Entrepreneurship and the route to economic freedom

We fear so much losing what little we have that we dare not take a stance against something we know is wrong, or to fight for something we know to be noble. We fail to see that we should have much more than what we have because we have had nothing for so long. We have fallen into the trap of thinking true economic liberation can only come from self-employment. This is what we have been taught to believe. This is what, at least in our country, is the prevailing wisdom.

In fact, it is so deeply ingrained that you might find it hard to reconcile these words with common sense. I mean, of course you need to be an entrepreneur to make it in this world, at least financially. Everyone knows that! I believe this to be very far from the truth. Or if not far from true then significantly skewed towards what is merely one alternative.

The richest in South Africa are entrepreneurs (but are not self-employed)

The list of the richest people in South Africa – and how much they are worth – from Forbes is mind boggling. Incidentally, there is only one black billionaire in this country. That’s one. In the entire top ten there are only two black people. And there are no females.

Rupert is the chairman of Richemont and Remgro; Gore is CEO of Discovery; Bekker is Naspers CEO; Ackerman was chairman of Pick ‘n Pay; Dippenar is chairman (and co-founder) of First Rand Group; Oppenheimer was chairman of De Beers before he sold it for $5.1 billion in cash; GT is also co-founder of First Rand; Saad is co-founder and CEO of Aspen; Wiese is executive director for Shoprite which he bought for R1M; Gray is the founder of Allan Gray; Noutton is chairman of PSG (his son is CEO); Sacco inherited Assore Group from his father; Attridge is co-founder and deputy CEO of Aspen; Ramaphosa chairman and founder of Shanduka Group; and Motsepe owner of ARM.

Although they are all CEO’s or Chairmen of their respective companies they are also co-founders of these companies or they got very lucky with some risky investments. I’m not an economist so I will not try to analyse their situations and what allowed them to make it when so many others did not. Maybe you can read Jim Collins’ Built To Last and Good To Great for that. The point is that it is clear that some form of entrepreneurship was vital in making these men as wealthy and successful as they are. So at this point I want to clarify: there is a difference between entrepreneurship and being self-employed.

The difference between an entrepreneur and being self-employed

There was some research done to try to understand why self-employed people in the US on average earn less than their salaried counterparts. What the researchers found was that they had to separate entrepreneurs from other types of the self-employed by “disaggregate(ing) the self-employed into two groups—the incorporated and unincorporated.” They described the incorporated as having “limited liability” and “a separate legal identity”. This simply means you have your own business but you are owned by a bigger corporation or they have a significant stake in your company. The research they found was that these individuals earn 28% more than their salaried counterparts. They found that unincorporated self-employed individuals earned less than their salaried counterparts. Interesting.

They also found that successful incorporated entrepreneurs were successful salaried employees before they ventured out on their own and that those who remained unincorporated were never successful as salaried employees. Very interesting.

Entrepreneurs in the corporate world

We’ve heard about the incorporated self-employed, what about entrepreneurs in the corporate world? Can they exist? The answer, if you buy into the above argument of incorporated self-employed, is that of course they can and they do. In fact, I would argue that what encourages them to leave and start their own businesses is a recognition that the corporate world is holding them back from achieving their goals of changing the world. The same researchers found that there are have been organisations for a while now, long before Google and Apple that actively encouraged the spirit of entrepreneurship within their employees because they understood the role these people played in the success of the organisation. And think about these guys mentioned above. They are the leaders of their organisations. Is it not feasible and even probable that they will be looking for people like them to continue their businesses? I see a trend in corporate towards building a culture of entrepreneurship. The more forward thinking organisations have this already inculcated in their people and it is a key factor for new hires.

But for some reason we view people who stay in the corporate world as not being brave enough to tackle the outside world on their own. We use terms like the rat race (I saw a poster saying that even if you win the rat race you’re still a rat!). We make being self-employed sound sexy and earning a salary sound boring. You even see it with your friends and acquaintances. They walk around like heroes with the slightest bit of self-importance around them. It’s like people who have this insatiable need to tell everyone how difficult their MBA is while they’re doing it and how hard it is to have to attend lectures after-hours. MBAeish!

