“The ability to acquire the skills to be an effective CEO is as difficult as an average singer becoming a great recording artist.  Unfortunately many entrepreneurs as their companies become more and more successful fail to acquire the next level of skill sets…”  Roy Cammarano, former leader of three INC. 500 companies and author of Creating Do-It-Yourself Customers and the award-winning book, Entrepreneurial Transitions.

 

The Rich Niche Group blog interviews and enables you to hear directly from successful entrepreneurs and product managers about the steps they took to grow their businesses/products and how they were able to create, penetrate, and/or dominate their niche.  In addition, we also interview those that provide services entrepreneurs and small businesses need in order to help them build their companies.  This week we interview Roy Cammarano:

Interviewee:  Roy Cammarano, former President of three INC. 500 companies, business consultant, public speaker and author of Creating Do-It-Yourself Customers and the award-winning book, Entrepreneurial Transitions.

Why Selected:  Having had the pleasure of working with Roy at two different companies, I can attest to the fact that Roy’s perspectives and insights into helping entrepreneurs, entrepreneurial organizations and businesses of all sizes grow themselves and their companies is invaluable.  I would encourage every entrepreneur to read Entrepreneurial Transitions, it is one of the very few books that can help you move from being an entrepreneur to a leader.

In the following interview, Roy discusses how starting and running a business is analogous to starting a family, helping it grow and some of the mistakes to avoid along the way.  As you read the full interview, here are some points that stood out to me:

1.  As a company grows, the founder and/or leader of the company must transition from being the “entrepreneurial genius” to visionary leader.  One key to this relies on the leader of the company building a strong executive team and then enabling them to run their departments.

2.  Entrepreneurs need to realize that at some point in order for their company to reach its full potential, they may need to bring in someone to run the business.

3.  When times get tough, focus everyone on a common goal and use that to rally the troops by celebrating small wins and build positive momentum. 

4.  When hiring outside consultants, only hire those that provides the skills the company needs and does not already possess.

5.  Companies that continually dominate their niche are always asking themselves, “how would I compete with me” and then building the barriers to keep them competition at bay.

In your book Entrepreneurial Transitions you compare the life of a company with that of a human (Birth, infancy, toddler, adolescent, etc.) can you elaborate on that and why it is important for a business leader/entrepreneur to the stages?

I think it is important to create an analogy that most people are familiar with and this one allows significant latitude to address the “growing pains” than an organization goes through. For instance at some point a discussion will take place as to whether the founder has the necessary skills to grow the company: The skills of impregnating are different than the skills of parenting and those skills are different than teaching skills.  A child needs all and so does a company.

Additionally, as a company grows new skills and processes become necessary and often perfection is expected at these new skills and process and little tolerance exists for on the job learning. I liken this to a crawling baby learning to walk. The parents and virtually anyone seeing this struggling acquisition of new skills and process offers encouragement and by providing a helping hand they create a safe environment whereby they can pick the child up and provide comfort when the inevitable fall happens.  Rarely do companies provide this type of learning to take place, so I like to ask them what would have happened to the baby had they been treated to a negative, critical impatient process?

 

There are very few founders who have made that transition to lead and grow the company as it gets larger, how do you suggest other executives & board members start this conversation with the founder and many times the majority share holder?

In my book “Entrepreneurial Transitions” I describe 4 phases that an entrepreneur goes through, Entrepreneurial Genius, Benevolent Dictator, Disassociated Director and Visionary leader. Unfortunately very few ever become Visionary Leaders.  Most actually vacillate between Benevolent Dictator and Disassociated Director and this is very frustrating and painful for the entrepreneur and the organization.  The ability to acquire the skills to be an effective CEO is as difficult as an average singer becoming a great recording artist.  Some of it is God given talent and much of it is hard work and dedication at “constant improvement” and growth. Unfortunately many entrepreneurs as their companies become more and more successful fail to acquire the next level of skill sets to continue to lead the organization instead they rely on the skills that got them to where they are. Professional athletes still practice and get coaching in order to improve. Often entrepreneurs do not. If you have the opportunity to influence an entrepreneur make sure you: 1) respect what they have accomplished; 2) provide them with an illustration so they can see what has worked for others; 3) ask them to play to their strength; and 4) provide a safe environment to help them acquire the skills they need.

 

You’ve worked with and run several small businesses and some large ones, what key traits have you seen in some that make them more successful than others? 

Like watching small children play soccer as they grow and mature they learn to transition from “bunch ball” (everyone around the ball or in the corporate world – decisions) to positions and then ultimately strategy. When the positions are understood and the strategy in place, tactical skills (specific to positions) can improve. Going to a Saturday morning soccer field can teach you about the proper growth and maturity of the organization as it transitions through the age groups to eventually look like the pros.  Often entrepreneurs think they are David Beckham and can always carry the day.

