On 15 July 1410, the Polish-Lithuanian coalition scored a decisive victory over the Teutonic Order in the battle of Grunwald. Many factors contributed to this outcome, which set the wheels in motion for the ultimate demise of the Order.

However, one element stands out: the Polish king controlled his army from a command post on a hill. In contrast, the Grand Master of the Teutonic Knights fought with his troops on the battlefield – the Order gained a great and committed soldier, but they lost a general.

What kind of leader are you?

Many of today’s entrepreneurs and business executives make the same mistake. They personally handle a range of operational functions within the business, only attending to strategy and business development in their spare time, which rarely arrives.

Just like the Grand Master of the Teutonic Knights, they get dirty in the trenches rather than conduct operations from the hill.

Two factors lead to such behaviour: either a flawed belief that unless you complete a task personally it won’t be done well, or the lack of operating capital. The latter forces the entrepreneur to invest their ‘free’ time in activities other than core strategic endeavors, instead of hiring someone better suited to the task.

I would suggest that if funds are the problem, but you believe that your business has potential, do whatever it takes to raise the money needed to finance the required resources.

However, if you insist on doing everything yourself out of the belief that others can’t deliver, your business has a much more severe constraint than just cash – your personality.

The first rule of entrepreneurship: know thyself

The first step towards being a general rather than a foot solider involves knowing how to structure your business from its inception.

A study completed by the University of Wisconsin in the 1970s found that companies fall into one of three categories. The type of category determines the extent to which the owner can work on the business, rather than in it.

The first group belong to the craft firms; companies started by an entrepreneur particularly skilled in a certain area. It can be a restaurant opened by a talented chef, a pastry shop headed by a great baker or an auto repair yard started by a skilled mechanic.

These entrepreneurs tend not to be professional managers. They have decided to put their skills to use in business, but the business depends on the owner to be personally involved in creating a product or providing a service to customers. These companies do not grow that much, usually because of the owner’s contentment with the status quo and the inherent lack of scalability – if demand doubles, the owner can’t double his or her hours.

The second group comprises the promotion firms. These companies have high growth built around a product or service with some kind of competitive advantage, a niche in the market that they hold.

Generally, you’ll find the stereotypical entrepreneur at the helm of these kinds of businesses. The type of person who has started several other businesses over the last few years. These entrepreneurs have high growth goals and they have the vision and charisma to get people excited about the business.

While these sorts of entrepreneurs have excellent start-up skills, they do not tend to be that good at managing or delegating – finding it difficult to work on the business rather than in it.

The final group belongs to the administrative companies. These sorts of companies have professional managers who spend their time planning and budgeting, rather than being directly involved in the day-to-day activities of the business.

With the primary focus on product and process improvement, these companies have formal procedures, processes, and job descriptions. In contrast to the craft companies, which have low growth and the promotion companies, which have spectacularly high growth, administration companies fall somewhere in the middle, settling for slow, steady and predictable growth. These sorts of companies can run by themselves – with or without the owner.

Finding the right structural balance

The first type of business, the one built around the owner’s unique skills, can’t really be considered a business, but rather a glorified form of self-employment.

The true corporate world consists primarily of promotion firms and administrative companies, and success in this sphere rests in finding a balanced mix between the two. The following quadrant graph illustrates this dependency.

Screen Shot 2016-01-28 at 3.24.22 PMAs you can see from the graph, without entrepreneurial spirit success will be limited. Passion and drive form the essential prerequisites for a great business.

But, even if you have a dynamic organisation, it must be run well to maximise its potential. This is where administration comes in, as well as the strategic understanding that the ‘generals’ in the business must not leave the hill and join the crew in the day-to-day operating tasks.

As a senior executive, you can gain a lot from following the example of the Polish king rather than that of the Grand Master of Teutonic Knights. It may feel heroic to charge into the field with your troops, but a true business hero orchestrates success rather than trying to play the music.

Incidentally, the Grand Master lost his life on the battlefield at Grunwald. His personal sacrifice was not only in vain, but also hastened the collapse of the Order. Perhaps another lesson worth paying attention too…

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Andrew Gorecki, MD of Retail Directions, has worked with the retail industry since 1985. Industry insiders appreciate his strategic advice and insights, as he lives and breathes for the industry. Andrew received a nomination for the Australian Entrepreneur of the Year Award in 2010.
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