Four Seasons of Enterprise

In the beginning, there is no enterprise, just a couple of founders fascinated by a single idea and working hard to realize it. The startup does not earn much money, and there are barely any employees, so that I suppose it might feel just like a (very hardcore) hobby. Or a side gig. There are no formally defined roles. Everybody is doing everything, and everybody is responsible for everything, and everybody can see the real contribution of each other. There is an Enterprise Spring feeling, full of the can-do mentality.

The Enterprise Summer begins, when the enterprise starts earning substantial amount of money and hires their 20th employee. The founders, now CEOs, suddenly realize that “they” (their company) are earning much more money than they would have been ever able to earn by their own. And they are responsible that this revenue increases, not decreases. Also, they realize that dozens of their employees trusted them and build on stability of the company to plan their life, pay off mortgages and so on. This is a huge responsibility and huge pressure. And for sure, a lot of sleepless nights, with a single thought running through your head: “how are we going to survive?”

I had a chance to observe several founders in several companies, hitting this level. They were all good-hearted, creative, smart, modest and ethical people. But I could see, day for day, how this pressure had melted, squeezed or at least severely bent their personality. At some point, you have to ignore interests of your friends, in the sake of the enterprise. At some point, you have to make unpopular, hard decisions and stop some projects, because your enterprise can’t handle too much projects at once and has to focus more sharply to survive. You have to cut parts of the body to save the rest. And on some day, you have to lay off somebody for the first time. If you didn’t had grey hairs before, this is the time for the first one.

At this stage, enterprises usually have a very loyal staff, and everyone has a very entrepreneurial approach: everybody knows exactly, how are we earning money, what does he or she has to do to help earning money, and what will happen if someone stops earning money. Summer Enterprises that don’t have enough staff of this kind, die very quickly.

First formally defined roles appear, out of a very practical and extremely transparent reason (that everyone can follow): that the division of work will reduce overhead, and thus help earning more money, and thus help the enterprise to survive. With roles comes responsibility, and some formal processes. The individual contribution of every single person starts getting fuzzy, because of division of labor, so that first non-monetary KPIs appear. Non-monetary KPIs lead to the first “locality problems”, where some people tend to over-optimize their own KPI, at the expense of some other departments, and the overall revenue. But because the company is still on the profitability edge and is fighting for its survival, these problems are usually timely detected by CEOs and fixed.

At some point, the enterprise gets a momentum. Some kind of a flywheel appears, generating ever more revenue and income, seemingly by itself. In the Enterprise Autumn, the company starts hiring more and more staff. Survival of the company is getting less and less dependent on individual contribution or individual decisions of any single employee. There will be more and more process. At this point, CEOs realize that they have finally achieved the nirvana they had envisioned so eagerly in their sleepless nights before, and start focusing on the conservation of the status quo. Minimizing or at least managing risks of destroying the flywheel is prioritized above trying some new ways earning money. Every single department is culturally trimmed to minimize risks and avoid mistakes. As a result, any major innovation ceases.

Usually, at this point, more and more people playing corporate politics are hired.

Remember the feeling of people before the 20th century? The mankind was so small compared with the nature that no one made any second thought cutting the last tree in the forest or spilling waste into a river. The “Well, when this forest is cut down, we’ll just move on to the next forest” attitude. Only in the 20th century, people have finally realized that the Earth is a closed and pretty limited ecosystem. The Enterprise Summer is just like ecological thinking — everybody is aware that any single major fuck-up can end up with a global meltdown. Everybody is an Entrepreneur. On the contrary, in the Enterprise Autumn companies, there are a lot of people with the middle age attitude. They know that the momentum is huge and flywheel is big, so that they can allow putting their own career interests above the interests of the enterprise.

This is why Autumn Enterprises are so full of corporate politics. And from some particular point of view, one can at least understand it. After all, the well-being of a living, breathing person should be valued more than some abstract 0,01% uplift in revenues of some soulless corporate monster, earning money for some minority to allow them to buy a second yacht. So no wonder some people feel it ethical to do corporate politics and enjoy playing politic games. Others have to participate to protect themselves. Yet another just go under radar and opt out.

Another consequence of the corporate politics is the rise of huge locality problems, where the narrow focus on the KPIs of my own department prevails, often at the expense of the overall revenue, and there is nobody who can untangle these problems.

But no momentum can be forever. Either the too much of locality problems, or some external sudden market shift damages the flywheel, so that it cannot rotate so effortlessly than before. This is the time of the Enterprise Winter. At this point, the company usually has a long history of corporate politics, so that

a) all of its most important posts are occupied by corporate politicians with a non-ecological thinking, and

b) most of ecologically thinking Entrepreneurs have either left the company, or remained on an outsider role without any real influence.

To fix the flywheel, or to find out a new one, the enterprise needs (more) Entrepreneurs. But the corporate politicians (correctly) see them as a danger for themselves and fight them.

Different things can now happen depending on balance of power between the two groups. Entrepreneurs might win the battle, or at least manage to fix the flywheel while being constantly under attack. Or personal interests of corporate politicians might accidentally be best represented by a project that also fixes the flywheel. Or the flywheel has so much energy that it allows the company to survive for years and years, even in the damaged state, and then, another lucky external influence might fix it. Microsoft’s flywheel has been severely damaged around 10 years ago, and they have demonstrated both spectacular flywheel repairs and awful additional flywheel damages since than. Apple had experienced a similarly long period, the 12 years without Jobs.

But in the worst case, if the flywheel is weak and the corporate politics prevails, the agony might start, with all possible short-term potentials being sucked out of the flywheel, then staff getting laid off, and then all remaining assets being sold.

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