 

When evangelizing the business, I have found many entrepreneurs have the same pitch for each audience.  Can you share your experience and the need to different pitches for each target audience (investors, partners, end-users)?

Often listening to entrepreneurs is like listening to a tape recorder repeating what they say and know regardless of the audience.  Be careful of the single pitch as it means that they may have only one way to get what they want.  I believe that you can always have your way provided you have more than one way.  Unfortunately entrepreneurs often have a story pitch because it worked at one time and people reacted favorably so they continue to do what had worked before. Have them read “Who Moved My Cheese.”  It is especially important to understand that people listening to what you are saying can only understand what you are saying if they can relate to what you are saying.  Audiences are made up of many different types of people having only one way to tell your story ensures that only a limited number of people will understand and relate.

 

What were the biggest obstacles you’ve faced at the different stages of the companies you’ve run and how did you overcome them? 

Working with an entrepreneur who has gone from hero to villain within their organization is always tough.  The parenting skills they had do not transition to the educator and then coach roll they need to play so they are angry.  Often the organization has rebelled and battle lines are drawn.   The employees suffer, the entrepreneur suffers and the customers get frustrated.  I again use analogies to help everyone understand that this is normal (like adolescence) and we begin to look for common ground we can work towards as opposed to focusing on what we disagree on. Take on small problems solve them celebrate and continue to gain positive momentum.  Never take on the big problem that no one thinks can be fixed and never allow people to criticize an individual’s focus on the necessary results.

 

If you avoid ever taking on the big problems that will likely haunt the company, are you suggesting they break the big problems into smaller components and tackle each component one at a time, or something else?

I think I was specific about the BIG problem that no one thinks can be fixed. Take on the big problems that you think you can fix after you have success with the problems that are easy to fix.  Problems in organizations will always come up and having a team of people that can work together is critical to solving them.  In many instances entrepreneurs believe that they are the only ones that can solve the problems and they have done it so many times that they have trained their employees to not even try to fix something because they know that the entrepreneur will only want it solved their way.  Big problems often happen because people do not handle the little ones.

 

What do you see as the most common mistake leaders of start-ups and small businesses are making?

They think they have to be in control of every detail and that the only way to solve a problem is their way. It destroys people’s willingness to contribute and the entrepreneur never teaches anyone they just tell them what to do.

 

Describe how you suggest leaders of start-ups and small businesses interact and utilize outside consultants? 

Carefully! Only hire for specific skills that the company needs and does not possess. Never take operating advice from a lawyer and realize that most accountants are historians and risk averse. Check the references and be careful if you meet them on a plane. It seems most entrepreneurs (most people) seem to open up to strangers on airplanes, I think it is breathing the pressurized air that makes everyone susceptible to listening to a complete stranger and take their advise while ignoring what your top employees are telling you. Also never attend a one day seminar and think you have the necessary perspective and skill to implement what you learned.

 

In general, what piece of advice would you give to someone who is either starting a new company or getting ready to launch a new product which they are hoping to either create and/or penetrate a niche?

Two very different questions and each depend on the maturity and previous experience of person and the complexity of the offering.  Know it is going to cost you way more than you think it is and take more time.  A rule of thumb is two time the money and three times as long or three times the money and twice as long.

 

What are the key characteristics of companies that have been able to penetrate a niche, even niches dominated by another company?

Niche penetration means that the other company did not protect itself by asking the key question how they would compete with themselves.  And then doing it or creating barriers for others. Often we like to glamorize the one company or product that makes it.  We ignore the ones that failed miserably and cost people their life savings. Learn before you take action but when you take action go for the gold.

 

When you think of companies that dominate a niche, who do you think of and what do you see them doing to keep that dominating spot?

Most often we think of big companies that are dominant and we loose sight of the growing pains and the mistakes that were made as they grew.  Jim Collins in his book “From Good to Great” did a good job of sharing the learning’s that these companies went through.  I think what they do is adhere to a core set of beliefs and create a culture of always getting better.  I like asking Peter Drucker’s questions; “What business are we in? What business will we be in? What business should we be in?”  Intel is the most notable example of asking and answering these questions.

 

What are the biggest threats to losing that dominating position?

Fail to ask Drucker’s questions and think that the market will never change.

 

Finally, which companies come to mind who once held a niche dominating position and then lost them and why do you think they lost that position?

SONY (the walkman vs. the IPod)

SONY created the take your personal music where ever you want to go.  IPod now dominates that market. SONY had too many battles on too many fronts (beta max vs. VHS) etc. but the market was made by SONY and they did not stay on the edge and adapt to the new technologies till it was too late.