Over the last couple of months I’ve had the opportunity to observe a friend as he has designed and launched a new, high-tech entrepreneurial venture. He has been very generous in sharing the ins and outs, and it has been exciting to watch the roller-coaster ride — and I suppose living somewhat vicariously through his experiences!
Through our various conversations it has occurred to me that classical management theory (propounded by the likes of Henri Fayol, Elton Mayo, Max Weber and Frederick Taylor) is in many ways still relevant, at least descriptively, and despite its industrial age origins. For example, business schools still teach that among the core activities of management are:
- Planning (anticipating the future).
- Organizing (assembling resources).
- Directing (harmonizing activities).
- Controlling (establishing rules and procedures).
As my innovative friend goes about the business of birthing his business, I can see that he is engaging in every one of these “PODC” activities, and doing so very effectively.
But wait. I’ve observed other “traditional” (non high-tech) entrepreneurs close-up, and there is something quite different going on here. Two thoughts.
First: the work environment. As if starting a new business were not challenging enough, today’s virtual technologies have enabled (some might say fostered) increasing geographical dispersion. Employees now spend much of their time working away from the traditional office – whether from a client’s business, airport, coffee shop, or home – heavily supported by information technologies (notebooks, smart phones, wifi connectivity, enterprise databases, and a legion of generic and specialized software). This is “enabling” technology on one hand, but it creates challenges for PODC. Rather than fight against this reality, my friend is leveraging virtual technologies to accomplish his PODC leadership activities — cheap, high quality tools such as BasecampHQ, SubVersioN, and DropBox.
Second: the competitive environment. Traditional startups relied on natural barriers to entry to keep out unwelcome newcomers, assumed that first movers who had a solution to a real problem would have a sustainable advantage, and trusted that the factors of production (land, labour, capital) could not be easily transferred. In the world of high-tech business, barriers to entry are fickle and can appear, and disappear, shockingly quickly (resulting in hyper-competition). First mover positioning can provide an initial opportunity, but if mishandled can become a liability (eBay was not the first online auction; Amazon was not the first online bookstore; and Google was not the first search engine). The factors of production become less relevant — witness the cheap, high quality tools linked in the paragraph above, all of which run in the cloud. My friend is keenly aware of this competitive reality, and is trying to run flat out — yet avoid making a misstep and falling on one of these land mines. Time will tell whether he is successful.
What does all of this mean for planning, organizing, directing and controlling? In one sense, I think it means nothing at all. The core PODC management activities must go on. The old rules still apply. Capital budgeting, 4 P’s of marketing, supply chains — these all must be thought through and dealt with.
And yet, today’s IT-infused business environment is demanding new approaches. Earlier today I came across a new book by Charlene Li called Open Leadership. It describes much of what I am observing in my friend, and what in my opinion is very rare among business leaders (even the entrepreneurial ones). I will be giving Li’s ideas a closer look. If you are interested in high tech entrepreneurship, I’d encourage you to do the same.