The sad thing is I used to feel inferior somehow (I could never really understand the exactly how I was inferior) for not following my friends’ and former colleagues examples of starting my own business. I think about it now and there really is no reason that I can see right now to leave the corporate world and start my own business. If a company is no longer fulfilling my passions then I need to find one that will. I need to rise high enough in the organisation to be able to influence decisions on things like culture change, contribution to economic development, the building of leaders in-house and whatever else you may be passionate about. And if you are truly entrepreneurial you will know when corporate is no longer sufficient to fulfil your passions and then you will build your own little corporate or big corporate to satisfy those passions. Not because you want to make money!

There is nothing less inspiring than money. I had a debate with my little cousin some time back. He was adamant that his goal in life is to make money. I asked why he wants to make money. He was unable to answer not because he didn’t have an answer but because he felt it was self-explanatory. It is not. If you one of those people whose goal is to ‘make a lot money’ ask yourself why? Why do you want to make money? Is it so you can be comfortable? If so would you accept other sources of this comfort other than money? Is it to provide for your kids? I would argue that staying in corporate is the best way to do this. You can’t get any more stability than that. Ask yourself why you want to make money and then stop focussing on the money and start focussing on the reason!

This is where the economical difference between an entrepreneur and someone who is self-employed. The entrepreneur is not focussed on being self-employed for the sake of being self-employed or for the sake of making money. They engage in entrepreneurship because they thrive on invention and innovation, on creating and finding needs to fulfil. A Forbes reader commenting on an article about entrepreneurship wrote that an entrepreneur has “an insatiable need to make the world a better place through… improved services or products.” Richard Branson said “There is no point in going into a business unless you can make a radical difference in other people’s lives.”

So the next time you feel under pressure to ‘start your own business’ think about whether you will be changing the world or not. Think about what difference you will make in this country with your invention. Think about the impact you have in your current job and whether or not you can do more. Ask yourself if you have not been successful in the corporate world where you are given all the resources at your disposal what makes you think you will be successful on your own with significantly less resources. Think about your driving passion and if it is compelling enough for you to say fuck it I’m doing it.

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What is your purpose as a leader

DERS-Q~1

 

What is your purpose as a leader?  Is it not to help your employees love the work they do, to help them find that sweet spot where they are making the world – even the tiny space they occupy – a better place. There are a few points I want to make to (hopefully) illustrate just how far away from true leadership we have gone. In some cases we have found ‘alternatives’ to doing the difficult work of a leader and wrongfully equated them to leadership. Leadership is about people first, second, third and always.

Work-life balance is a luxury leaders can no longer afford

If you are a leader in your organisation and you do not spend time – hours, days even – thinking about your employees then you are sure to miss a crucial opportunity to engage meaningfully when you are with them. When your job wholly depends on the people under you then shouldn’t the majority (all?)of your focus and energy go into these people?

“Of course it should!” is the immediate answer often said with a look of incredulity and insulted surprise that someone would actually ask such a silly question. Well let’s look at your current boss. Do you believe s/he spends time thinking about you outside of work? I’m not talking about a passing thought about work in general, I mean a targeted specific session at home to think about where you are going, what makes you tick, how s/he will use this to make you a better leader. I’m talking about holding conversations in the shower with you in your absence. Plotting potential career paths for you that s/he will later engage you on, not because her/his boss or HR has now said they need a certain position filled but because s/he genuinely feels that you are capable of doing that job and that it fits with both of your ideas of career progression. Thinking about your gaps and the best way to help you close them while having a beer on a Sunday afternoon. Do you believe your boss spends this much time on you? Do you believe s/he should? Do you believe you should? If not, why not? Are you then going to try to do this in the work place? May as well try to do your MBA in your office.

Leadership is a profession and must be treated as one. We spend time and money extending our technical knowledge or working on that assignment or project for the entire weekend. Yet we don’t do the same for our people. If you can spend an entire Saturday evening working on a presentation surely you can spend the same amount of time working on your people.

I can see you saying that’s just ridiculous, when do you spend time with your family? What about work-life balance?! The MD of a company I used to work for said it quite nicely: it doesn’t exist. If you’re looking for a work-life balance you’re doing the wrong job. I would put it slightly differently: work-life balance is a luxury leaders can no longer afford. This is where Conrad’s quote becomes critical for you as a leader. After all, if you don’t like what you are doing how can you be expected to take it home with you? Another behaviour I’ve never understood is the people who are out the door of the office and out the gate religiously at knock-off time, every single day. These people cannot wait to leave the office. How much do you dislike your job that every single day you can’t wait to leave it? Even worse when you are a leader in your organisation! Do you not cherish those after-hours chats with your employees? Catching up on their lives, getting better insights into the people they are. These times when their guard is down and they open to you are gold.

