There’s a careful balance to be maintained between over-complicating our businesses and trying to short-cut the necessary steps for success. Finding quicker or more effective ways to do things can be the very reason why a business thrives and out-performs its competitors; or it can be its downfall, if quicker and easier means taking shortcuts that increase risk or decrease quality. And adding complexity can make the owners’ lives harder, as it can introduce management and reporting requirements that don’t add to the bottom line; or it can make life easier by providing extra resources and skills so they don’t have to try to do it all.
The line charted above, between taking dangerous shortcuts and over-complicating things, shows an optimum path for a typical new owner’s business journey. As you start off, there’s often a period where the business remains quite simple, and adding complexity (in the form of more products or taking on staff) doesn’t really do much to make life any easier. Then a point arrives where the added complexity provides capacity to do more, more easily, and the entrepreneur’s life gets steadily easier as complexity increases. In this phase, trying to keep life easy by keeping the business simple risks making it ineffective by taking shortcuts. And making it too complex just erodes profits without creating a better entrepreneurial experience.
At the sweet spot in the middle, the entrepreneur has the opportunity to specialise back to your ‘Joyful Genius’ – that work that you are naturally brilliant at and you love to do – and leave other specialists to do the bits they love, and do well. At this point you are neither over-complicating things nor taking short-cuts. And you can really love their work – and at the same time help others to make a living doing what they love.
As the business matures more, it becomes much harder to grow simply by adding complexity – each extra product, staff member, division, whatever, adds little in the way of ease in the owners’ lives. That’s not to say that the entrepreneur has to stop growing – just at this stage, growth tends to be about establishing formalised systems to support increased volume. Chartered marketer and small business guru Dr Alan Rae calls it “the dawn of formality”. At this point, making the owners life easier is about putting managers in, rather than just focussing on what you’re great at and you enjoy. This adds significant complexity – including things like corporate governance and management incentives – without adding much to the ease of the entrepreneur’s life. What it does add, is a whole load of extra cash as the business gets bigger under its management team.
Introduce them too soon, and you’re into over-complicating things – and blowing the profits. Leave it too late, and you’re into short-cut territory, burning out the entrepreneur.
Each business will have its own curve. Some will be less steep at the ends; some steeper in the middle – and nearly all will have some form of that ‘double hockey stick’ shape.