ENTREPRENEURIAL BUSINESS EVOLUTION

The hardest part of entrepreneurship is getting the business up and running. Perhaps the second hardest is deciding when to let it go. Consultants will tell you every business has four stages in its life-cycle: Start-up, Early growth, Maturity, and Decline. They’ll draw you a sigmoid (S-shaped) curve to illustrate it — a long slow start, then a surge as it catches on, then levelling off, and finally dropping. That curve represents revenues and profitability, but it often tracks closely with the passion of management and public markets for the business as well.

How does this apply to a Natural Enterprise which, almost by definition, is not focused on growth, but rather on well-being of its member partners, and on sustainability? The experts suggest that a company that is continually innovating can pile one of these ‘S’ curves on top of another, and theoretically grow at a reasonably fast pace forever. Innovation is equally critical, as we have seen, in entrepreneurial businesses, but its purpose in these businesses is somewhat different:  to (a) discover new unmet needs that replace products and services that are no longer needed (or have been obviated by other companies’ disruptive innovations), (b) discover new applications and markets for the products and services you already offer, and (c) continuously improve your products and services as you understand more deeply both the customer’s needs and the solution alternatives. This is a process that offers entrepreneurs a tremendous competitive edge over large corporations, which get very attached to, and defensive of, existing products and services (in which they are heavily invested), and hence are loath to change. The pressures of meeting public shareholder expectations also makes large corporations short-term focused and less willing and able to incorporate radical innovations that can ‘cannibalize’ existing offerings and cut into short-term profits.

So while the large corporation uses a mix of innovation, massive marketing, acquisitions and globalization to try to sustain growth as long as it can, and eventually and inevitably goes into a phase of permanent decline, divestiture or absorption into a newer, growing organization, more agile entrepreneurial businesses can stay healthy indefinitely, provided they don’t grow too large, cease to be innovative or succumb to the lure of low-cost capital through public ownership. If the large corporation is the ‘dinosaur’ of the business world (big, rapacious, hugely successful but doomed to die), the entrepreneur is more analogous to a community of small animals, sustaining itself indefinitely as long as it doesn’t succumb to an ‘ecological’ catastrophe.

While competent entrepreneurs need not, therefore, worry about either the problems of rapid growth or the problems of inevitable decline, it doesn’t necessarily follow that the enterprise should aspire to live forever. Here’s where the elegance of self-managing systems shows itself to best advantage: The members of a Natural Enterprise vote with their feet if and when the organization no longer meets their needs. There’s no need to plan for the sunset of the enterprise because it will happen organically if and when its members choose to dissociate from each other, naturally.

Most entrepreneurs strive, usually without success, to put in place a succession plan, to encourage either family members or key employees to ‘buy them out’ when they’re ready to retire. Why don’t these plans work? Two reasons: (1) to some extent the entrepreneur is the enterprise, he or she represents it to its customers, and has so much of the wisdom, the intellectual capital of the enterprise caught up in his/her head that its value to someone else, even a child of the entrepreneur, is often negligible, and (2) it’s hard to transfer the passion of the enterprise to someone who wasn’t part of its inception and life-long realization — most entrepreneurs, unless the price is very low, would sooner start their own business than take on someone else’s with all its ‘baggage’.

Natural enterprises don’t have to worry about succession — they add and lose members organically as the needs of the business and the competencies and needs of the members evolve. Natural enterprises have no shares and no hierarchy to worry about transitioning, and the concept of ‘retirement’ doesn’t apply — if a member’s needs change such that he wants to spend less time on enterprise activities, he simply declares this to his partners and they will, using the self-management techniques outlined earlier in this book, re-jig the mix of members and roles (and if necessary identify and invite someone new to join) organically to compensate. If you’re in an organization with people you love, doing work that you love, why would you ever abruptly and completely ‘retire’ anyway? Just as an old goose never ‘retires’ from the flock, but just transfers responsibilities to others in the flock as needed, the concepts of retirement and succession just don’t apply.

The global business community, setting aside the somewhat artificial constructs of large multinational corporations — hierarchy, oligopoly, unequal distribution of resources, propensity to bribery and corruption, lack of responsibility for others’ well-being etc. — meets the definition of a complex adaptive system.  It’s complex, rather than complicated, because it’s impossible for anyone who know everything about it, or even everything needed to make a significant business decision. Like an ecosystem, the global business community (again, ignoring the corporate dinosaurs) is non-hierarchical and self-organizing, and despite the fact no one is ‘in charge’, certain decisions and behaviours that work very well tend, in an evolutionary fashion, to emerge over time (which is why complex adaptive systems are sometimes called ’emergent’ systems). Using a combination of self-adjustment (in self-interest) and instinct, like flocks of birds that swirl in the air like a single organism, and stay in perfect formation during migrations of thousands of miles that, thanks to the ‘collective intelligence’ of the flock, take them precisely to their nesting grounds each year, entrepreneurs and their customers comprise an adaptive commercial ‘ecosystem’. More than any other factor it is this attribute, this elegant capability to do the right thing almost perfectly, collectively, every time, that makes Natural Enterprise — natural.

And that brings us to the end of our journey.

[I’ll be putting a brief re-cap of the entire book, and the key things to remember, here, when it goes to press]

It is my hope that the purchasers of this book and other entrepreneurs will take advantage of the Internet, and particularly the new and evolving social networking tools, to learn much more about Natural Enterprise and about entrepreneurship in general from each other, than I could ever hope to teach in this one volume. To that end, I have created (I’ll do this soon, and blog about it) the Natural Enterprise Forum. Readers are welcome to use it to pose questions or comment on this book, or to tell their personal entrepreneurial stories (to give other readers all-important context) that capture your learnings, good and bad, about entrepreneurial business. I’ll be active on this site.

In addition, through my business Meeting of Minds (website for this also going up shortly), I can offer entrepreneurs, Natural or otherwise, guidance, advice and coaching on a wide variety of business-related matters, especially business innovation. Pricing and contact information may be found in Appendix Two.

* Table of Contents for Natural Enterprise: Making a Joyful Living with People You Love  (each chapter will be edited for book form, additional material will be added to some chapters, a bibliography will be appended, and about 50 ‘mini-case studies’ of entrepreneurial best — and worst — practices will be included throughout the book.):