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Why entrepreneurs struggle to scale their companies

One of the best and most insightful pieces of writing about the trials of entrepreneurship comes from John Hamm writing for the Harvard Business Review. His article, entitled “Why Entrepreneurs Don’t Scale,” provides a brilliant look into the behaviours and tendencies of entrepreneurs as their companies grow from single product firms run by small teams, to multi-product organizations with a staff list that no longer fits on a sticky note.

At the core of Hamm’s much-referenced article are four key tendencies that keep many entrepreneurs from growing with their companies.

First, entrepreneurs tend to feel very attached to their founding team. Unfortunately, this team may not have the skills to cope with a larger and larger scope of responsibility.

Second, entrepreneurs spend most of their time “working on things” at their startups. When their job transitions from “working on things” to “managing things,” entrepreneurs can have trouble switching gears. Being caught up with tasks may prevent entrepreneurs from seeing the big picture, and can siphon valuable thought and resources away from planning the company’s overall direction.

Third, the founder’s ability to focus intensely on a narrow set of objectives can become a hindrance as his or her company grows. While it is extremely valuable for entrepreneurs to be able to exercise single-mindedness and devotion in order to achieve early milestones, this narrow focus can later blind entrepreneurs to the broader range of issues that must be addressed as part of running a larger organization.

Lastly, Hamm points out that many entrepreneurs who run technology-centric start-ups have a personality type that lends itself best to solitary work. Working alone may suffice when running a five-person company, but when a staff of 50 is looking to the founder for leadership, staying cloistered in an office for weeks at a time does not inspire a team.

According to Hamm, being able to evolve with the growth of the company takes discipline and the ability to do what doesn’t come naturally to most entrepreneurs. For a great read, see Hamm’s full discussion of the topic:“ Why Entrepreneurs Don’t Scale.”

 

References

Hamm, J. (2002, December). Why Entrepreneurs Don’t Scale. Harvard Business Review. Retrieved May 26, 2010, from http://hbr.org/product/why-entrepreneurs-don-t-scale/an/R0212J-PDF-ENG.

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