Leadership is work and must be treated as such. It is not a means to an end, a way of delivering results. It is a calling and unfortunately too often people who do not subscribe to it as such are called into it. Your own leadership is to be analysed constantly and constantly improved. If you’re not doing this you’re not in the right game.

Work is love made visible

  • A friend posted this on Facebook (which inspired me to write this post):

“I don’t like work… but I like what is in work – the chance to find yourself. Your own reality – for yourself, not for others – which no other man can ever know.”

It’s a quote by Joseph Conrad. I didn’t know who he was so I looked him up. Fewer professions can provide the sentiments he makes above than writing. Leading people is one of them.

I can honestly say I found myself when I was leading people. I can honestly say I don’t know if I did it well or not but I know I found my own reality. I created it every day with the people I was leading. I don’t know how successful as a leader I was (you can never know this but for your people – the moment you think you can do a self-analysis on your leadership you’re dead in the water; you must strive to do better than your last attempt no matter how successful it was) but I believe I would have been immeasurably less successful had I not enjoyed what I was doing.

So knowing this it only makes sense that I work hard to make sure that I help my employees achieve the same opportunity to find themselves, and create their own reality in the work.

Another friend asked on Facebook (yes sometimes value adding conversations do take place on Facebook!) if it was better to be feared than to be loved as a leader. The answer was instantly clear to me, it is never better to be feared. There is no scenario out there in the known universe where this is the case. Some people confuse fear for respect or, even worse, think it can be applied to get respect. I have found that these people are usually novices at the leadership game; they still have a few bumps and bruises of experience to get through. One of the questions that usually come up at this point is the question on delivery of results. It is here that it becomes apparent that people, on top of confusing fear with respect, also confuse love with weakness. An article in the HBR Blog Network titled What Stops Leaders from Showing Compassion addressed this very question. One of the commenters wrote this which summed it perfectly for me: “At the risk of stating the obvious, the leader without compassion is leaderless. Heart with backbone are quintessential points on the compass of life in whatever endeavour.”

This has to be genuine though. It cannot be an implementation of something that you have been told by a leadership coach. If you do not believe then something has to happen to convince you, a paradigm shift, or you are simply not suitable to be a leader. You have to believe with every bone in your body that your people come first, that if you help them be the best they can be they will deliver the best results they can. And you have to believe all of this will be done with love and compassion and not fear.

“Work is love made visible. And if you cannot work with love but only with distaste, it is better that you should leave your work and sit at the gate of the temple and take alms of those who work with joy.”Kahlil Gibran

I don’t believe there is a better way to say it and something of which your employees must constantly be reminded.

Fear of competition from followers

Finally there is this competition that some ‘leaders’ create with their employees. A fellow blogger perhaps articulates it slightly different here in an article called Causes of Leadership Failure – Fear of Competition from Followers. He suggests here that the reason for this fear, and hence the competition, is a practical one, that the employee will one day take his job or, for private business, become competition to him. He then lists reasons why this fear makes no sense. And I fully agree with his reasons. Where I differ slightly from him are the reasons for the competition in the first place, sure there are those individuals who have that fear that their jobs may be at risks from their subordinates. But in my experience there are usually two types of people who engage in this competition, the ones who have climbed the ladder relatively fast and have set records within the organisation and ones who took an unusually long time to get to where they are and often think others (usually their own employees) must take the same amount of time to get there.

We are all in competition with each other. We want to come first, be the only one to have achieved this, the youngest to have achieved that, the quickest to have risen through the ranks. As leaders, we need to rise above this individualism. Years from now no one will care how fast you rose through the ranks, or how old you were when you promoted.  They will only care what impact you have made in people’s lives and the business. What legacy you have left behind.

Your purpose as a leader to allow, and even help, your subordinates to surpass the standards that you have set and not be envious of them. If they fail the accountability must rest with you as a leader first and then with them.

We all aspire to greatness. We all wish and dream about that moment when we will be pronounced as great leaders. Great leaders know that the standard has been set and if they wish to be pronounced as great leaders then they need to set a new standard. The greatest leaders do not aspire to be great leaders themselves but rather to build great leaders.

