a piece of his business,” the financier remembers. “Instead of making the business bigger, he ended up selling it and then started another one and did the whole thing all over again.”

Leadership is that most elusive, intangible quality that often separates good companies from great companies. It’s incumbent on a good leader to know her strengths and surround herself with people whose skills complement themThat takes self-awareness. If you don’t know who you are, to paraphrase Adam Smith, business is an expensive place to find out.

Hewlett-Packard once used a kind of crib sheet for managers as they moved up the ranks, getting them comfortable with the decisions they’d have to make as their responsibilities grew. Staff gets bigger, budgets get bigger, and a manager has to get bigger, too.

There are some ways, though, that cross most management situations and come in especially handy in the less-formal world of small businesses.

Choose trusted deputies.

A company’s chief can run himself and the business into the ground trying to do everything, so it’s important to have one or two people around on whom you can depend for information and judgment. Anthony Bourdain’s “Kitchen Confidential” is a fun read, but there are good management tips in there, too (Not, however, telling an underling: “When I want your opinion, I’ll tell you what it is”).

At several points in the book, he writes about taking over a kitchen and figuring out which waiters and bartenders to trust and almost always bringing a line cook with him that he already knew. They were the ones who plugged into the place’s gossip and knew when he was running short of fish—both crucial pieces of knowledge for the operation.

Know your weakness. 

Maybe you’re a numbers woman. Or maybe you have the charisma of a preacher. Want an idea? Hire your opposite. Not necessarily a personality opposite—you want someone who approaches people and problems the way you do—but someone who is good at the things you’re not.

If you’re a good leader in a small group because you can easily show you care for the staff, it may be harder to do that with more troops. If you’re a screamer and longtime employees are accustomed to it, you may need to chill out a bit if you start to expand as to not scare off talented newcomers.

Think hard about how big you want to get. 

Sometimes, smaller is better and a company chief isn’t comfortable taking on the responsibility of more employees, more space and more customers.

There’s a cost to every decision, and again, screwing it up can be very expensive.