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  • Writer's pictureWylde International

How Entrepreneurs Undermine the Success of Their Businesses.

Like most Kenyans, I have been the unwilling recipient of harrowing service experiences at the hands of public officials. In fact, the service reputation of officers in government departments such as the various land registries is well documented as nothing short of legendary, albeit in the wrong direction. These long-suffering consumers of public services intuitively sense that they are up against the entrenched, mostly negative cultures that our public officers at the grassroots level are infamous for.

But I doubt that things were always that way.

These negative cultures were not born; they were made by individuals over an extended period of time until they became the accepted standards of how things get done. To be sure, some people have perfected the art of getting the services they want from difficult public officers by learning how to circumvent the system. Still, others opt for the pragmatic stance of "doing what needs to be done" to obtain the services they need from intransigent public officials. As rank outsiders, it is perhaps understandable that citizens choose to act in this way based on the apparently impossible task of changing the entrenched cultures that govern the behaviors of these public officers.

But therein lies the problem. We have forgotten or are just unaware of the fact that culture is created by what we do as much as by what we don't do. When we fail to act when, or as we are supposed to, we invariably send subtle messages that we don't care and by extension, display the underlying beliefs, values, or attitudes that drive our behaviors.

These signals are particularly potent if they come from people of influence or leaders. Leaders have a way of creating and entrenching the cultures of the organizations over which they exercise considerable influence. Leadership attitudes, values, beliefs, and approaches to problem-solving all tend to filter into their organizations as acceptable or normative standards of behavior. With time, these leadership behaviors become the dominant organizational culture.

There are other ways in which leaders create organizational culture such as how they go about setting priorities for resource allocation and deployment, how they approach crises and resolve conflicts, how they respond to or act in highly ambiguous situations, and what they measure or pay most attention to. The truth is leaders are always creating culture, for better or for worse, either deliberately or just by default. This is a lesson that entrepreneurs as the de facto leaders of their businesses are apt to forget, many times to their detriment. For instance, by delineating which attitudes, customers, behaviors, or performance standards are acceptable or not, entrepreneurs set in motion processes that guide the actions of employees in certain directions which over a period will eventually result in organizational cultures that become the unseen but powerful drivers of the behaviors and attitudes of their employees.

In order to pick out the culture of an organization, the first port of call should be to examine the manner in which entrepreneurs and their employees go about executing their duties or responsibilities, their reactions to events such as crises and achievement of significant milestones, and their attitudes.

The process of setting behavior standards need not be deliberate; it can come from simple things like verbal reprimands for lateness, upbraiding employees for treating customers discourteously, telephone manners, and reactions to crises events will eventually communicate to employees the things that matter most to entrepreneurs. Before too long, these often unspoken behavior standards become the dominant and accepted way for employees to go about their usual duties and responsibilities.

Smart entrepreneurs are alert to establishing effective incentive systems early in their business ventures to guide the behavior of employees in the knowledge that employee behaviors and attitudes are almost always aligned with the incentives available in their firms. In the narrow sense, incentives simply refer to how business owners apply a system of rewards and sanctions aimed at directing employee behaviors in desired directions. The implied assumption here is that employees will tend to behave in ways that get rewarded and eschew those practices that invite displeasure from their bosses.

However, in the widest sense, incentives can be viewed as those ongoing signals that entrepreneurs are always communicating to employees about what really matters to them. Most employees will find it difficult to maintain the motivation to apply their efforts to tasks that do not appear to carry any weight with their employers. That is simply human nature. Instead, they will most likely direct their efforts where they yield the highest impact, in this case, measured by what appears to matter most to their bosses. This same reasoning can also be applied to suppliers, creditors, debtors, and financiers that form part of a typical entrepreneur's ecosystem.

The upshot is that entrepreneurs can be the greatest contributors to their business challenges through the sub-optimal cultures that they have created. As an illustration, consider the entrepreneur who habitually accepts low productivity, output, or poor service quality from her employees. Over time, the employees of the firm will eventually think of their poor performance or low productivity levels as good enough or as normative, even though they know better. After all, why bother with something the boss doesn't appear to care about or even measure?

In response, the typical entrepreneur may simply choose to fire the non-performing employees and hire fresh ones. Or perhaps she could spend time whining to her chama friends about how her employees are continuously letting her down. However, it is unlikely that the new hires, or for that matter, the whining will solve the problem. Her problem is primarily a failure of leadership, or more accurately a failure to set in place the right culture, mostly by what she failed to do. In other words, the culture she created has come home to roost.

A recurring complaint among consultants engaged in business advisory services is that entrepreneurs frequently prove to be the biggest obstacles to worthwhile change initiatives. Have you ever wondered why many large firm owners tend to replace their top managers whenever they decide that some form of radical change is required to keep the organization alive or prepare it for future challenges? Or have you ever considered why many great and well-intentioned change efforts come to a cropper even after much energy, effort, and financial resources have been expended to make things work? The answer to the first question is that it's rather difficult to bring about any lasting transformational change in an organization while leaving the existing culture intact. And here is the answer to the second question: It's even harder to change the culture of an organization without changing leadership (i.e. what leaders do), which in some instances can only be effected by a change in leaders (i.e. the people who lead).

The lesson for entrepreneurs is clear. Even if we grant that you may not be in a position to replace yourself as the leader of your firm in the manner of the large businesses alluded to above, the time may be ripe to examine how your leadership input may have created the culture that is directly or indirectly undermining the success of your business. The results of this introspective exercise should be used to plan the deliberate steps required to create the organizational culture that will drive your business forward. `

And for those entrepreneurs who are just setting out on their entrepreneurial journey, it would be wise to begin to set in place the building blocks of your vision of a great company culture sooner rather than later. The reason is that it will be much harder to dismantle the offending aspects of culture in the future long after they have been established.

Mr. Kiriinya is the Director of Strategy and Advisory at Wylde International.


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