Martin Luther King Jr said that “All labour that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.” And this is what the greatest leaders seek to achieve and the legacy they wish to leave behind, an uplifting of humanity.

Your employees are still your most important investment

I’m beginning to think that Larry was a small but critical part of my development into a leader. He stands as the symbol for the metamorphosis that I went through while under his tenure. There were surely events that occurred in my earlier life that have been preparing me to be a leader. From my family to high school; sports to varsity. All of these experiences and life lessons cannot be relegated to the back benches in favour of a single period in my life as life changing as that period was. So I conclude that Larry having a massive influence over my life that he did was another cog in the still being built wheel. If there are three central cogs that keep this wheel turning, and if my father is one, my high school rugby coach (who was also the superintendent in the boarding house) is another, then Larry would be a third. Perhaps there are more than three of these cogs, maybe there are six or ten. What’s relevant right now is that there is more than one.

Larry has been a yard stick for every manager that came after him. Most have fallen short. Some have brought different perspective to how I view leadership and in that way have helped me grow as a leader. Others have shown me how not to be a leader. And I have taken their lesson to heart.

Sensitivity analysis is defined in the Business Dictionary as: simulation analysis in which key quantitative assumptions and computations (underlying a decision, estimate, or project) are changed systematically to assess their effect on the final outcome. So the question is how many of us as newly employed graduates do a sensitivity analysis to determine which variable skills or competencies is to be changed systematically and by how much to deliver the final outcome of the best leader? Or better yet, how many of our managers have determined this? How many are capable of determining this?

What I now appreciate is that Larry understood that my learning curve for skills would take care of itself and that if it didn’t hard work would do it. He also understood that he would have to take care of the competencies. You can teach (almost) anyone how to use SAP, make washing powder, run a boiler, run payroll, test a sample in the lab and so on. It’s a bit more difficult to teach someone how to talk to people, how to discipline people, and how to bring a team together. It gets increasingly difficult when their whole lives have been a lesson in the exact opposite. But it can be done. This is the first thing a manager needs to understand if he or she has any hope of being a good leader.

So what happens when you have been through this for a few years, and you have grown your leadership potential and you now have people reporting to you? The simple answer is that you apply the same principles that have helped you get to where you are physically and emotionally. But it’s not that simple is it? The position that you are in now means that you have to contend with a higher level of management, with different priorities. Your new manager is now asking you to forget about people and focus on results. Less time is given to building these competencies and all the focus is put on skills. To be fair not all of this can be put on the new manager. It is expected that at a higher level the focus will shift to profit a lot more than at a lower level. When the world is going through a recession you can also expect an organisation to shift its focus to immediate delivery of results. What I don’t understand is that even after people have been doing business for over two thousand years they still don’t understand that human capital is the biggest investment they have and that growing it will ensure the security of the future of the organisation.

Burning platforms are here to stay. The days of cash cows are numbered if not yet quite over. Resources are scarce and getting less. There is competition for both your consumers and your talent. Cash flow has become critical over the security of stock, while ensuring that your customers are serviced on time and in full. Does all this pressure translate to: we will no longer put as much effort in building leaders but will expect results based on the investment we have made on skills and experience? I believe that the message must be that we need to put conscious effort behind building (leadership) capability and not rely on managers to do this by themselves. The new business pressure does not mean an abandonment of what we know works to create new leaders but rather a change in the speed with which this is done focussing on impact and not process.

Larry had a natural talent for it. Not every manager does. They will have to be trained how to do this while they themselves are being grown as leaders. If this is not done there will come a time in the future when organisations realise that they have run out of leaders. This will be a great time for recruitment specialists and head hunters but with consequences that some organisations cannot afford. It is happening in some companies already. They have exhausted their pipeline for leaders and are having to recruit outside. They have failed to realise that human capital and not machinery is the priority and therefore have no plans to grow this investment in the future. They have run out of leaders and are now buying them from other organisations. And where does that leave the people already within the organisation who would have been looking to be given that opportunity? Besides a mass exodus you will have people that are disillusioned (which ultimately leads to them leaving anyway); you will create a culture where people believe they can only get to a certain level within the organisation before looking elsewhere but most important of all is that you start robbing the community and the country of a much needed influx of great leaders.