Back in 2016, I stepped away from my 30-year career in marketing communications. Since then, I’ve thought about business nearly as much as I did when I owned a company. Retrospect, it turns out, is a marvelous business professor. Most recently I found myself questioning whether I sold my business at the right time. What if I’d taken another two or three years to expand revenue and plump up profit? Had our EBITDA (earnings before income tax, depreciation, and amortization) been higher, I might have realized much greater value from the sale. After considerable reflection, however, I decided that time wasn’t as much a factor in my business growth as was my mindset.
More to the point, I thought small too much of the time.
We’ve all heard the admonition, “You’ve got to think big.” It’s easy to forget, though, that when you’re a business owner, thinking big involves taking big risks—real, not theoretical risks that make your stomach churn and your palms sweat, risks that leave you staring at your bedroom ceiling at 2 AM. So it’s no surprise that risk aversion is a major deterrent to starting a new business. For those who do start a business, risk aversion is a dangerous inhibitor of growth. Nearly every growth opportunity I identified involved undertaking substantial risk, financial or otherwise, such as leveraging the balance sheet, entering a new market, or developing a new capability. All of these involved either putting major capital at risk or stepping way outside my comfort zone as a leader, or both.
Clock-Makers and Time-Tellers
I’ve long been a devotee of Jim Collins, author of Built to Last and other great books. In his writing, Collins distinguishes between clock-building and time-telling, urging the entrepreneur to favor the first capability over the second. Time-tellers come and go, he tells us, but clocks can report the time whenever consulted and, consequently, have enduring value. Now, I loved this advice because I am by nature a builder of things, and the idea of building an enduring business with real intellectual property appealed to that creator mentality. So I set about a (narrowly construed) clock-maker approach to business, too often focusing on the internal mechanisms and processes of my business more than on the larger market conditions. Over time I developed what I can only describe as a highly-wrought operation, one with meticulous workflow management, quality control, HR practices, and financial reporting. I delighted in all these mechanisms because they satisfied my desire to build—and they felt durable.
In all my efforts to build a great clock, however, I failed to think expansively and audaciously, to identify opportunities and pursue them with a “damn the torpedoes” mentality. (Collins refers to these seemingly impossible objectives as BHAGs, big, hairy, audacious goals.) But identifying and going after a major opportunity requires, among other things, some ballsy time-telling—thinking outside the clock. Fine-tuning our company’s internal systems appealed to my control-freak side and made me feel like the business was well run. But one can’t foresee or control the outcome of a bold new venture, and for that reason I missed some obvious growth opportunities. That imbalance of vision, more than the availability of time, limited our company’s growth.
I gained valuable perspective on small thinking when, later in my career, I worked in corporate development. In this capacity, I identified and courted businesses for acquisition, and I got to know many entrepreneurs as a result. Without fail, those business owners who accomplished great things had the ability, yes, to build a good clock, but also to look beyond their business, identify a stretch of blue ocean (here I refer to the book Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim), and go pursue it. They respected risk but weren’t afraid to take it. They focused on minutiae, but not at the expense of the big picture. They knew when to push that stack of poker chips into the center of the table, cross their toes, and whisper, “Baby needs a new pair of shoes.” On top of all that, the best entrepreneurs had what I call cultivated ignorance, the power to willfully ignore the scariest aspects of a given risk.
I once saw a placard on someone’s wall that read, “What would you try if you knew you could not fail?” It’s a hackneyed bit of pop psychology, to be sure, but it’s also a reminder that most of us are limited only by our mindset. When it comes to building a business, we need the patience to focus on the minutiae, but also the confidence to play visionary at times, to think ridiculously big, to seek out scary risks and drive straight at them.
All this is easy for me to say, I realize, but that’s the beauty of hindsight.